Labor Law Cases PDF

Labor Cases Penned By Justice Del Castillo
18 OCT 2017 | SUBJECT | LABOR AND

EMPLOYMENT | ILLEGAL
DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE
MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME COURT
Meatworld International, Inc. Vs. Dominique

A. Hechanova; G.R. No. 208053; October 18,
2017
DECISION
DEL CASTILLO, J.:
―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.‖[1]
Before the Court is a Petition for Review on Certiorari[2] filed under Rule 45 of the Rules of
Court assailing the September 12, 2012[3] and July 3, 2013[4] Resolutions of the Court of
Appeals (CA) in CA-G.R SP No. 125953.
Factual Antecedents
On September 6, 2006, petitioner Meatworld International, Inc., a corporation engaged in the

business of selling fresh meat under the brand name of ―Mrs. Garcia‘s Meats‖ in different
outlets located in different malls or markets,[5]hired respondent Dominique A. Hechanova as
a head butcher.[6] At the time of his termination; respondent was assigned at the outlet of
Robinsons Place Mall, Ermita, Manila (Robinsons Place Manila), with a salary of P10,600 a
month.[7]
On March 2, 2011, respondent filed a Complaint[8] for Illegal Dismissal with claim for
reinstatement and backwages against petitioner and/or Joyce Alcoreza (Alcoreza),[9] Vice-
President[10] of petitioner. Respondent alleged that on November 10-19, 2010, he was
suspended for violating the regulation of SM Hypermarket, Muntinlupa, prohibiting
employees of concessionaires from tasting food peddled by some promodizers; [11] that after
his suspension, he reported to the office of petitioner for his reassignment but he was
informed by the Employee Relation Supervisor Junel Romadia (Romadia), that there was no
available outlet yet;[12] that on December 9, 2010, respondent was assigned at Robinsons
Place Manila;[13] that on January 5, 2011, he was relieved from his assignment and was told
to report to the office on January 6, 2011 for his performance evaluation;[14] that when he
reported to the office on January 6, 2011, he was told to come back on January 10,
2011;[15] that on January 10, 2011, Romadia asked him to leave his cellphone number so she
could text him when to come back;[16] that on January 12, 2011, respondent via text message
asked Romadia when he could report for work;[17] that Romadia replied that he could report
for work anytime;[18] that on January 13, 2011, respondent reported to the office at around 1
PM but was scolded by Alcoreza for not arriving in the morning; [19] that respondent explained
to Alcoreza that he came in the afternoon because he knew the office personnel were very
busy in the morning;[20] that Alcoreza retorted, ―Magresign ka na lang or tanggalin ka
namin;‖[21] that respondent pleaded to her but she left without saying a word;[22] that Romadia
approached him and told him to wait for her text;[23] that on January 17, 2011, he decided to
ask the help of Mr. Raffy Tulfo (Tulfo) since he had not received any text message from
petitioner;[24] that Tulfo gave him a referral letter to the Department of Labor and Employment
(DOLE) – CAMANAVA;[25] that on the same day, he went to the DOLE-CAMANAVA and
filled-out a Single-Entry Approach (SENA) Form for illegal constructive dismissal alleging
that he was not given any work assignment and was being forced to resign;[26] and that the
case was forwarded to the National Labor Relations Commission (NLRC).[27]
In response, petitioner claimed that it did not dismiss respondent as he was the one who
failed to report for work.[28]Petitioner alleged that in April 2010, respondent was banned from
working at all Puregold outlets because a personnel of Puregold BF caught him urinating in
the storage room where fresh food items were kept;[29] that respondent was suspended from
November 18-25, 2010 for leaving his workplace without permission on November 5, 2010
and for being under time for the dates October 31 and November 1, 2010; [30] that respondent
was placed on preventive suspension on November 27-30, 2010 for eating food products or
sample items of another concessionaire in the cold room storage area;[31] that respondent
was banned from working at the SM Hypermarket Muntinlupa branch because of the
incident;[32] that respondent was temporarily assigned at that Robinsons Place Manila;[33] that
his assignment ended on January 5, 2011;[34] that respondent was told to report to the office
on January 6, 2011 for his new assignment but since he arrived late he was told by his
supervisor to return the following day as there was a long queue at the Human Resources
(HR) Department;[35] that since respondent failed to report on January 6, 2011, the vacancy
which he was supposed to fill was no longer available;[36] that on January 10, 2011,
respondent barged in at the HR Department and made a demand for his new
assignment;[37] that he was told to return in the morning of January 13, 2011; [38] that on said
date, he arrived late giving Romadia the impression that he was no longer interested to
work;[39] that on the same day, he received a Memorandum asking him to explain in writing
why no disciplinary action should be taken against him for failing to report to the HR
Department as scheduled;[40] that after the said date, he never reported back to work;[41] and
that on January 18, 2011, petitioner sent a Memorandum dated January 17, 2011, asking
respondent to submit a written explanation and to report to the HR Department on January
24, 2011 at 3:00 PM.[42]
Ruling of the Labor Arbiter
On January 10, 2012, the Labor Arbiter rendered a Decision[43] declaring respondent to have
been illegally dismissed. The Labor Arbiter gave no credence to petitioner‘s theory, that
respondent failed to return to work for fear of being investigated for his violations of company
rules and regulations, for lack of evidence.[44] The Labor Arbiter also found petitioner‘s
accusations against respondent to be untrue and without basis.[45] However, considering that
the work environment would no longer be healthy, the Labor Arbiter ordered the payment of
separation pay in lieu of reinstatement.[46] In the absence of any factual or legal basis, the
Labor Arbiter relieved Alcoreza of any liability.[47]Thus:
WHEREFORE, a decision is hereby rendered declaring [respondent] to have been illegally dismissed.
[Petitioner] Meatworld International is directed to pay complainant P116,600.00 as backwages and
P42,400.00 as separation pay. Other claims are dismissed.
SO ORDERED.[48]
Ruling of the National Labor Relations Commission

Petitioner appealed the case to the NLRC.
On March 30, 2012, the NLRC rendered a Decision,[49] affirming the findings of the Labor
Arbiter that respondent was illegally dismissed and thus entitled to backwages and
separation pay. The NLRC ruled that petitioner‘s allegation that it was respondent who
refused to report for work was belied by the latter‘s ―immediate action to seek help from
Raffy Tulfo.‖[50] As to the alleged infraction of respondent of urinating in the storage room, the
NLRC considered it as a fabricated infraction as no document was presented to support
this.[51] The NLRC even considered the two previous suspensions of respondent as proof that
petitioner was giving respondent a hard time.[52] It also gave credence to the statement of
respondent that he was told to resign by Alcoreza.[53] All these taken together led the NLRC
to conclude that respondent was illegally dismissed.
Petitioner moved for reconsideration but the NLRC denied the same in its June 15, 2012
Resolution.[54]
Ruling of the Court of Appeals
Unfazed, petitioner elevated the matter to the CA via a Petition for Certiorari[55] under Rule 65
of the Rules of Court.
On September 12, 2012, the CA dismissed the Petition due to the following infirmities:
1. there was no proper proof of service of the Petition to the adverse party and the agency
a quo. While petitioners filed the Affidavit of Service and incorporated registry
receipts, [petitioner] still failed to comply with the requirement on proper proof of
service. Post office receipt is not the required proof of service by registered mail.
Section 10, Rule 13 of the 1997 Rules of Civil Procedure specifically stated that
service by registered mail is complete upon actual receipt by the addressee, or after
five (5) days from the date he received the first notice of the postmaster, whichever is
earlier. Verily, registry receipts cannot be considered as sufficient proof of service;
they are merely evidence of mail matter by the post office to the addressee; and
2. there was no competent evidence regarding the identity of Jocelyn B. Alcoreza as the
alleged authorized representative of co-petitioner Meatworld International on the
attached Verification and Certification Against Non-Forum Shopping as required by
Section 12, Rule II of the 2004 Rules on Notarial Practice. Further, there was no board
resolution empowering Jocelyn B. Alcoreza to represent petitioner corporation in this
case. The Supreme Court was emphatic when it ruled that in the absence of authority
from the board of directors, no person[,] not even the officers[,] can bind the
corporation. It stressed that any suit filed on behalf of the corporation wanting the
required board resolution should be dismissed, since the power of the corporation to
sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. Thus, only individuals vested with authority by a valid board
resolution may sign the certificate of non-forum shopping in behalf of a corporation. In
addition, the Court has required that proof of said authority must be attached. Failure
to provide a certificate of non-forum shopping is sufficient ground to dismiss the
petition. Likewise, the petition is subject to dismissal if a certification was submitted
unaccompanied by proof of the signatory‘s authority.[56]
Petitioner sought reconsideration contending that it complied with the proof of service
requirement and that the Secretary‘s Certificate attached to the Petition is sufficient proof of
the authority of Alcoreza to file the said Petition.[57]
In its July 3, 2013 Resolution,[58] the CA conceded that petitioner complied with the proof of
service requirement, however, it maintained that petitioner failed to present the Board
Resolution and the competent evidence of identity of the affiant.
Hence, petitioner filed the instant Petition for Review on Certiorari, raising the following
errors:
1. THE FINDING OF 1HE [CA] THAT THERE WAS NO COMPETENT EVIDENCE

OF IDENTITY AND BOARD RESOLUTION AUTHORIZING THE VICE
PRESIDENT OF PETITIONER COMPANY TO FILE THE PETITION IS
CONTRARY TO FACTS.
2. THE [CA] ERRED IN DECLARING THAT A COPY OF 1HE BOARD

RESOLUTION ITSELF, AUTHORIZING THE PERSON ACTING IN ITS BEHALF
SHOULD BE APPENDED TO THE PETITION.
3. THE [CA] ERRED IN NOT RESOLVING THE CASE ON THE MERITS AND:1.
NOT DECLARING THAT RESPONDENT WAS NOT DISMISSED, MUCH LESS
ILLEGALLY DISMISSED BY THE PETITIONER COMPANY FROM
EMPLOYMENT; AND
2. UPHOLDING THE FINDING OF THE NLRC IN AWARDING BACKWAGES AND

SEPARATION PAY IN FAVOR OF RESPONDENT.[59]
Petitioner’s Arguments
Petitioner contends that the CA erred in insisting that a copy of the Board Resolution is
required to be attached to the Petition for Certiorari.[60] It claims that under prevailing
jurisprudence, a copy of the Secretary‘s Certificate, attesting that petitioner authorized
Alcoreza to file the said Petition for Certiorari suffices.[61] Moreover, contrary to the findings of
the CA, Alcoreza submitted competent proof of identity before the notary public. [62] In any
case, even if there were defects in the Petition for Certiorari, these were excusable, and
thus, the CA still should have resolved the case on the merits.[63]
As to the merits of the case, petitioner insists that it did not dismiss respondent from
employment.[64] Rather, it was respondent who failed to report for work because he
erroneously assumed that he was being terminated.[65]Petitioner likewise puts in question the
CA‘s reliance on respondent‘s act of seeking help from Tulfo as proof of dismissal.[66]
Respondent’s Arguments
Respondent, however, argues that the instant case has been rendered moot as the
judgment has been satisfied by the release of the appeal bond by the NLRC Cashier to the
respondent[67] In any case, respondent maintains that the CA did not err in dismissing the
Petition for Certiorari due to technicalities.[68] Respondent likewise asserts that the factual
findings of the Labor Arbiter and the NLRC are in accord with the facts and evidence on
record.[69]
Ruling
The Petition must fail.

There were no procedural defects in the Petition for Certiorari.
Under the Corporation Code, a corporation exercises its powers and transacts its business
through its board of directors or trustees.[70] Its corporate officers and agents, therefore,
cannot exercise any corporate power pertaining to the corporation without authority from the
board of directors.[71] Corollarily, in order for a person to represent a corporation in a suit, a
board resolution authorizing the former to represent the latter is necessary. In several
instances, however, the Court has considered a Secretary‘s Certificate sufficient proof of
authority for a person named in it to represent a corporation in a suit.[72]
In this case, no board resolution was attached to the Petition for Certiorari. However, in lieu
thereof, petitioner attached a Secretary‘s Certificate attesting that Alcoreza was duly
authorized by the Board of Directors to sign the necessary pleadings, verification, and
certificate of non-forum shopping on behalf of the corporation. This, under prevailing
jurisprudence, is sufficient proof of authority.
In addition, contrary to the CA‘s finding, Alcoreza presented ―competent evidence of identity‖
as she presented before the notary public her valid Philippine Passport.[73]
In view of the foregoing, the Court agrees with petitioner that there were no procedural
defects to warrant the dismissal of the Petition for Certiorari by the CA. However, while there
were no procedural defects, the Court finds that the instant petition is still dismissible on the
merits.
Respondent was illegally dismissed.
In illegal dismissal cases, the employer bears the burden of proving that the employee‘s
termination was for a valid or authorized cause.[74] This rule, however, presupposes that the
employee was dismissed from service.[75]
In this case, records show that in November 2010 respondent was suspended for one week
because of his undertime on October 31, 2010 and November 5, 2010 and his absence on
November 1, 2010. Immediately after his suspension, he was placed on preventive
suspension for three days for sampling food products. After his preventive suspension,
respondent reported to the office but was told that there was no available outlet. After more
than a week of making follow-ups, respondent was assigned at Robinsons Place Manila.
Less than a month later, petitioner told respondent to report to the office on January 6, 2011
as his assignment at Robinsons Place Manila was only temporary. Respondent reported to
the office on January 6, 10, and 13, 2011 but was told that there was no available outlet. On
January 13, 2011, the last time respondent went to the office of petitioner, he was scolded
by Alcoreza for arriving late and was told to resign, otherwise, he would be dismissed. All
these factual circumstances, taken together, led the NLRC to conclude that petitioner was
giving respondent a hard time in order to make his employment unbearable, and eventually,
force him to resign. Unfortunately, instead of resigning, respondent sought the help of Tulfo
who referred him to DOLE. With these findings, the NLRC sustained the ruling of the Labor
Arbiter that respondent was illegally dismissed.
Petitioner, however, insists that respondent was not dismissed from employment. Instead, it
was respondent who failed to report for work because he erroneously assumed that he was
being terminated.
After a careful review of the instant Petition, the Court finds that although there was no
actual dismissal, the failure of petitioner to assign respondent to a specific branch without
any justifiable reason constituted illegal constructive dismissal.
Constructive dismissal is defined as a ―cessation of work because continued employment is

rendered impossible, unreasonable or unlikely.‖[76] Similarly, there is constructive dismissal
―when an act of clear discrimination, insensibility or disdain by an employer has become so
unbearable to the employee leaving him with no option but to forego with his continued
employment.‖[77] Simply put, it is a ―dismissal in disguise or an act amounting to dismissal but
made to appear as if it were not.‖[78]
In this case, petitioner admits that after relieving respondent from his assignment at
Robinsons Place Manila on January 5, 2011, it failed to assign him to a new branch.
However, to justify its failure, petitioner claims that there was no available post as the
vacancy which respondent was supposed to fill was no longer available since he failed to
report on January 6, 2011. Petitioner later clarified that respondent did report to the office on
January 6, 2011 but that he arrived late, and thus was not given the assignment Petitioner
also claims it was having a hard time finding a new branch as respondent was already
banned at SM Hypermarket Muntinlupa, Market Market, and all Puregold supermarkets.
The Court finds petitioner‘s justification unacceptable.
It bears stressing that ―[d]ue to the grim economic consequences to the employee, the
employer should bear the burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned.‖[79] Thus, in this case, it was incumbent
upon petitioner to prove that respondent was banned at SM Hypermarket Muntinlupa,
Market Market, and all Puregold supermarkets, and that there was no available branch for
respondent Unfortunately, petitioner failed to prove both. Except for a Memorandum from
SM Hypermarket stating that respondent was no longer allowed to be assigned at the
Muntinlupa branch, no other evidence was presented by petitioner to show the respondent
was also banned at Market Market and at all Puregold supermarkets and that all posts were
indeed taken. Petitioner could have easily asked its HR Department for a list of all its
branches together with the list of all its employees assigned thereat to prove its allegation
that there are no available posts for respondent. But it did not. Instead, it argued that
respondent‘s various infractions made it difficult for petitioner to assign respondent to a new
assignment. As evidence, petitioner submitted several memoranda it issued against
respondent. These, however, do not prove petitioner‘s allegation that there are no available
posts for respondent. If at all, it only shows that petitioner considered respondent an
undesirable employee due to his various infractions. Such infractions, however, are not
sufficient to prove that there are no available posts for respondent.
Moreover, contrary to the claim of petitioner, respondent‘s act of seeking help from Tulfo was
not the primary consideration of the NLRC in finding the existence of illegal dismissal. It was
only one of the many circumstances, which the NLRC took into consideration. Petitioner‘s
failure to assign respondent to an outlet without any justifiable reason, as well as the
apparent disdain of petitioner towards respondent as can be seen through the acts of
Alcoreza, the immediate response of respondent to seek help from Tulfo, and the
antecedent events, were all considered in determining the existence of illegal dismissal.
Accordingly, the Court finds no error on the part of the Labor Arbiter and the NLRC in ruling
that respondent was illegally dismissed, and thus entitled to backwages and separation pay.
In closing, while the Court recognizes that the management has the discretion and
prerogative to regulate all aspects of employment, which includes the transfer of employees,
work assignments, discipline, dismissal and recall of workers, the exercise of power is not
absolute as ―it must be exercised in good faith and with due regard to the rights of
labor.‖[80] More important, ―management prerogative may not be used as a subterfuge by the
employer to rid himself of an undesirable worker.‖[81]
WHEREFORE, the Petition is hereby DENIED.
SO ORDERED.
02 OCT 2017 | JURISPRUDENCE | PONENTE | JUSTICE

MARIANO C. DEL CASTILLO | SUBJECT | LABOR AND
EMPLOYMENT | NON-PAYMENT OF SALARIES, BENEFITS
AND DAMAGES | SUBJECT | RULES OF COURT | CIVIL
PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO THE
SUPREME COURT
Career Philippines Shipmanagement, Inc. and

Columbian Shipmanagement, Ltd. Vs.
Eduardo J. Godinez/Eduardo J. Godinez Vs.
Career Philippines Shipmanagement, Inc. and
Columbian Shipmanagement, Ltd.; G.R. No.
206826/G.R. No. 206828; October 2, 2017
DECISION
DEL CASTILLO, J.:
The Court cringes at the thought, generated by the experience in this proceeding and in past
cases, that in spite of all the laws passed and jurisprudence created to level the playing field
for the disadvantaged worker, his plight continues against employers who will stop at nothing
to avoid their obligations by taking advantage of the worker‘s weakness, ignorance, financial
hardship, other handicap, or the cunning of their lawyers.
Before us are consolidated Petitions for Review on Certiorari[1] assailing the May 22, 2012
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 105602, as well as its April 18,
2013 Resolution[3] denying the parties‘ respective Motions for Reconsideration.[4]
Factual Antecedents
Eduardo J. Godinez (Godinez) was hired by local manning agency Career Philippines
Shipmanagement, Inc. (Career), for its foreign principal Columbian Shipmanagement, Ltd.
(Columbian). He was assigned as Deck Cadet onboard the vessel ―M/V Norviken.‖ His nine-
month stint, covered by a Philippine Overseas Employment Administration (POEA) Standard
Employment Contract,[5] began on November 7, 2003.
Godinez was 20 years old at the time.
Prior to his employment, Godinez underwent a pre-employment medical examination

(PEME) consisting of a physical medical examination and psychological evaluation, involving
an intelligence and personality test, after which he was declared fit to work. Particularly,
Godinez‘s Psychological Evaluation[6] revealed ―no significant manifestation of personality
and mental disturbances noted at the time of evaluation.‖
As Deck Cadet, Godinez‘s duties were as follows:

1. Act as look-out from 12:00 to 4:00 p.m. and 12:00 to 4:00 a.m. during navigation;
2. Perform gangway watch from 6:00 a.m. to 4:00 p.m. in port;
3. Assist in deck preventive maintenance;
4. Assist in arrival and departures, mooring, and unmooring;
5. Assist officers in the conduct of their work; and
6. Perform other tasks that may be assigned by his superiors.[7]
On November 13, 2003, Godinez boarded ―M/V Norviken‖ and commenced his work.
On the evening of December 17, 2003, just before the start of his look-out duty at midnight,
Godinez failed to wake up despite attempts by the crew to rouse him from sleep. As a result,
his superior, Second Officer Antonio Dayo (Dayo) took his place and acted as look-out,
together with the outgoing look-out. For this, Dayo became strict with Godinez, requiring the
latter, as punishment, to clean toilets instead of performing his regular look-out duty; Dayo
became rude, always finding fault and humiliating, accusing, shouting, insulting, nagging,
and snapping at Godinez, who was also prevented from preparing his food for breakfast and
snacks.[8]
On December 24, 2003, a report[9] was prepared and sent by the vessel master via electronic
mail to Career, stating thus:
Subj: Update for Deck Cadet Eduard SJ. Godinez x x x x
Early morning of 23 Dec. 2003, abt 0800 hrs. he inform[ed] Bosun that if Bosun need[ed] him just
call him in Hie crew smoke room where he [was] viewing tv.
At abt 1030 hrs. he came up to Master cabin to take the Bond store key and open it for he want[ed] to
take beer, fanta and cigarettes for he said he [was] very thirsty. But then I didn‘t give anything.
Instead, he ask[ed] chief officer [for] a packet of cigarettes when in fact for this month he got already
3 cartons.
At noon time while the crew [was] having lunch he [came] inside the messroom wearing short[s]
without [a] shirt and shout[ed] that (babasagin ko lahat ang mga mukha ninyo). Then he [ate] and
[kept] on transferring from one place to another (smoke room, crew mess, officer mess).
Before lunch he [came] up to 2/o and asked for his declared beer and cigarette. When 2/o asked him if
he had [a] problem he said no. When 2/O ask him if he had taste[d] marijuana and shabu before, he
admitted YES it taste[d] very good. He said he taste[d] marijuana during his high school days and
shabu during his college days.
After [the] crews[,] coffee break, at abt 1530 to 1745, he [was] on deck walking around with
sometimes a basketball ball on his hand sometimes mop handle and sometimes a floor mop itself. The
crew had to [stop] working when he pass[ed] by for they [were] afraid that he might hit them.
At dinner time he [came] down to crew messroom wearing white uniform with shoulder board
wearing short pants (sleeping short pants) and rubber shoes without socks. After dinner he join[ed] the
crew in [the] smoke room and [kept] on talking and laughing. Without any sense.
He [was] still under guard by one crew most of the time especially during night time until he [got]
inside his cabin and [slept]. But in the early evening he [brought] his pillow and blanket in [the]
crews[,] smoke room to sleep.
Yours truly,
Capt. Vicente A. Capero

Master
On December 25, 2003, another report[10] was sent via electronic mail by the vessel master to
Career, declaring as follows:
Subject: UPDATE OF DCD1 GODINEZ – CONDITION
xxxx
The condition now [was getting worse]. He [didn‘t] want to listen anymore to the officer on duty.
Today 25 Dec. 2003 at 0255 It second officer woke me up and told me that deck cadet GODINEZ
[was] in the focsle railings doing sight seeing again with binocular[s]. Upon arrival on the bridge I
switch[ed] on the foremast light and [saw] him [in the] same position as I mentioned] before. I
call[ed] him thru the compass deck external speaker or public address system to come back here in the
accommodation. As per second officer info he [came] up to the bridge at about 0235 and [took] the
binocular[s] and [brought] it down w[h]ere the escort [was] also following him. When he [didn‘t]
listen to his escort and to [the] second officer on duty, he [rang] me up for it also near to [sic] the
mark on chart as per my instruction to be [woken] up. At that time we [were] about to enter the TSS
in [the] Gulf of Suez w[h]ere mere [was] so [much] traffic. When he [came] up on the bridge I asked
him why he [did] that, he just answer[ed] that he want[ed] to see the light if it [was] a tug boat. So, I
told him just go down in the messroom or dayroom and he obey[ed]. I call[ed] another crew for
escort.
At 0400lt, 1AE called me up on bridge that Deck cadet [was] forcing to open engine room door coz
he want[ed] to see the engine. But then he didn‘t let him in.
At about 0445hrs it was noticed that he [was] walking on deck again. The escort inform[ed] the bridge
that he [didn‘t] want to sleep, he want[ed] to see the lights. Then I shout[ed] again in [the] public
address system to let him come back inside coz [it was] still too dark.
At 0608hrs he [was] again on deck walking/jogging with no shirty only short pants and slippers. He
had not been sleeping for Hie whole night as per escort report. Also third officer inform[ed] me that at
abt 2200hrs he [came] up also on the bridge with blanket and pillow. When ask by third officer just
say this is just my baby. At daytime he [was] always in the dayroom playing music and [on] full
volume [for] which galley boys are also complaining.
In this condition of him of which everyday is getting wors[e], I strongly oppose his presence on board.
I want him to be dis-embarked immediately on arrival. He is now resisting orders, he [doesn‘t] listen
to the officers and to his escort. This endanger[s] the safety of all crew on board and the vessel
especially during transit and maneuvering. All my patience is over now.
Yours truly,
Capt. V. A. Capero
Upon the vessel‘s arrival in Egypt on December 25, 2003, a physician was called on board
to assist Godinez, and he was brought to a local medical facility.
On January 10, 2004, Godinez was repatriated, and was referred to and confined at Sachly
International Health Partners, Inc. (Sachly), the company-designated medical facility, for
evaluation and treatment. The resulting Initial Medical Report[11] on Godinez‘s case, which
was unsigned, contains an admission made by the latter that when he was 15 years old, he
began to have episodes of insomnia and paranoia, for which he sought psychiatric
evaluation and management.
On January 13, 2004, Godinez was once more examined at Sachly, and the January 19,
2004 Medical Progress Report[12] issued by Sachly‘s Medical Coordinator Dr. Susannah Ong-
Salvador (Salvador) thereafter contained a recommendation that a psychological test be
done ―to [c]onsider bipolar disorder II‖, as it was noted that Godinez became ―excessively
talkative, with flight of ideas, and had erratic sleeping patterns [of only 1-2 hours,
hallucinations, and was verbally abusive towards his mother and suffered from uncontrolled
sleepiness].‖ He was admitted at the University of Santo Tomas Hospital on January 19,
2004.
On January 22 and 23, 2004, Godinez underwent psychological tests.
On February 6, 2004, Salvador issued another report[13] which confirmed that Godinez was
suffering from bipolar disorder, which ―has a good prognosis with adequate treatment‖ but ―is
not an occupational related illness.‖
On February 13, 2004, Godinez was again examined at Sachly, and Salvador‘s Report[14] of
even date states that he ―is in euthymic mood at present‖ with continuation of scheduled oral
medication.
On March 12, 2004, an unsigned Medical Progress Report[15] on the findings of the
examination conducted on Godinez on even date was ostensibly issued by Sachly. It
contained findings that Godinez was ―asymptomatic and doing well with no recurrence of
depressive episodes;‖ that Godinez ―verbalized a feeling of wellness;‖ that his ―[v]ital signs
were stable;‖ that he was in a ―euthymic mood, and is able to sleep and eat well;‖ and finally,
that he was ―found to be functionally stable at present.‖
That very same day, or on March 12, 2004, Godinez was made to sign a prepared
form/document entitled ―Certificate of Fitness for Work‖[16] whose particulars were
mechanically filled out. Godinez signed this document as the declarant, and, interestingly,
Sachly‘s Medical Coordinator, Dr. Salvador, signed as witness. The document was likewise
notarized. It reads as follows:
I, Eduard Godinez, for myself and my heirs, do hereby release Columbia Shipmanagement Ltd. and
Career Phils. Shipmgt. Inc. of all actions, claims, demands, etc., in connection with being released on
this date as fit for duty.
In recognizing this Certificate of Fitness for Work, I hold the said Columbia Shipmanagement Ltd.
and its Agent Career Phils. Shipmgt. Inc. free from all liabilities as consequence thereof.
Finally, I hereby declare that this Certificate of Fitness for Work may be pleaded in bar or any
proceedings of the law that may be taken by any government agency, and I do promise to defend the
right of said Career Phils. Shipmgt. Inc. and Columbia Shipmanagement Ltd. in connection with this
Certificate of Fitness for Work.
Witness my hand this 12 day of March 2004 in the City of Manila, Philippines.
(signed)
EDUARD GODINEZ
Name of Vessel: M/V NORVIKEN
Nature of Illness or Injury: BIPOLAR MOOD
DISORDER, TYPE II, IMPROVED
Date of Ill/Inj.: 25 December 2003
(signed)
Witness: SUSANNAH O. SALVADOR MEDICAL COORDINATOR
Ako, EDUARD GODINEZ, ay nagsasaad na ang bahagi ng salaysay na ito ay along nabasa at ang
nasabi ay naipaliwanag sa akin sa salitang aking naiintindihan. Ito pa rin ay katunayan na ang aking
pagsangayon sa nasabi ay aking sarili at kusang kagustuhan, at hindi bunga ng anumang pangako,
pagkukunwari o pagpilit ng sinumang may kinalaman sa mga nasasaad na usapin.
Katunayan, aking nilagdaan ang pagpapahayag nitong ika-12 ng MARSO 2004 sa MANILA.
(signed)
EDUARD GODINEZ
(jurat and notarization)

All medical expenses incurred prior to Godinez‘s above certification were paid for by Career
and Columbian. Godinez also received his sickness allowance for the period beginning from
his repatriation up to March 12,2004.[17]
Godinez sought to be re-hired and re-engaged by Career, but he was denied. He sought to
be hired by other manning agents as well, but he was rejected just the same.[18]
On February 26, 2006, Godinez consulted an independent specialist, Dr. Randy Dellosa
(Dellosa), who diagnosed him to be suffering from bipolar disorder, per Dellosa‘s handwritten
Medical Certificate/Psychiatric Report dated February 27, 2006.[19] Godinez was declared
―unfit to work as a seaman,‖ placed on ―maintenance medication,‖ and advised to undergo
―regular counseling and psychotherapy‖ as he was ―prone to relapses due to emotional
triggers.‖
Godinez returned to the company-designated physician, Dr. Johnny K. Lokin (Lokin), who
provided regular treatment and medication at Godinez‘s personal expense.
On March 7, 2006, Godinez filed a labor case with a claim for disability benefits, sickness
allowance, medical and hospital expenses, moral and exemplary damages, attorney‘s fees,
and other relief against Career, Columbian, and Verlou Carmelino (Carmelino), Career‘s
Operations Manager. The case was docketed as NLRC-NCR Case No. (M) 06-03-00768-00.
In his Position Paper[20] and Reply,[21] Godinez essentially argued that he should be paid
permanent total disability benefits for contracting bipolar disorder during his employment;
that such illness was work-related and aggravated by the harsh treatment he received from
Dayo; that there was no declaration of fitness to work as the March 12, 2004 Medical
Progress Report merely stated that he ―was found to be functionally stable at present,‖ which
did not amount to an assessment of his fitness for work; that his illness persisted and had
not been cured; that the Certification of Fitness for Work he signed was void as it was a
general waiver, and he was cajoled into signing it under the false hope that he would be re-
employed by Career, and for the reason that he could not make a competent finding or
declaration of his own state of health since he was not a doctor; that based on Dellosa‘s
findings, he was deemed unfit to work as a seaman, and thus entitled to disability benefits,
sickness allowance, and other benefits; and that he should be entitled to moral and
exemplary damages and attorney‘s fees for the treatment he received from his employers,
and for the latter‘s malice and bad faith in evading their liabilities. Thus, Godinez prayed that
Career, Columbian and Carmelino be held solidarity liable for the following:
1. To pay disability grading equivalent to Grade 1 of the POEA SEC and based on
Amosup ITF-TCC Agreement or US$60,000.00[;]
2. To pay 120 days sickness allowance equivalent to US$1,000.00[;]
3. To pay medical and hospital expenses in the total amount of Php70,475.90[;]
4. To pay moral damages in the amount of US$10,000 and exemplary damages in the
amount of US$10,000[;]
5. To pay attorney‘s fees equivalent to 10% of the total award[;]
6. Other relief just and equitable under the premises, are also prayed for.[22]
In their joint Position Paper,[23] Career, Columbian, and Carmelino argued that Godinez
should have filed his case before the Voluntary Arbitrator as it involved a dispute regarding a
collective bargaining agreement and the interpretation of the POEA-Standard Employment
Contract; that his illness is not compensable and work-related, since bipolar disorder is
―chiefly rooted in gene defects‖ and in heredity; therefore, he could not have contracted
bipolar disorder during his employment on board Columbian‘s vessel, and his work did not
expose him to any risk of contracting the illness; that he was nonetheless declared fit to
work, and he did not dispute this, as he, in fact, executed a Certificate of Fitness for Work;
that Godinez‘s failure to declare in his pre-employment medical examination that he
previously suffered from insomnia and paranoia amounted to fraudulent concealment under
Section 20(E) of the POEA contract which 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;‖ that
Godinez has been paid his illness allowance; and that for lack of merit, Godinez is not
entitled to his claim of damages and attorney‘s fees. Thus, they prayed for dismissal of the
case.
In their joint Reply,[24] Career, Columbian, and Carmelino also argued that it was not possible
for Godinez to have been maltreated by Dayo during the period from December 17 to 25,
2003, since the latter was repatriated on November 29, 2003 due to chronic gastritis,
hyperlipidemia and hypercholesteremia; and that Dellosa‘s findings actually indicated that
Godinez was fit to work, although he was required to continue medication in order to avoid
relapse.
On May 16, 2007, Labor Arbiter Thelma M. Concepcion issued her Decision[25] declaring that
her office had jurisdiction over the case; that Godinez‘s bipolar disorder was work-connected
and thus compensable, pursuant to Section 20(B)(4) of the POEA Standard Employment
Contract; and that based on substantial evidence, the nature of Godinez‘s work and/or his
working conditions on board ―M/V Norviken,‖ as well as Dayo‘s harsh treatment, which
caused trauma and anxiety, increased the risk of contracting his illness.
The Labor Arbiter stated further that the defense that Dayo could not have maltreated
Godinez in December, 2003, since he was already medically repatriated as early as
November 29, 2003, could not hold because: a) there was no documentary or other
evidence to prove that Dayo was indeed repatriated on said date; b) on the contrary, the
documentary evidence submitted, a November 21, 2003 Medical Examination Report [26] on
Dayo‘s condition, did not contain an advice of repatriation, but instead a recommendation ―to
consult doctor for more detailed exams and further treatment at the patient‘s home country 3
months later;‖ c) an Initial Medical Report[27] dated February 3, 2004 issued by Sachly‘s
Salvador showed that Dayo was examined only on February 3, 2004, indicating that he
could not have been repatriated on November 29, 2003 but later, at a date closer to
February 3, 2004, as it would be illogical for him to have belatedly consulted a doctor given
the seriousness of the declared illnesses, chronic gastritis, hyperlipidemia and
hypercholesteremia, which caused his repatriation; and d) the said February 3, 2004 Initial
Medical Report is a forgery, considering that Salvador‘s signature affixed thereon is
―strikingly dissimilar‖ to her signature contained in the other medical reports she issued in
Godinez‘s case. The Labor Arbiter concluded that Career, Columbian, and Carmelino were
guilty of misrepresentation for submitting a forged document.
The Labor Arbiter held further that the ―psychological trauma and anxiety attacks as a result
of the maltreatment which complainant suffered under 2nd Officer Dayo has already
rendered Godinez permanently and totally disabled;‖[28] that the ―result of the x x x trauma
and anxiety attacks caused by 2nd Officer Dayo‘s harassment and maltreatment of Godinez
caused his permanent and total disability considering that the result of the first episode has
left Godinez a high risk to subsequent episodes of a mood disorder;‖[29] that Godinez‘s status
and his genetic history were not factors to be considered as he was still single and there was
no history of bipolar disorder in his family; that the claim that Godinez was already fit for
work, as opined by Sachly‘s doctors and certified in the March 12, 2004 Medical Progress
Report could not be considered as there was nothing in said report to suggest that Godinez
was fit for work; that the Certificate of Fitness for Work executed by Godinez was an
improper waiver, ―irregular and scandalous‖[30] especially when it was witnessed by Salvador,
and did not deserve evidentiary weight since there was nothing in the POEA contract
authorizing or requiring a seafarer to certify his own state of health.
On the defense that following Section 20(E) of the POEA contract, Godinez should be barred
from claiming benefits in view of his concealment of and failure to disclose during the PEME
that he consulted medically for insomnia and paranoia when he was 15 years old, the Labor
Arbiter held that Godinez‘s failure to disclose this fact was not intentional and did not amount
to intentional concealment; that the fact simply ―slipped his mind considering the passage of
time;‖[31] and that when he underwent the PEME, he was only 20 years old and could not
have known the consequences of the PEME except that it was a simple prerequisite to
employment.
Regarding monetary claims, the Labor Arbiter held that, having found permanent and total
disability, Godinez was entitled to US$60,000.00 as disability benefit; sickness allowance,
less what he already received; medical expenses; moral and exemplary damages since
malice and bad faith attended the denial of his claims and for presenting forged documentary
evidence; and attorney‘s fees. The Decision thus decreed:
WHEREFORE, premises considered, respondents Career Phils. Shipmanagement, Inc.; Columbia

Shipmanagement Ltd. and individual respondent Verlou R. Carmelino are hereby ordered jointly and
severally to pay complaint Eduard J. Godinez the following:
1. Permanent and total disability compensation in the amount of US$60,000.00;
2. Sickness allowance amounting to US$475.00;
3. Reimbursement of medical expenses in the amount of Php70,475.90;
4. Moral damages in the amount of US$10,000.00; and Exemplary damages in the

amount of US$5,000.00; and
5. Ten percent (10%) of the total judgment award for and as attorney‘s fees.
In US DOLLARS or its equivalent in PHILIPPINE PESO at the time of payment.
All other claims are hereby ordered dismissed for lack of merit.
SO ORDERED.[32]
Career, Columbian, and Carmelino appealed before the National Labor Relations
Commission (NLRC), which docketed the case as OFW(M) 06-03-00768-00 (CA NO. 08-
000152-07).
On April 30, 2008, the NLRC issued a Decision[33] declaring as follows:
Aggrieved by the adverse ruling, the respondents-appellants interposed the instant appeal premised on
serious errors, allegedly committed by the Labor Arbiter, such as:
1. In ruling that the Labor Arbiter has jurisdiction over the complaint a quo;
2. In awarding disability benefits to appellee;
3. In ruling that appellee is entitled to sickness allowance amounting to US$475.00;
4. In failing to consider that appellee‘s claims for medical expenses against appellants
have been fully paid;
5. In awarding moral and exemplary damages; and,
6. In holding individual appellant personally liable.
WE MODIFY.
xxxx
It must be stressed though that pursuant to Section 10 of R.A. No. 8042, entitled Migrant Workers and
Overseas Filipinos Act of 1995, ‗the Labor Arbiter of the 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 involving Filipino workers for overseas
deployment x x x.‘
Similarly, under the 2005 Revised Rules of Procedure of the NLRC, particularly Section (G), Rule V,
thereof, explicitly provides that:
‗Section 1. Jurisdiction of Labor Arbiters. – Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide the following cases, including workers, whether agricultural or non-
agricultural;
xxxx
g) Money claims arising out of 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.‘
It is also observed that the respondents-appellants herein vigorously participated and argued their
defense during the proceedings below, hence, it is too late in the day to question the same on appeal.
Moreover, as between the provisions of a mere administrative order and the Republic Act and of the
2005 Revised Rules of Procedure of the NLRC, we are persuaded that the law should be accorded
with respect. In other words, R.A. 8042 that confers exclusive and original jurisdiction to the Labor
Arbiter and of the Commission, to hear and decided money claims arising out of an employer-
employee relationship of Filipino overseas workers should prevail.
As to the averment x x x that the award of disability benefits has no basis in law because complainant-
appellee has been declared fit to return to his duties, We are more inclined though to agree with the
Labor Arbiter‘s position that there is ‗nothing on record that would suggest that complainant is
already fit and may now go back to work‘ x x x. If indeed, the said allegation is to be accorded with
respect, how come that herein respondents-appellants did not welcome him back? Moreover, as
observed by the Labor Arbiter which we adopt as Ours,
‗Furthermore, we find irregular and scandalous the execution by Godinez of the ‗Certificate of Fitness
For Work‘ on March 12, 2004, specially so, when witnessed by the company-designated physician.
This certification do not deserve evidentiary value, as there is nothing in the POEA Standard
Employment Contract requiring the seafarer to certify as to his own health status. Neither can the said
certificate bar complainant to his claim for disability compensation. Jurisprudence is replete that
waiver and release cannot bar complainant from claiming what he is legally entitled to.‘ x x x
Anent the issue of complainant-appellee‘s entitlement to sickness allowance in the amount of

US$475.00, the respondents-appellants alleged that the same has been reimbursed to him x x x. A
closer examination of the alleged Annex ‗Q‘ of their Position Paper, however, would show that this
refers to a handwritten ‗Medical Certificate-Psychiatric Report‘ of a certain Dr. Randy Dellosa, which
does not show of any payment made to him x x x. The alleged Annex ‗Q-1‘ is also not among the
records. Hence, the said finding of the Labor Arbiter must be sustained.
The awards for moral and exemplary damages should, likewise, be granted because the instant case
falls under the instances when such award is due, considering that the respondents-appellants acted in
bad faith in refusing to comply with their obligation and such refusal is clearly tainted with oppression
to labor.
Attorney‘s fees is also justifiable because this is an action for recovery of unpaid monetary benefits
and complainant-appellee was forced to litigate and incur expenses to protect his rights and interests.
The ruling of the Labor Arbiter ‗holding individual appellant personally liable in this action‘, cannot
be sustained though. We agree with the respondents-appellants‘ position that there is really no basis,
in fact and in law, to make individual respondent-appellant liable both by way of official capacity as
officer and in his individual capacity. Worded differently, since the corporate employer has already
been specified in the case, his inclusion in the caption of the case is therefore immaterial.
WHEREFORE, premises considered, the appealed Decision is hereby, AFFIRMED with

MODIFICATION only, insofar as Our order for individual respondent-appellant to be deleted from
the dispositive portion.
SO ORDERED.[34]
Career and Columbian moved to reconsider, but in a July 31, 2008 Resolution,[35] the NLRC
held its ground.
Career and Columbian went up to the CA on certiorari. On May 22, 2012, the CA issued the
assailed Decision, decreeing as follows:
As gleaned from the above-cited issues, petitioners anchor this Petition on procedural and substantive
grounds. Anent the procedural matter, petitioners question the assumption of jurisdiction by the Labor
Arbiter in this case on the supposition mat the case should have been lodged with the Voluntary
Arbitrator, in accordance with Section 29 of POEA Standard Contract. As to substantive matters, on
the other hand, petitioners bewail the common decision of the Labor Arbiter and the NLRC to grant
disability benefits and other monetary awards to private respondent on the theory that their decisions
are bereft of factual basis and were done in utter disregard of evidence as well as applicable laws and
jurisprudence.
Resolving the issue of jurisdiction, We are of the considered view that petitioners cannot fault the
Labor Arbiter for taking cognizance of this case. Section 29 of the POEA Standard Contract is explicit
that the voluntary arbitrator or panel of arbitrators have jurisdiction only when the claim or dispute
arises from employment. In the instant case, the Labor Arbiter was correct that there was no longer an
employer-employee relationship existing between the parties when private respondent filed the
Complaint. Consequently, We agree with the Labor Arbiter that Section 31 of the POEA Standard
Contract, and not Section 29 thereof, should apply in this case. As said provision states –
‗SECTION 31. APPLICABLE LAW
Any unresolved dispute, claim or grievance arising out of or in connection with this 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.
We also find it apt to point out that Section 10 of Republic Act No. 8042 (Migrant Workers
Act) clearly states that claims arising from contract entered into by Filipino workers for
overseas employment are cognizable by the labor arbiters of the NLRC –
xxxx
In view of the foregoing, We hold that the labor tribunals did not err in taking cognizance of
this case.
Prescinding, this Court, after thoroughly reading the entire records and weighing all the facts
and evidence on hand, found [sic] and so holds that petitioners failed in their duty to prove
that the NLRC committed grave abuse of discretion or had grossly misappreciated evidence
insofar as its affirmation of the Labor Arbiter‘s conclusion that private respondent was
entitled to disability benefits in the amount of Sixty Thousand US Dollars (US$60,000.00).
As the records bear out, the Labor Arbiter declared private respondent to be suffering from a
permanent and total disability because of the psychological trauma and anxiety attacks
which resulted from the maltreatment inflicted on him by Second Officer Dayo, private
respondent‘s immediate superior on board ‗MV Norviken‘. We see no reason to reverse this
finding as the same is duly supported by substantial evidence. Significantly, the Labor
Arbiter even emphasized that such ‗factual findings is supported by the medical opinion on
Psychosocial Factors, a risk factor as shown in Chapter 15, P. 543, Kaplan and Sadock‘s
Synopsis of Psychiatry, Eighth Edition x x x.‘
Notably, petitioners vehemently deny that private respondent‘s illness was compensable and
take serious exception on [sic] the common findings of the Labor Arbiter and the NLRC that
private respondent‘s working conditions on board the ‗M/V Norviken‘ aggravated his illness.
To be sure, this Court agrees that ‗[f]or disability to be compensable under Section 20(B) of
the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-
related; and (2) the work-related injury or illness must have existed during the term of the
seafarer’s employment contract. In other words, to be entitled to compensation and
benefits under this provision, it is not sufficient to establish that the seafarer‘s illness or injury
has rendered him permanently or partially disabled; it must also be shown that there is a
causal connection between the seafarer‘s illness or injury and the work for which he had
been contracted. The 2000 POEA-SEC defines ‗work-related injury‘ as ‗injury[ies] resulting in
disability or death arising out of and in the course of employment‘ and ‗work-related illness‘
as ‗any sickness resulting to disability or death as a result of an occupational disease listed

under Section 32-A of this contract with the conditions set therein satisfied.‘
Relative to the foregoing, it bears pointing out that this pertinent provision under the POEA
Standard Contract is 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 latter‘s employment. x x x
In light of the foregoing pertinent precepts, the question now is whether there is substantial
evidence to prove the existence of the above-stated elements.
Our assiduous assessment of the records leads Us to answer in the affirmative. Indeed, like
the Labor Arbiter and the NLRC, We too are convinced that private respondent was able to
prove by substantial evidence that his risk of contracting such illness was aggravated by his
working conditions on board petitioners‘ ‗MV Norviken‘, specially taking into consideration
the inhumane treatment he suffered from Second Officer Dayo which ultimately led private
respondent to snap. And as aptly pointed out by the Labor Arbiter, the degree of proof
required in this case is merely substantial evidence and a reasonable work-connection; not a
direct causal relation. ‗It is enough that the hypothesis on which the workmen‘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. x x x.‘ Furthermore, under the POEA Standard Contract, private respondent
is disputably presumed work-related [sic] and, therefore, it is incumbent for petitioners to
contradict it by their own substantial evidence. As the records would reveal, however,
petitioner miserably failed to discharge this burden since, as found by the Labor Arbiter, and
affirmed by the NLRC, the pieces of evidence, which petitioners presented were either of
dubious character or bereft of probative value.
On petitioners‘ stance that private respondent is, under Section 20(E) of the POEA Standard
Contract, barred from claiming disability benefit for his failure to disclose his previous bout
with insomnia and paranoia, suffice it to state that We fully concur with the labor tribunal that
this omission cannot just be taken against private respondent as to deprive him of disability
benefits considering that Section 20(E) requires that such information should have been
knowingly concealed. Considering that private respondent was only at a tender age of fifteen
(15) when it happened, it is indeed fair to conclude that he really had no intention of
deliberately withholding such information and that it merely slipped his mind when answering
his PEME.
Ail the foregoing considered, We hold that there is no basis for Us to annul and set aside the
findings of the Labor Arbiter, as affirmed by the NLRC, with respect to private respondent‘s
right to disability benefit, as no amount of grave abuse of discretion attended the same.
xxxx
With respect to the award of sickness allowance, Paragraph 3, Section 20(B) of the 2000
POEA Standard Employment Contract is categorical that ‗[u]pon 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.‘
Based on this provision and given the finding that private respondent‘s illness was work-
related and had become total and permanent, We hold that the NLRC correctly awarded
sickness allowance equivalent to his four (4) months salary or the maximum period of one
hundred twenty (120) days.
xxxx
In the instant case, however. We found that the pieces of evidence submitted by private
respondent are not sufficient enough for him to successfully claim reimbursement of x x x
[P70,475.90]. To be sure, most of the documents submitted by private respondent are not
official receipts but are actually mere itemization of the medicines supposedly procured by
private respondent as well as the price of each medicine prescribed by his doctor.
‗Jurisprudence instructs that the award of actual damages must be duly substantiated by
receipts.‘ Verily, ‗[a] list of expenses cannot replace receipts when the latter should have
been issued as a matter of course in business transactions.‘ For this reason, the award for
reimbursement of medical expenses should be reduced appropriately. Based on this Court‘s
computation, private respondent should be entitled only to a reimbursement of x x x
[P16,647.85], as this is only the amount duly substantiated by receipts.
Coming now to the award of moral damages and exemplary damages, it is long settled that
‗[m]oral damages may be recovered only 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.
In the instant case, the records show that the awards are premised on the following findings
of the Labor Arbiter –
xxxx
Consequently, we hold respondents Career Phils. and Columbia and individual respondent Verlou
Carmelino guilty of ‗misrepresentation for having falsely claimed that 2nd Officer Dayo was no longer
on board M/V NORVIKEN at the time complainant was allegedly subjected to ‗verbal and
psychological harassment‘ x x x.
We are also led to believe that respondents submitted a fraudulent Medical Report x x x. Thus, we
find Hie signature of Dr. Susannah Ong-Salvador appearing on the Initial Medical Report relative to
the health status of 2nd Officer Dayo, a ‗forgery‘, which rendered the claim of 2nd Officer Dayo‘s
repatriation a mere afterthought.
x x x x.
Considering that the NLRC affirmed the grant of moral damages and exemplary damages
based on such findings of the Labor Arbiter and considering further that petitioners did not
shown [sic] any convincing proof to contradict such findings before this Court, as in fact they
did not make any effort to directly contest the said findings of the Labor Arbiter, We are wont
to likewise affirm private respondent‘s entitlement to moral damages and exemplary
damages in view of the express findings of bad faith and malice on the part of the petitioners
in denying private respondent‘s just claims.
However, while We affirm the Labor Arbiter‘s award of moral damages and exemplary
damages, We axe convinced that the amount of moral damages and the exemplary
damages awarded are far too excessive, if not unconscionable. As it is always stressed in
jurisprudence, ‗[m]oral damages are recoverable only if the defendant has acted fraudulently
or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard
of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad
faith, oppressive or abusive.‘ Similarly, x x x [e]xemplary [d]amages 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. In line with prevailing jurisprudence, We hereby
reduce the moral damages and exemplary damages to the more equitable level of One
Thousand US Dollars (US$1,000.00) each.
Finally, regarding the award of attorney‘s fees to private respondent, We found the same to
be warranted based on the facts of this case and prevailing jurisprudence. As it is oft-said,
‗[t]he law allows the award of attorney‘s fees when exemplary damages are awarded, and
when the party to a suit was compelled to incur expenses to protect his interest.‘
In view of Our herein disquisition, We shall no longer delve into the merits of petitioners‘
prayer for issuance of a Temporary Restraining Order (TRO) for it is now moot and
academic.
WHEREFORE, premises considered, the instant Petition is DISMISSED. The assailed Decision and
Resolution of the NLRC are AFFIRMED with the following MODIFICATIONS –
1. Reimbursement of medical expenses is REDUCED to Sixteen Thousand Six Hundred

Forty-Seven Pesos and 85/100 (P16,647.85);
2. Moral damages is REDUCED to One Thousand US Dollars (US$1,000.00); and
3. Exemplary damages is REDUCED to One Thousand US Dollars (US$1,000.00).
In addition, the prayer for issuance of Temporary Restraining Order (TRO) is hereby DENIED for
being moot and academic. All other claims are likewise DISMISSED for lack of merit.
SO ORDERED. [36] (Citations omitted; emphasis and underscoring in the original)
Godinez filed a Motion for Partial Reconsideration, questioning the reduction in the award of
medical expenses and moral and exemplary damages. In essence, he sought reinstatement
of the monetary awards contained in the NLRC Decision. On the other hand, Career and
Columbian filed a joint Motion for Reconsideration questioning the entire decision and
award, and reiterating all their arguments before the Labor Arbiter, NLRC, and in their
Petition for Certiorari.
On April 18, 2013, the CA issued the assailed Resolution denying the parties‘ respective
motions for reconsideration. Thus, the present petitions.
Issues
The following issues are raised by the parties in their respective Petitions:
By Career and Columbian as petitioners in G.R. No. 206826
A. THE HONORABLE COURT OF APPEALS COMMITTED CLEAR ERROR OF LAW AND IN

ITS APPRECIATION OF THE FACTS AND EVIDENCE WHEN IT AFFIRMED THE AWARD
OF TOTAL AND PERMANENT DISABILITY BENEFITS, SICKNESS ALLOWANCE, AND
REIMBURSEMENT OF MEDICAL EXPENSES DESPITE THE FOLLOWING:
a.1 Malicious concealment of a past mental disorder is fraudulent misrepresentation. Under express
provisions of the governing POEA Contract, fraudulent misrepresentation of a past medical
condition disqualifies a seafarer from any contractual benefits and claims [sic].
a.2 Work-relation must be proved by substantial evidence. Convenient allegations cannot justify a
claim for disability benefits. In the present case, respondent‘s allegations that his mental
breakdown was due to the maltreatment of Second Officer Dayo is a falsity as the latter had
already been signed-off prior to the material period. Work-relation is therefore absent and the
claim is not compensable.
a.3 Notwithstanding the above, respondent was provided necessary treatment until he was declared
fit to work, a fact he himself confirmed and never disputed for almost two (2) years. Clearly
therefore, petitioners can no longer be rendered liable for respondent‘s subsequent mental
condition.
B. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN

AFFIRMING THE AWARD OF DAMAGES AND ATTORNEY‘S FEES DESPITE ABSENCE OF
ANY FINDING OR DISCUSSION SHOWING BAD FAITH OR MALICE ON THE PART OF
PETITIONERS.[37]
By Godinez as petitioner in G.R. No. 206828
THE LONE ISSUE BEING RAISED BY TFffi PETITIONER IN THIS CASE IS WHETHER THE
HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN MODIFYING
AND REDUCING THE AMOUNT OF DAMAGES.[38]
The Parties’ Respective Arguments
In G.R. No. 206826. In their Petition and Reply,[39] Career and Columbian insist that
Godinez‘s failure to disclose his past medical record amounts to fraudulent concealment
which disqualifies him from receiving the benefits and claims he seeks; that it was erroneous
for the CA to simply assume that this fact merely slipped Godinez‘s mind during the PEME;
that the PEME itself contained a certification, which Godinez read and signed, that any false
statement made therein shall disqualify him from any benefits and claims; that Godinez‘s
condition is not work-related; that Dayo‘s alleged maltreatment is not supported by any other
evidence, such as written statements of other crewmembers; that on the contrary, it has
been sufficiently shown that Dayo was no longer aboard the vessel during the period that
Godinez claims Dayo maltreated him; that it has been opined and certified by the company-
designated medical facility in a February 6, 2004 medical report that Godinez‘s illness is not
an occupational disease, but a mere symptom of genetic defects, developmental problems,
and psychological stresses; that even assuming that Godinez‘s misrepresentation is
excusable and his illness is work-related, he was nonetheless afforded full medical treatment
and was cured and declared fit for work by the company-designated medical facility in a
March 12, 2004 medical progress report; that Godinez himself declared that he was cured
and fit for work by way of his March 12, 2004 Certificate of Fitness for Work; and, that
Dellosa‘s February 27, 2006 Medical Certificate/Psychiatric Report actually declared that
Godinez was fit for work.
As for the other monetary awards, Career and Columbian argue that moral and exemplary
damages may not be awarded to Godinez, absent malice and bad faith on their part. On the
award of attorney‘s fees, they claim that this must be deleted as well, since they are not at
fault and did not conduct themselves in bad faith and with malice. Thus, they pray that the
assailed CA dispositions be reversed and set aside; that Godinez‘s labor case be ordered
dismissed; and that he be ordered to return the amount of P4,105,276.07 which was
advanced to him by virtue of a premature execution of the judgment award.
In his Comment[40] seeking denial of the Petition and reinstatement of the NLRC‘s April 30,
2008 Decision, Godinez reiterates that his illness is compensable as it is work-related; that
there is no fraudulent concealment on his part; that permanent and total disability has been
shown to exist and was caused and triggered by the harsh and cruel treatment he received
while aboard ―M/V Norviken,‖ as well as by conditions of work, such as ―confined living
quarters, motion of the ship, exposure to varied climatic conditions, lack of stability in hours
[of] work, noise and vibrations from engines and equipment, exposure to irritant substances,
inadequate nutrition, overheated surroundings and inadequate physical work combined with
monotony and mental stress resulting from larger and more automated vessels, x x x
seasickness x x x unsuitable [food] and water supplies on board, improper eating habits, and
intemperate behavior while ashore,‖[41] and psychosocial factors and stressors in the work
environment, such as ―role ambiguity, role conflicts, discrimination, supervisor-supervisee
conflicts, work overload, and work setting [which are] associated with greater susceptibility to
stress-related illness, tardiness, absenteeism, poor performance, depression, anxiety, and
other psychological distress;‖[42] that there was no categorical declaration by the company-
designated physician that he is cured and fit for work; that the certificate of fitness for work
he was made to execute is null and void as it was forced upon him at a time of financial and
emotional distress, and he was made to believe falsely that after its execution, he may once
more work for Career and Columbian; that his medical expenses should be reimbursed in
full; that while the CA did not err in affirming the award of moral and exemplary damages, it
was not correct in reducing them, considering the fraudulent and malicious manner in which
Career and Columbian conducted themselves in the proceedings, in trying to avoid liability
and deny medical assistance to him and sacrificing the welfare of their employees for the
sake of keeping and protecting their profits; and, that as a result of the cruel and inhuman
treatment he received at work, he is now condemned to a lifetime of maintenance
medication consisting of mood stabilizers and other medicines, under pain of relapse.
G.R. No. 206828. In his Petition and Reply,[43] Godinez essentially reproduces and reiterates
the issues and arguments contained in his Comment to the Petition in G.R. No. 206826.
In their Comment,[44] Career and Columbian essentially reproduce and replead the
allegations, arguments, and relief sought in their Petition in G.R. No. 206826, apart from
seeking the denial of the Petition in G.R. No. 206828. They, however, reiterate that in
dealing with Godinez, they were not motivated by bad faith, malice, or ill will; nor did they act
in a manner that is contrary to morals, good customs, or public policy.
Our Ruling
We find for Godinez.

Workers are not robots built simply for labor; nor are they machines that may be turned on or
off at will; not objects that are conveniently discarded when every ounce of efficiency and
utility has been squeezed out of them; not appliances that may be thrown away when they
conk out. They are thinking and feeling beings possessed of humanity and dignity, worthy of
compassion, understanding, and respect.
Defense of Fraudulent Concealment
It is claimed that Godinez concealed his past medical history when he failed to disclose
during the PEME that when he was 15, he suffered from insomnia and paranoia for which he
sought psychiatric evaluation and management. This is based on an unsigned document, an
Initial Medical Report, containing a supposed admission by Godinez that he was treated in
the past for insomnia and paranoia. However, this unsigned report cannot have any
evidentiary value, as it is self-serving and of dubious character. In Asuncion v. National
Labor Relations Commission,[45] the Court disregarded unsigned listings and computer
printouts presented in evidence by the employer to prove its employee‘s absenteeism and
tardiness. It was held therein that —
In the case at bar, mere is a paucity of evidence to establish the charges of absenteeism and tardiness.
We note that the employer company submitted mere handwritten listing and computer print-outs. The
handwritten listing was not signed by the one who made the same. As regards the print-outs, while the
listing was computer generated, the entries of time and other annotations were again handwritten and
unsigned.
We find that the handwritten listing and unsigned computer print-outs were unauthenticated and,
hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of that
nature should be rejected as evidence without any rational probative value even in
administrative proceedings. x x x (Emphasis supplied)
Thus, there could be no fraudulent concealment on Godinez‘s part.
Even if it is true that Godinez suffered from insomnia and paranoia and he failed to disclose
this fact, we do not believe that the omission was intentional and fraudulent. As the labor
tribunals and the CA correctly opined, the fact may have simply ―slipped his mind
considering the passage of time‖[46] since his bout with insomnia and paranoia occurred when
he was only 15 years old. Given his age, innocence, and lack of experience at the time he
was applying for work with Career, one is not quick to assume that Godinez was capable of
deception or prevarication; as a young boy breaking into the world and facing the prospect of
serious honest work for the first time in his life, it can be said that he innocently believed this
fact to be unimportant and irrelevant. In any event, Career and Columbian‘s defense is
grounded on Section 20(E) of the POEA contract which, to be applicable, requires that the
seafarer must knowingly conceal his past medical condition, disability, and history. This
cannot apply in Godinez‘s case. If he were a seasoned and experienced seafarer, this Court
would have viewed his failure to disclose in a different way.
Nature and Cause of Godinez’s Illness
On the other hand, the Court believes that Godinez was unjustifiably maltreated by his
superior, 2nd Officer Dayo, who, according to the former in his Position Paper below —
x x x suddenly became irritated and angry at the complainant x x x, ordered and forced complainant to
clean the toilets as punishment instead of performing his regular functions and duties on board as
watch on the bridge. Then, Second Officer Dayo became rude to him, always finding fault in him,
humiliating him or giving him conflicting orders such as cleaning all the toilets instead of performing
the look-out job which he regularly performed from 12:00 P.M. – 16:00 P.M. and 00:00 – 04:00 A.M.
In every instance when there is an opportunity to accuse him, Second Officer Dayo would snap at
him, nag him and shout to him in front of everyone while the poor complainant cadet was performing
his four-hour watch job. In other words, these harrowing experiences became regular. Such daily and
regular acts of harassment by the said Second Officer took its toll on the emotional and psychological
health of the complainant. He was traumatized and it had become so unbearable for him to continue
working.
Regularly, from 00:00 (Midnight) to 04:00 A.M., complainant was regularly not allowed to prepare
his food for breakfast and snacks. Because of this, he starved and he became weak. As a result, he
became mentally and physically weak during his regular four (4)[-]hour watch. Furthermore, having
experienced insults, verbal abused [sic], humiliation, pressures and stress during his three-day ordeal
with his indifferent supervisor Second Officer Dayo, complainant suffered trauma and anxiety attacks
during the period from December 21 to December 25, 2003 x x x.[47]
When Godinez applied for work with Career, he was an innocent boy of 20; his stint with
Career would be his very first employment as a seafarer onboard an ocean-going
vessel.[48] He was lacking in experience and knowledge, yet full of innocence, dreams,
idealism, positive expectations, enthusiasm, and optimism. All these were shattered by his
horrible experience onboard the ―M/V Norviken,‖ under the hands of Dayo, who
unnecessarily exposed the young, inexperienced, and innocent boy to a different reality, a
cruel one, and robbed him of the positive expectations and dreams he had coming to his
very first job as a seafarer. His uncalled for cruelty broke the heart and spirit of this fledgling
until he could no longer take it. The conditions of work, the elements, the environment, the
fear and loneliness, the strange surroundings, and the unnecessary cruelty and lack of
understanding and compassion of his immediate superior, the weight of all these was too
much for the young man to handle. Like a tender twig in a vicious storm, he snapped.
To complicate matters, Godinez was never given medical care onboard as soon as he
became ill. The December 24 and 25, 2003 reports of the vessel master, Capt. Vicente A.
Capero, sent to Career prove that even as Godinez was already exhibiting the symptoms of
a nervous breakdown, his superiors and the crew provided no medical intervention or
support. Instead, they ignored him as he wandered aimlessly half-naked around the ship;
simply watched him make a fool of himself in front of his peers; and allowed him to
precariously roam the ship even as it became evident that he was becoming a danger to
himself, the crew, and the ship. In short, he was treated like a stray dog, whose presence is
merely condoned. The vessel master‘s reaction was not reassuring either: instead of
exhibiting compassion and providing needed care, he could not wait to expel Godinez from
the ship, because the poor boy‘s strange behavior was starting to get on his nerves. We
quote him, thus:
In this condition of him which x x x is getting [worse everyday], I strongly oppose his presence on
board. I want him to be dis-embarked immediately on arrival. He is now resisting orders, he
[doesn‘t] listen to the officers and to his escort. This endanger[s] the safety of all crew on board and
the vessel especially during transit and maneuvering. All my patience is over now.[49] (Emphasis
supplied)
The confluence of all these, the inhumane treatment inflicted upon this green, fragile, and
innocent fledgling; the harsh environment and conditions of work he was exposed to for the
very first time in his young life; the indifference of his superiors despite realizing what was
happening to him; and the utter lack of a professional and medical response to the boy‘s
progressing medical condition, led to the complete breakdown of Godinez‘s body, mind, and
spirit.
The Court concludes that Godinez‘s grave illness was directly caused by the unprofessional
and inhumane treatment, as well as the physical, psychological, and mental abuse inflicted
upon him by his superiors, aggravated by the latter‘s failure and refusal to provide timely
medical and/or professional intervention, and their neglect and indifference to his condition
even as it was deteriorating before their very eyes.
The Court does not subscribe to the defense that Dayo could not have committed the acts
attributed to him as he was medically repatriated on November 29, 2003 due to chronic
gastritis, hyperlipidemia and hypercholesteremia. The only evidence presented to
substantiate his claimed repatriation consist of: 1) a November 21, 2003 Medical
Examination Report issued by a doctor in Japan,[50] and 2) an Initial Medical Report dated
February 3, 2004 issued by Sachly‘s Salvador.[51] However:
1. The November 21, 2003 Medical Examination Report contains a recommendation for
Dayo to consult a ―doctor for more detailed exams and further treatment at the patient‘s
home country 3 months later.‖[52] The second medical report coincides with the first, being
dated February 3, 2004, or nearly three months after November 21, 2003, meaning that
Dayo must have followed the Japanese doctor‘s advice and indeed consulted Sachly nearly
three months after he consulted with the latter. It can only be that before that time, February
3, 2004, Dayo remained onboard ―MTV Norviken‖.
2. If Dayo was truly repatriated on November 29, 2003, experience and logic dictate that he
should have, pursuant to the provisions of the standard POEA contract, submitted himself to
a post-employment medical examination by a company-designated physician within three
working days upon his return, because his failure to comply with such mandatory
examination shall result in the forfeiture of his benefits. Yet it appears that he only presented
himself for post-employment medical examination on February 3, 2004. Given that he was
then suffering from serious illnesses, chronic gastritis, hyperlipidemia and
hypercholesteremia, and his failure to timely submit himself for examination would result in
the forfeiture of his benefits, it cannot be believed that he consulted with Sachly only on
February 3, 2004.
3. An examination of Salvador‘s signature affixed on the February 3, 2004 medical report

would indeed lead Us to the conclusion that it is materially different from her customary
signature affixed on the five medical reports she issued in this case and on the Certificate of
Fitness for Work executed by Godinez, where she signed as witness.
The Court thus concludes that Dayo was not repatriated on November 29, 2003; he
remained as part of the ―M/V Norviken‖ crew, which leads us to the allegations of Godinez
that he was maltreated and harassed by Dayo, which, apart from being credible, necessarily
remain unrefuted by Career and Columbian on account of their insistence upon the sole
defense that Dayo was not on board during the time that Godinez claims he was maltreated.
In Cabuyoc v. Inter-Orient Navigation Shipmanagernent, Inc.,[53] the Court declared that work-
connected mental illnesses or disorders are compensable, thus:
As to the basic issue raised herein, the CA confined the resolution of the dispute to the enumerated list
of injuries under the category ‗HEAD‘ per Appendix 1 of the old POEA Standard Employment
Contract, and ruled that only those injuries that are ‗traumatic‘ shall be considered compensable. The
CA ratiocinated that ‗[B]ecause the enumeration of head injuries listed under the category
of HEAD includes only those mental conditions or illnesses caused by external or physical force,‘ it
follows that mental disorders which are not the direct consequence or effect of such external or
physical force were not intended by law to be compensable. And while the CA gives judicial
emphasis to the word ‗traumatic,‘ it did not bother to explain why petitioner‘s illness, classified as
schizophrenia, should not be considered ‗traumatic‘ and compensable. x x x
xxxx
As it were, Hie foregoing observation of tlie appellate court contradicts both the ruling of the Labor
Arbiter and the NLRC. In its decision, the labor arbiter states:
[Petitioner‘s] disability is total and permanent. He worked with respondent INC in another vessel to
finish his contract. Respondent INC was satisfied with [petitioner‘s] efficiency and hard work that
when the very first opportunity where a vacancy occur[red, petitioner] was immediately called to
[join] the vessel MV Olandia.
Barely two and a half months after joining MV Olandia, the misery and mental torture he suffered
totally disabled him. The supporting medical certification issued by a government physician/hospital
and by another expert in the field of psychiatry, respectively find him suffering from psychosis and
schizophrenia which under tlie OWWA impediment classification falls under Grade I-A (Annex C/
Complaint). Under the POEA Revised Standard Employment Contract, the employment of all Filipino
Seamen on board ocean-going vessel, particularly appendix 1-A, Schedule of Disability Allowances,
Impediment Grade 1, tlie disability allowance is maximum rate multiplied by 120%
The above findings of the Labor Arbiter were seconded by the NLRC in this wise:
Likewise bereft of scant consideration is Respondents‘ argument that psychosis or schizophrenia is

not compensable, claiming that such mental disorder does not result from traumatic head injury which
contemplates accidents involving physical or head contacts. There is nothing in the Standard
Terms and Conditions governing the Employment of Filipino Seafarers On-Board Ocean-Going
Vessels, particularly Section 30, thereof, that specifically states that traumatic head injury
contemplates accidents involving physical or head contacts. Notably, The New Britannica-
Webster Dictionary & Reference Guide, Copyright 1988 by Encyclopedia Britannica, Inc.
defines the word injure as „1: an act that damages or hurts: WRONG 2: hurt, damage, or loss
sustained.‟ Here, said dictionary does not specifically state that the hurt, damage, or loss
sustained should be physical in nature, hence, the same may involve mental or emotional hurt,
damage or loss sustained. Further, said dictionary defines the word trauma as „a: a bodily
injury caused by a physical force applied from without; b: a disordered psychic or behavioral
state resulting from stress or injury.‟ From the above definitions, it is patent that „traumatic
head injury‟ does not only involve physical damage but mental or emotional damage as
well. Respondents‘ argument that [petitioner‘s] co-seaman belied the claimed harassment is bereft of
merit. Suffice it to state that [petitioner‘s] illness occurred during tlie term of his employment contract
with them, hence, respondents are liable therefor.
The above findings of the NLRC are in recognition of the emotional turmoil that petitioner
experienced in the hands of the less compassionate German officers. This Court has ruled that
schizophrenia is compensable.In NFD International Manning Agents, Inc. v. NLRC,[54] the Court
went further by saying:
Strict rules of evidence, it must be remembered, are not applicable in claims for compensation and
disability benefits. Private respondent having substantially established the causative circumstances
leading to his permanent total disability to have transpired during his employment, we find the NLRC
to have acted in the exercise of its sound discretion in awarding permanent total disability benefits to
private respondent. Probability and not the ultimate degree of certainty is the test of proof in
compensation proceedings.
The findings of both the Labor Arbiter and the NLRC as well as the records of the case convince the
Court that petitioner‘s claim is substantiated by enough evidence to show that his disability is
permanent and total. First, mere is the medical findings of the Philippine General Hospital that
petitioner is down with psychosis; to consider paranoid disorder, making it extremely difficult for him
to return to shipboard action; and second, the findings of the Social Benefits Division of the Overseas
Workers Welfare Administration through its attending doctor Leonardo Bascar, that petitioner is
suffering from ‗schizophrenic form disorder.‘
Time and again, 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 she was trained
for or accustomed to perform, or any kind of work which a person of her mentality and attainment
could do. It does not mean absolute helplessness. In disability compensation, it is not the injury which
is compensated, but rather it is the incapacity to work resulting in the impairment of one‘s earning
capacity.
Lastly, it is right that petitioner be awarded moral and exemplary damages and attorney‘s fees. Article
2220 of the Civil Code provides:
Willful injury to property may be a legal ground for awarding moral damages if the court should find
that, under the circumstances, such damages are justly due. The same rule applies to breaches of
contract where the defendant acted fraudulently or in bad faith.
Here, petitioner‟s illness and disability were the direct results of the demands of his shipboard
employment contract and the harsh and inhumane treatment of the officers on board the
vessel Olandia. For no justifiable reason, respondents refused to pay their contractual obligations in
bad faith. Further, it cannot be gainsaid that petitioner‘s disability is not only physical but mental as
well because of the severe depression, mental torture, anguish, embarrassment, anger, sleepless nights
and anxiety that befell him. To protect his rights and interest, petitioner was constrained to institute
his complaint below and hire the services of an attorney. (Emphasis supplied)
Permanent and Total Disability, Benefits and Medical Expenses
The Court finds as well that Godinez suffered permanent total disability, as there has been
no definite medical assessment by the company-designated physician regarding his
condition – even up to now. ―The company-designated doctor is expected to arrive at a
definite assessment of the seafarer‘s fitness to work or. to determine [the degree of] his
disability within a period of 120 or 240 days from repatriation, [as the case may be. If after
the lapse of the 120/240-day period the seafarer remains incapacitated and the company-
designated physician has not yet declared him fit to work or determined his degree of
disability,] the seafarer is deemed totally and permanently disabled.‖[55]
The defense that Godinez was cured and became fit for work is founded on
an unsigned March 12, 2004 Medical Progress Report (Annex ―M‖ of Career and
Columbian‘s Position Paper[56]) stating that Godinez was ―asymptomatic and doing well with
no recurrence of depressive episodes;‖[57] that Godinez ―verbalized a feeling of
wellness;‖[58]that his ―[v]ital signs were stable;‖[59] that he was in a ―euthymic mood, and is able
to sleep and eat well;‖[60] and that he was ―found to be functionally stable at present.‖[61] Being
unsigned, it has no evidentiary value as well, just like the January 10, 2004 Initial Medical
Report containing Godinez‘s supposed admission to a past history of mental illness. Indeed,
even the Labor Arbiter must have noted that this January 10, 2004 medical report was
unsigned, as it was not considered in the comparison of Salvador‘s customary signature and
that appearing on the Initial Medical Report dated February 3, 2004 utilized by Career and
Columbian to prove Dayo‘s alleged repatriation on November 29, 2003.[62]
Neither can the Certificate of Fitness for Work executed by Godinez serve as proof of his
state of health. He is not a trained physician; his declaration is not competent and cannot
take the place of the company-designated physician‘s assessment required by law and the
POEA. contract. Nor can Salvador‘s signature as witness on the certificate validate the
document or be considered as substitute for the legally required medical assessment; quite
the contrary, it proves her unethical and unprofessional conduct. As the Medical Coordinator
of Sachly and the officer who customarily signs the medical reports issued in Godinez‘s
case, it was fundamentally improper for her not to have signed the Medical Progress Report
issued by her employer on March 12, 2004, and yet participate as witness in Godinez‘s
certificate, executed on that very same day to boot.
On the matter of medical expenses, this Court finds nothing irregular in the CA‘s finding that
the amount awarded must be reduced on account of failure to substantiate. An examination
of the evidence supports the view that some of the claimed expenses were not actually
supported by the necessary receipts. In the determination of actual damages, ―[c]redence
can be given only to claims which are duly supported by receipts.‖[63]
Fabricated Evidence and Underhanded Tactics
This Court notes mat Career, Columbian, and their counsel-of-record, have submitted
documents of dubious nature and content; inadmissible in evidence and oppressive to the
cause of labor; and condoned a licensed physician‘s unethical and unprofessional conduct.
For this case, they submitted no less than four (4) dubious and irregular pieces of
evidence. First of all, the January 10, 2004 unsigned Initial Medical Report where Godinez is
claimed to have admitted to a history of insomnia and paranoia. The second is the March
12, 2004 Medical Progress Report, also unsigned, which supposedly contains a physician‘s
certification that Godinez was cured or fit for work. The third is the March 12, 2004
Certificate of Fitness for Work, a. prepared blank form which Godinez merely filled up and
signed, which, given the surrounding circumstances, shows that it was prepared by them
and not by Godinez. And fourth is the falsified Initial Medical Report dated February 3, 2004
containing an express declaration that Dayo was medically repatriated on November 29,
2003.
The execution of the ―Certificate of Fitness for Work‖ is inherently absurd in light of the fact
that Godiiwz is not a doctor and also considering the legal requirement that only a licensed
physician may issue such certification. It is a ploy that aims to take advantage of the
worker‘s lack of sufficient legal knowledge and his desperate circumstances.
Indeed, the impression generated by the absence of Salvador‘s signature on the March 12,
2004 Medical Progress Report, and her consenting to sign as witness to Godinez‘s
Certificate of Fitness for Work instead, is that Salvador refused to certify that Godinez‘s
condition had been cured or had improved. But somehow she was prevailed upon to affix
her signature just the same, but only as witness to Godinez‘s Certificate of fitness for Work,
which must have been the final concession she was willing to make, but an unethical and
unprofessional one nonetheless. By what she did, she was hiding, as witness, under the
cloak of Godinez‘s own admission that he was already well, hoping and expecting that any
tribunal, including this Court, possibly gullible or unthinking, might be duped into believing
that her signature should lend credibility to Godinez‘s certification.
Thus, this Court warns against the continued use of underhanded tactics that undermine the
interests of labor, damages the integrity of the legal profession, mock the judicial process as
a whole, and insult the intelligence of this Court. In prosecuting a client‘s case, there are
multiple ways of securing victory, other than through fabrication, prevarication, and guile.
Evident Malice and Bad Faith
It has become evident, without need of further elaboration, that in dealing with Godinez and
in prosecuting their case, Career and Columbian acted in evident malice and bad faith thus
entitling Godinez to an award of moral and exemplary damages.
Not only was Godinez‘s illness caused directly by his employment, as a result of
unnecessary cruelty on the part of the officers aboard Columbian‘s ship; there was also
failure and refusal to properly and professionally address his condition until it became worse;
and lack of compassion and understanding on the part of the ship‘s officers in failing to
consider that Godinez was an innocent young man who was on his very first assignment
onboard an ocean-going vessel, and in treating him inhumanely even as it became evident
that he was already gravely afflicted. The manner in which Godinez was dealt with in these
proceedings evinces a perverse attempt to evade liability by fabricating evidence and
utilizing objectionable and oppressive means and schemes to secure victory. It constitutes
an affront, not only to this Court, but to all honest workingmen earning a living through hard
work and risking their lives for their families.
WHEREFORE, the Court resolves to DENY the Petitions in G.R. No. 206826 and G.R. No.
206828. The May 22, 2012 Decision of the Court of Appeals in CA-G.R. SP No. 105602
is AFFIRMED WITH MODIFICATION, in that INTEREST is hereby imposed upon the total
monetary award at the rate of six percent (6%) per annum from the date of finality of this
judgment until full satisfaction.
SO ORDERED.
27 SEP 2017 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
TSM Shipping (Phils.), Inc. and MST Marine

Services Phils, Inc. Vs. Shirley G. De Chavez;
G.R. No. 198225; September 27, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[2] assails the January 31, 2011 Decision[3] and the
August 8, 2011 Resolution[4]of the Court of Appeals (CA) in CA-GR SP No. 112898. The CA
granted the Petition for Certiorari filed therewith and reversed and set aside the December
16, 2009 Decision[5] of the National Labor Relations Commission (NLRC) in NLRC LAC OFW
(M) 09-000540-09, which affirmed the July 18, 2009 Decision[6] of the Labor Arbiter (LA)
dismissing the complaint for payment of death benefits in NLRC-NCR OFW (M) 12-17395-08
for lack of merit.
Factual Antecedents
On August 23, 2005, petitioners hired Ryan Pableo De Chavez[7] (Ryan) as chief cook on
board the oil tanker vessel Haruna Express for period of nine months.[8] However, on
February 26, 2006, Ryan was found dead inside his cabin bathroom hanging by the shower
cord and covered with blood.[9] Thus, Ryan‘s surviving spouse, Shirley De Chavez (Shirley),
filed complaint[10] for death benefits.
In her Position Paper,[11] Reply,[12] and Rejoinder,[13] Shirley alleged that Ryan did not commit
suicide considering that Ryan even submitted himself to medical check up at hospital in
Ulsan, Korea day prior to his death; that during their telephone conversation two days before
his alleged suicide, Ryan informed her that the vessel would be discharging crude oil in
Batangas and that they might see each other; that no suicide note was found; that Ryan died
during the effectivity of his contract and while on board the vessel, hence, his heirs are
entitled to death benefits; that petitioners did not clarify how Ryan could have committed
suicide; that the presumption of regularity in the performance of duties is not accorded to
foreign nationals, such as the Ulsan police authorities; that no evidence was adduced that
the Ulsan Maritime Police indeed conducted an investigation into Ryan‘s death; that the
imputation that Ryan took his own life because he was pressured by his mother to obtain a
loan for new house flies in the face of the fact that Ryan was recently married and about to
start family, that he had acquired new house and that he wag recently promoted as chief
cook; and, that the pictures taken when Ryan was found dead which tended to show that he
was murdered was not at all explained in the Medical Certificate of Death issued by the
Ulsan City Hospital of Korea.
On the other hand, petitioners claimed in their Position Paper,[14] Reply,[15] and
Rejoinder[16] that Shirley is not entitled to death benefits under the Philippine Overseas
Employment Administration-Standard Employment Contract (POEASEC) because the

Medical Certif1cate of Death the written statements of the Chief Mate, the Ship Master, and
Messman Benjamin Melendres (Messman Melendres), and the investigation report prepared
by International Inspection and Testing Corporation (INTECO), uniformly found Ryan‘s
cause of death as suicide; that the Personnel Manager of Thome Ship Management Pte.
Ltd. (Thome Ltd.) submitted an Investigation Report indicating that the possible reason for
the suicide was Ryan‘s loss of direction or overwhelming despair after his mother virtually
pushed him to take huge loan to purchase house; that the Ulsan Maritime police who
investigated the incident did not notice any foul play; that Messman Melendres, who was the
first person to break into Ryan‘s locked room, likewise observed that there was nothing in
Ryan‘s cabin to suggest that there had been fight or struggle; that the examination of Ryan‘s
corpse revealed no signs of trauma; and, that Shirley could not testify on how Ryan died
because she was not on board the vessel when the incident transpired.
In Decision dated July 18, 2009,[17] the LA dismissed the complaint on the ground that the
evidence convincingly showed that Ryan‘s death was authored by Ryan himself, viz.:
A careful perusal of [INTECO‘s Investigation Report] and [the] medical certificate reveals that the
direct cause of [Ryan‘s death,] based on the autopsy findings of the Ulsan City Hospital, showed that
the cause of death x x x was ‗excessive bleeding from [Ryan‘s] cut wrist apparently by scissors‘,
[even] the Medical Certificate of Death issued by the Ulsan City Hospital certified that the cause of
death of the deceased was by ‗Hanging, strangulation and suffocation‘.[18]
In its Resolution dated September 30, 2009,[19] the NLRC initially dismissed Shirley‘s appeal
for failure to submit certificate of non-forum shopping. However, on reconsideration the
NLRC granted and reinstated her appeal.
On December 16, 2009,[20] the NLRC rendered its Decision denying Shirley‘s appeal and
affirming the LA‘s ruling that petitioners succeeded in proving that Ryan died at his own
hands, thus:
A careful and thorough reading of the appeal would show that the same is based more on assumptions
and speculations rather than on facts. The fact that [Ryan] has x x x a new wife, [a] new home and
recently was promoted as Chief Cook does not mean that he could not have committed suicide
anymore [sic]. The fact that the medical certificate and the result of the autopsy appears to be
contradictory to each other on the causes of death as detailed by [Shirley] does not mean that [Ryan]
was murdered and did not commit suicide. And the fact that the comfort room has not been built for
possible self suspension does not mean that [Ryan] was murdered.[21]
Shirley instituted before the appellate court Petition for Certiorari,[22] contending that
petitioners had not presented substantial evidence to support the conclusion that Ryan
indeed committed suicide and insisting that his death was compensable.
In its assailed January 31, 2011 Decision,[23] the CA reversed the NLRC and disposed as
follows:
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The assailed Decision, dated
December 16, 2009, and Resolution, dated September 30, 2009, in NLRC LAC OFW (M) 09 000540-
09 (NLRC-NCR OFW (M) 12-17395-08) are hereby ANNULLED and SET ASIDE. The records of
this case are remanded to the National Labor Relations Commission tor the computation of the death
benefits to be awarded to [respondent] Shirley De Chavez in behalf of [her] deceased husband Ryan
Pableo De Chavez.
SO ORDERED.[24]
The CA found no sufficient evidence that Ryan took his own life, hence it declared Shirley
entitled to death benefits. The CA held that the cause of Ryan‘s death as stated in the
Medical Certificate of Death issued by the Ulsan City Hospital was different from that set
forth in the INTECO Report. It stressed that there was nothing in the records to show that
INTECO had the authority to investigate into Ryan‘s death and to issue official findings at the
conclusion of its investigation. We quote pertinent portions from the CA‘s disquisition:
A perusal of the record of this case shows that the basis of the ruling of the Labor Arbiter and [the]
NLRC was Medical Certificate of Death, prepared by certain Dr. Sung Yeoul Hung of the Ulsan City
Hospital, and an Investigation Report of the International Inspections and Testing Corp. However, an
examination x x x of the aforesaid evidence fails to conclusively convince the Court that the death of
the [Shirley‘s] husband was due to his own hand.
First, the findings under the said Medical Certificate and the said Investigation Report appear to be
contradictory with one another. Under the Medical Certificate the cause of death [was] hanging by
strangulation, thus:
‗Cause of death
1. Direct Cause of Death.
INTENTIONAL SELF-HARM BY [HANGING], STRANGULATION AND SUFFOCATION
2. Intermedicate Predisposing Cause of Death.
3. Predisposing Cause of Death.
BLOOD LOSS‘ (emphasis supplied)
However, Under the Investigation Report the cause of death was found to be due to excessive
bleeding from the cuts from the seafarer‘s wrist, thus:
‗Autopsy on the Corpse of [Ryan] Investigation by Ulsan Maritime Police:
The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital x x x [witnessed by]
all parties concerned including us Mr. Leow Ai Hin, Senior Shipping Executive of Thome Ship
Management Pte. Ltd., Singapore x x x and x x x the cause of death of [Ryan] was excessive bleeding
from the cut wrist of [Ryan] apparently by scissors. The Ulsan Maritime Police requested handwritten
statements of all remaining crews of ―HARUNA EXPRESS‖ in the evening hours of Feb. 27th which
were prepared submitted to the Police in the morning hours of Feb. 28 and then ―HARUNA
EXPRESS‖ sailed off Ulsan Port at 12:30 hrs. of Feb. 28th. (Emphasis supplied)
Second, who is this ‗International Inspection and Testing Corporation‘ that performed the autopsy and
prepared the Investigation Report? Is this corporation trained to perform an autopsy? More
importantly, are its findings officially recognized? The Court has scoured the record and it cou1d not
see one iota of description, aside [from the fact] that it is ‗foreign corporation‘, that would tend to lend
credence to itself as an investigtive body and to its findings. As it is, the said investigation report
woefully pales in comparison as to what real autopsy report should look like. An autopsy report
should give an accurate account of the various marks found on the body such as ligature marks, cuts,
the precise locations thereof, and other tell-tale signs that would lead an investigator to conclusively
conclude as to the cause of death but the so[-]called investigation report only gives vague account at
best.
Third, why was there no official autopsy done on the body of the deceased seafarer by the Ulsan
Maritime Police? And if there ever was an autopsy done by the Ulsan Maritime Police, where is the
autopsy report of the police? The Court would think that the shipping company, understandably
interested in avoiding paying any compensation, would prefer an autopsy done by the police rather
than private corporation. After all, the findings of the police are accorded respect and regularity by the
courts but, curiously enough in this case, the shipping company decided to have the body examined
instead by private corporation whose credentials to perform an autopsy have not even been verified.[25]
In its August 8, 2011 Resolution,[26] the CA likewise denied petitioners‘ motion for
reconsideration.
Hence, the instant Petition raising the following issue:
The Honorable Court of Appeals committed serious error of law in awarding [to Shirley] death
compensation benefits under Section 20 (A) of the POEA contract despite undisputed evidence which
clearly show that the seafarer died by his own hand. The award is not unjustified [sic] under the facts
and evidence of the case, the same is likewise plainly contrary to Section 20 (D) of the governing
POEA contract.[27]
Petitioners’Arguments
In their Petition,[28] Reply,[29] and Memorandum,[30] petitioners contend that under the governing
POEA-SEC, seafarer‘s death during the term of his contract is not automatically
compensable particularly if the same was due to his willful act; that the LA‘s findings of fact,
which were upheld by the NLRC, should not have been disregarded by the CA because
Shirley herself, whose duty was to establish her entitlement to the death benefits, has utterly
failed to adduce any evidence to substantiate her bare allegation that Ryan was not
responsible for his own death; that apart from her absolutely empty and hollow claim, Shirley
presented no proof that Ryan was victim of foul play; that the purported contradictory
information about the cause of Ryan‘s death, whether he chose to hang himself or slash his
wrist with scissors, did not negate the fact that his death was self-inflicted; that the Medical
Certificate of Death[31] prepared by Dr. Sung Yeoul Hung of the Ulsan City Hospital, which
listed ―Intentional Self Harm by [Hanging], Strangulation and Suffocation‖ as the direct cause
of death, and the INTECO‘s Report[32] which declared Ryan‘s death as ―suicide,‖ effectively
meant the same thing; that although no official autopsy report was issued by the Ulsan
Maritime Police, the latter allowed the vessel to sail on February 28, 2006 only after they had
verified and were satisfied that there was no foul play in Ryan‘s death; that Lapid v. National
Labor Relations Commission[33] is not applicable because the coroner‘s report therein was
incomplete, whereas the Medical Certificate of Death of the Ulsan City Hospital and INTECO
Report, gave detailed account that Ryan was found hanging by rope or cord while sitting on
the toilet bowl with his wrist slashed and pair of scissors nearby; that incumbent upon the
Supreme Court to resolve this case because the CA‘s findings are not only diametrically
opposed to the findings of both the LA and the. NLRC, but the CA‘s findings are grounded
entirely on speculation, surmises or conjectures; that it was Shirley‘s duty to prove by
substantial evidence her entitlement to death benefits; that the CA erred ill not giving
credence to INTECO‘s. Report as well as the Medical.Certificate of Death issued by the
Ulsan City Hospital; and that they have proven by substantial evidence that Ryan‘s death
was self-inflicted, thus Shirley is not entitled to death compensation benefits pursuant
Section 20(D) of the governing POEA-SEC.
Respondent Arguments
Shirley counters that re-assessment of the propriety of the award of death compensation
benefits involves an examination of the evidence, which is not proper in Rule 45 petition; that
petitioners failed to prove that Ryan committed suicide; that INTECO‘s Report has no
credence at all; that Ryan‘s death should not be presumed to be self-inflicted and that
compensability attaches by the mere fact that Ryan died in the course of his employment;
that there was no indication that Ryan contemplated to commit suicide; 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;‖[34] and, that the burden of proof that an employee‘s death
is noncompensable always lies with his employer.
Issue
Is the CA correct in ruling that the NLRC committed grave abuse of discretion in
denying Shirley‘s claim for death benefits?
Our Ruling
The Petition is meritorious.

In general, the Court is not trier of facts; however, an exception lies when the findings of the
CA and the NLRC conflict with each other, as in this case, in which event this Court must go
over the records to determine whether the CA had sufficient basis for overturning the
NLRC.[35] More specifically, the Court must adjudge in this Rule 45 petition whether the CA
correctly found that the NLRC had committed grave abuse of discretion amounting to lack or
excess of jurisdiction in holding that the seafarer committed suicide.[36] The unbending
precept that must guide this Court in resolving petition of the character elevated before this
Court is: ―As claimant for death benefits, [the seafarer‘s heir] has the burden to prove by
substantial evidence that [the seafarer‘s] death is work-related and that it transpired during
the term of his employment contract.‖[37]
Section 20(A) and (D) of the 2000 POEA-SEC provide that:
SECTION 20. COMPENSATION AND BENEFITS
A COMPENSATION AND BENEFITS FOR DEATH

1. In case of work-related 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) x x x at the exchange rate prevailing during the time of payment.
xxxx
D. 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,
provided however, that the employer can prove that such injury, incapacity, disability or death is
directly attributable to the seafarer.
Given the evidence on record, we hold that Ryan‘s death was due to his own deliberate act
and deed. Indeed the Medical Certificate of Death prepared by Dr. Sung Yeoul Hung of the
Ulsan City Hospital, who, it is presumed, must have examined Ryan‘s cadaver, and the
INTECO‘s Report which contained information involving the self-same death, must be
deemed as substantial evidence of that fact. We are satisfied that the material facts set forth
in the Decisions of both the LA and the NLRC constitute substantial evidence that Ryan took
his own life, that he died by his own hands. ―That [the seafarer‘s] death was result of his
willful act is matter of defense. Thus, petitioners [as employers] have the burden to prove
this circumstance by substantial evidence‖[38] which is the quantum of proof in labor cases.
In Wallem Maritime Services, Inc. v. Pedrajas,[39] this Court held that the seafarer‘s heirs
were not entitled to any benefits since the employers were able to substantially prove that
the seafarer who was found hanging on the vessel‘s upper deck with rope tied to his neck
had committed suicide. The employers therein presented the forensic report of the Medical
Examiner appointed by the Italian Court from the Public Prosecutor‘s Office of Livomo, Italy
which pointed out in detail that there were no other injuries in the seafarer‘s body and
confirmed the deceased himself ―tied the rope to the metal pipe‖[40] based on the evaluation
of ―the crime scene, the rope used for hanging, type of knot, temperature and position of the
body when found.‖[41] Furthermore, two suicide notes written by the seafarer addressed to his
wife and to the vessel‘s crew were also offered as evidence. Similarly, in Unicol
Management Services, Inc. v. Malipot,[42] this Court found substantial evidence that the true
cause of the seafarer‘s death was suicidal asphyxia due to hanging in the vessel‘s store
room. These findings were based on the employers‘ submission of the Medico Legal Report
issued by the Ministry of Justice of the United Arab Emirates (UAE) and the Death Certificate
issued by the UAE Ministry of Health together with the Investigation Report, log book
extracts, and Master‘s Report. The conclusion in said Medico Legal Report that the seafarer
committed suicide drew support from an external examination of the cadaver which showed
that the deep lacerated groove around the deceased‘s neck was vital, recent, and result of
hanging with rope and that there were no other recent injuries.
To belabor point, the resolution of whether herein petitioners have shown that Ryan
committed suicide is based essentially on the examination of two pertinent documents.
The first document is the Ulsan City Hospital‘s Medical Certificate of Death [43] which was
signed by one Dr. Sung Yeoul Hung with License No. 25028. It reads:
xxxx
• Date and Time of Death: Date 26th FEB. 2006

Time 03:00-4:00 at the break of the day

• Place of Death: B-DECK, HIS BATHROOM, THE BOARD, HARUNA EXPRESS
ON THE SEA 15km FROM ULSAN

• Cause of death
1. Direct Cause of Death.
INTENTIONAL SELF-HARM BY [HANGING], STRANGULATION AND SUFFOCATION
2. Intermedicate Predisposing Cause of Death.
3. Predisposing Cause of Death.
BLOOD LOSS
THE ABOVE STATEMENT IS TRUE TO BEST OF MY KNOWLEDGE[44]
The second document is the INTECO Report[45] signed by one ―S.M. Han, Rep. Director.‖ It
pertinently stated:
I) General Information:
xxxx
b) Upon completion of the load in work, ―HARUNA EXPRESS‖ sailed off Onsan Port at 06:35 hrs.
of Feb. 26th bound for Nagoya. However, ―HARUNA EXPRESS‖ deviated returned to Ulsan Port due
to the death of Chief Cook, [Ryan], x x x and sailed off Ulsan Port at 12:30 hrs. of Feb. 28th after
completion of the investigation by Ulsan Maritime Police.
xxxx
IV) Circumstance/Cause of Accident:
Upon interviewing the Master, Chief Engineer, Third Officer Mess Boy and also upon reviewing the
statements of crews, our finding were as follows:
17:30 hrs. of Feb. 25th: Chief Cook instructed the mess boy x x x to bring provisions from the reefer
for the breakfast of the next day and to cook the breakfast of Feb. 26th for the crew.
xxxx
08:45 hrs. of Feb. 26th:

x x x [T]he mess boy went up the Chief Cook‘s cabin to inform that he would leave the galley x x x
he called the Chief Cook before opening the cabin door, but no response, and therefore, he opened the
cabin door, but there was no Chief Cook in his cabin, and the bathroom door was closed and very
quiet. The mess boy knocked [at] the bathroom door calling the Chief Cook‘s name, but no response,
and the mess boy tried to open the bathroom door, but it was locked, and so, the mess boy opened the
bathroom door using his (messboy‘s) key. Upon opening the bathroom door, considerable blood was
found on the floor, and part of the Chief Cook‘s feet was seen with the shower curtain partly closed.

The mess boy immediately notified x x x the Chief Officer [what he saw], and both mess boy Chief
Officer rushed to the Chief Cook‘s cabin and upon opening the shower curtain, they found the shower
hose around the neck of the Chief Cook, and the Chief Officer instructed the mess boy not to touch
anyt[h]ing.

Alerted all crews including the Master Chief Engineer x x x after removing the shower hose from the
Chief Cook‘s neck, first aid care was performed on him, and his left wrist was found cut about 5cm
long about 1cm max. deep, and pair of sharp scissors was found in the bathroom x x x oxygen
resuscitation heart pressuring were performed x x x. However, the Chief Cook was almost in dead
condition with his tongue hung out and the breathing stopped.
09:05 hrs. of Feb. 26th: x x x the ship‘s course altered back to Ulsan.
xxxx
11:35 hrs. of Feb. 26th: Transferred the Chief Cook to Coast Guard Vessel ―POLICE 307‖.
xxxx
12:10 hrs. of Feb. 26th: Chief Cook was taken to City Hospital in Ulsan.
13:25 hrs. 13:50 hrs of Feb. 26th.

The Chief Cook was examined under the witness of the ships‘ agent the Ulsan Maritime Police, and
the result was that the Chief Cook x x x was dead x x x 03:00 hrs. of Feb. 26th.
V) Autopsy on the Corpse of [Ryan] Investigation by Ulsan Maritime Police:
The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital under the witness of
Management Pte Ltd., Singapore from 18:00 hrs. to 19:00 hrs. of Feb. 27th, and as result of the
autopsy, the cause of death of [Ryan] was excessive bleeding from the cut ―Wrist of [Ryan]
apparently by scissors. The Ulsan Maritime Police requested the hand-written statements of all
remaining crews of ―HARUNA EXPRESS‖ in the evening hours of Feb. 27th, which were prepared
submitted to the Police in the morning hours of Feb. 28th, and then ―HARUNA EXPRESS‖ sailed off
Ulsan Port at 12:30 hrs. of Feb. 28th.
VI) Cause of Death of Mr. Dechavez:
Based on x x x all [information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.[46]
Indeed, it is settled that:

In labor cases, [this Court‘s review power] under Rule 45 of the Rules of Court involves the
determination of the legal correctness of the CA Decision. This means that [this] Court must ascertain
whether the CA [had] properly determined the presence or absence of grave abuse of discretion in the
NLRC Decision. Simply put, ‗in testing for legal correctness, [this] Court views the CA Decision in
the same context that the [Rule 65] petition for certiorari it [adjudicated] was presented‘ to [that
court]. It entails limited review of the acts of the NLRC, [viz.,] whether [the NLRC] committed errors
of jurisdiction. It does not cover the issue of whether the NLRC committed any error of judgment,
unless there is showing that its findings and conclusions were arbitrarily arrived at or were not based
on substantial evidence;[47]
In the present case, both the LA and the NLRC ruled that Shirley‘s claim for death benefits
was without basis since. Ryan committed suicide as principally established by the Medical
Certificate of Death issued by Dr. Sung Yeoul Hung of the Ulsan City Hospital, who attested
that the direct cause of Ryan‘s death was ―Intentional Self-Harm by [Hanging], Strangulation
and Suffocation.‖[48] Both the LA and the NLRC also adverted to the Report prepared by the
INTECO which stated that .
The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital under the witness of
Management Pte Ltd., Singapore from 18:00 hours to 19:00 hours of February 27th, and as result of the
autopsy, the cause of death of [Ryan] was excessive bleeding from the cut wrist of [Ryan], apparently
by scissors. The Ulsan Maritime Police requested the handwritten statements of all remaining crews
of ‗Haruna Express‘ in the evening of February 27, which were prepared submitted to the police in the
morning hours of February 28th, and then ‗Haruna Express‘ sailed off Ulsan Port at 12:30 of February
28.
xxxx
Based on x x x all [information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.[49]
Elaborating on the foregoing, Leow Ai Hin, Marine Personnel Manager of the Thome Ltd.,
stated in Attachment No. 4:
xxxx
LATE C/COOK DECHAVEZ‘S FAMILY HAS BEEN NOTIFIED AND INFORMED OF HIS
DEATH. ON INVESTIGATION WITH THE FAMILY FOR POSSIBLE REASON OF HIS
INTENDED SUICIDE, WE UNDERSTAND THAT THE MOTHER HAD ACTUALLY WANTED
HIM TO TAKE LOAN FOR HOUSE INVESTMENT. THIS WAS SUPPORTED BY HIS WIFE,
WE BELIEVE THAT X X X THIS BIG INVESTMENT AMOUNT HAS PUT VERY HEAVY
[RESPONSIBILITY] ON HIM THAT HE MAY HAVE LOST HIS DIRECTION AND PURSUE
THE DEATH SOLUTION. BESIDES HE WAS JUST PROMOTED TO CHIEF COOK [IN] THIS
CONTRACT AFTER SERVING CONTRACTS BEFORE WITH US AS MESSMAN.
WE DO NOT SUSPECT ANY FOUL PLAY ON BOARD AS HE IS VERY WELL LIKED BY ALL
CREWMEMBERS AND HAS NO DISPUTE OR ENEMIES WITH ANYONE ON BOARD. THE
CREW STATEMENT GIVEN TO THE POLICE YESTERDAY CAN TESTIFY TO HIS STATUS
[ON BOARD].[50]
We believe that the above-mentioned pieces of documentary evidence upon which both the
LA and the NLRC erected their conclusions that Ryan‘s death was directly attributable to his
own deliberate act and will, in other words, suicide, constitute substantial evidence that Ryan
was the author of his own death. In the absence, as in this case, of incontrovertible proof to
the contrary, it must be presumed that the persons who prepared these documents acted in
good faith to attest to the facts they saw or had personal knowledge of, even as it should
also be presumed that these documents likewise spoke the truth. Indeed the facts and
circumstances mentioned in said documents pointing to the fact that Ryan‘s death was
suicide, are spread all over the entire records of the case, indicating purposeful and
deliberate intent to bring out the core reality that Ryan was the author of his own death.
What is more, the sum of such facts and circumstances had been recognized, appreciated
and adopted by both the LA and the NLRC and was made the underpinning of the most
critical and crucial basis of their Decisions which they rendered in the regular performance of
their duties.
By contrast, the question may be asked: What was the basis of the CA in granting the
petition for the extraordinary writ of certiorari instituted before it by Shirley? According to the
CA, the findings of the Medical Certificate of Death prepared by Dr. Sung Yeoul Hung of the
Ulsan City Hospital which mentioned the direct cause of Ryan‘s death as Intentional Self-
Harm by Hanging, Strangulation and Suffocation, are at war with the cause of death
mentioned in the INTECO Report, which described ―the cause of death of [Ryan as]
excessive bleeding from the cut wrist of [Ryan] apparently by scissors‖. [51] If there is any
difference between the two documents with respect to Ryan‘s suicidal death, it is difference
with hardly any distinction. In point of fact, however, the CA appeared to have overlooked
that the INTECO Report stressed the cause of death of Ryan thus: ―Based on [all the
foregoing information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.‖[52] It is evident that the appellate tribunal had engaged in petty
nitpicking in pitting the findings made in the two documents. This is so because death by
intentional self-harm as stated in the Medical Certificate of Death prepared by Dr. Sung
Yeoul Hung of the Ulsan City Hospital is the necessary equivalent of suicide mentioned in
the INTECO Report.
The CA also asked the rhetorical question:
[W]ho is this ‗International Inspection and Testing Corporation‘ that performed the autopsy and
prepared the Investigation Report? Is this corporation trained to perform an autopsy? More
importantly, are its findings officially recognized? The Court has scoured the record and it could not
see one iota of description, aside [from the fact] that [it] is ‗foreign corporation‘ that would tend to
lend credence to itself as an investigative body and to its findings.[53]
Such rhetorical question by the CA need not merit clear-cut answer if only because it is
rhetorical question. It suffices to say, however, that both the LA and the NLRC took notice of
the INTECO Report and both agencies were well in their right and power to do so. It is horn-
book law that quasi-judicial agencies like the LA and the NLRC are not bound by the
technical rules of evidence that are observed by the regular courts of justice. [54] Thus,
in Wallem Maritime Services, Inc. v. Pedrajas,[55] this Court had occasion to observe:
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 the petitioners proving that Hernani committed
suicide.[56]
The CA also asked another rhetorical question:
Third, why was there no official autopsy done on the body of the deceased seafarer by the Ulsan
Maritime Police? And if there ever was an autopsy done by the Ulsan Maritime Police, where is the
autopsy report of the police? The Court would think the shipping company, understandably interested
in avoiding paying any compensation, would prefer an autopsy done by the police rather than private
corporation. After all, the findings of the police are accorded respect and regularity by the courts, but
curiously enough in this case, the shipping company decided to have the body examined by private
corporation whose credentials to perform an autopsy have not even been verified.[57]
This observation is of no consequence in this matter. For in point of fact, the INTECO‘s
Report categorically stated that the Ulsan Maritime Police were present when the cadaver of
Ryan was being autopsied at the Ulsan Hospital. Moreover, it noted that the Ulsan Maritime
Police had requested handwritten statements of all remaining crews of the Haruna Express
in the evening February 27, 2006 which were prepared and submitted to the police in the
morning of February 28, 2006 after which the Haruna Express sailed off Ulsan Port at 12:30
of February 28, 2006.
What is more, it is not for the CA to substitute its own discretion for the discretion of the LA
and the NLRC relative to labor relations cases that are within these agencies‘ peculiar
expertise and jurisdiction. The CA apparently overlooked that the case instituted before it is
petition for certiorari under Rule 65 of the Rules of Court which addresses nothing more than
the question of grave abuse of discretion amounting to lack or excess of jurisdiction. And, to
repeat, we find nothing in the Decisions of both the LA and the NLRC that approximates
grave abuse of discretion amounting to lack or excess of jurisdiction. The reason is that the
Decisions of both the LA and the NLRC are grounded on substantial evidence which
stemmed from the aforestated documentary evidence that were presented by the petitioners
before the LA and the NLRC.
Almost on all fours with this case is our holding in Unicol Management Services, Inc. v.
Malipot:[58]
Normally, the Supreme Court is not trier of facts. However, since the findings of the CA and the
NLRC were conflicting, it is incumbent upon this Court to wade through the records to find out if
there was enough basis for the CA‘s reversal of the NLRC decision.
In this case, the CA ruled out the commission by seaman Glicerio of suicide on the ground that the
evidence presented by petitioners, such as the Medico-Legal Report and Death Certificate, did not
state the circumstances regarding the cause of seaman Glicerio‘s death. Also, the CA held that the
Investigation Report, log book extracts, and Master‘s Report were submitted for the first time on
appeal to the NLRC, and thus, should not have been admitted by the NLRC.
First, this Court would like to underline the fact that the NLRC may receive evidence submitted for
the first time on appeal on the ground that it may ascertain facts objectively and speedily without
regard to technicalities of law in the interest of substantial justice.
In Sasan, Sr. v. National Labor Relations Commission 4th Division, We held that our jurisprudence is
replete with cases allowing the NLRC to admit evidence, not presented before the Labor Arbiter, and
submitted to the NLRC for the first time on appeal. The submission of additional evidence before the
NLRC is not prohibited by its New Rules of Procedure considering that rules of evidence prevailing
in courts of law or equity are not controlling in labor cases. The NLRC and Labor Arbiters 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 keeping with this directive, it has been held that the NLRC may consider evidence, such as
documents and affidavits, submitted by the parties for the first time on appeal.
Moreover, among the powers of the Commission as provided in Section 218 of the Labor Code is that
the Commission may issue subpoenas requiring the attendance and testimony of witnesses or the
production of such books, papers, contracts, records, statement of accounts, agreements, and others. In
addition, the Commission may, among other things, conduct investigation for the determination of a
question, matter or controversy within its jurisdiction, proceed to hear and determine the disputes in
the absence of any party thereto who has been summoned or served with notice to appear, conduct its
proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer
technical matters or accounts to an expert and to accept his report as evidence after hearing of the
parties upon due notice. From the foregoing, it can be inferred that the NLRC can receive evidence on
cases appealed before the Commission, otherwise, its factual conclusions would not have been given
great respect, much weight, and relevance when an adverse party assails the decision of the
NLRC viapetition for certiorari under Rule 65 of the Rules of Court before the CA and then to this
Court via petition for review under Rule 45.
Accordingly, if we take 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.
Contrary to the findings of the CA, it appears that the Investigation Report submitted by Inchcape
Shipping Services 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 Report issued by Dr. Sajeed
Aboobaker who diagnosed sean1an Glicerio with musculoskeletal pain and emotional trauma due to
family problems, when the latter complained of chest pains and palpitations on December 10, 2008.
Second, both the Medico-Legal Report and Death certificate indicate that the actual cause of death of
seaman Glicerio is ‗suicidal asphyxia due to hanging.‘
The Medico-Legal Report issued by the United Arab Emirates, Ministry of Justice states:
Medico-Legal Report on Case No. 2/2009/Casualties

In accordance with the letter of the Director of Fujairah Public Prosecution dated 09.07.2006 to carry
out the external examination on the remains of Mr. Glicerio Ramirez [M]alipot, Filipino national, to
show the reason of death and how death occurred, I, Prof. Dr. Osman Abdul Hameed Awad. medico-
legal senior consultant in Fujairah, hereby certify that I carried out the external examination on the
aforementioned body on 15.01.2009 at Fujairah Hospital Postmortem. also reviewed the minutes of
investigations. Moreover, I hereby decide the following:
A) External Examination:
The body is for man aging about 56 years, in saprophytic state because of being in the refrigerator
along with blood precipitation in the upper and lower limbs. I noticed deep lacerated groove
transverse in the front of the neck and [the upper] level of the thyroid gristle with em width, going up
and to the two sides of the neck and disappears beneath the ear along with the emergence of the
tongue outside the.mouth. did not notice any recent injuries in the body.
B) Opinion:
Based on the above, I decide the following:
1) Based on the external examination of the body of the aforementioned deceased deep lacerated
groove round the neck. It (sic) vital and recent. It occurs as result of pressure and hanging with
an elastic body such as rope x x x
2) The death is due to suicidal Asphyxia due to hanging.
3) The time of death synchronizes with the given date.
From the foregoing, it can be inferred that there was no foul play regarding seaman Glicerio‘s suicide
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 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.
With that settled, we now resolve the issue of whether respondent is entitled to death compensation
benefits under the POEA-Standard Employment Contract.
Section 20 of the POEA ―Standard Terms and Conditions Governing the Overseas Employment of
Filipino Seafarers On-Board Ocean-Going Ships,‖ provides:
A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
xxxx
B. COMPENSATION AND BENEFITS FOR DEATH

1. In case of work-related 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
D 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, provided, however, that the employer can prove that such injury, incapacity, disability or
death is directly attributable to the seafarer.
Clearly, 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 respondent, 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 her petition, lest an injustice be caused to the employer. While it is true that labor
contracts are impressed with public interest and the provisions of the POEA Employment Contract
must be construed logically and liberally in favor of Filipino seamen in the pursuit of their
employment onboard ocean-going vessels, still the rule is that justice is in every case for the
deserving, to be dispensed with in the light of established facts, the applicable law, and existing
jurisprudence.
WHEREFORE, the Petition is GRANTED. The challenged January 31, 2011 Decision and
August 8, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 112898
are ANNULLED and SET ASIDE, and the December 16, 2009 Decision of the National
Labor Relations Commission in NLRC LAC OFW (M) 09-000540-09 is hereby REINSTATED
and AFFIRMED.
SO ORDERED.
14 AUG 2017 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
North Sea Marine Services Corporation, Ms.

Rosalinda Cerdina and/or Carnival Cruise
Lines Vs. Santiago S. Enriquez; G.R. No.
201806; August 14, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the January 20, 2012 Decision[2] and May 8,
2012 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 117050, which dismissed
the Petition for Certiorari filed therewith and thus affirmed the June 25, 2010 Decision[4] and
September 20, 2010 Resolution[5] of the National Labor Relation Commission (NLRC)
ordering petitioners North Sea Marine Services Corporation, Ms. Rosalinda Cerdina, and
Carnival Cruise Lines (collectively petitioners) to pay respondent Santiago S. Enriquez
(respondent) US$80,000.00 as permanent disability benefit, US$576.00 as balance for
sickness wages, and 10% thereof as attorney‘s fees.
Antecedent Facts
On February 27, 2008, petitioner North Sea Marine Services Corporation, for and on behalf
of its foreign principal, petitioner Carnival Cruise Lines, entered into a Contract of
Employment[6] with respondent for a period of six months which commenced on April 27,
2008, as Assistant Plumber for the vessel MS Carnival Triumph.
On September 2, 2008, while in the performance of his duties, respondent experienced nape
pains that radiated to his upper back. The ship doctor diagnosed him to be suffering from
mechanical back pains and prescribed him with medicines.[7] However, due to the worsening
of his back pains, he was medically repatriated on October 5, 2008.
Upon arrival in Manila on October 7, 2008, respondent was immediately referred to the
company-designated physician, Dr. John Rabago (Dr. Rabago), at the Cardinal Santos
Medical Center. An orthopedic specialist recommended Magnetic Resonance Imaging (MRI)
of respondent‘s cervical spine, which test revealed that he was suffering from Cervical
Spondylosis with Thickening of the Posterior Longitudinal Ligament from C2-3 to C5-6; Mild
Disc Bulging from C3- 4 to T2-E; and Superimposed Left Paracentral Disc Protrusion at C5-
6.[8] During his confinement at the Cardinal Santos Medical Center from October 28, 2008 to
October 30, 2008, respondent underwent Anterior Disectomy, Spinal fusion C5-C6 Ciliac
Bone Graft, and Anterior Plating.[9] After his discharge from the hospital, respondent
continuously reported to the orthopedic surgeon for medical treatment and evaluation. On
November 28, 2008, he was referred to a physiatrist to undergo physical therapy. [10]
In a Medical Report[11] dated December 17, 2008, Dr. Rabago declared respondent fit to
resume sea duties, with the conformity of both the orthopedic surgeon and the physiatrist.
Respondent thereafter signed a Certificate of Fitness to Work,[12] releasing petitioners from
all liabilities.
On February 25, 2009, respondent consulted an independent orthopedic surgeon, Dr.

Venancio P. Garduce, Jr. (Dr. Garduce), of the UP-PGH Medical Center, who certified his
unfitness to work as a seaman with the following findings:
February 25, 2009

To whom it may concern
This is to certify that SANTIAGO S. ENRIQUEZ, 45 years old, male, has been seen & examined by
the undersigned as outpatient. History reviewed and patient‘s physical examination reveal limitation
of neck motion associated with tenderness on posterior aspect of the neck. He also has numbness of
the (R) shoulder with muscle spasm. The (L) pelvic/iliac bone graft down is tender associated with
numbness.
Considering all these findings, it would be impossible for him to work as seaman-plumber. Disability
grade of three (3) is recommended.[13]
Proceedings before the Labor Arbiter (LA)
On March 4, 2009, respondent filed a Complaint[14] with the NLRC seeking to recover
permanent disability compensation in the amount of US$80,000.00 under the International
Transport Workers‘ Federation Cruise Ship Collective Bargaining Agreement (ITF Cruise
Ship CBA),[15] balance of sick wages for two months, moral and exemplary damages, and
attorney‘s fees. Respondent claimed that despite the lapse of 120 days and medical
attention given to him by the company-designated physician, his condition did not improve,
as attested by the medical findings of his own physician Dr. Garduce.
Petitioners, on the other hand, disclaimed respondent‘s entitlement to any disability benefit
since he was declared fit to work by Dr. Rabago, as attested by both the orthopedic surgeon
and physiatrist. Petitioners asserted that the fit-to work assessment of the company-
designated physician deserved utmost credibility because it was rendered after extensive
monitoring and treatment of respondent‘s condition by a team of specialists, and it contained
a detailed explanation of the progress in respondent‘s condition. Petitioners also asserted
that there was no proof that respondent‘s employment was covered by a CBA or that his
injury was caused by an accident as to fall under the CBA provisions. Moreover, petitioners
insisted that respondent had executed a Certificate of Fitness to Work, releasing petitioners
from any obligation in relation to his employment.
In a Decision[16] dated September 29, 2009, the Labor Arbiter denied respondent‘s claim for
disability benefits. The Labor Arbiter found credence in Dr. Rabago‘s fit to work assessment,
which was buttressed by the findings of the specialists, was arrived at after careful and
accurate evaluation of respondent‘s condition, and well-substantiated by the medical
records.
The Labor Arbiter disregarded the ITF Cruise Ship Model CBA presented by respondent for
lack of proof that petitioners were parties to such agreement. Further, there was no evidence
that respondent‘s illness resulted from an accident. The dispositive portion of the Decision
read:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the Complaint for lack
of merit.
However, in the interest of justice, this Arbitration Branch awards complainant US$3,000.00 as
financial assistance.
All other claims are likewise denied for want of any basis.
SO ORDERED.[17]
Records show that only respondent appealed from the Decision of the Labor Arbiter.
Petitioners did not appeal but instead filed an Opposition to Complainant‘s Request for
Payment of Financial Assistance.[18]
Proceedings before the National Labor Relations Commission
In a Decision[19] dated June 25, 2010, the NLRC found respondent‘s appeal meritorious. The
NLRC gave more weight to the medical certificate of Dr. Garduce which declared respondent
unfit to resume sea duties since petitioners never redeployed him for work despite the
company-designated physician‘s assessment of fitness to resume sea duties. The NLRC
ruled that permanent and total disability did not mean a state of absolute helplessness but
mere inability to perform usual tasks. The NLRC also held that the Certificate of Fitness is
akin to a release or quitclaim, which did not constitute a bar for respondent to demand what
was legally due him.
The NLRC found that respondent‘s injury was caused by an accident when his spinal column
cracked while lifting some heavy pipes; it thus awarded him total and permanent disability
benefits under the ITF Cruise Ship CBA. The dispositive portion of the Decision read:
WHEREFORE, premises considered, the assailed Decision rendered by Labor Arbiter Aliman D.
Mangandog dated September 29, 2009 is hereby REVERSED and SET ASIDE and a NEW ONE
ENTERED holding respondents liable to pay jointly and severally, complainant‘s claim for permanent
disability benefits in the sum of US$80,000.00 and US$576.00 as balance for sickness wages, plus
attorney‘s fees in the sum equivalent to 10% of the total judgment award.
SO ORDERED. [20]
Petitioners filed a motion for reconsideration on the grounds that the NLRC erred in granting
disability benefits under the alleged CBA and in awarding attorney‘s fees in the absence of a
finding of bad faith. This motion was, however, denied by the NLRC in a Resolution [21] dated
September 20, 2010.
Proceedings before the Court of Appeals
Petitioners filed a Petition for Certiorari with Application for the Issuance of a Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction to enjoin the enforcement and
execution of the NLRC judgment. In a Resolution[22] dated March 2, 2011, the CA denied
petitioners‘ prayer for a TRO.
The CA, in a Decision[23] dated January 20, 2012, dismissed petitioners‘ Petition
for Certiorari for lack of merit. The CA held that while it is the company designated physician
who is tasked under the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA-SEC) to assess the condition of the seafarer, his medical
report is not binding and may be disputed by a contrary opinion of another physician. The
CA went on to affirm the NLRC‘s reliance on the medical assessment of Dr. Garduce as it
was based not merely on respondent‘s physical examination but also after considering the
medical findings of Dr. Rabago.
Petitioners sought reconsideration of this Decision but was denied by the CA in its
Resolution[24] dated May 8, 2012.
Issues
Hence, petitioners filed the instant Petition, arguing that:
1. The Court of Appeals committed a serious error in law in affirming the award of
US$80,000.00 under the CBA. Respondent‘s employment has no overriding CBA.
2. The Court of Appeals committed serious error in holding that Respondent is entitled to
disability benefits. Respondent was declared FIT TO WORK by the company-
designated physician. The findings of the company-designated physician should be
given weight in accordance with the rulings of this Honorable Court in the cases
of Coastal Safeway Marine Services, Inc. v. Esguerra, G.R. No. 185352, 10 August
2011 and Allen Santiago vs. Pacbasin Shipmanagement, Inc. and/or Majestic Carriers,
Inc., G.R. No. 194677, 18 April 2012.
3. The Court of Appeals committed a serious error in law in ruling that respondent is
entitled to attorney‘s fees. The denial of private respondent‘s claims were based on
legal grounds and made in good faith.[25]
Petitioners maintain that the CA committed serious error in awarding respondent full
disability benefits despite the timely fit to work assessment of Dr. Rabago, which was
rendered after extensive treatment of respondent‘s condition, vis-a-vis the baseless opinion
and medical findings of Dr. Garduce that was rendered only after a single consultation.
Besides, probative weight should be given to the company-designated physician‘s
assessment as there was no third doctor appointed to properly dispute the same. Moreover,
the Certificate of Fitness to Work signed by respondent corroborated the fit to work
assessment of Dr. Rabago; therefore, respondent lacked any basis in claiming disability
benefits.
Petitioners also argue that there was no sufficient evidence to entitle respondent to disability
benefits in the amount of US$80,000.00 under an alleged CBA. The CBA presented was
merely a model CBA which was unsigned and unauthenticated. There was likewise no
concrete proof to support respondent‘s claim that his condition resulted from an accident as
to entitle him to claim benefits under the CBA‘s provisions.
Our Ruling
We find merit in the Petition.
No proof was presented to show that

respondent’s employment was covered
by the CBA.
We find that respondent failed to adequately prove that he was entitled to the benefits of an
alleged CBA he had presented. The ITF Cruise Ship Model Agreement For Catering
Personnel April 2003[26] presented by respondent bore no specific details as regards the
parties covered thereby, the effectivity or duration thereof, or even the signatures of
contracting parties. Records are bereft of evidence showing that respondent‘s employment
was covered by the supposed CBA or that petitioners had entered into any collective
bargaining agreement with any union in which respondent was a member.
There was likewise no evidence that an accident happened that caused respondent‘s injury.
There was no report in the crew illness log[27] dated September 2, 2008 that an accident
happened on board the vessel which resulted in respondent‘s back pain. It is basic that
respondent has the duty to prove his own assertions. And his failure to discharge the burden
of proving that he was covered by the CBA militates against his entitlement to any of its
benefits. As such, the NLRC and the CA had no basis in awarding respondent disability
benefits under the supposed CBA.
Respondent‘s entitlement to disability benefits is therefore governed by the POEA-SEC and

relevant labor laws which are deemed written in the contract of employment with petitioners.
Dr. Rabago’s fit to work assessment

prevails. Respondent is not entitled to
total and permanent disability benefits.
Section 20 B (3) of the POEA-SEC provides:
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
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.
It is clearly provided in the POEA-SEC that in order to claim disability benefits, it is the
company-designated physician who must proclaim that the seafarer suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of his
employment. If the doctor appointed by the seafarer makes a finding contrary to that of the
assessment of the company-designated physician, a third doctor may be agreed jointly
between the employer and seafarer whose decision shall be binding on both of them.
In Vergara v. Hammonia Maritime Services, Inc.,[28] the Court pronounced that while a
seafarer has 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 this agreed procedure. The
Court went on to emphasize that failure to observe this will make the company-designated
physician‘s assessment final and binding.
Upon repatriation on October 5, 2008, respondent‘s condition was medically evaluated and
treated by the company-designated physicians. Respondent was subjected to continuous
medical examination by Dr. Rabago, underwent surgery under the care of an orthopedic
specialist, and received physical therapy from a physiatrist. On December 17, 2008, Dr.
Rabago, the orthopedic surgeon, and the physiatrist assessed respondent fit to resume sea
duties. On February 25, 2009, respondent sought an independent opinion from Dr. Garduce
who assessed him to be unfit for sea duties. However, respondent did not refer these
conflicting assessments to a third doctor in accordance with the mandated procedure. In
fine, the company-designated physician‘s assessment was not effectively disputed; hence,
the Court has no option but to declare Dr. Rabago‘s fit to work declaration as final and
binding.
In any event, the Court finds Dr. Rabago‘s assessment to be credible considering his close
monitoring and extensive treatment of respondent‘s condition. His fit to work assessment
was supported by the findings of the orthopedic surgeon and physiatrist who both opined,
after making a thorough evaluation of respondent‘s condition, that respondent was already
physically fit to resume work without any restrictions. The extensive medical attention and
treatment given to respondent starting from his repatriation on October 5, 2008 until
December 17, 2008 were clearly supported by medical reports. In Dr. Rabago‘s initial
medical report[29] dated October 10, 2008, respondent was referred to an orthopedic
specialist for proper treatment and procedure. In a subsequent medical report [30] dated
November 7, 2008, respondent was evaluated after surgery and found to be recovering well
although complaining of some discomfort and pain which are common during post surgery.
Respondent was then referred to a physiatrist for rehabilitation. In a medical report[31] dated
December 12, 2008 significant improvement in respondent‘s condition was noted after a
series of physical therapy and rehabilitation. These medical reports confirmed that
respondent had already recovered from his injury after treatment by the specialists. On the
other hand, Dr. Garduce rendered a medical opinion after a singular examination of
respondent. His pronouncement of respondent‘s unfitness to resume sea duties and partial
disability impediment of Grade 3 was unsupported by adequate explanation as to how his
recommendations were arrived at.
Besides, Dr. Rabago‘s fit to work assessment was supported by the Certificate of Fitness to
Work signed by respondent. It bears to emphasize that respondent immediately caused the
execution of this waiver or release in favor of petitioners instead of disputing the fit to work
declaration of Dr. Rabago. We have held that not all waivers: and quitclaims are invalid as
against public policy.[32] Absent any evidence that any of the vices of consent is present, this
document executed by respondent constitutes a binding agreement and a valid waiver in
favor of petitioners.[33]
In fine, we find Dr. Rabago‘s fit to work assessment a reliable diagnosis of respondent‘s
condition and should prevail over Dr. Garduce‘s appraisal of respondent‘s disability. Dr.
Rabago‘s timely assessment, rendered within 120 days from respondent‘s repatriation,
which was not properly disputed in accordance with an agreed procedure, is considered final
and binding. The CA erred in awarding respondent his claim for permanent disability
benefits.
While the provisions of the POEA-SEC are liberally construed in favor of the well-being of
Filipino seafarers, the law nonetheless authorizes neither oppression nor self-destruction of
the employer. In any event, we sustain the Labor Arbiter‘s award of US$3,000.00 as financial
assistance in the interest of equity and compassionate justice. Besides, the same was not
properly assailed by the petitioners via an appeal to the NLRC. As such, the same had
attained finality and could no longer be questioned by petitioners.
WHEREFORE, the Petition is GRANTED. The January 20, 2012 Decision and May 8, 2012
Resolution of the Court of Appeals in CA-G.R. SP No. 117050 are REVERSED and SET
ASIDE. The September 29, 2009 Decision of Labor Arbiter Aliman D. Mangandog in NLRC-
NCR Case No. (M) NCR-03-03817-09 dismissing respondent‘s claim for disability benefits
and awarding US$3,000.00 as financial assistance is REINSTATED and AFFIRMED.
SO ORDERED.
31 JUL 2017 | JURISPRUDENCE | PONENTE | JUSTICE

CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND EMPLOYMENT | UNFAIR
LABOR PRACTICE
United Polyresins, Inc., Ernesto Uy Soon, Jr.

and/or Julito Uy Soon Vs. Marcelino Pinuela;
G.R. No. 209555; July 31, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the December 11, 2012 Decision[2] and
October 10, 2013 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 115402
which set aside the June 11, 2011 Decision[4]of the National Labor Relations Commission
(NLRC) in NLRC-LAC Case No. 06- 001577-09.
Factual Antecedents
Petitioner United Polyresins, Inc. (UPI) is a registered domestic corporation doing business
in San Pedro, Laguna, while petitioners Ernesto Uy Soon, Jr. and Julito Uy Soon are its
corporate officers.
Respondent Marcelino Pinuela was employed by UPI in 1987. He became a member of the
labor union, Polyresins Rank and File Association (PORFA), and was elected President
thereof in May, 2005 and slated to serve until the end of 2007.
The collective bargaining agreement (CBA) then existing between UPI and PORFA provided
that:
Section 3. The Company shall grant to the Union the amount of Three Hundred Thousand Pesos
(P300,000.00) free of interest as the union‘s capital for establishing a cooperative to meet the needs of
its members. Said loan shall fall due and become payable at the same date that this Bargaining
Agreement expires, to wit – December 31, 2007. In the event of non-payment, all officers and
members will be personally accountable. In case of additional funds, they can make a written request
[addressed] to the President of the company.[5]
The CBA likewise contained a union security clause which provided that employees who
cease to be PORFA members in good standing by reason of resignation or expulsion shall
not be retained in the employ of UPI.
Upon his assumption as union President, respondent wrote the former union President,
Geoffrey Cielo (Cielo), to turn over the records, papers, documents and financial statements
of the union. Cielo surrendered the union‘s bank account documents, among others, which
indicated that the union had an available P78,723.60 cash balance. Cielo likewise submitted
a Financial Report indicating that the union had P208,623.60 in cash and P159,500.00 in
receivables.
Finding that the bank documents and Cielo‘s report did not match, and Cielo unable to
explain the discrepancies, the union‘s Executive Committee, which was headed by
respondent, resolved to hire a certified public accountant to conduct an audit of the union‘s
finances. In a December 1, 2005 report, the accountant concluded that the union‘s finances,
income, and disbursements for the years 2003 and 2004 were not properly documented,
recorded, and reported. He recommended that the union officers ―take a seminar on basic
bookkeeping and accounting;‖[6] that the union adopt and/or install the necessary accounting
and internal control systems; that the union prepare the proper financial statements; and that
the officers take corrective measures in financial management as an integral part of sound
management.[7]
Meanwhile, during respondent‘s term as PORFA President, it appeared that UPI

automatically deducted from the respective salaries of PORFA members amounts
representing union membership dues and loan payments. These amounts, which totalled
P2,402,533.43, were then regularly turned over by UPI to PORFA in the form of fifty eight
(58) crossed checks, made payable to PORFA.[8] These amounts were then deposited and
credited to PORFA‘s account.[9]
On December 8, 2007, or several days before the P300,000.00 loan by UPI to PORFA
became due, petitioners, respondent, and the other union officers met to discuss the
proposed new CBA. Thereat, petitioners told respondent that until the P300,000.00 is
returned, the former shall not discuss the proposed CBA. Respondent explained that the
union did not have the finances and had only P78,723.60, which was the original amount
turned over by Cielo to respondent when the latter assumed office as union President.
Petitioners then told respondent and the other union officers that if the amount is not
returned, the same will be deducted from the salaries of the union members.[10]
On January 7, 2008, respondent filed a complaint before the National Conciliation and
Mediation Board (NCMB), claiming that petitioners refused to bargain collectively. During the
scheduled conferences before the NCMB, petitioners raised the issue of non-payment of the
P300,000.00 owing to UPI and insisted on its payment; they also threatened to deduct the
amount of P1,500.00 from the respective salaries of the union members.[11]
Because of the recurring threat of failed CBA negotiations and salary deductions as means
of recovering the P300,000.00 loaned to the union, union members began to demand the
holding of a special election of union officers. They likewise accused respondent and the
other union officers of mismanagement, unduly hanging on to their positions, and lack of
accountability.[12]
Thus, in March 2008, special elections were held, and a new union President and set of
officers were elected.[13]
On March 29, 2008, the union‘s new set of officers conducted an investigation into the fact
that the union had little or no funds remaining in its bank account. Respondent attended the
investigation, and admitted that the union had no more funds as they were ―utilized in the
prosecution of cases during his incumbency.‖[14] He likewise failed to make a formal turnover
of documents to the new President. Respondent was required to surrender union documents
in his possession on the next scheduled meeting.[15]
On April 8, 2008, another inquiry was held where respondent was present. The investigation
centered on respondent‘s continued failure to account for the union‘s bank accounts,
documents, and deposits made during his incumbency, and his failure to formally turn over
union‘s papers to the new officers. After the meeting, respondent and the new officers
proceeded to the bank, where they discovered that the PORFA account had already been
closed.[16]
On April 10, 2008, the new set of union officers issued a Resolution[17] expelling respondent
from PORFA for being guilty of the following violations:
1. No annual financial statement.
2. No listings or ledger of union member‘s [sic] emergency loans.
3. Unposted cheques on the Union‘s passbook collected from union members [sic]
monthly dues.
4. Our union checking account at Security Bank were [sic] Zero balance/closed
account.
5. No receipts/cash disbursement presented for the union operational [sic] expenses.
6. Unable to return the P300,000.00 lent by the management free of interest. (Art.
XXVII, Section 3 of our CBA).
7. Unable to explain and present documents to support where the agency fees and
union dues collected from legitimate union members were used.[18]
The officers held that these violations constituted an infringement of the union‘s Constitution,
particularly Article XV, Section 1, paragraphs (e) and (f) thereof, which specifically prohibit
the misappropriation of union funds and property and give ground for the impeachment and
recall of union officers.[19]
In an April 11, 2008 letter[20] to petitioners, PORFA communicated respondent‘s expulsion

from the union.
On April 14, 2008, petitioners issued a letter of termination[21] to respondent, to take effect
immediately.
Respondent filed a complaint against petitioners before the Labor Arbiter for illegal
dismissal, with monetary claims and damages, which was docketed as NLRC Case No.
RAB-IV-08-27303-08-L. He claimed that his dismissal was effected in bad faith and without
due process and was thus illegal. Petitioners countered that respondent‘s dismissal is valid
under the union security clause of the CBA; that his failure to return the P300,000.00 loan to
the union due to mismanagement/misappropriation constitutes just cause for his expulsion
from the union, as well as dismissal from employment; that he was accorded substantive
and procedural due process; that the herein individual petitioners may not be held liable for
respondent‘s claims; and that accordingly, the case should be dismissed.
On April 20, 2009, the Labor Arbiter issued a Decision[22] dismissing respondent‘s complaint
on the finding that respondent was not illegally terminated, thus:
While complainant, as then Union President, denies any misappropriation of union funds, it is
undisputed that he failed to account for the missing union funds and to return the P300,000.00 which
the respondent company had lent for the union‘s assistance upon the expiration of the CBA dated
December 31, 2007.
More importantly, in the investigation conducted by the newly elected officers of the union, it was
uncovered that union funds were in fact personally used by the former officers of PORFA which
includes complainant.
Thus, the union passed a resolution expelling complainant from the PORFA union and the
corresponding letter was sent to the respondent company informing the latter of complainant‘s
expulsion coupled with a recommendation that complainant be terminated from employment pursuant
to the union security clause of the CBA.
Given the foregoing, we rule that complainant was validly dismissed since the respondent company
merely did its obligation under the CBA by terminating the services of complainant who ceased to be
a member in good standing of the PORFA union by reason of expulsion.
WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant

complaint for lack of merit.
SO ORDERED.[23]
Respondent appealed before the NLRC, which initially overturned the Labor Arbiter in a
December 8, 2009 Decision,[24] which decreed as follows:
WHEREFORE, the assailed Decision is hereby SET ASIDE and a NEW one is entered declaring the
complainant-appellant‘s dismissal to be illegal. Respondents Union [sic] and respondent company are
hereby declared jointly and severally liable to pay complainant his full backwages from the date he
was dismissed until date instant [sic] and to pay his separation pay equivalent to one month salary per
year of service computed as follows:
BACKWAGES
04/14/08 – 10/14/09
P396 x 26 days x 18 mos.
P10,296.00 x 18 days = P185,328.00
SEPARATION PAY
P396.00 x 26 x 22yrs.
P10,296 x 22yrs. = P226,512.00
13th Month Pay

P185,328.00 / 12 = P15,444.00
Grand Total P427,284.00
SO ORDERED.[25]
However, on motion for reconsideration, the NLRC issued its June 11, 2011 Decision, which
held as follows:
What cannot escape from [sic] our attention and consideration are the following: (1) there was an
obligation x x x to return the amount of P300,000.00 to the respondent upon termination of the CBA
on December 31, 2007, (2) complainant, as the President of the Union at the time the loan was due
and demandable, failed to account for said funds, and under the same provision, was to be held
personally accountable, (3) Pinuela actually participated x x x in the whole process of determining
accountability over the union funds, (4) denied knowledge over and receipt of the missing funds,
despite his being among those charged with its custody and safe-keep, as the Union President.
It is also to be noted that the complainant as union president, could not explain nor comment on the
fact that their union‘s bank account is already a closed account. Even if We assume and in fact
complainant admitted that he had custody of P78,723.60 as union funds as of June 3, 2005, still he
could not account the whereabouts of the said money. As a signatory to the said account, complainant
cannot be considered as entirely faultless since he was grossly negligent in the custody of the funds.
There is substantial basis in complainant‘s dismissal thus, the award of backwages and 13th month pay
should be deleted. However, even if We find complainant‘s dismissal to be valid, there is equally no
evidence showing that he pocketed the missing funds of the union. In this regard since he had
rendered a considerable number of years in the service (21 years) complainant may be awarded
separation pay at the rate of 1/2 month salary for every year of service (396 x 13 x 21 years) from the
inception of his employment till his dismissal in the interest of justice and compassion since his
infraction did not involve serious misconduct.
Further, We also hold that while complainant‘s dismissal was valid pursuant to the enforcement of the
Union Security Clause, respondents however did not comply with the requisite procedural due
process. As held in the case of Agabon vs. NLRC, x x x the Supreme Court held that where the
dismissal is for a cause recognized by the prevailing jurisprudence, the absence of the statutory due
process should not nullify the dismissal or render it illegal x x x. Accordingly, for violating
complainant‘s statutory rights, respondents should indemnify him the amount of P30,000.00 as
nominal damages in addition to his separation pay.
WHEREFORE, premises considered, respondents-appellees‘ Motion for Reconsideration is

GRANTED, a new Decision is rendered finding complainant‘s dismissal as valid. Respondents-
appellees are however ordered to pay complainant the amounts of P108,108.00 and P30,000.00 as
separation pay and nominal damages.
All other claims whether monetary or otherwise are hereby DISMISSED.
SO ORDERED.[26]
In a Petition for Certiorari[27] before the CA and docketed as CA-G.R. SP No. 115402,
respondent sought to reverse the above NLRC Decision and reinstate its December 8, 2009
Decision, arguing that the Commission gravely erred in concluding that he was personally
accountable for the missing funds, the closing of PORFA‘s bank account, and that he was
grossly negligent in the custody of the union funds. In their Comment,[28] petitioners
countered that respondent‘s dismissal was attended by due process; that he is guilty of the
infractions for which he was dismissed; and that his guilt had been proved by substantial
evidence.
On December 11, 2012, the CA issued the assailed Decision containing the following
pronouncement:
Petitioner insists that he is innocent of the charges against him made by the PORFA (the union),
particularly the embezzlement of the union funds. He vehemently denied misappropriation of the
same and that the PORFA Union officers conspired with the Respondents in removing him as a
member in good standing of the said union and his subsequent dismissal as employee pursuant to the
CBA‘s union security clause.
Respondents on the other hand, denied the Petitioner‘s allegation of conspiracy and that in fact, there
was a series of conferences conducted jointly by the management and the union on the matter of lost
union funds and that the Petitioner was made aware of the charges against him before he was
terminated. They claim that the management participated in the investigations and that it was shown
that even if the Petitioner as president of the union did not misappropriate the funds nevertheless he
committed omission/gross negligence for which reason he was expelled therefrom. The Respondents
also claim that Petitioner was accorded procedural due process during the investigations.
It is basic in labor jurisprudence that the burden of proof rests upon management to show that the
dismissal of its worker was based on a just cause. When an employer exercises its power to terminate
an employee by enforcing the union security clause, it needs to determine and prove the following: (1)
the union security clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union
to expel the employee from the union.
The dispute before Us does not raise any issue with respect to the first two requisites; the issue being
whether there was sufficient evidence to support Petitioner‘s expulsion from PORFA. In arriving at
any conclusion thereto, the Petitioner must first be accorded due process of law. x x x
xxxx
On both questions of whether there exist[s] sufficient evidence to support Petitioner‘s expulsion from
the union (substantive due process), and whether Petitioner was properly informed of the accusation
against him and his dismissal from employment (procedural due process), We answer in the negative.
An examination of the submitted evidence before the Labor Arbiter show [sic] that the same are not
enough to prove the alleged charges of misappropriation against the Petitioner and neither was he
properly informed thereof.
xxxx
On the other hand, the Petitioner have [sic] shown adequate explanation about the funds of the union
that came to his possession. The Memorandum of Ramon M. Martinez, a Certified Public Accountant,
show [sic] that he made an audit of the funds of the union during the previous administration and that
the actual funds the union had was merely P34,344.25 when Petitioner took over. This amount was
not even shown to have been misappropriated by the Petitioner.
Compounding this want of substantive evidence is the lack of procedural due process that Petitioner
was entitled to. As [has] been previously discussed, the Petitioner was not given the proper first
notice. Thereafter, despite such lack of first notice, on the mere letter of the union that he was
expelled therefrom because of alleged causes, the Petitioner was dismissed from employment by the
Respondents in the termination letter dated 14 April 2008 on the sole basis of union security clause.
Such action cannot be countenanced. In the same Inguillo case, the Supreme Court also ruled:
‗Thus, as held in that case, ‗the right of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the company or his own Union
is not wiped away by a Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards his
rights but also from his own Union, the leadership of which could yield to the temptation of swift and
arbitrary expulsion from membership and mere dismissal from his job.‘
In sum, the NLRC gravely abused its discretion in reconsidering its earlier Decision which is more in
accord with the evidence on record.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated 11 June 2010[29] is
hereby SET ASIDE. The Decision dated 8 December 2009 is REINSTATED with the
MODIFICATION that the backwages shall be recomputed from the date of Petitioner‘s dismissal to
the finality of this Decision.
SO ORDERED.[30] (Citations omitted)
Petitioners filed a Motion for Reconsideration,[31] which was denied by the CA in its October
10, 2013 Resolution. Hence, the instant Petition.
Issues
In a June 22, 2015 Resolution,[32] the Court resolved to give due course to the Petition, which
contains the following assignment of errors:
I. THE APPELLATE COURT ERRED IN RULING THAT THE CHARGES OF

MISAPPROPRIATION AGAINST THE RESPONDENT WERE INSUFFICIENT
(SUBSTANTIVE DUE PROCESS)
II. THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT WAS
NOT PROPERLY INFORMED OF THE CHARGES AGAINST HIM (PROCEDURAL
DUE PROCESS).
III. THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT IS
ENTITLED TO SEPARATION PAY, BACKWAGES FROM DISMISSAL TO THE
FINALITY OF ITS DECISION, AND 13TH MONTH PAY.[33]
Petitioners’ Arguments
Praying that the assailed CA dispositions be set aside and that respondent‘s case be
dismissed instead, petitioners maintain in their Petition and Reply[34] that substantive and
procedural due process were observed in respondent‘s case; that respondent was apprised
of the charges against him and given the opportunity to refute them; that the evidence points
to the conclusion that he misappropriated the union‘s funds and was unable to explain the
dissipation thereof; that for what he has done, respondent violated Article XV, Section 1,
paragraphs (e) and (f) of the union‘s Constitution; that respondent‘s dismissal on the basis of
the union security clause in the CBA was thus valid, based on substantial proof, and in
accord with the pronouncement in Cariño v. National Labor Relations Commission,[35] where
the dismissal of an employee was upheld on the basis of the union security and expulsion
clauses contained in the CBA; and that since his dismissal is valid, then he is not entitled to
his monetary claims.
In his Comment,[36] respondent maintains that the CA did not err in finding that the evidence
against him was insufficient; that the CA was correct in ruling that his right to procedural due
process was violated when he was not properly informed of the charges against him; and
that for these reasons, he was illegally dismissed and thus entitled to his monetary claims.
Our Ruling
The Court denies the Petition.
Respondent‘s expulsion from PORFA is grounded on Article XV, Section 1, paragraphs (e)
and (f) of the union‘s Constitution, which provides:
ARTICLE-XV
IMPEACHMENT AND RECALL
Section 1. Any of the following shall be ground for the impeachment or recall of the union officers.
a. Committing or causing the commission directly or indirectly of acts against the interest and
welfare of the union;
b. Malicious attack against the union, its officers or against a fellow union officer or member;
c. Failure to comply with the obligation to turn over and return to union treasurer within three (3)
days unexpanded [sic] sum of money received from the money funds to answer for an authorized
union purpose;
d. Gross misconduct unbecoming of a union officer;
e Misappropriation of union funds and property. This is without prejudice to the filing of an
appropriate criminal or civil action against the responsible officer/(s) by any interested
party;
f. Willful violation of any provision of the constitution or rules, regulations, measures,

resolution(s) and decision of the union.[37] (Emphasis supplied)
However, these provisions refer to impeachment and recall of union officers, and not
expulsion from union membership. This is made clear by Section 2(e) of the same Article
XV, which provides that ―(t)he union officers impeached shall ‗IPSO FACTO‘ to [sic] be
considered resigned or ousted from office and shall no longer be elected nor appointed to
any position in the union.‖ In short, any officer found guilty of violating these provisions shall
simply be removed, impeached or recalled, from office, but not expelled or stripped of union
membership.
It was therefore error on the part of PORFA and petitioners to terminate respondent‘s
employment based on Article XV, Section 1, paragraphs (e) and (f) of the union‘s
Constitution. Such a ground does not constitute just cause for termination.
A review of the PORFA Constitution itself reveals that the only provision authorizing removal
from the union is found in Article X, Section 6, that is, on the ground of failure to pay union
dues, special assessments, fines, and other mandatory charges.[38] On the other hand,
grounds for disqualification from membership may be found in Article IV, which states that-
Section 3. The following are not eligible neither [sic] for membership nor to election or appointment
to any position in the union:
1. Subversive or persons who profess subversive ideas.
2. Persons who have been convicted of crime involving moral turpitude.
3. Persons who are not employees of the company.[39]
These provisions do not apply in respondent‘s case. Although he was eventually charged
with estafa,[40] a crime involving moral turpitude,[41] still, he has not been convicted of the
crime. For this reason, he may not be disqualified as union member.
Thus, for what he is charged with, respondent may not be penalized with expulsion from the
union, since this is not authorized and provided for under PORFA‘s Constitution.
Contrary to petitioners‘ claim, Cariño v. National Labor Relations Commission is not

applicable here. In that case, the employee was terminated on the basis
of existing suspension and expulsion provisions contained in the CBA and rules on
discipline found in the union‘s Constitution. There are no such provisions in PORFA‘s
Constitution; neither has it been shown that there are similar stipulations in the parties‘ CBA.
The matter of respondent‘s alleged failure to return petitioners‘ P300,000.00 which was lent
to PORFA is immaterial as well. It may not be used as a ground to terminate respondent‘s
employment; under the Labor Code, such a contribution by petitioners to PORFA is illegal
and constitutes unfair labor practice.
ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit
any of the following unfair labor practice:
xxxx
(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;[42] (Emphasis supplied)
This could be an opportune time for the union to consider amending its Constitution in order
to provide for specific rules on the discipline of its members, not just its officers. After all, it is
given the right under the Labor Code, ―to prescribe its own rules with respect to the
acquisition or retention of membership.‖[43] But it may not insist on expelling respondent from
PORFA and assist in his dismissal from UPI without just cause, since it is an unfair labor
practice for a labor organization to ―cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or to terminate an employee on any
ground other than the usual terms and conditions under which membership or continuation
of membership is made available to other members.‖[44]
On account of the foregoing disquisition, the other issues raised by the parties need not be
discussed.
WHEREFORE, for the foregoing reasons, the Petition is hereby DENIED. The December 11,
2012 Decision and October 10, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
115402 are AFFIRMED.
SO ORDERED.

COURT | SUBJECT | LABOR AND
EMPLOYMENT | TERMINATION BY EMPLOYER
Vigel Dave Japos Vs. First Agrarian Reform

Multi-Purpose Cooperative (FARMCOOP)
and/or Crislino Bagares; G.R. No. 208000;
July 26, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari (With Supplemental Allegations In Support Of The
Application To Litigate As An Indigent)[1] assails the July 29, 2011 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 03319-MIN which reversed and set aside the August 27,
2009 and October 15, 2009 Resolutions[3] of the National Labor Relations Commission
(NLRC) in NLRC Case No. MAC-09-010462-08, and the CA‘s subsequent September 18,
2012 Resolution[4] denying herein petitioner‘s Motion for Reconsideration.[5]
Factual Antecedents
Respondent First Agrarian Reform Multi-Purpose Cooperative (FARMCOOP) is a registered

domestic cooperative doing business in Kisolon, Sumilao, Bukidnon as a banana contract
grower for DOLE Philippines, Inc. Respondent Crislino Bagares is FARMCOOP‘s
chairman/executive officer.
Petitioner Virgel Dave Japos was employed by FARMCOOP in 2001 as gardener. Under
FARMCOOP‘s Personnel Policies and Procedures,[6] it is provided that:
11. Absences
In order not to disrupt the operations due to absences, prior authorization or permission from the
immediate superior must be secured. A Personnel Leave Authority (PLA) form must be properly
filled up/[sic]approved to be submitted to the Personnel Section. The immediate superior shall have
the discretion to allow or [disapprove] leave applications depending on the work/activity schedules at
the particular time. However, leave of absence for any personal reason may be granted up to a
maximum of 20 days only for every year, subject to our disciplinary action policies.
xxxx
14. Attendance and Punctuality

The Cooperative expects all its members and non-members to be in their work place regularly and at
the time designated in the schedule.
Note: AWOL[7] RULE
An employee/worker is subject to disciplinary action if he/she incures [sic] the following

COMMULATIVE [sic] ABSENCES:
xxx
1st Offense -Written Warning
2nd Offense – 1 to 7 days suspension (Notice shall be prepared by Personnel)
3rd Offense – 8 to 15 days suspension (Notice shall be prepared by Personnel)
4th Offense – DISMISSAL
xxxx
1. ATTENDANCE
1. UNAUTHORIZED LEAVE OF ABSENCE
An employee who wants to be absent from work must seek previous approval from his/her supervisor
by applying for leave using the prescribed [form] for application for leave.
An employee/worker is subject to discharge if he/she incurs six (6) or more absences without
permission within one employment year.
FIRST INFRACTION – suspension 1 to 7 days

SECOND INFRACTION- suspension 8 to 15 days
THIRD INFRACTION – dismissal
Note: AWOP[8] RULE
An employee is subject to disciplinary action if he/she incurs the following CONSECUTIVE

ABSENCES:
xxx
First three (3) days – Written Warning
4th day – 1 to 7 days suspension (Notice shall be prepared by Personnel)

5th day – 8 to 15 days suspension (Notice shall be prepared by Personnel)
6th day – DISMISSAL[9]
During his stint with FARMCOOP, petitioner incurred the following absences:[10]
1. May 2-15, 2003 – which is covered by a Medical Certificate dated May 16, 2003;
2. December 18-27, 2003 – for which no doctor‘s certificate was submitted;
3. January 26, 2005 – absence without permission, for which petitioner was issued a
Written Warning dated January 28, 2005;
4. February 28, 2005 – absence without permission, for which petitioner was issued a
2nd Written Warning dated March 2, 2005;
5. May 24, 2005- absence without permission, for which petitioner was issued a Last
Warning dated June 9, 2005; and
6. June 22-28, 2005 – absence without permission, but which is supposedly covered
by a Medical Certificate[11]issued on July 7, 2005 by a certain Dr. Carolyn R. Cruz
(Dr. Cruz), Medical Officer IV of the Philhealth Center, certifying that petitioner was
diagnosed and given treatment for respiratory tract infection, although the
document did not indicate the period during which petitioner was ill, diagnosed, or
had undergone treatment.
With regard to his June 22-28, 2005 absences, petitioner received on June 28, 2005 an
inter-office memorandum[12]giving him until July 4, 2005 to explain the same in writing. On
June 30, 2005, he personally submitted his signed written explanation[13] of even date, which
states, in part:
SIR, MADAM,
SORRY, I WAS NOT ABLE TO REPORT ON JUNE 22, 2005 UNTIL NOW BECAUSE I‘M
SUFFERING ENFLUENZA [sic]. I‘M SORRY IF I DIDN‘T REPORT TO THE OFFICE FOR
FILLING [sic] LEAVE.
HOPING FOR YOUR KIND CONSIDERATION OF THIS MATTER.[14]
On July 5, 2005, petitioner reported back to work, but he was not admitted by FARMCOOP
as he did not present a medical certificate. It was only on July 7, 2005 that petitioner was
able to secure Dr. Cruz‘s Medical Certificate and submit the same to his employer. Also, on
July 5, 2005, FARMCOOP issued a Notice of Termination[15] informing petitioner that effective
July 6, 2005, his employment would be terminated.
On July 8, 2005, petitioner submitted a Personnel Leave Authority Application Form[16] of

even date, which was not acted upon by FARMCOOP as petitioner was already considered
dismissed as of July 6, 2005. In said application, petitioner sought approval of his
leave/absence from June 22 to July 7, 2005.
On February 6, 2008, petitioner filed a complaint against respondents before the Labor
Arbiter for illegal dismissal, separation pay, underpayment of salaries, and other monetary
claims, which was docketed as NLRC Case No. RAB 10-02-00116-2008. He claimed that his
dismissal was effected without due process and, thus, illegal.
On July 21, 2008, the Labor Arbiter issued a Decision[17] finding that petitioner was legally
terminated for the unauthorized June 22-28, 2005 absences. He ruled that petitioner was
dismissed for cause; that petitioner‘s past infractions, his unauthorized January 26, February
28, and May 24, 2005 absences for which written warnings were issued against him, were
justifiably considered by FARMCOOP in arriving at the decision to dismiss petitioner; that
procedural due process was observed by respondents; and that petitioner failed to prove
that he is entitled to monetary claims, except for wage differential. Thus, the Labor Arbiter
ruled:
WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the respondent FCI-
FARM Coop., Inc. [sic] to pay the complainant in the sum of P8,739.00 representing wage differential
plus 10% of the total award in the sum of P873.90 representing attorney‘s fees.
SO ORDERED.[18]
Ruling of the National Labor Relations Commission Petitioner appealed before the
NLRC which overturned the Labor Arbiter. In its August 27, 2009 Resolution in NLRC Case
No. MAC-09- 010462-08, it ruled as follows:
The complainant being able to present a Personnel Leave Authority and a Medical Certificate for his
absences on June 22 to July 5, 2005, his termination from employment cannot be said to be justified.
While the Labor Arbiter is correct in citing and we quote:
‗Generally, absences, once authorized or with prior approval of the employer, irrespective of length
thereof, may not be invoked as ground for termination of employment. Consequently, dismissal of an
employee due to his prolonged absence with leave by reason of illness duly established by the
presentation of a medical certificate, is not justified x x x. however [sic], unauthorized absences or
those incurred without official leave, constitute gross and habitual neglect in the performance of work
x x x.‘
We cannot sustain his conclusion that ‗complainant was dismissed for a valid cause and after
observance of due process.‘ The Labor Arbiter should have followed the doctrine laid down in the
case of Oriental Mindoro Electric Cooperative, Inc. v. NLRC and not that of Cando v.
NLRC considering that a Personnel Leave Authority and a Medical Certificate was [sic] submitted by
the complainant. The prolonged absence of complainant cannot be construed as abandonment of work
when said absences was [sic] due to a justifiable reason.
The fact that, in complainant‘s July 7, 2005 medical certificate, he was diagnosed to have ―acute
respiratory tract infection‖ while in his letter of explanation dated June 30, 2005, complainant
mentioned ―influenza‖ should not militate against him. Complainant is not a medical practitioner as to
be in a position to know how to diagnose his illness. The date of medical certificate, July 7, 2005, is
likewise of no serious concern since it merely refers to the date when said medical certificate was
executed and not to the date complainant was ill.
In fine, we find the complainant‘s dismissal illegal.
WHEREFORE, premises considered, the appealed Decision is hereby REVERSED and VACATED,
except as regards the award of wage differentials, and a new one is entered declaring the dismissal of
complainant as ILLEGAL. Consequently, respondent is hereby ordered to forthwith reinstate
complainant to his former or equivalent position without loss of seniority rights and other privileges
and to pay his full backwages, inclusive of allowances and to his other benefits or its [sic] monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
The respondent is likewise ordered to pay complainant‘s attorney‘s fees equivalent to ten (10%)
percent of the total awards herein granted.
The Regional Arbitration Branch is hereby directed to cause the computation of the awards granted in
this Resolution.
The award of wage differentials granted in the appealed decision stays.
SO ORDERED.[19] (Citations omitted)
Respondents moved to reconsider,[20] but the NLRC stood its ground.
In a Petition for Certiorari[21] filed with the CA and docketed as CAG.R. SP No. 03319-MIN,
respondents sought to reverse the above dispositions of the NLRC and reinstate the Labor
Arbiter‘s July 21, 2008 Decision, arguing that the NLRC committed grave abuse of discretion
ruling that petitioner was illegally dismissed and was entitled to his money claims; that the
NLRC wrongly appreciated the evidence and the facts; that the medical certificate submitted
by petitioner, which stated that petitioner was diagnosed and treated for respiratory tract
infection, could not be given credence because it conflicted with petitioner‘s own claim that
he was sick with influenza; that petitioner‘s supposed illness was an obvious fabrication to
cover up for his unauthorized absences; that the medical certificate was of doubtful veracity;
and that overall, petitioner‘s case was not covered by substantial evidence.
Petitioner submitted his Comment,[22] wherein he argued that the NLRC committed no error;
that it would be absurd under FARMCOOP‘s rules and policies to require an employee to
submit a Personnel Leave Authority prior to contracting illness when it could not be known or
planned precisely when he might get sick; that his past infractions could not be used to
justify the penalty of dismissal since he was penalized therefor with mere warnings, thus, the
penalty for the latest infraction should have been mere suspension only and not dismissal;
and that the penalty of dismissal was not commensurate to his infraction, which did not
involve moral turpitude nor gross misconduct.
On July 29, 2011, the CA issued the assailed Decision containing the following
pronouncement:
We find the dismissal of private respondent Japos valid.

For an employee‘s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the
employee must be afforded due process.
In the case at bench, records indubitably show that Japos incurred several absences without authority
or permission from his immediate supervisor even before he was terminated from service in violation
of FARMCoop‘s policy. Records likewise show that FARMCoop was quite lenient and considerate to
Japos as he was not penalized for his previous unauthorized absences despite its policy providing for
the suspension and dismissal of its employee in case of infraction thereto. In fact, before he was
terminated and despite his unauthorized absences he was only served with written warnings instead of
immediate suspension. FARMCoop‘s policy further provides that if an employee incurs six (6) or
more absences without permission within one (1) employment year, the employee could be validly
dismissed from employment. In the year 2005, and prior to his dismissal, he already incurred three (3)
unauthorized absences where he was served with three (3) written warnings with a warning that
should he incur further unauthorized absences, the same would be dealt with seriously. Nonetheless,
despite said warning, he was again absent for more than six (6) consecutive days from June 22, 2005
until he reported back to work on July 5, 2005 allegedly for being sick with influenza without any
medical certificate to substantiate the same. It was only on July 7, 2005 when he submitted a medical
certificate dated on even date certifying that he was examined and found to have acute respiratory
tract infection.
It should be emphasized however, that the said medical certificate did not indicate the period within
which he was examined by the physician and the period he was to rest due to his illness. It fails to
refer to the specific period of his absences. It should likewise be emphasized that in the absence of
evidence indicating that he was indeed sick before the date stated in the medical certificate, his
alleged sickness/illness ought not be considered as an excuse for his excessive absences without leave.
In the case of Filflex Industrial & Manufacturing Corp. vs. NLRC, the Supreme Court ruled that if the
medical certificate fails to refer to the specific period of the employee‘s absence, then such absences
are not supported by competent proof and hence, unjustified.
Corollarily, under Article 282(b) of the Labor Code, gross and habitual neglect of duty by the
employee of his duties is a just cause for the termination of the latter‘s employment. Settled is the rule
that an employee‘s habitual absenteeism without leave, which violated company rules and regulation,
is sufficient to justify termination from the service. In the case of R.B. Michael Press vs. Galit, it was
ruled that habitual tardiness and/or absenteeism is a form of neglect of duty as the same exhibit the
employee‘s deportment towards work and is therefore inimical to the general productivity and
business of the employer. This is especially true when the tardiness and/or absenteeism occurred
frequently and repeatedly within an extensive period of time. In the instant case, Japos failed to refute
and controvert the fact of his habitual absenteeism. Instead, he admitted his absences though he tried
to justify the same by belatedly submitting a medical certificate. Unfortunately, said medical
certificate did not help his case.
Moreover, it should be noted that Japos‘ previous infractions, past and present absences considered,
can be used collectively by petitioner as a ground for his dismissal. As held in a case, ‗[P]revious
infractions may be used as justification for an employee‘s dismissal from work in connection with a
subsequent similar offense.‘
Furthermore, in the case of Valiao vs. Court of Appeals, the Supreme Court ratiocinated that:
xxxx
x x x Petitioner‘s repeated acts of absences without leave and his frequent tardiness reflect his
indifferent attitude to and lack of motivation in his work. More importantly, his repeated and habitual
infractions, committed despite several warnings, constitute gross misconduct unexpected from an
employee of petitioner‘s stature. This Court has held that habitual absenteeism without leave
constitute gross negligence and is sufficient to justify termination of an employee.‘
Thus, private respondent Japos was validly dismissed for a cause.
Anent the requirement of due process, we find that Japos was afforded the same. Law and
jurisprudence require an employer to furnish the employee two written notices before termination of
his employment may be ordered. The first notice must inform him of the particular acts or omissions
for which his dismissal is sought; the second, of the employer‘s decision to dismiss the employee after
he has been given the opportunity to be heard and defend himself.
In the case at bench, records show that the first notice requirement was complied with by FARMCoop
when prior to his termination, an interoffice memorandum was sent to him asking him to explain in
writing why he was absent. It should be noted however that this notice was sent to Japos after he was
already warned three (3) times in writing that a similar offense in the future would be dealt with
severely. On July 30, 2005 he submitted his written explanation but FARMCoop found it implausible
and without basis as he failed to substantiate his allegation that he was sick.
Corollarily, the second notice requirement was again complied with when FARMCoop sent another
notice to Japos informing him of his termination. Consequently, private respondent and his father sent
a letter to FARMCoop‘s BOD questioning private respondent‘s termination. In a letter dated August
8, 2005 the BOD explained to Japos why he was terminated. Hence, we hold that such notices sent to
Japos and the opportunity to thereafter assailed [sic] his termination before the FARMCoop‘s BOD
satisfy the due process requirement.
It should be stressed that the essence of due process lies simply in an opportunity to be heard, and not
that an actual hearing should always and indispensably be held. Even if no hearing or conference was
conducted, the requirement of due process had been met since private respondent was accorded a
chance to explain his side of the controversy.
Finally, notice and hearing in termination cases does [sic] not connote full adversarial proceedings as
elucidated in numerous cases decide [sic] by the Supreme Court. In a case, it was held that due
process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one‘s side or an opportunity to seek a reconsideration of the action or ruling
complained of. A formal or trial-type hearing is not at all times and in all instances essential, as the
due process requirements are satisfied where the parties are afforded fair and reasonable opportunity
to explain their side of the controversy at hand. What is frowned upon is the absolute lack of notice
and hearing.
Thus, in this case, private respondent Japos was given ample opportunity to be heard, and his
dismissal was based on valid grounds.
WHEREFORE, premises considered, the petition is GRANTED. The assailed Resolutions dated
August 27, 2009 and October 15, 2009 of the National Labor Relations Commission are hereby
REVERSED and SET ASIDE. The Decision dated July 21, 2008 of the Labor Arbiter is
REINSTATED.
SO ORDERED.[23] (Citations and emphases omitted)

Petitioner filed his Motion for Reconsideration, which was denied by the CA in its September
18, 2012 Resolution. Hence, the instant Petition.
In a July 15, 2013 Resolution,[24] this Court granted petitioner‘s application to litigate as an
indigent. And in June 15, 2015 Resolution,[25] the Court resolved to give due course to the
Petition.
Issues
Petitioner claims that:
FIRST
THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING AND SETTING ASIDE THE
RESOLUTIONS OF THE NATIONAL LABOR RELATIONS COMMISSION AS THE
DISMISSAL OF THE PETITIONER WAS ILLEGAL FOR FAILURE OF THE RESPONDENT TO
ESTABLISH JUST CAUSE.
SECOND
GRANTING, ARGUENDO, THAT THE PETITIONER WAS LIABLE IN SOME RESPECT, THE
COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE APPLICATION OF THE
PENALTY OF DISMISSAL AS A LESS GRAVE PENALTY WOULD HAVE BEEN MORE
APPROPRIATE UNDER THE CIRCUMSTANCES.[26]
Praying that the assailed CA dispositions be set aside and the NLRC dispositions be
reinstated instead, petitioner maintains in his Petition and Reply[27] that the CA should not
have disregarded Dr. Cruz‘s July 7, 2005 Medical Certificate; that the CA‘s reliance on Filfex
Industrial & Manufacturing Corporation v. National Labor Relations Commission[28] is
misplaced because the declaration therein, to the effect that if the medical certificate fails to
refer to the specific period of the employee‘s absence, then such absence is not supported
by competent proof, is mere obiter dicta, and thus not persuasive; that throughout the
proceedings, respondents did not dispute the fact that he was ill during the period covering
June 22-28, 2005; that there is no valid cause to fire him, as he was able to prove his illness
through the documentary evidence he submitted; and that even assuming that he was liable
for his absences, the dismissal was not the proper penalty, but rather suspension instead.
In their joint Comment,[29] respondents maintain that the Petition raises factual issues which
are not the proper subject of a current remedy sought; that, as correctly held by the CA, the
medical certificate in issue is not credible evidence that may be considered to justify
petitioner‘s June 22-28, 2005 absences; and that petitioner‘s plea for a lesser penalty is
unavailing, considering that in the past, he was treated with considerable leniency, yet in
spite of this, he continues to flout the cooperative‘s policies and regulations.
Our Ruling
First off, it must be noted that there is no issue relative to the observance of procedural due
process; while it has been raised during the proceedings below, it was not made an issue in
the present Petition. Petitioner merely questions the propriety of his dismissal on the ground
of excessive unauthorized absences; he argues that his June 22-28, 2005 absences are
excusable as they are justified by his illness, which in turn was duly proved by substantial
evidence. On the other hand, respondents contend that petitioner‘s illness is fabricated, as is
the documentary evidence presented to support it.
The evidence shows that prior to his June 22-28, 2005 absences, petitioner already incurred
several unauthorized absences for 2005, specifically on January 26, February 28, and May
24, 2005, for which written warnings were issued against him. While FARMCOOP opted not
to penalize petitioner with suspension for the February 28 and May 24 absences, as
mandated under the AWOL and AWOP Rules of FARMCOOP‘s Personnel Policies and
Procedures, this does not take away the fact that these prior absences are nonetheless
infractions – three in all, to be exact. This being the case, petitioner‘s June 22-28, 2005
absences become significant because if it is found to be unauthorized and thus inexcusable;
it would constitute a fourth infraction which merits the penalty of dismissal under the AWOL
Rule, as well as an infraction that merits dismissal under the AWOP Rule, for being an
unauthorized absence of at least six consecutive days.
The Court agrees with the CA‘s pronouncement that Dr. Cruz‘s July 7, 2005 Medical
Certificate does not constitute reliable proof of petitioner‘s claimed illness during the period
June 22-28, 2005. The said document states, as follows:
MEDICAL CERTIFICATE
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that I, the undersigned, personally saw and examined Virgilio Japos, 22 y/o, of LF,
Impasugong, Bukidnon and I found him to have acute respiratory tract infection. He was given medication.
THIS CERTIFICATION is issued this 7th day of July 2005 at Impasugong, Bukidnon.
(signed)
CAROLYN R. CRUZ, MD
Medical Officer IV[30]
The certificate does not indicate the period during which petitioner was taken ill. It does not
show when he consulted with and was diagnosed by Dr. Cruz. And it does not specify when
and how petitioner underwent treatment, and for how long. Without these relevant pieces of
information, it cannot be reliably concluded that indeed, petitioner was taken ill on June 22-
28, 2005. All that can be assumed from a reading of the document is that on July 7, 2005,
Dr. Cruz issued a certification that she treated petitioner for a respiratory tract infection. She
might have done so in 1995, or maybe even earlier, but not necessarily on June 22-28,
2005. The document is open to interpretation in every manner, in which case this Court
cannot be sufficiently convinced that petitioner became ill and was treated specifically on
June 22-28, 2005.
One may argue that in the interest of justice and in order to uphold the rights of labor, this
Court must simply accept the medical certificate as proof that indeed, petitioner became ill
and required rest and treatment during the questioned period. But this cannot be done
without lowering the standards required for the presentation of proof in courts of justice and
even in administrative bodies such as the labor tribunals. We cannot dignify the July 7, 2005
Medical Certificate simply because it is too broad and sweeping that it borders on
prevarication and forgery; it goes against the basic common sense, logic, experience, and
precision required and expected of every trained physician who, apart from saving human
lives on a daily basis, must issue such important document with full realization that they are
to be utilized in key proceedings. To put it more bluntly, evidence, to be believed, must be
credible in itself. ―We have no test of the truth of human testimony, except its conformity to
our knowledge, observation and experience. Whatever is repugnant to these belongs to the
miraculous and is outside judicial cognizance.‖[31]
With the finding that Dr. Cruz‘s certification is of doubtful veracity, petitioner‘s claim of illness
is left with no leg to stand on. Besides, the Court notes that while petitioner claims to have
been ill until June 28, 2005, still he reported for work only on July 5, 2005, thus making him
absent for several more days. Knowing, by his receipt on June 28, 2005 of an interoffice
memorandum giving him until July 4, 2005 to explain his absence since June 22, that he was
already on the verge of being fired from work for his unexplained and prolonged absence, he
could have made an effort to report back to work on June 29, 2005 if only to show good faith,
sincerity, and concern for his employer, if not contrition for not timely informing the latter of
his illness so that substitute workers may be obtained in his stead. But he did not. His
actions betray an utter lack of concern for his work which, needless to say, is fundamentally
inimical to his employer‘s interest.
The Court thus concludes that petitioner‘s June 22 to July 5, 2005 absences are
unauthorized and inexcusable. Consequently, under FARMCOOP policy, petitioner is
deemed to have committed a fourth infraction, which merits the penalty of dismissal under
the AWOL Rule, as well as an infraction that merits dismissal under the AWOP Rule, for
being an unauthorized absence of at least six consecutive days without prior notice.
Next, there is no truth to petitioner‘s claim that respondents did not dispute his claim of
illness. On the contrary, they precisely contend that such claim is a lie, and that the medical
certificate submitted to corroborate it was manufactured.
Finally, petitioner‘s contention that, if at all, he should be penalized only with suspension,
considering that he was not punished for his January 26, February 28, and May 24, 2005
unauthorized absences. Quite the contrary, he was penalized with written warnings for these
infractions. The fact that he was not suspended is of no moment; FARMCOOP management
merely exercised its prerogative to choose which penalty to impose upon him. Respondents‘
explanation that they took care not to impose severe penalties upon petitioner out of respect
for his father, who was a founding member of the cooperative, is well taken. Nonetheless, as
elsewhere stated herein, while FARMCOOP opted not to penalize petitioner with suspension
for his February 28 (second infraction) and May 24 (third infraction) absences as mandated
under the AWOL and AWOP Rules of FARMCOOP‘s Personnel Policies and Procedures,
these prior absences remain to be infractions that may be considered in treating his
unauthorized June 22 to July 5, 2005 absences as his fourth infraction.
WHEREFORE, the Petition is DENIED. The July 29, 2011 Decision and September 18, 2012
Resolution of the Court of Appeals in CA G.R. SP No. 03319-MIN are AFFIRMED in toto.
SO ORDERED.
25 APR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT
Dutch Movers, Inc., Cesar Lee and Yolanda

Lee Vs. Edilberto Lequin, et al.; G.R. No.
210032; April 25, 2017
DECISION
DEL CASTILLO, J.:
Before the Court is a Petition for Review on Certiorari assailing the July 1, 2013 Decision[3] of
the Court of Appeals in CA-G.R. SP No. 113774. The CA reversed and set aside the
October 29, 2009[4] and January 29, 2010[5]Resolutions of the National Labor Relations
Commission (NLRC), which in turn reversed and set aside the Order[6]dated September 4,
2009 of Labor Arbiter Lilia S. Savari (LA Savari).
Also challenged is the November 13, 2013 CA Resolution.[7] which denied the Motion for
Reconsideration on the assailed Decision.
Factual Antecedents
This case is an offshoot of the illegal dismissal Complaint[8] filed by Edilberto Lequin (Lequin),
Christopher Salvador, Reynaldo Singsing, and Raffy Mascardo (respondents) against Dutch
Movers, Inc. (DMI), and/or spouses Cesar Lee and Yolanda Lee (petitioners), its alleged
President/Owner, and Manager respectively.
In their Amended Complaint and Position Paper,[9] respondents stated that DMI, a domestic
corporation engaged in hauling liquefied petroleum gas, employed Lequin as truck driver and
the rest of respondents as helpers; on December 28, 2004, Cesar Lee, through the
Supervisor Nazario Furio, informed them that DMI would cease its hauling operation for no
reason; as such, they requested DMI to issue a formal notice regarding the matter but to no
avail. Later, upon respondents‘ request, the DOLE NCR[10] issued a certification[11] revealing
that DMI did not file any notice of business closure. Thus, respondents argued that they
were illegally dismissed as their termination was without cause and only on the pretext of
closure.
On October 28, 2005, LA Aliman D. Mangandog dismissed[12] the case for lack of cause of
action.
On November 23, 2007, the NLRC reversed and set aside the LA Decision. It ruled that
respondents were illegally dismissed because DMI simply placed them on standby, and no
longer provide them with work. The dispositive portion of the NLRC Decision[13] reads:
WHEREFORE, the Decision dated October 28, 2005 is hereby REVERSED and SET ASIDE and a
new judgment is hereby rendered ordering respondent Dutch Movers, Inc. to reinstate complainants to
their former positions without loss of seniority rights and other privileges. Respondent corporation is
also hereby ordered to pay complainants their full backwages from the time they were illegally
dismissed up to the date of their actual reinstatement and ten (10%) percent of the monetary award as
for attorney‘s fees.
SO ORDERED.[14]
The NLRC Decision became final and executory on December 30, 2007.[15] And, on February
14, 2008, the NLRC issued an Entry of Judgment[16] on the case.
Consequently, respondents filed a Motion for Writ of Execution.[17] Later, they submitted a
Reiterating Motion for Writ of Execution with Updated Computation of Full
Backwages.[18] Pending resolution of these motions, respondents filed a Manifestation and
Motion to Implead[19] stating that upon investigation, they discovered that DMI no longer
operates. They, nonetheless, insisted that petitioners – who managed and operated DMI,
and consistently represented to respondents that they were the owners of DMI – continue to
work at Toyota Alabang, which they (petitioners) also own and operate. They further averred
that the Articles of Incorporation (AOI) of DMI ironically did not include petitioners as its
directors or officers; and those named directors and officers were persons unknown to them.
They likewise claimed that per inquiry with the SEC[20] and the DOLE, they learned that DMI
did not tile any notice of business closure; and the creation and operation of DMI was
attended with fraud making it convenient for petitioners to evade their legal obligations to
them.
Given these developments, respondents prayed that petitioners, and the officers named in
DMI‘s AOI, which included Edgar N. Smith and Millicent C. Smith (spouses Smith), be
impleaded, and be held solidarity liable with DMI in paying the judgment awards.
In their Opposition to Motion to Implead,[21] spouses Smith alleged that as part of their
services as lawyers, they lent their names to petitioners to assist them in incorporating DMI.
Allegedly, after such undertaking, spouses Smith promptly transferred their supposed rights
in DMI in favor of petitioners.
Spouses Smith stressed that they never participated in the management and operations of
DMI, and they were not its stockholders, directors, officers or managers at the time
respondents were terminated. They further insisted that they were not afforded due process
as they were not impleaded from the inception of the illegal dismissal case; and hence, thy
cannot be held liable for the liabilities of DMI.
On April 1, 2009, LA Savari issued an Order[22] holding petitioners liable for the judgment
awards. LA Savari decreed that petitioners represented themselves to respondents as the
owners of DMI; and were the ones who managed the same. She further noted that
petitioners were afforded due process as they were impleaded from the beginning of this
case.
Later, respondents filed anew a Reiterating Motion for Writ of Execution and Approve[d)
Updated Computation of Full Backwages.[23]
On July 31, 2009, LA Savari issued a Writ of Execution, the pertinent portion of which reads:
NOW THEREFORE, you [Deputy Sheriff] are commanded to proceed to respondents DUTCH
MOVERS and/or CESAR LEE and YOLANDA LEE with address at c/o Toyota Alabang, Alabang
Zapote Road, Las Piñas City or wherever they may be found within the jurisdiction of the Republic of
the Philippines and collect from said respondents the amount of THREE MILLION EIGHT
HUNDRED EIGHTEEN THOUSAND ONE HUNDRED EIGHTY SIX PESOS & 66/100
(Php3,818,186.66) representing Complainants‘ awards plus 10%, Attorney‘s fees in the amount of
THREE HUNDRED EIGHTY ONE THOUSAND EIGHT HUNDRED EIGHTEEN PESOS &
66/100 (Php381,818.66) and execution fee in the amount of FORTY THOUSAND FIVE HUNDRED
PESOS (Php40,500.00) or a total of FOUR MILLION TWO HUNDRED FORTY THOUSAND
FIVE HUNDRED FIVE PESOS & 32/100 (Php4,240,505.32) x x x[24]
Petitioners moved[25] to quash the Writ of Execution contending that the April 1, 2009 LA
Order was void because the LA has no jurisdiction to modify the final and executory NLRC
Decision and the same cannot anymore be altered or modified since there was no finding of
bad faith against them.
On September 4, 2009, LA Savari denied petitioners‘ Motion to Quash because it did not
contain any ground that must be set forth in such motion.
Thus, petitioners appealed to the NLRC.
On October 29, 2009, the NLRC quashed the Writ of Execution insofar as it held petitioners
liable to pay the judgment awards. The decretal portion of the NLRC Resolution reads:
WHEREFORE, in view of the foregoing, the assailed Order dated September 4, 2009 denying
respondents‘ Motion to Quash Writ is hereby REVERSED and SET ASIDE. The Writ of Execution
dated July 13,[26] 2009 is hereby QUASHED insofar as it holds individual respondents Cesar Lee and
Yolanda Lee liable for the judgment award against the complainants.
Let the entire record of the case be forwarded to the Labor Arbiter of origin for appropriate
proceedings.
SO ORDERED.[27]
The NLRC ruled that the Writ of Execution should only pertain to DMI since petitioners were
not held liable to pay the awards under the final and executory NLRC Decision. It added that
petitioners could not be sued personally for the acts of DMI because the latter had a
separate and distinct personality from the persons comprising it; and, there was no showing
that petitioners were stockholders or officers of DMI; or even granting that they were, they
were not shown to have acted in bad faith against respondents.
On January 29, 2010, the NLRC denied respondents‘ Motion for Reconsideration.
Undaunted, respondents filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion against the NLRC in quashing the Writ of Execution insofar as it held petitioners
liable to pay the judgment awards.
On July 1, 2013, the CA reversed and set aside the NLRC Resolutions, and accordingly
affirmed the Writ of Execution impleading petitioners as party-respondents liable to answer
for the judgment awards.
The CA ratiocinated that as a rule, once a judgment becomes final and executory, it cannot
anymore be altered or modified; however, an exception to this rule is when there is a
supervening event, which renders the execution of judgment unjust or impossible. It added
that petitioners were afforded due process as they were impleaded from the beginning of the
case; and, respondents identified petitioners as the persons who hired them, and were the
ones behind DMI. It also noted that such participation of petitioners was confirmed by DIVII‘s
two incorporators who attested that they lent their names to petitioners to assist the latter in
incorporating DMI; and, after their undertaking, these individuals relinquished their purported
interests in DMI in favor of petitioners.
On November 13, 2013, the CA denied the Motion for Reconsideration on the assailed
Decision.
Thus, petitioners filed this Petition raising the following grounds:
THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING

THAT RESPONDENTS SHOULD BE LIABLE FOR THE JUDGMENT AWARD TO
RESPONDENTS BASED ON THE FOLLOWING:
THE VALDERAMA VS. NLRC AND DAVID VS. CA ARE NOT APPLICABLE IN THE
INSTANT CASE.
II
THERE IS NO LEGAL BASIS TO PIERCE THE VEIL OF CORPORATE FICTION OF DUTCH

MOVERS, INC.[28]
Petitioners argue that the circumstances in Valderrama v. National Labor Relations

Commission[29] differ with those of the instant case. They explain that in Valderrama, the LA
therein granted a motion for clarification. In this case, however, the LA made petitioners
liable through a mere manifestation and motion to implead filed by respondents. They further
stated that in Valderrama, the body of the decision pointed out the liability of the individual
respondents therein while here, there was no mention in the November 23, 2007 NLRC
Decision regarding petitioners‘ liability. As such they posit that they cannot be held liable
under said NLRC Decision.
In addition, petitioners claim that there is no basis to pierce the veil of corporate fiction
because DMI had a separate and distinct personality from the officers comprising it. They
also insist that there was no showing that the termination of respondents was attended by
bad faith.
In fine, petitioners argue that despite the allegation that they operated and managed the
affairs of DMI, they cannot be held accountable for its liability in the absence of any showing
of bad faith on their part.
Respondents, on their end, counter that petitioners were identified as the ones who owned
and managed DMI and therefore, they should be held liable to pay the judgment awards.
They also stress that petitioners were consistently impleaded since the filing of the complaint
and thus, they were given the opportunity to be heard.
Issue
Whether petitioners are personally liable to pay the judgment awards in favor of
respondents
Our Ruling
To begin with, the Court is not a trier of facts and only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. This rule, nevertheless, allows certain
exceptions, which include such instance where the factual findings of the CA are contrary to
those of the lower court or tribunal. Considering the divergent factual findings of the CA and
the NLRC in this case, the Court deems it necessary to examine, review and evaluate anew
the evidence on record.[30]
Moreover, after a thorough review of the records, the Court finds that contrary to petitioners‘
claim, Valderrama v. National Labor Relations Commission,[31] and David v. Court of
Appeals[32] are applicable here. In said cases, the Court held that the principle of immutability
of judgment, or the rule that once a judgment has become final and executory, the same can
no longer be altered or modified and the court‘s duty is only to order its execution, is not
absolute. One of its exceptions is when there is a supervening event occurring after the
judgment becomes final and executory, which renders the decision unenforceable.[33]
To note, a supervening event refers to facts that transpired after a judgment has become
final and executory, or to new situation that developed after the same attained finality.
Supervening events include matters that the parties were unaware of before or during trial as
they were not yet existing during that time.[34]
In Valderrama, the supervening event was the closure of Commodex, the company therein,
after the decision became final and executory, and without any showing that it filed any
proceeding for bankruptcy. The Court held that therein petitioner, the owner of Commodex,
was personally liable for the judgment awards because she controlled the company.
Similarly, supervening events transpired in this case after the NLRC Decision became final
and executory, which rendered its execution impossible and unjust. Like in Valderrama,
during the execution stage, DMI ceased its operation, and the same did not file any formal
notice regarding it. Added to this, in their Opposition to the Motion to Implead, spouses
Smith revealed that they only lent their names to petitioners, and they were included as
incorporators just to assist the latter in forming DMI; after such undertaking, spouses Smith
immediately transferred their rights in DMI to petitioners, which proved that petitioners were
the ones in control of DMI, and used the same in furthering their business interests.
In considering the foregoing events, the Court is not unmindful of the basic tenet that a
corporation has a separate and distinct personality from its stockholders, and from other
corporations it may be connected with. However, such personality may be disregarded, or
the veil of corporate fiction may be pierced attaching personal liability against responsible
person if the corporation‘s personality ―is used to defeat public convenience, justify wrong,
protect fraud or defend crime, or is used as a device to defeat the labor laws x x x.‖ [35] By
responsible person, we refer to an individual or entity responsible for, and who acted in bad
faith in committing illegal dismissal or in violation of the Labor Code; or one who actively
participated in the management of the corporation. Also, piercing the veil of corporate fiction
is allowed where a corporation is a mere alter ego or a conduit of a person, or another
corporation.[36]
Here, the veil of corporate fiction must be pierced and accordingly, petitioners should be held
personally liable for judgment awards because the peculiarity of the situation shows that they
controlled DMI; they actively participated in its operation such that DMI existed not as a
separate entity but only as business conduit of petitioners. As will be shown be shown
below, petitioners controlled DMI by making it appear to have no mind of its own, [37] and used
DMI as shield in evading legal liabilities, including payment of the judgment awards in favor
of respondents.[38]
First, petitioners and DMI jointly filed their Position Paper,[39] Reply,[40] and Rejoinder[41] in
contesting respondents‘ illegal dismissal. Perplexingly, petitioners argued that they were not
part of DMI and were not privy to its dealings;[42]yet, petitioners, along with DMI, collectively
raised arguments on the illegal dismissal case against them.
Stated differently, petitioners denied having any participation in the management and
operation of DMI; however, they were aware of and disclosed the circumstances surrounding
respondents‘ employment, and propounded arguments refuting that respondents were
illegally dismissed.
To note, petitioners revealed the annual compensation of respondents and their length of
service; they also set up the defense that respondents were merely project employees, and
were not terminated but that DMI‘s contract with its client was discontinued resulting in the
absence of hauling projects for respondents.
If only to prove that they were not part of DMI, petitioners could have revealed who operated
it, and from whom they derived the information embodied in their pleadings. Such failure to
reveal thus gives the Court reasons to give credence to respondents‘ firm stand that
petitioners are no strangers to DMI, and that they were the ones who managed and operated
it.
Second, the declarations made by spouses Smith further bolster that petitioners and no
other controlled DMI, to wit:
Complainants [herein respondents] in their own motion admit that they never saw [spouses Smith] at
the office of [DMI], and do not know them at all. This is because [spouses Smith‘s] services as
lawyers had long been dispensed by the Spouses Lee and had no hand whatsoever in the management
of the company. The Smiths, as counsel of the spouses at [that] time, [lent] their names as
incorporators to facilitate the [incorporation of DMI.] Respondent Edgard Smith was then counsel of
Toyota Alabang and acts as its corporate secretary and as favor to his former client and employer,
Respondent Cesar Lee, agreed to help incorporate [DMI] and even asked his wife Respondent,
Millicent Smith, to act as incorporator also [to] complete the required 5 man incorporators. After the
incorporation they assigned and transferred all their purported participation in the company to the
Respondents Spouses Cesar and Yolanda Lee, who acted as managers and are the real owners of the
corporation. Even at the time complainant[s were] fired from [their] employment respondents Spouses
Smith had already given up their shares. The failure to an1end the Articles of Incorporation of [DMI],
and to apply for closure is the fault of the new board, if any was constituted subsequently, and not of
Respondents Smiths. Whatever fraud committed was not committed by the Respondents Smiths,
hence they could not be made solidarily liable with Respondent Corporation or with the spouses Lee.
If bad faith or fraud did attend the termination of complainant[s], respondents Smiths would know
nothing of it because they had ceased any connection with [DMI] even prior to such time. And they
had at the inception of the corporation never exercised management prerogatives in the selection,
hiring, and firing of employees of [DMI].[43]
Spouses Smith categorically identified petitioners as the owners and managers of DMI. In
their Motion to Quash, however, petitioners neither denied the allegation of spouses Smith
nor adduced evidence to establish that they were not the owners and managers of DMI.
They simply insisted that they could not be held personally liable because of the immutability
of the final and executory NLRC Decision, and of the separate and distinct personality of
DMI.
Furthermore, the assailed CA Decision heavily relied on the declarations of spouses Smith
but still petitioners did not address the matters raised by spouses Smith in the instant
Petition with the Court.
Indeed, despite sufficient opportunity to clarify matters and/or to refute them, petitioners
simply brushed aside the allegations of spouses Smith that petitioners owned and managed
DMI. Petitioners just maintain that they did not act in bad faith; that the NLRC Decision is
final and executory; and that DMI has a distinct and separate personality. Hence, for failure
to address, clarify, or deny the declarations of spouses Smith, the Court finds respondents‘
position that petitioners owned, and operated DMI with merit.
Third, piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution, provided
that such persons deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or resorted to fraud, bad faith, or malice in evading their obligation. [44]
In this case, petitioners were impleaded from the inception of this case. They had ample
opportunity to debunk the claim that they illegally dismissed respondents, and that they
should be held personally liable for having controlled DMI and actively participated in its
management, and for having used it to evade legal obligations to respondents.
While it is true that one‘s control does not by itself result in the disregard of corporate fiction;
however, considering the irregularity in the incorporation of DMI, then there is sufficient basis
to hold that such corporation was used for an illegal purpose, including evasion of legal
duties to its employees, and as such, the piercing of the corporate veil is warranted. The act
of hiding behind the cloak of corporate fiction will not be allowed in such situation where it is
used to evade one‘s obligations, which ―equitable piercing doctrine was formulated to
address and prevent.‖[45]
Clearly, petitioners should be held liable for the judgment awards as they resorted to such
scheme to countermand labor laws by causing the incorporation of DMI but without any
indication that they were part thereof. While such device to defeat labor laws may be
deemed ingenious and imaginative, the Court will not hesitate to draw the line, and protect
the right of workers to security of tenure, including ensuring that they will receive the benefits
they deserve when they fall victims of illegal dismissal.[46]
Finally, it appearing that respondents‘ reinstatement is no longer feasible by reason of the

closure of DMI, then separation pay should be awarded to respondents instead.[47]
WHEREFORE, the Petition is DENIED. The July 1, 2013 Decision and November 13, 2013
Resolution of the Court of Appeals in CA-G.R. SP 113774 are AFFIRMED with
MODIFICATION that instead of reinstatement, Dutch Movers, Inc. and spouses Cesar Lee
and Yolanda Lee are solidarily liable to pay respondents‘ separation pay for every year of
service.
SO ORDERED.

Herma Shipyard, Inc. and Mr. Herminio

Esguerra Vs. Danilo Oliveros, et al.; G.R. No.
208936; April 17, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the Decision[2] dated May 30, 2013 of the Court
of Appeals (CA) in CA-G.R. SP No. 118068 that reversed the Decisions of the National
Labor Relations Commission (NLRC) and the Labor Arbiter and declared that Danilo
Oliveros, Jojit Besa, Arnel Sabal, Camilo Oliveros, Robert Nario, Frederick Catig, Ricardo
Ontalan, Ruben Delgado, Segundo Labosta, Exequiel Oliveria, Oscar Tirol and Romeo
Trinidad (respondents) are regular employees of petitioner Herma Shipyard, Inc. (Herma
Shipyard).
Factual Antecedents
Herma Shipyard a domestic corporation engaged in the business of shipbuilding and repair.
The respondents were its employees occupying various positions such as welder, leadman,
pipe fitter, laborer, helper, etc.
On June 17, 2009, the respondents filed before the Regional Arbitration Branch III, San
Fernando City, Pampanga a Complaint[3] for illegal dismissal, regularization, and non-
payment of service incentive leave pay with prayer for the payment of full backwages and
attorney‘s fees against petitioners. Respondents alleged that they are Herma Shipyard‘s
regular employees who have been continuously performing tasks usually necessary and
desirable in its business. On various dates, however, petitioners dismissed them from
employment.
Respondents further alleged that as a condition to their continuous and uninterrupted

employment, petitioners made them sign employment contracts for a fixed period ranging
from one to four months to make it appear that they were project-based employees. Per
respondents, petitioners resorted to this scheme to defeat their right to security of tenure, but
in truth there was never a time when they ceased working for Herma Shipyard due to
expiration of project-based employment contracts. In fact, if they were indeed project
employees, petitioners should have reported to the Department of Labor and Employment
(DOLE) the completion of such project. But petitioners have never submitted such report to
the DOLE.
For their defense, petitioners argued that respondents were its project-based employees in
its shipbuilding projects and that the specific project for which they were hired had already
been completed. In support thereof, Herma Shipyard presented contracts of employment,
some of which are written in the vernacular and denominated as Kasunduang Paglilingkod
(Pang-Proyektong Kawani).[4]
On May 24, 2010the Labor Arbiter rendered a Decision[5] dismissing respondents‘ Complaint.
The Labor Arbiter held that respondents were project based employees whose services
were validly terminated upon the completion of the specific work for which they were
individually hired. The dispositive portion of the Labor Arbiter‘s Decision reads:
WHEREFORE, premises considered, let the instant complaint be, as it is hereby ORDERED
dismissed for lack of merit.
All the money claims as well as moral and exemplary damages and attorney‘s fees raised by the
complainants in their complaint are likewise DENIED for lack of merit.
SO ORDERED.[6]
Respondents thus appealed to the NLRC.
On September 7, 2010, the NLRC rendered its Decision[7] denying respondents‘ appeal and
affirming in toto the Decision of the Labor Arbiter. It sustained the finding of the Labor Arbiter
that based on their employment contracts, respondents were project-based employees hired
to do a particular project for a specific period of time.
Respondents moved tor reconsideration but the NLRC denied their Motion for
Reconsideration[8] in its November 11, 2010 Resolution.[9]
Unfazed, respondents filed a Petition for Certiorari[10] before the CA imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the labor tribunals in
finding that they were project-based employees and in not awarding them service incentive
leaves. Respondents contended that the labor tribunals grievously erred in relying on the
project employment contracts which were tor a uniform duration of one month. They argued
that if it were true that they were project-based employees, the duration of their employment
should have coincided with the completion of the project for which they were hired and not
for a uniform period of one month.
On May 30, 2013, the CA rendered its assailed Decision[11] granting respondents‘ Petition
for Certiorari and setting aside the labor tribunals‘ Decisions. It held that even if the contracts
of employment indicated that respondents were hired as project-based workers, their
employment status have become regular since: they were performing tasks that are
necessary, desirable, and vital to the operation of petitioners‘ business; petitioners failed to
present proof that respondents were hired for a specit1c period or that their employment was
coterminous with a specific project; it is not clear from the contracts of employment
presented that the completion or termination of the project or undertaking was already
determined at the time petitioners engaged the services of respondents; respondents were
made to work not only in one project but also in different projects and were assigned to
different departments of Herma Shipyard; respondents were repeatedly and successively
rehired as employees of Herma Shipyard; except with regard to respondents‘ last
employment, petitioners failed to present proof that they reported to the nearest public
employment office the termination of respondents‘ previous employment or every time a
project or a phase thereof had been completed; and, petitioners failed to file as many reports
of termination as there were shipbuilding and repair projects actually completed. The CA
concluded that the project employment contracts were indeed used as a device to
circumvent respondents‘ right to security of tenure. The fallo of the assailed CA Decision
reads:
WHEREFORE, the instant petition for certiorari is GRANTED. The assailed decision and resolution
of the respondent National Labor Relations Commission are REVERSED and SET ASIDE, and a new
judgment is hereby rendered holding petitioners as regular employees and declaring their dismissal as
illegal. Accordingly, private respondents are hereby ordered to REINSTATE petitioners to their
former employment. Should reinstatement be not possible due to strained relations, private
respondents are ordered to pay petitioners their separation pay equivalent to one-month pay or one-
half-month pay for very year of service, whichever is higher, with full backwages computed from the
time of dissmissal up to the finality of the decision. For this purpose, the case is hereby REMANDED
to the respondent NLRC for the computation of the amounts due petitioners.
SO ORDERED.[12]
Petitioners moved for reconsideration. In a Resolution[13] dated August 30, 2013, however,
the CA denied their Motion for Reconsideration.[14]
Hence, this Petition for Review on Certiorari assailing the May 30, 20l3 Decision and August
30, 2013 Resolution of the CA, Petitioners anchor their Petition on the following arguments:
PREVAILING JURISPRUDENCE DICTATES THAT RESPONDENTS ARE NOT REGULAR

EMPLOYEES OF PETITIONER [HERMA SHIPYARD]. THEY ARE PROJECT EMPLOYEES
WHOSE TERMS OF EMPLOYMENT WERE VALIDLY TERMINATED UPON THE
EXPIRATION OF THE TERM OF THEIR PROJECT EMPLOYMENT CONTACTS.
THE ASSAILED DECISION AND ASSAILED RESOLUTION RULED ON ISSUES WHICH

WERE NEITHER DISPUTED IN RESPONDENTS‘ PETITION FOR CERTIORARI NOR RAISED
IN THE DECISION OF THE HONORABLE [NLRC].
AS BORNE BY THE PROJECT EMPLOYMENT CONTRACTS OF RESPONDENTS AND

TERMINATION REPORTS SUBMITTED TO THE DEPARTMENT OF LABOR AND
EMPLOYMENT, RESPONDENTS ARE UNDOUBTEDLY PROJECT EMPLOYEES OF
PETITIONER [HERMA SHIPYARD].
THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT RESPONDENTS‘

PETITION FOR CERTIORARI DID NOT RAISE AS AN ISSUE THE ACTS COMMITTED BY
THE HONORABLE [NLRC] WHICH AMOUNTED TO GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
BY VIRTUE OF THE DOCTRINE OF SEPARATE JURIDICAL PERSONALITY, PETITIONER

ESGUERRA SHOULD NOT BE HELD LIABLE IN THE INSTANT LABOR COMPLAINT
THE HONORABLE COURT OF APPEALS FAILED TO GIVE WEIGHT AND RESPECT TO

THE FACTUAL FINDINGS OF THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION AND THE HONORABLE LABOR ARBITER.
THE HONORABLE COURT OF APPEALS DID NOT ACQUIRE JURISDICTION OVER THE
INSTANT CASE AS THE HONORABLE NLRC‘S DECISION AND RESOLUTION ALREADY
BECAME EXECUTORY CONSIDERING THAT RESPONDENTS‘ PETITION FOR
CERTIORARI WAS FILED BEYOND THE REGLEMENTARY PERIOD PRESCRIBED BY THE
RULES.[15]
Petitioners contend, among others, that necessity and desirability of respondents‘ services in
Herma Shipyard‘s business are not the only factors to be considered in determining the
nature of respondents‘ employment. They assert that the CA should have also taken into
consideration the contracts of employment signed by the respondents apprising them of the
fact that their services were engaged for a particular project only and that their employment
was coterminous therewith. The authenticity and genuineness of said contracts, according to
petitioners, were never disputed by the respondents during the pendency of the case before
the labor tribunals. It was only in their Comment[16] to the instant Petition that respondents
disavow said contracts of employment for allegedly being fictitious.
Petitioners aver that the CA also erred in ruling that the duration of respondents‘
employment depends upon a progress accomplishment as paragraph 10 of the employment
contract readily shows that the same is dependent upon the completion of the project
indicated therein.
With regard to the repeated rehiring of the respondents, petitioners insist that the same will
not result in respondents becoming regular employees because length of service does not
determine employment status. What is controlling of project-based employment is whether
the employment has been fixed for a specific project or undertaking, its completion having
been determined and made known to the employees at the time of their engagement. Thus,
regardless of the number of projects for which respondents had been repeatedly hired, they
remained project-based employees because their engagements were limited to a particular
project only. Petitioners emphasize that Herma Shipyard merely accepts contracts for
shipbuilding and for repair of vessels. It is not engaged in the continuous production of
vessels for sale which would necessitate the hiring of a large number of permanent
employees.
Respondents, for their part, deny having worked for a specific project or undertaking. They
insist that the employment contracts presented by petitioners purportedly showing that they
were project-based employees are fictitious designed to circumvent the law. In any case,
said contracts are not valid project employment contracts because the completion of the
project had not been determined therein or at the time of their engagement. In fact, the
duration of their contracts with Herma Shipyard may be extended as needed for the
completion of various projects and not for a definite duration. And even assuming that they
were previously hired as project employees, their employment ceased to be coterminous
with a specific project and became a regular after they were repeatedly rehired by the
petitioners for various projects.
Our Ruling
The Petition is impressed with merit.
At the outset, the issue of whether petitioners were project-based employees is a question of
fact that, generally, cannot be passed and ruled upon by this Court in a petition for review
on certiorari filed under Rule 45 of the Rules of Court. It is settled that the jurisdiction of this
Court in a Rule 45 petition is generally limited to reviewing errors of law. Nevertheless, in
view of the opposing views of the tribunals below, this Court shall take cognizance of and
resolve the factual issues involved in this case.[17]
Who are project-based employees?
A project employee under Article 280 (now Article 294)[18] of the Labor Code, as amended, 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.
Thus:
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 service to be
performed is seasonal in nature and the employment is for the duration of the season.
x x x x (Emphasis supplied)
The services of project-based employees are co-terminous with the project and may be
terminated upon the end or completion of the project or a phase thereof for which they were
hired.[19] The principal test in determining whether particular employees were engaged as
project-based employees, as distinguished from regular employees, is whether they were
assigned to carry out a specific project or undertaking, the duration and scope of which was
specified at, and made known to them, at the time of their engagement.[20] It is crucial that the
employees were informed of their status as project employees at the time of hiring and that
the period of their employment must be knowingly and voluntarily agreed upon by the
parties, without any force, duress, or improper pressure being brought to bear upon the
employees or any other circumstances vitiating their consent.[21]
Respondents knowingly and voluntarily entered into and signed the project-based
employment contracts.
The records of this case reveal that for each and every project respondents were hired, they
were adequately informed of their employment status as project-based employees at least at
the time they signed their employment contract They were fully apprised of the nature and
scope of their work whenever they affixed their signature to their employment contract. Their
contracts of employment (mostly written in the vernacular) provide in no uncertain terms that
they were hired as project based employees whose services are coterminous with the
completion of the specific task indicated therein. All their contracts of employment state
clearly the date of the commencement of the specific task and the expected completion date
thereof. They also contain a provision expressly stating that respondents‘ employment shall
end upon the arrival of the target completion date or upon the completion of such project.
Except for the underlined portions, the contracts of employment read:
KASUNDUAN NG PAGLILINGKOD
(PANG-PROYEKTONG KAWANI)
ALAMIN NG LAHAT NA:
HERMA SHIPYARD, INC., isang Korporasyon na itinatag at nananatili sa ilalim ng batas ng

Pilipinas at may tanggapan sa Herma Industrial Complex, Mariveles, Bataan na kinakatawan
[ni] EDUARDO S. CARANCIO ay makikilala bilang KUMPANYA;
OLIVEROS, CAMILO IBAÑEZ, sapat ang gulang, Pilipino, may asawa/walang asawa na tubong
_______, nainirahan sa BASECO Country Aqwawan, Mariveles, Bataan dito ay makikilala bilang
PANG-PROYEKTONG KAWANI;
NAGSASAYSAY NA:
NA, ang Kumpanya ay nangangailangan ng paglilingkod ng isang Ship Fitter Class A sa panandaliang
panahon at bilang pang suporta sa paggawa at pagsasaayos ng proyekto para sa MT Masinop.
NA, ang PANG-PROYEKTONG KAWANI ay nagpapahayag ng kanyang kakayahan at kagustuhang

isagawa ang proyektong iniaalok ng KUMPANYA at handing tuparin ang nasabing Gawain sa
KUMPANYA sa ilaalim ng sumusunod na kondisyon;
Bilang pagkilala sa maga nasabing batayan, ang mga kinauukulang partido ay nagkakasundo at
nagtatakda ng mga sumusunod:
1) Ang KUMPANYA ay pumapayag na bayaran ang serbisyo ng PANG-PROYEKTONG KAWANI

bilang isang Ship Fitter Class A sa nasabing proyekto simula 4/1/2009 hanggang 4/30/2009
o sa sandaling matapos ang nasabing gawain o anumang bahagi nito kung saan siya ay
inupahan o kung saan ang kanyang serbisyo ay kailangan at ang PANG-PROYEKTONG
KAWANI ay sumasang-ayon. Ang mga gawaing nabanggit sa kasunduang ito ay hindi

pangkaraniwang ginagawa ng KUMPANYA kundi para lamang sa itinakdang panahon o
hanggang matapos ang nasabing proyekto;
2) Ang KUMPANYA ay may karapatan na pawalang bisa o kanselahin ang kasunduang ito
anomang oras kung mapatutunayan na ang PANG-PROYEKTONG KAWANI ay walang
kakayahan na gawin ang naturang gawain kung saan siya ay inupahan nang naaayon sa
pamantayan o sa kagustuhan ng KUMPANYA o sa anumang dahilan na naaayon sa batas,
kasama na rito ang paglabag ng PANG PROYEKTONG KAWANI sa mga alituntunin ng
KUMPANYA;
3) Ang PANG-PROYEKTONG KAWANI ay sumasang-ayon na gampanan ang mga gawaing ito para
sa KUMPANYA buong katapatan at husay;
4) Ang PANG-PROYEKTONG KAWANI ay magtratrabaho ng walong (8) oras sa bawat araw ng

trabaho ayon sa oras na itinakda ng KUMPANYA at siya ay babayaran ng P405 (P397.00/basic +
8/ecola) bawat araw at ito ay kanyang matatanggap tuwing ika-labinlimang araw at katapusan
ng buwan na kanyang ipinagtrabaho. Ang PANGPROYEKTONG KAWANI ay hindi babayaran sa
rnga araw na hindi siya pumasok sa trabaho sa KUMPANYA;
5) Lahat ng kaalaman o impormasyon na maaaring mabatid ng PANGPROYEKTONG KAWANI

habang siya ay may kaugnayan sa KUMPANYA ay iingatan niya at hindi maaaring gamitin,
ipasipi o ipaalam sa kaninuman ng walang kaukulang pahintulot lalo na kung ito ay maaaring
makapinsala sa KUMPANYA;
6) Ang PANG-PROYEKTONG KAWANI ay nangangako na ibibigay ang kanyang panahon at buong

kakayahan para sa kapakanan ng KUMPANYA, tutugon sa lahat ng alituntunin ng KUMPANYA,
susunod sa utos ng mga namumuno na naaayon sa batas, at tatanggapin ang pananagutan sa
lahat ng kanyang mga galaw na maaaring makapinsala o makasakit sa kapwa kawani at sa ari-
arian ng KUMPANYA, ganun din ang kapakanan at ari-arian ng ibang tao;
7) Nababatid at nauunawaan ng bawat partido sa kasunduang ito na ang PANG-PROYEKTO

KAWANI ay hindi maituturing na pampirmihan or “regular” na kawani ano man at gaano
man katagal ang kanyang paglingkod sa Kumpanya. Sa ganitong kadahilanan, ang PANG-
PROYEKTO KAWANI ay hindi tatanggap ng karaniwang benepisyo na ipinagkakaloob sa
pampirmihan o “regular” na kawani; katulad ng bonuses, medical insurance, at retirement
benefits, maliban sa ilang benepisyo na pinagkakaloob ng batas.
8) Sa pagtupad ng mga nasabing gawa, nalalaman at inaasahan ng PANG-PROYEKTONG KAWANI

ang ilang kaakibat na peligro sa maayos na pagganap ng naturang rnga gawa. Alam ng PANG-
PROYEKTONG KAWANI na ang KUMPANYA ay walang kinalaman sa bagay na ito at hindi dapat
panagutin ukol dito;
9) Ang lahat ng mga nakasaad at nasusulat na mga kondisyon sa kasunduang ito ay nauunawaan
at naiintindihan ng PANG-PROYEKTONG KAWANI;
10) Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring
kailanganin para sa matagumpay na pagtatapos ng mga gawa o proyektong pinagkasunduan;
BILANG SAKSI sa kasundang ito, ang mga partido ay lumagda ngayong ika-1 ng Abril 2009 sa
Mariveles, Bataan, Pilipinas;[22] (Emphases supplied)
There is no indication that respondents were coerced into signing their employment
contracts or that they affixed their signature thereto against their will. While they claim that
they signed the said contracts in order to securee continuous employment, they have not,
however, presented sufficient evidence to support the same other than their bare allegations.
It is settled that ―[c]ontracts for project employment are valid under the law.‖[23] Thus,
in Jamias v. National Labor Relations Commission,[24] this Court upheld the project
employment contracts which were knowingly and voluntarily signed by the employees for
want of proof that the employers employed force, intimidation, or fraudulently manipulated
them into signing the same. Similarly in this case, by voluntarily entering into the
aforementioned project employment contracts, respondents are deemed to have understood
that their employment is coterminous with the particular project indicated therein. They
cannot expect to be employed continuously beyond the completion of such project because
a project employment terminates as soon as it is completed.
Performance by project-based employees of tasks necessary and desirable to the

usual business operation of the employer will not automatically result in their
regularization.
ln disregarding the project employment contracts and ruling that respondents are regular
employees, the CA took into consideration that respondents were performing tasks
necessary and desirable to the business operation of Herma Shipyard and that they were
repeatedly hired. Thus:
[I]t is significant to note that even if the contract of employment indicates that [respondents] were
hired a project workers, they are still considered regular employees on the ground that as welder, ship
fitter, pipe fitter, expediter and helper, [respondents‘] services are all necessary, desirable and vital to
the operation of the ship building and repair business of [petitioners]. A confirmation of the necessity
and desirability of their services is the fact that [respondents] were continually and successively
assigned to the different projects of private respondents even after the completion of a particular
project to which they were previously assigned. On this score, it cannot be denied that petitioners
were regular employees.[25]
It is settled, however, that project-based employees may or may not be performing tasks
usually necessary or desirable in the usual business or trade of the employer. The fact that
the job is usually necessary or desirable in the business operation of the employer does not
automatically imply regular employment; neither does it impair the validity of the project
employment contract stipulating fixed duration of employment.[26] As this Court held in ALU-
TUCP v. National Labor Relations Commission:[27]
In the realm of business and industry, we note that ‗project‘ could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refr to 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. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this first
type of project is a particulr construction job or project of a construction company. A construction
company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-
five storey hotel in Makati; a residential condominium building in Baguio City; amd a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects,
the scope and duration of which has been determined and made known to the employees at the time of
employment, are properly treated as ‗project employees,‘ and their services may be lawfully
terminated at completion of the project.
The term ‗project‘ could also refer to, secondly, particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times.[28]
Here, a meticulous examination of the contracts of employment reveals that while the tasks
assignd to the respondents were indeed necessary and desirable in the usual business of
Herma Shipyard, the same were distinct, separate, and identifiable from the other projects or
contract services. Below is the summary of respondents‘ employment contracts indicating
the positions they held, the specific projects for which they were hired, and the duration or
expected completion thereof:
Names Positions Projects Durations
1. Ricardo J. Pipe Fitter MT Masinop 03/18/09-03/31/09[29]

Ontolan Pipe Fitter 12mb_phase 3 09/15/08-12/20/08[30]
Pipe Fitter 12mb/Petrotrade 6 05/29/08-08/31/08[31]
Pipe Fitter Alcem Calaca 04/29/08-completion[32]
Pipe Fitter Hull 0102-phase 6 12/17/07-03/03/08[33]
Pipe Fitter Hull 0103 & Hull 0104-phase 1 09/11/07-12/11/07[34]
2. Robert T. Welder 6G MT Masinop 03/18/09-03/31/09[35]

Welder 6G 12mb/Matikas/Red Dragon 06/02/08-07/31/08[36]
Nario Welder 6GWelder 22mb/12mb/Galapagos/Petrotrade 03/04/08-

6G 7/Ma Oliva/Solid 06/05/08[37]10/18/07-
Sun/Hagonoy/Banga Uno/Bigaa 12/18/07[38]
Hull 0102-phase 5
3. Oscar J. Tirol Pipe Fitter Class B Red Dragon (installation of lube oil, 01/16/09-02/15/09[39]
diesel oil, air compressed line,
06/27/08-completion[40]
Pipe Fitter freshwater cooling, lavatory, sea 02/08/08[41]-02/08/08[42]
———– water pipe line)
MT Magino/MV Diana
Petrotrade 7/Solid Gold
4. Exequiel R. Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[43]

Oliveria Leadman Red Dragon 04/29/08-05/31/08[44]
Leadman Hull 0102-phase 6 12/01/07[45]
Leadman Hull 0102-phase 5 03/03/08[46]
Leadman Hull 0102-phase 4 09/11/07-11/30/07[47]
06/07/07-08/27/07[48]
5. Arnel S. Leadman MT Masinop 03/18/09-03/31/09[49]

Sabal Leadman 12mb-phase 3 09/15/08[50]-12/20/08[51]
Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[52]
LeadmanLeadman 22mb/12mb/Galapagos/Petrotrade 03/04/08-
Leadman 7/Ma Oliva/Solid 06/05/08[53]12/01/2007[54]-
Pipe Fitter Sun/Hagonoy/Banga Uno/Bigaa 3/03/08[55]
———- Hull 0102-phase 6 9/11/07-11/30/07[56]
Pipe Fitter Hull 0102-phase 2 01/08/07-completion[59]
Pipe Fitter Hull 0102 05/17/06-completion[60]
Pipe Fitter Petro Trade 8/EUN HEE 06/02/05[61]-06/25/05[62]
Pipe Fitter MT Angat 12/08/04-completion[63]
M/T Pandi 11/08/04-completion[64]
M/T Makisig 08/12/04[65]-09/13/04[66]
Petro Trade – 7
6. Segundo Q. ABS Welder 6G MT Masinop

13/18/09-03/31/09[67]
Labosta, Jr. ABS Welder 6G 12mb-phase 3
09/26/08-12/20/08[68]
ABS Welder 6G Petrotrade 6/12 mb
08/01/08-10/31/08[69]
ABS Welder 6G Cagayan de Oro/Petrotrade
16/01/08-07/31/08[70]
6/Plaridel
7. Jojit A. Besa Leadman – ABS MT Masinop 03/18/09-03/31/09[71]

6G 12mb/Barge Kwan Sing/Solid Pearl 01/16/09-03/14/09[72]
Leadman – ABS 12mb-phase 3 10/10/08-12/20/08[73]
6G Hull 0102-phase 6 12/01/07-02/29/08[74]
Leadman – ABS Hull 0102-phase 4 06/07/07-08/29/07[75]
6G Hull 0102-phase 4 06/01/07-08/27/07[76]
ABS Welder 6G MT Matilde/M/Tug Mira 08/07/06-completion[77]
Pipe Welder MT Marangal/MT Masikap/MT 04/15/06-completion[78]
Pipe Welder Maginoo/Petro Trade 8 03/01/06-completion[79]
Pipe Fitter MV ST Ezekiel Moreno 11/03/05-
Pipe FitterPipe MT Plaridel/Monalinda completion[80]05/31/05-
Fitter/Welder 95/Tug Boat Sea Lion 06/30/05
Pipe Fitter MT Angat/Banga Dos 11/08/04-completion[81]
Pipe Fitter M/T Makisig 10/18/04-completion[82]
M/T Baliuag Oceantique
Pipe Fitter 9/17/04-one
Pipe Fitter Pedro Trade-7 month/completion[83]
Pipe Fitter Petro Trade V/Guiguinto 08/03/04-two
months/completion[84]
07/03/04-one
Pipe Fitter month/completion[85]
Pipe Fitter
Pipe Fitter
8. Camilo I. Ship Fitter MT Masinop 04/01/09-04/30/09[86]

Oliveros Class A
Petrotrade 6/Plaridel/Red Dragon 06/03/08-09/10/08[87]
Leadman Hull 0102/0103 01/15/08-completion[88]
ABS Welder 6G Hull 0102-phase 5 09/11/07-12/04/07[89]
Welder Hull 0102-phase 4 06/06/07-08/28/07[90]
Hull 0102-phase 3 04/12/07-06/12/07[91]
Welder Hull 0102-phase 2 01/24/07-03/30/07[92]
Welder 22 mb oil tanker 09/06/06-completion[93]
Welder
Ship Welder
9. Romeo I. Helper Modernization project – painting of 01/24/07-01/28/07[94]

Trinidad prod’n bldg. and overhead crane
Laborer 09/10/07-12/10/07[95]
Pin Jiq assembly, building table
construction, painting of ex-oxygen
Laborer 04/23/07-05/31/07[96]
bldg, frabrication of slipway railings
Ground level of main entrance
Electrician/Laborer 12/04/06-completion[97]
road & CHB wall plastering/repair
of warehouse no 1 for conversion
to training bldg.
Construction of launchway and
perimeter fence
10. Ruben F. Leadman Red Dragon (water tight door 01/16/09-12/15/09[98]

Delgado installation, soft batch)
Leadman 10/13/08-12/20/08[99]
Leadman Red Dragon 06/28/08-completion[100]
Ship Fitter MV Ma. Diana 05/30/07-08/26/07[101]
Ship Fitter Hull 0102-Phase 4 12/03/07-completion[102]
Ship Fitter 03/10/07-completion[103]
Thomas Cloma 02/01/07[104]-02/21/07[105]
MV Solid Jade/Construction of New 01/09/07-completion[106]
Ship Fitter
Caisson Gate 12/18/06[107]-1/07/07[108]
Ship Fitter
Ship Fitter MT Hagonoy
MT Mabiuag
MT Ma Xenia
11. Danilo I. Welder 3G & 4G MT Hagonoy/MT Masinop/MT

04/01/09-04/15/09[109]
Oliveros Welder 3G & 4G Matikas
03/20/09-03/31/09[110]
Welder 3G & 4G Hagonoy
09/25/08-12/20/08[111]
Welder 12mb-phase 3
07/01/08-09/30/08[112]
Welder 3G & 4G 12mb/Petrotrade 6
12/08/07-03/08/08[113]
Welder Hull 0102-phase 6
09/10/07-12/10/07[114]
Welder Hull 0102-phase 5
12/19/06-completion[115]
Hull 0102
12. Frederick Pipe Fitter Class C MT Masinop 02/06/09-02/28/09[116]

C. Catig Pipe Fitter Class C 12mb 01/08/09-01/31/09[117]
Helper 12mb-phase 3 19/15/08-completion[118]
Helper 12mb/Petrotrade 6 05/29/08-08/31/08[119]
Helper Hull 0102-phase 6 01/02/08-03/31/08[120]
Helper Hull 0102, Hull 0103, Hull 0104 10/01/07-12/31/07[121]
Helper Hull 0103 phase 1 07/25/07-09/31/07[122]
As shown aboverespondents were hired for various projects which are distinct, separate,
and identifiable from each other. The CA thus erred in immediately concluding that since
respondents were performing tasks necessary, desirable, and vital to Herma Shipyard‘s
business operation, they are regular employees.
Repeated rehiring of project employees to different projects does not ipso facto make
them regular employees.
―[T]he repeated and successive rehiring [of respondents as project-based employees] does
not [also], by and of itself, qualify them as regular employees. Case law states that length of
service (through rehiring) is not the controlling detenninant of the employment tenure [of
project-based employees but, as earlier mentioned], whether the employment has been fixed
for a specific project or undertaking, with its completion having been determined at the time
of [their] engagement.‖[123] Stated otherwise, the rule that employees initially hired on a
tempormy basis may become permanent employees by reason of their length of service is
not applicable to project-based employees. Our ruling in Villa v. National Labor Relations
Commission[124] is instructive on the matter, viz.:
Thus, the fact that petitioners worked for NSC under different project employment contracts for
several years cannot be made a basis to consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have worked. Length of service is not
the controlling determinant of the employment tenure of a project employee. In the case of Mercado
Sr. v. NLRC, this court ruled that the proviso in the second paragraph of Article 280, providing that
an employee who has served for at least one year, shall be considered a regular employee, relates only
to casual employees and not to project employees.
The rationale for the inapplicability of this rule to project-based employees was discussed
in Dacles v. Millenium Erectors Corporation,[125] to wit:
x x x While generally, length of service provides a fair yardstick for determining when an employee
initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization, this standard will not be fair, if applied to the construction industry because
construction firms cannot guarantee work and funding for its payrolls beyond the life of each project
as they have no control over the decisions ard resources of project proponents or owners. Thus, once
the project is completed it would be unjust to require the employer to maintain these employees in
their payroll since this would be tantamount to making the employee a privileged retainer who
collects payment from his employer for work not done, and amounts to labor coddling at the expense
of management.[126]
Indeed, if we consider the nature of Herma Shipyard‘s business, it is clear that Herma
Shipyard only hires workers when it has existing contracts for shipbuilding and repair. It is
not engaged in the business of building vessels for sale which would require it to
continuously construct vessels for its inventory and consequently hire a number of
pemmnent employees. In Sandoval Shipyards, Inc. v. National Labor Relations
Commission[127] where therein petitioner was engaged in a similar kind of business, this Court
opined that:
It is significant to note that the corporation does not construct vessels for sale or otherwise which will
demand continuous productions of ships and will need permanent or regular workers. It merely
accepts contracts for shipbuilding or for repair of vessels from the third parties and, only, on occasion
when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts
only for less than a year or longer.[128]
The completion of their work or project automatically terminates their employment, in which case, the
employer is, under the law, only obliged to render a report on the termination of the employment.
Hence, Herma Shipyard should be allowed ―to reduce [its] work force into a number suited
for the remaining work to be done upon the completion or proximate accomplishment of
[each particular] project.‖[129] As for respondents, since they were assigned to a project or a
phase thereof which begins and ends at determined or determinable times, their services
were lawfully terminated upon the completion of such project or phase thereof.[130]
Moreover, our examination of the records revealed other circumstances that convince us
that respondents were and remained project-based employees, albeit repeatedly rehired.
Contrary to their claim, respondents‘ employment were neither continuous and uninterrupted
nor for a uniform period of one month; they were intermittent with varying durations, as well
as gaps ranging from a few days to several weeks or months. These gaps coincide with the
completion of a particular project and the start of a new specific and distinct project for which
they were individually rehired. And for each completed project, petitioners submitted the
required Establishment Employment Records to the DOLE which is a clear indicator of
project employment.[131] The records also show that respondents‘ employment had never
been extended beyond the completion of each project or phase thereof for which they had
been engaged.
The project employment contract is not subject to a condition.
The CA likewise erred in holding that paragraph 10 of the employment contract allowing the
extension of respondents‘ employment violates the second requisite of project employment
that the completion or termination of such project or undertaking be determined at the time of
engagement of the employee. It reads:
10 Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring

kailanganin para sa matagumpay na pagtatapos ng mga gawa o proyektong
pinagkasunduan;[132]
To our mind, paragraph 10 is in harmony with the agreement of the parties that respondents‘
employment is coterminous with the particular project stated in their contract. It was placed
therein to ensure the successful completion of the specific work for which respondents were
hired. Thus, in case of delay or where said work is not finished within the estimated date of
completion, respondents‘ period of emplqyrnent can be extended until it is completed. In
which casethe duration and nature of their employment remains the same as previously
determined in the project employment contract; it is still coterminous with the particular
project for which they were fully apprised of at the time of their engagement.
As to the requirement that the completion or termination of the specific project or undertaking
or which respondents were hired should be determined at the time of their engagement, we
rule and so hold that it is enough that Herma Shipyard gave the approximate or target
completion date in the project employment contract. Given the nature of its business and the
scope of its projects which take months or even years to finish, we cannot expect Herma
Shipyard to give a definite and exact completion date. It can only approximate or estimate
the completion date. What is important is that the respondents were apprised at the time of
their engagement that their employment is coterminous with the specific project and that
should their employment be extended by virtue of paragraph 10 the purpose of the extension
is only to complete the same specific project, and not to keep them employed even after the
completion thereof. Put differently, paragraph 10 does not allow the partis to extend the
period of respondents‘ employment after the completion of the specific project for which they
were hired. Their employment can only be extended if that particular project, to which their
employment depends, remains unfinished.
In sum, the CA erred in disregarding the project employment contracts and in concluding
that respondents have become regular employees because they were performing tasks
necessary and desirable to the business of Herma Shipyard and were repeatedly rehired.
The Labor Arbiter and the NLRC, which have expertise in their specific and specialized
jurisdiction, did not err, much less commit grave abuse of discretion in holding that
respondents were project-based employees. Their uniform conclusion is supported by
substantial evidence and should, therefore, be accorded not only respect, but even finality.
WHEREFORE, the instant Petition for Review on Certiorari is GRANTED. The assailed
Decision dated May 30, 2013 of the Court of Appeals in CA-G.R. SP No. 118068
is REVERSED and SET ASIDE. The May 24, 2010 Decision of the Labor Arbiter dismissing
respondents‘ Complaint and affirmed by the National Labor Relations Commission in its
Decision dated September 7, 2010 is REINSTATED and AFFIRMED.
SO ORDERED.
15 MAR 2017 | SUBJECT | LABOR AND

Ernesto Brown Vs. Marswin Marketing, Inc.

and Sany Tan; G.R. No. 206891; March 15,
2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the January 18, 2013 Decision[2] of the Court of
Appeals (CA) in CA-GR. SP No. 124098. The CA annulled and set aside the December 19,
2011[3] and January 31, 2012[4] Resolutions of the National Labor Relations Commission
(NLRC), which affirmed the June 30, 2011 Decision[5] of the Labor Arbiter (LA) declaring
illegal the dismissal from work of Ernesto Brown (Brown). Likewise assailed is the April 23,
2013 CA Resolution[6]denying Brown‘s Motion for Reconsideration.
Factual Antecedents
On June 7, 2010, Brown filed a Complaint[7] for illegal dismissal, nonpayment of salary and
13th month pay as well as claim for moral and exemplary damages and attorney‘s fees
against Marswin Marketing, Inc. (Marswin) and Sany Tan (Tan), its owner and President. He
prayed for reinstatement with full backwages and payment of his other monetary claims.
In his Position Paper,[8] Brown alleged that on October 5, 2009, Marswin employed, him as
building maintenance/ electrician with, a salary of P500.00 per day; he was assigned at
Marswin‘s warehouse in Valenzuela, and was tasked to maintain its sanitation and make
necessary electrical repairs thereon.
Brown further averred that on May 28,2010, he reported, at the Main Office of Marswin, and
was told that it was already his last day of work. Allegedly, he was made to sign a document
that he did not understand; and, thereafter, he was no longer admitted back to work. Thus,
he Insisted that he was terminated without due process of law.
For their part, Marswin/Tan argued in their Position Paper[9] and Comment[10] that on October
4, 2009, Marswin, a domestic corporation engaged in wholesale trade of construction
materials, employed Brown as electrician; during his eight-month stay, Marswin received
negative reports anent Brown‘s work ethics, competence, and efficiency. On May 28, 2010,
they summoned him at its Main Office to purportedly discuss the complaints of the
Warehouse Manager and the Warehouse Supervisor; during the meeting, they informed
.Brown of the following charges against him:
1. x x x [Disobedience to instructions given by the Electrical Engineer and Contractor

during the time [of] the renovation of the staff room at the Valenzuela warehouse;
making himself scarce and worse not responding to calls for errands regarding
electrical connections at the warehouse;
2. Exposing the office to possible criminal liability for installing a jumper at the
Valenzuela warehouse without being told to [make such installation];
3. Not performing his job well as electrician, thus, resulting to additional expenses to the
company, when it could have been avoided had he been following x x x orders given
to him;
4. Unreasonable refusal to perform his assigned tasks despite being repeatedly ordered to
do so x x x.[11]
Marswin/Tan stated that during the meeting, Brown excused himself purportedly to get in
touch with his wife; however, he never returned and no longer reported for work.
According to Marswin/Tan, Brown‘s work as electrician did not involve an activity usually
necessary or desirable in the usual business of Marswin; thus, he was not its regular
employee. They also contended that during the May 28, 2010 meeting, Bernadette S.
Azucena (Azucena), its Accounting Supervisor and Human Resource Head, only
admonished Brown but he left the meeting and no longer returned to work. They attached in
their Position Paper the Sinumpaang Salaysay[12] executed by Azucena stating the alleged
complaints she received against Brown, and the events that transpired during the May 28,
2010 meeting, to wit:
xxxx
11. x x x [Si] Ernesto Brown ay aking pinatawag sa main office noong Mayo 28, 2010
para kausapin dahil sa mga nasabing reklamo sa kanyang pagtatrabaho; noong aking
binanggit sa kanya [ang] mga nasabing reklamo ay wala man lang siyang kaimik imik;
sinabi ko sa kanya na kung ipagpapatuloy [nya] ang maling pagtrabaho at hindi
pagsunod sa mga pinagagawa sa kanya ay walang magagawa ang opisina kundi
tanggalin na siya; nanatili siyang walang imik at nagsabi siya na tatawag siya sa
kanyang asawa at umalis sya; hindi na siya bumalik noon at hindi na pumasok
magmula noon at nakatanggap na nga lang kami ng reklamo [mula] sa tanggapa[n] ng
Labor Arbiter. x x x.
12. Hindi totoo ang kanyang reklamo na siya ay dinismis; may legal na kadahilanan na
para siya ay dismisin pero hindi pa siya dinismis noong Mayo 28, 2010; siya mismo
ang hindi na bumalik sa tanggapan x x x[13]
On June 30, 2011, the LA rendered a Decision declaring Brown‘s dismissal illegal, the
decretal portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainant Ernesto

Brown to have been illegally dismissed from work.
Respondents are directed to reinstate complainant Brown to his former position without loss of
seniority rights and to notify this Office of their compliance thereto within ten (10) days from receipt
of this Decision. Further respondent Marswin Marketing, Inc. is hereby directed to pay complainant
Brown‘s backwages computed from the time he was illegally dismissed from work until his actual
reinstatement pursuant to Article 279 of the Labor Code and to pay his 13th month pay computed as
follows:
a) backwages – P188,335,98
b) 13thmonth
– P 5,308.33
pay
All other claims are dismissed for lack of merit.
SO ORDERED.[14]
The LA held that Brown was a regular employee of Marswin because Marswin/Tan
confirmed hiring him on October 4, 2009; they paid him salary; they had the power to control
bis conduct, especially on how he should do his work; and, they had the power to dismiss
him.
In ruling that Brown was illegally dismissed, the LA noted that the alleged complaints against
Brown were embodied in Azucena‘s affidavit yet no actual complaints or reports against him
were adduced in evidence. The LA was also unconvinced that Brown left Marswin‘s
premises and abandoned his work considering that he filed this illegal dismissal case; and
his employer failed to notify‘ him to report back to work.
On appeal,[15] the NLRC, through its Resolution dated December 19, 2011, affirmed the LA
Decision.
The NLRC held that the purported complaints against Brown were only gathered by Azucena
from the reports she supposedly received from the Warehouse Manager and Supervisor;
thus, her affidavit was hearsay and of poor evidentiary value. It ratiocinated that
Marswin/Tan did not give Brown the opportunity to confront his accusers, and did not
observe due process in terminating him. it also declared that there was no showing that
Brown abandoned his work as Marswin/Tan did not cite him for his alleged refusal to return
to work.
On January 31, 2012, the NLRC denied the Motion for Reconsideration filed by
Marswin/Tan.
Ruling of ike Court of Appeals
Undaunted, Marswin/Tan filed a Petition for Certiorari with the CA argumg that the NLRC
committed grave abase of discretion amounting to lack or excess of jurisdiction hi affirming
the LA Decision.
On January 18, 2013, the CA annulled and set aside the NLRC Resolutions. It entered a
new judgment declaring that Brown was legally dismissed, and therefore not entitled to
backwages and 13th month pay.
According to the CA, aside from his allegation that he was unceremoniously terminated,
Brown presented no evidence supporting such claim. It also held that there was no showing
that Brown was prevented from returning or was deprived of work. It likewise gave weight to
the affidavit of Azucena, which asserted that during the May 28, 2010 meeting, Brown was
not dismissed but was only informed of the complaints against him.
In sum, the CA decreed that this case did not involve the dismissal of an employee on the
ground of abandonment, there being no evidence proving that Brown was actually
dismissed.
In its Resolution dated April 23, 2013, the CA denied the Motion for Reconsideration filed by
Brown.
Issue
Aggrieved, Brown filed this Petition raising the sole issue as follows:
WHETHER THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE
NLRC3S RESOLUTIONS AFFIRMING THE LABOR ARBITER‟S DECISION THAT THE
PETITIONER ERNESTO BROWN WAS ILLEGALLY DISMISSED BY THE PRIVATE
RESPONDENTS.[16]
Brown contends that Marswin failed to discharge its burden to prove that he committed
abandonment. He argues that the fact that he challenges his dismissal disproves that he
abandoned his employment. He also stresses that the reliance of the CA on Azucena‘s
affidavit is unwarranted as no actual complaints as regards his supposed infractions were
adduced in evidence. He posits that the bare allegations of Azucena are hearsay, and are
not proof that he committed any infraction.
Marswin/Tan, on their end, counter that the Court should not give due course to this Petition
because it raises factual issues which are not within the ambit of a petition under Rule 45 of
the Rules of Court.
Our Ruling
The Court grants the Petition.

As a rule, the Court, is not a trier of facts and only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. A departure from this rule is nevertheless
allowed where the factual findings of the CA are contrary to those of the lower courts or
tribunals. In this case, the findings of the CA vary with those of the NLRC and LA. As such,
the Court deems it necessary to review the records and determine which findings and
conclusion truly conform with the evidence .adduced by the parties.[17]
Moreover, in dismissal cases, the employer bears the burden of proving that the employee
was not terminated, qr if dismissed, that the dismissal was legal. Resultantly, the failure of
fee employer to discharge such burden would mean that the dismissal is unjustified and
thus, illegal.[18] The employer cannot simply discharge such burden by its plain assertion that
it did not dismiss the employee; and it is highly absurd if the employer will escape liability by
its mere claim that the employee abandoned his or her work. In fine, where there is no clear
and valid cause for termination, the law treats it as a case of illegal dismissal.[19]
Thus, in order for the employer to discharge its burden to prove that the employee
committed abandonment, which constitutes neglect of duty, and is a just cause for dismissal,
the employer must prove that the employee 1) failed to report for work or had been absent
without valid reason; and 2) had a clear intention to discontinue his or her employment. The
second requirement must be manifested by overt acts and is more determinative in
concluding that the employee is guilty of abandonment. This is because abandonment is a
matter of intention and cannot be lightly presumed from indefinite acts.[20]
Here, Brown contends that on May 28, 2010, his employer informed him that it was already
his last day of work; and, thereafter, he was no longer admitted back to work. On the other
hand, Marswin/Tan confirmed having summoned Brown on May 28, 2010 but they denied
that he was dismissed, but that he left the meeting and since then never returned for work.
Nonetheless, apart from the allegation of abandonment, Marswin/Tan presented no

evidence proving that Brown felled to return without justifiable reasons and had clear
intentions to discontinue his work.
In fact, in her affidavit, Azucena did not specify any overt act on the part of Brown showing
that he intended to cease working for Marswin. At the same time, Azucena did not establish
feat Marswin, on its end, exerted effort to convince Brown to return for work, if only to show
that Marswin did not dismiss him and it was Brown who actually refused to return to
work.[21] And neither did Marswin send any notice to Brown to warn him that his supposed
failure to report would be deemed as abandonment of work.[22] Clearly from the foregoing,
Marswin failed to discharge the burden of proving that Brown abandoned his work.
In addition, on June 7, 2010, or just ten days after Brown‘s last day at work (May 28, 2010),
he already filed an illegal dismissal suit against his employer, Such filing conveys his desire
to return, and strengthens his assertion that he did not abandon his work. To add, in his
Complaint, Brown prayed for reinstatement, which further bolsters his intention to continue
working for Marswin, and. negates abandonment.[23] Indeed, the immediate filing of an illegal
dismissal case especially so when it includes a prayer for reinstatement is totally contrary to
the charge of abandonment.[24]
Furthermore, Marswin/Tan presented the affidavit of Azucena, their Accounting Supervisor

and HR Head, as proof that Brown committed abandonment. However, aside from being
insufficient, self-serving, and unworthy of credence,[25] such affidavit did not allege any actual
complaint against Brown, when Marswin summoned him on May 28, 2010. In said affidavit,
Azucena did not at all specify the name of any officer or employee against whom Brown
allegedly committed an infraction, and neither did any of these persons submit their own
affidavits to prove that Brown should be disciplined by his employer. As stated by Azucena:
5. Na tumanggap ako ng mga reklamo sa aming Warehouse Manager at Warehouse

Supervisor ng aming bodega sa Valenzuela na [si] Ernesto Brown ay madalas na
maraming dahilan kapag ito ay pinapapunta sa Valenzuela para maggawa; x x x
6. Na noong buwan ng Enero hanggang Marso ng taong ito (2010) ay ginawa ang opisina
ng staff sa bodega sa Valenzuela at bilang elek[t]risyan ay inatasan siyang gawin ang
‗electrical wireline‘ doon; Na nakarating [sa amin] ang sumbong nina Electrical
Engineer at Contraktor x x x na si Ernesto Brown ay hindi sumusunod sa mga

pinauutos nila at madalas na makagalitan dahil doon;
7. Na noong nawalan ng electric power ang bodega sa Valenzuela dahil sa electric

shortage ay pinatingnan ito sa kanya, ngunit sa halip na ayusin ng tarna ang problems,
sa electrical wireline ay nilagyan niya ito ng ‗jumper‘ at ito ay nakita ng taga Meralco
x x x;
8. Nito lang buwan ng Abril 2010 ay gumawa na naman ng kapalpakan si Ernesto Brown
dito naman sa main office sa Binondo; iyong electronic lock ng front door ng office sa
third floor x x x ay nagmalfunction at nasira; ang nasabing electronic lock ay covered
pa ng warranty x x x; [n]ang suriin ang nasabing electronic lock ay nalaman nami[n]
na may nakialam sa loob ng lock kung kaya hindi ito nakober ng warranty at nagbayad
ang kumpanya ng halagang P6,000.0[0] a pagsasaayos nito; x x x
9. x x x [Nang] ipatawag nami[n] ang security guard ay doon lang namin nalaman na
pinakialaman pala ni Ernesto Brown ang loob ng nasabing electronic lock samantalang
hindi naman ito pinagagawa sa kanya;
10. Na noong ipasuri ang electrical wireline sa bodega ng Valenzuela, nakita ang sala-
salabat o ‗spaghetti type‘ na wiring nito; ilan[g] beses iniutos sa kanya na ayusin at
iwasto [ang] nasabing wiring pero hindi nya ito ginagawa x x x;
11. Dahil dito si Ernesto Brown ay aldng pinatawag sa main office noong Mayo 28, 2010
para kausapin dahil sa mga nasabing reklamo sa kanyang pagtatrabaho x x x[.][26]
Given all these, there is clearly no showing that Brown committed abandonment instead,
evidence proved that he was illegally dismissed from work.
Thus, as properly found by the LA and affirmed by the NLR.C, by reason of his illegal
termination, Brown is entitled to reinstatement without loss of seniority rights, and to full
backwages, which include allowances and other benefits or their monetary equivalent, from
the time his compensation was withheld until his actual reinstatement.[27]
At the same time, Brown is entitled to attorney‘s fees of 10% of the total monetary award, as
he was compelled to litigate to protect his rights and interest The legal interest of 6% per
annum shall also be imposed on the total monetary awards from the finality of this Decision
until fully paid.[28]
WHEREFORE, the Petition is GRANTED. The January 18, 2013 Decision and April 23,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124098 are REVERSED and
SET ASIDE.
Accordingly, the June 30, 2011 Decision of the Labor Arbiter, as affirmed by the December
19, 2011 Resolution of fee National Labor Relations Commission, is REINSTATED and
AFFIRMED with MODIFICATIONS in that Ernesto Brown is also entitled to receive
attorney‘s fees of 10% of the total monetary awards. The legal interest of 6% per
annum shall be imposed on the monetary grants from the date of finality of this Decision until
fully paid.
SO ORDERED.
30 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

Jack C. Valencia Vs. Classique Vinyl Products

Corporation, et al.; G.R. No. 206390; January
30, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the December 5, 2012 Decision[1] and March
18, 2013 Resolution[2] of the Court of Appeals (CA) in CA G.R. SP No. 120999, which
respectively denied the Petition for Certiorari filed therewith by petitioner Jack C. Valencia
(Valencia) and the motion for reconsideration thereto.
Factual Antecedents
On March 24, 2010, Valencia filed with the Labor Arbiter a Complaint[3] for Underpayment of
Salary and Overtime Pay; Non-Payment of Holiday Pay, Service Incentive Leave Pay,
13th Month Pay; Regularization; Moral and Exemplary Damages; and, Attorney‘s Fees
against respondents Classique Vinyl Products Corporation (Classique Vinyl) and its owner
Johnny Chang (Chang) and/or respondent Cantingas Manpower Services (CMS). When
Valencia, however, asked permission from Chang to attend the hearing in connection with
the said complaint on April 17, 2010, the latter allegedly scolded him and told him not to
report for work anymore. Hence, Valencia amended his complaint to include illegal
dismissal.[4]
In his Sinumpaang Salaysay,[5] Valencia alleged that he applied for work with Classique Vinyl
but was told by the latter‘s personnel office to proceed to CMS, a local manpower agency,
and therein submit the requirements for employment. Upon submission thereof, CMS made
him sign a contract of employment[6] but no copy of the same was given to him. He then
proceeded to Classique Vinyl for interview and thereafter started working for the company in
June 2005 as felitizer operator. Valencia claimed that he worked 12 hours a day from
Monday to Saturday and was receiving P187.52 for the first eight hours and an overtime pay
of P117.20 for the next four hours or beyond the then minimum wage mandated by law. Five
months later, he was made to serve as extruder operator but without the corresponding
increase in salary. He was neither paid his holiday pay, service incentive leave pay, and
13th month pay. Worse, premiums for Philhealth and Pag-IBIG Fund were not paid and his
monthly deductions for Social Security System (SSS) premiums were not properly remitted.
He was also being deducted the amounts of P100.00 and 60.00 a week for Cash Bond and
Agency Fee, respectively. Valencia averred that his salary was paid on a weekly basis but
his pay slips neither bore the name of Classique Vinyl nor of CMS; that all the machineries
that he was using/operating in connection with his work were all owned by Classique Vinyl;
and, that his work was regularly supervised by Classique Vinyl. He further averred that he
worked for Classique Vinyl for four years until his dismissal. Hence, by operation of law, he
had already attained the status of a regular employee of his true employer, Classique Vinyl,
since according to him, Civ1S is a mere labor only contractor. Valencia, therefore, argued
that Classique Vinyl should be held guilty of illegal dismissal for failing to comply with the
twin-notice requirement when it dismissed him from the service and be made to pay for his
monetary claims.
Classique Vinyl, for its part, denied having hired Valencia and instead pointed to CMS as the
one who actually selected, engaged, and contracted out Valencia‘s services. It averred that
CMS would only deploy Valencia to Classique Vinyl whenever there was an urgent specific
task or temporary work and these occasions took place sometime in the years 2005, 2007,
2009 and 2010. It stressed that Valencia‘s deployment to Classique Vinyl was intermittent
and limited to three to four months only in each specific year. Classique Vinyl further
contended that Valencia‘s performance was exclusively and directly supervised by CMS and
that his wages and other benefits were also paid by the said agency. It likewise denied
dismissing Valencia from work and instead averred that on April 16, 2010, while deployed
with Classique Vinyl, Valencia went on a prolonged absence from work for reasons only
known to him. In sum, Classique Vinyl asserted that there was no employer-employee
relationship between it and Valencia, hence, it could not have illegally dismissed the latter
nor can it be held liable for Valencia‘s monetary claims. Even assuming that Valencia is
entitled to monetary benefits, Classique Vinyl averred that it cannot be made to pay the
same since it is an establishment regularly employing less than 10 workers. As such, it is
exempted from paying the prescribed wage orders in its area and other benefits under the
Labor Code. At any rate, Classique Vinyl insisted that Valencia‘s true employer was CMS,
the latter being an independent contractor as shown by the fact that it was duly incorporated
and registered not only with the Securities and Exchange Commission but also with the
Department of Labor and Employment; and, that it has substantial capital or investment in
connection with the work performed and services rendered by its employees to clients.
CMS, on the other hand, denied any employer-employee relationship between it and
Valencia. It contended that after it deployed Valencia to Classique Vinyl, it was already the
latter which exercised full control and supervision over him. Also, Valencia‘s wages were
paid by Classique Vinyl only that it was CMS which physically handed the same to Valencia.
On September 13, 2010, the Labor Arbiter issued a Decision,[7] the pertinent portions of
which read:
Is [Valencia] a regular employee of respondent [Classique Vinyl]?
The Certificate of Business Name Registration issued by the Department of Trade and Industry dated
17 August 2007 and the Renewal of PRPA License No. M-08-03-269 for the period 29 August 2008
to 28 August 2010 issued by the Regional Director of the National Capital Region of the Department
of Labor and Employment [on the] 1st day of September 2008 are pieces of evidence to prove that
respondent [CMS] is a legitimate Private Recruitment and Placement Agency.
Pursuant to its business objective, respondent CMS entered into several Employment Contracts with
complainant Valencia as Contractual Employee for deployment to respondent [Classique Vinyl], the
last of which was signed by [Valencia] on 06 February 2010.
The foregoing Employment Contract for a definite period supports respondent [Classique Vinyl‘s]
assertion that [Valencia] was not hired continuously but intermittently ranging from 3 months to 4
months for the years 2005, 2007, 2009 and 2010. Notably, no controverting evidence was offered to
dispute respondent [Classiquc Vinyl‘s] assertion.
Obviously, [Valencia] was deployed by CMS to [Classique Vinyl] for a fixed period.
In Pangilinan v. General Milling Corporation, G.R. No. 149329, July 12, 2004, the Supreme Court
ruled that it does not necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities. There is thus nothing essentially
contradictory between a definite period of employment and the nature of the employee‘s duties.
Thus, even if respondent [Classique Vinyl] exercises full control and supervision over the activities
performed by [Valencia], the latter‘s employment cannot be considered as regular.
Likewise, even if [Valencia] is considered the regular employee of respondent CMS, the complaint
for illegal dismissal cannot prosper as [the] employment was not terminated by respondent CMS.
On the other hand, there is no substantial evidence to support [Valencia‘s] view that he was actually
dismissed from his employment by respondent [Classique Vinyl]. After all, it is elementary that he
who makes an affirmative allegation has the burden of proof. On this score, [Valencia] failed to
establish that he was actually dismissed from his job by respondent [Classique Vinyl], aside from his
bare allegation.
With regard to underpayment of salary, respondent CMS admitted that it received from respondent
[Classique Vinyl] the salary for [Valencia‘s] deployment. Respondent CMS never contested that the
amount received was sufficient for the payment of [Valencia‘s] salary.
Furthermore, respondent [Classique Vinyl] cannot be obliged to pay [Valencia‘s] overtime pay,
holiday pay, service incentive leave and 13th month pay as well as the alleged illegal deduction on the
following grounds:
a) [Valencia] is not a rank-and-file employee of [Classique Vinyl];
b) No proof was offered to establish that [Valencia] actually rendered overtime services;
c) [Valencia had] not [worked] continuously or even intermittently for [one whole] (1) year[-]period
during the specific year of his deployment with respondent [Classique Vinyl] to be entitled to service
incentive leave pay.
d) [Valencia] failed to offer substantia1 evidence to prove that respondent [Classique Vinyl] illegally
deducted fiom his salary the alleged agency and cash bond.
Moreover, as against respondent CMS[,] the record is bereft of factual basis for the exact computation
of [Valencia‘s] money claims as it has remained uncontroverted that [Valencia] was not deployed
continuously neither with respondent [Classique Vinyl] and/or to such other clientele.
WHEREFORE, premises considered, judgment is hereby rendered [d]ismissing the above-entitled

case fur lack of merit and/or factual basis.
SO ORDERED.[8]
Valencia promptly appealed to the National Labor Relations Commission (NLRC). Applying
the four-fold test, the NLRC, however, declared CMS as Valencia‘s employer in its
Resolution[9] dated April 14, 2011, viz.:
In Order to determine the existence of an employer-employee relationship, the following yardstick

had been consistently applied: (1) the selection and engagement; (2) payment of wages; (3) power of
dismissal and; (4) the power to control the employee[‗]s conduct.
In this case, [Valencia] admitted that he applied for work with respondent [CMS] x x x. Upon the
acceptance of his application, he was made to sign an employment contract x x x. [Valencia] also
admitted that he received his wages from respondent [CMS] x x x. As a matter of tact, respondent
[CMS] argued that [Valencia] was given a non-cash wage in the approximate amount of Php3,000.00
x x x.
Notably, it is explicitly stated in the employment contract of [Valencia] that he is required to observe
all the rules and regulations of the company as well as [the] lawful instructions of the management
during his employment. That failure to do so would cause the termination of his employment contract.
The pertinent provision of the contract reads:
2. The employee shall observe all the rules and regulations of the company during the period of
employment and [the] lawful instructions of the management or its representatives. Failure to do so
or if performance is below company standards, management [has] the right to immediately cancel
this contract. x x x
The fact that [Valencia] was subjected to such restriction is an evident exercise of the power of
control over [Valencia].
The power of control of respondent [CMS] over Valencia was further bolstered by the declaration of
the former that they will not take against [Valencia] his numerous tardiness and absences at work
and[;] his nonobservance of the company rules. The statement of [CMS] reads:
Needless to say that [Valencia] in the course of his employment has incurred many infractions like
tardiness and absences, non-observance of company rules, but respondent [CMS], in reiteration will
not take this up as leverage against [Valencia]. x x x
Though [Valencia] worked in the premises of Classique Vinyl x x x and that the [equipment] he used
in the performance of his work was provided by the latter, the same is not sufficient to establish
employer-employee relationship between [Valencia] and Classique Vinyl x x x in view of the
foregoing circumstances earlier reflected. Besides, as articulated by jurisprudence, the power of
control does not require actual exercise of the power but the power to wield that power x x x.
With the foregoing chain of events, it is evident that [Valencia] is an employee of respondent [CMS].
x x x x[10]
Accordingly, the NLRC held that there is no basis for Valencia to hold Classique Vinyl liable
for his alleged illegal dismissal as well as for his money claims. Hence, the NLRC dismissed
Valencia‘s appeal and affirmed the decision of the Labor Arbiter.
Valencia‘s motion for reconsideration thereto was likewise denied for lack of merit in the
Resolution[11] dated June 8, 2011.
When Valencia sought recourse from the CA, the said court rendered a Decision[12] dated
December 5, 2012 denying his Petition for Certiorari and affirming the ruling of the NLRC.
Valencia‘s motion for reconsideration was likewise denied in a Resolution[13] dated March 18,
2013.
Hence, this Petition tor Review on Certiorari imputing upon the CA the following errors:
WITH DUE RESPECT, IT IS A SERIOUS ERROR WHICH CONSITITUTE[S] GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION ON THE PART
OF THE HONORABLE COURT OF APPEALS TO HAVE RULED THAT PETITIONER IS AN
EMPLOYEE OF CMS AND FURTHER RULED THAT HE IS NOT ENTITLED TO HIS
MONETARY CLAIMS.
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS[‗] DECISION AND

RESOLUTION ARE CONTRARY TO LAW AND WELL-SETTLED RULE.[14]
Valencia points out that the CA, in ruling that he was an employee of CMS, relied heavily on
the employment contract which the latter caused him to sign. He argues, however, that the
said contract deserves scant consideration since aside from being improperly filled up (there
were many portions without entries), the same was not notarized, Valencia likewise stresses
that the burden of proving that CMS is a legitimate job contractor lies with respondents.
Here, neither Classique Vinyl nor CMS was able to present proof that the latter has
substantial capital to do business as to be considered a legitimate independent contractor.
Hence, CMS is presumed to be a mere labor-only contractor and Classique Vinyl, as CMS‘
principal, was Valencia‘s true employer. As to his alleged dismissal, Valencia argues that
respondents failed to establish just or authorized cause, thus, his dismissal was illegal Anent
his monetary claims, Valencia invokes the principle that he who pleads payment has the
burden of proving it. Since respondents failed to present even a single piece of evidence that
he has been paid his labor standards benefits, he believes that he is entitled to recover them
from respondents who must be held jointly and severally liable tor the same. Further,
Valencia contends that respondents should be assessed moral and exemplary damages for
circumventing pertinent labor laws by preventing him from attaining regular employment
status. Lastly, for having been compelled to engage the services of counsel, Valencia claims
that he is likewise entitled to attorney‘s fees.
For their part, respondents Classique Vinyl and Chang point out that the issues raised by
Valencia involve questions of fact which are not within the ambit of a petition for review
on certiorari. Besides, findings of facts of the labor tribunals when affirmed by the CA are
generally binding on this Court. At any rate, the said respondents reiterate the arguments
they raised before the labor tribunals and the CA.
With respect to respondent CMS, the Court dispensed with the filing of its comment [15] when
the resolution requiring it to file one was returned to the Court unserved[16] and after Valencia
informed the Court that per Certification[17] of the Office of the Treasurer of Valenzuela City
where CMS‘s office was located, the latter had already closed down its business on March
21, 2012.
Our Ruling
There is no merit in the Petition.
The core issue here is whether there exists an employer-employee relationship between
Classique Vinyl and Valencia. Needless to state, it is from the said determination that the
other issues raised, i.e., whether Valencia was illegally dismissed by Classique Vinyl and
whether the latter is liable for his monetary claims, hinge. However, as correctly pointed out
by Classique Vinyl, ―[t]he issue of whether or not an employer-employee relationship existed
between [Valencia] and [Classique Vinyl] is essentially a question of fact.‖[18] ―The Court is not
a trier of facts find will not review the factual findings of the lower tribunals as these are
generally binding and conclusive.‖[19] While there are recognized exceptions,[20] none of them
applies in this case.
Even if otherwise, the Court is not inclined to depart from the uniform findings of the Labor
Arbiter, the NLRC and the CA.
―It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial
proceedings, ‗the quantum of proof necessary is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.‘ ‗The burden of proof rests upon the party who asserts the affirmative of an
issue‘.‖[21] Since it is Valencia here who is claiming to be an employee of Classique Vinyl, it is
thus incumbent upon him to proffer evidence to prove the existence of employer-employee
relationship between them. He ―needs to show by substantial evidence that he was indeed
an employee of the company against which he claims illegal dismissal.‖[22] Corollary, the
burden to prove the element of an employer employee relationship, viz.: (l) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the power of control, lies upon Valencia.
Indeed, there is no hard and fast rule designed to establish the aforementioned elements of
employer-employee relationship.[23] ―Any competent and relevant evidence to prove the
relationship may be admitted.‖[24] In this case however, Valencia failed to present competent
evidence, documentary or otherwise, to support his claimed employer employee relationship
between him and Classique Vinyl. All he advanced were mere tactual assertions
unsupported by proof.
In fact, most of Valencia‘s allegations even militate against his claim that Classique Vinyl
was his true employer. For one, Valencia stated in his Sinumpaang Salaysay that his
application was actually received and processed by CMS which required him to submit the
necessary requirements for employment. Upon submission thereof, it was CMS that caused
him to sign an employment contract, which upon perusal, is actually a contract between him
and CMS. It was only after he was engaged as a contractual employee of CMS that he was
deployed to Classique Vinyl. Clearly, Valencia‘s selection and engagement was undertaken
by CMS and conversely, this negates the existence of such element insofar as Classique
Vinyl is concerned. It bears to state, in addition, that as opposed to Valencia‘s argument, the
lack of notarization of the said employment contract did not adversely affect its veracity and
effectiveness since significantly, Valencia does not deny having signed the same.[25] The CA,
therefore, did not err in relying on the said employment contract in its determination of the
merits of this case. For another, Valencia himself acknowledged that the pay slips[26] he
submitted do not bear the name of Classique Vinyl. While the Court in Vinoya v. National
Labor Relations Commission[27] took judicial notice of the practice of employer to course
through the purported contractor the act of paying wages to evade liabilities under the Labor
Code, hence, the non-appearance of employer‘s name in the pay slip, the Court is not
inclined to rule that such is the case here. This is considering that although CMS claimed in
its supplemental Position Paper/Comment that the money it used to pay Valencia‘s wages
came from Classique Vinyl,[28] the same is a mere allegation without proof. Moreover, such
allegation is inconsistent with CMS‘s earlier assertion in its Position Paper [29] that Valencia
received from it non-cash wages in an approximate amount of P3,000.00. A clear showing of
the element of payment of wages by Classique Vinyl is therefore absent.
Aside from the afore-mentioned inconsistent allegations of Valencia, his claim that his work
was supervised by Classique Vinyl does not hold water. Again, the Court finds the same as
a self-serving assertion unworthy of credence. On the other hand, the employment contract
which Valencia signed with CMS categorically states that the latter possessed not only the
power of control but also of dismissal over him, viz.:
xxxx
2. That the employee shall observe all rules and regulations of the company during the period of
employment and [the] lawful instructions of the management or its representatives. Failure to do so or
if performance is below company standards, management [has] the right to immediately cancel this
contract.
x x x x[30]
Clearly, therefore, no error can be attributed on the part of the labor tribunals and the CA in
ruling out the existence of employer-employee relationship between Valencia and Classique
Vinyl.
Further, the Court finds untenable Valencia‘s argument that neither Classique Vinyl nor CMS
was able to present proof that the latter is a legitimate independent contractor and therefore
unable to rebut the presumption that a contractor is presumed to be a labor-only contractor.
―Generally, the presumption is that the contractor is a labor-only [contractor] unless such
contractor overcomes the burden of proving that it has the substantial capital, investment,
tools and the like.‖[31] Here, to prove that CMS was a legitimate contractor, Classique Vinyl
presented the former‘s Certificate of Registration[32] with the Department of Trade and
Industry and, License[33] as private recruitment and placement agency from the Department
of Labor and Employment. Indeed, these documents are not conclusive evidence of the
status of CMS as a contractor. However, such fact of registration of CMS prevented the legal
presumption of it being a mere labor-only contractor from arising.[34] In any event, it must be
stressed that ―in labor-only contracting, the statute creates an employer-employee
relationship for a 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. The principal employer therefore becomes
solidarity liable with the labor-only contractor for all the rightful claims of the
employees.‖[35] The facts of this case, however, failed to establish that there is any
circumvention of labor laws as to call for the creation by the statute of an employer-
employee relationship between Classique Vinyl and Valencia. In fact, even as against CMS,
Valencia‘s money claims has been debunked by the labor tribunals and the CA. Again, the
Court is not inclined to disturb the same.
In view of the above disquisition, the Court finds no necessity to dwell on the issue of
whether Valencia was illegally dismissed by Classique Vinyl and whether the latter is liable
for Valencia‘s money claims.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed December 5,
2012 Decision and March 18, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
120999 are AFFIRMED.
SO ORDERED.
23 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | CERTIFICATION

ELECTION | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
Asian Institute of Management Vs. Asian

Institute of Management Faculty Association;
G.R. No. 207971; January 23, 2017
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the January 8, 2013 Decision[2] of the Court of
Appeals (CA) which dismissed the Petition for Certiorari[3] in CA-G.R. SP No. 114122, and its
subsequent June 27, 2013 Resolution[4] denying herein petitioner‘s Motion for
Reconsideration.[5]
Factual Antecedents
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 election[6] 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
registration[8] – docketed as DOLE Case No. NCR-OD-0707-001-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
Order[9] 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 Decision[11] and May 4, 2009 Resolution,[12] decreeing thus:
WHEREFORE, the appeal filed by the Asian Institute of Management Faculty Association (AIMFA)
is GRANTED. The Order dated 30 August 2007 of DOLE-NCR Mediator-Arbiter Michael T. Parado
is hereby REVERSED and SET ASIDE.
Accordingly, let the entire records of the case be remanded to DOLE-NCR for the conduct of a
certification election among the faculty members of the Asian Institute of Management (AIM), with
the following choices:
1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION (AIMFA); and
2. No Union.
SO ORDERED.[13]
Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order[14] 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 Relations[15] (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.[18]
CA-G.R.SP No. 109487 and G.R. No. 197089
Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE Secretary‘s
February 20, 2009 Decision and May 4, 2009 Resolution relative to DOLE Case No. NCR-
OD-M-0705-007, or respondent‘s petition for certification election. Docketed as CA G.R. SP
No. 109487, the petition is based on the arguments that 1) the bargaining unit within AIM
sought to be represented is composed of managerial employees who are not eligible to join,
assist, or form any labor organization, and 2) respondent is not a legitimate labor
organization that may conduct a certification election.
On October 22, 2010, the CA rendered its Decision[19] containing the following
pronouncement:
AIM insists that the members of its tenure-track faculty are managerial employees, and therefore,
ineligible to join, assist or form a labor organization. It ascribes grave abuse of discretion on
SOLE[20] for its rash conclusion that the members of said tenure-track faculty are not managerial
employees solely because the faculty‘s actions are still subject to evaluation, review or final approval
by the board of trustees (―BOT‖). AIM argues that the BOT does not manage the day-to-day affairs,
nor the making and implementing of policies of the Institute, as such functions are vested with the
tenure-track faculty.
We agree.
Article 212(m) of the Labor Code defines managerial employees as:
‗ART. 212. Definitions. – x x x
(m) ‗Managerial employee‗ is one who is vested with 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.‘
There are, therefore, two (2) kinds of managerial employees under Art. 212(m) of the Labor Code.
Those who ‗lay down x x x management policies‘, such as the Board of Trustees, and those who
‗execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees‘.
xxxx
On its face, the SOLE‘s opinion is already erroneous because in claiming that the ‗test of
supervisory‘ or ‗managerial status‘ depends on whether a person possesses authority to act in the
interest of his employer in the matter specified in Article 212(m) of the Labor Code and Section
1(m) of its Implementing Rules, he obviously was referring to the old definition of a managerial
employee. Such is evident in his use of ‗supervisory or managerial status‘, and reference to ‗Section
1(m) of its Implementing Rules‘. For presently, as aforequoted in Article 212(m) of the Labor Code
and as amended by Republic Act 6715 which took effect on March 21, 1989, a managerial
employee is already different from a supervisory employee. x x x
xxxx
In further opining that a managerial employee is one whose ‗authority is not merely routinary or
clerical in nature but requires the use of independent judgment‗, a description which fits now
a supervisory employee under Section 1(t), Rule I, Book V of the Omnibus Rules Implementing the
Labor Code, it then follows that the SOLE was not aware of the change in the law and thus gravely
abused its discretion amounting to lack of jurisdiction in concluding that AIM‘s ‗tenure-track‗
faculty are notmanagerial employees.
SOLE further committed grave abuse of discretion when it concluded that said tenure-track faculty
members are not managerial employees on the basis of a ‗footnote‘ in AIM‘s Policy Manual, which
provides that ‗the policy[-]making authority of the faculty members is merely
recommendatory in nature considering that the faculty standards they formulate are still subject to
evaluation, review or final approval by the [AIM]‟s Board of Trustees‗. x x x
xxxx
Clearly, AIM‘s tenure-track faculty do not merely recommend faculty standards. They ‗determine all
faculty standards‗, and are thus managerial employees. The standards‘ being subjected to the
approval of the Board of Trustees would not make AIM‘s tenure-track faculty non-managerial
because as earlier mentioned, managerial employees are now of two categories: (1) those who ‗lay
down policies‘, such as the members of the Board of Trustees, and those who ‗execute management
policies (etc.)‘, such as AIM‘s tenure-track faculty.
xxxx
It was also grave abuse of discretion on the part of the SOLE when he opined that AIM‘s tenure-track
faculty members are not managerial employees, relying on an impression that they were subjected to
rigid observance of regular hours of work as professors. x x x
xxxx
More importantly, it behooves the SOLE to deny AFA‟s appeal in light of the February 16, 2009
Order of Regional Director Agravante delisting AFA from the roster of legitimate labor
organizations. For, only legitimate labor organizations are given the right to be certified as sole
and exclusive bargaining gent in an establishment.
xxxx
Here, the SOLE committed grave abuse of discretion by giving due course to AFA‘s petition for
certification election, despite the fact that: (1) AFA‘s members are managerial employees; and (2)
AFA is not a legitimate labor organization. These facts rendered AFA ineligible, and without any
right to file a petition for certification election, the object of which is to determine the sole and
exclusive bargaining representative of qualified AIM employees.
WHEREFORE, the instant petition is GRANTED. The assailed Decision dated February 20, 2009
and Resolution dated May 4, 2009 are hereby REVERSED and SET ASIDE. The Order dated
August 30, 2007 of Mediator-Arbiter Parado is hereby REINSTATED.
SO ORDERED.[21] (Emphasis in the original)
Respondent sought reconsideration, but was denied. It thus instituted a Petition for Review
on Certiorari before this Court on July 4, 2011. The Petition, docketed as G.R. No. 197089,
remains pending to date.
The Assailed Ruling of the Court of Appeals
Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM‘s petition

for cancellation of respondent‘s certificate of registration, petitioner filed on May 24, 2010 a
Petition for Certiorari[22] before the CA, questioning the BLR‘s December 29, 2009 decision
and March 18, 2010 resolution. The petition, docketed as CA-G.R. SP No. 114122, alleged
that the BLR committed grave abuse of discretion in granting respondent‘s appeal and
affirming its certificate of registration notwithstanding that its members are managerial
employees who may not join, assist, or form a labor union or organization.
On January 8, 2013, the CA rendered the assailed Decision, stating as follows:
The petition lacks merit
xxxx
It is therefore incumbent upon the Institute to prove that the BLR committed grave abuse of discretion
in issuing the questioned Decision. Towards this end, AIM must lay the basis by showing that
Article 239. Grounds for cancellation of union registration. The following may constitute grounds for
cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members
who took part in the ratification;
(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Article 238 of the Labor Code provides that the enumeration of the grounds for cancellation of union
registration, is exclusive; in other words, no other grounds for cancellation is acceptable, except for
the three (3) grounds stated in Article 239. The scope of the grounds for cancellation has been
explained –
For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with the
election of officers, the minutes of the election of officers, the list of voters, or failure to submit these
doctm1ents together with the list of the newly elected-appointed officers and their postal addresses to
the BLR.
The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent‘s
certificate of registration. The cancellation of a union‘s registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds tor
cancellation of union registration under 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.[23]
In this regard, it has also been held that:
Another factor which militates against the veracity of the allegations in the Sinumpaang Petisyon is
the lack of particularities on how, when and where respondent union perpetrated the alleged fraud on
each member. Such details are crucial for, in the proceedings for cancellation of union registration on
the ground of fraud or misrepresentation, what needs to be established is that the specific act or
omission of the union deprived the complaining employees-members of their right to choose.[24]
A cursory reading of the Petition shows that AIM did NOT allege any specific act of fraud or
misrepresentation committed by AFA. What is clear is that the Institute seeks the cancellation of the
registration of AFA based on Article 245 of the Labor Code on the ineligibility of managerial
employees to form or join labor unions. Unfortunately for the petitioner, even assuming that there is a
violation of Article 245, such violation will not result in the cancellation of the certificate of
registration of a labor organization.
It should be stressed that a Decision had already been issued by the DOLE in the Certification
Election case; and the Decision ordered the conduct of a certification election an1ong the faculty
members of the Institute, basing its directive on the finding that the members of AFA were not
managerial employees and are therefore eligible to form, assist and join a labor union. As a matter of
fact, the certification election had already been held on October 16, 2009, albeit the results have not
yet been resolved as inclusion/exclusion proceedings are still pending before the DOLE. The remedy
available to the Institute is not the instant Petition, but to question the status of the individual union
members of the AFA in the inclusion/exclusion proceedings pursuant to Article 245-A of the Labor
Code, which reads:
Article 245-A. Effect of inclusion as members of employees outside the bargaining unit. – The
inclusion as union members of employees outside the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said employees are automatically deemed removed from
the list of membership of said union.
Petitioner insists that Article 245-A is not applicable to this case as all AFA members are managerial
employees. We are not persuaded.
The determination of whether any or all of the members of AFA should be considered as managerial
employees is better left to the DOLE because,
It has also been established that in the determination of whether or not certain employees arc
managerial employees, this Court accords due respect and therefore sustains the findings of fact made
by quasi-judicial agencies which are supported by substantial evidence considering their expertise in
their respective fields.[25]
From the discussion, it is manifestly clear that the petitioner failed to prove that the BLR committed
grave abuse of discretion; consequently, the Petition must fail.
WHEREFORE, the Petition is hereby DENIED. The Decision and Resolution of public respondent
Bureau of Labor Relations in BLR-A-C-19-3-6-09 (NCR-OD-0707-001) are hereby AFFIRMED.
SO ORDERED.[26] (Emphasis in the original)
Petitioner filed its Motion for Reconsideration, which was denied by the CA via its June 27,
2013 Resolution. Hence, the instant Petition.
In a November 10, 2014 Resolution,[27] the Court resolved to give due course to the Petition.
Issue
Petitioner claims that the CA seriously erred in affirming the dispositions of the BLR and thus
validating the respondent‘s certificate of registration notwithstanding the fact that its
members are all managerial employees who are disqualified from joining, assisting, or
forming a labor organization.
Praying that the assailed CA dispositions be set aside and that the DOLE-NCR Regional
Director‘s February 16, 2009 Order granting AIM‘s petition for cancellation of respondent‘s
certificate of registration and ordering its delisting from the roster of legitimate labor
organizations be reinstated instead, petitioner maintains in its Petition and Reply[28] that
respondent‘s members are all managerial employees; that the CA erred in declaring that
even if respondent‘s members are all managerial employees, this alone is not a ground for
cancellation of its certificate of registration; that precisely, the finding in DOLE Case No.
NCR-OD-M-0705-007, which the CA affirmed in CA-G.R. SP No. 109487, is that
respondent‘s members are managerial employees; that respondent‘s declaration that its
members are eligible to join, assist, or form a labor organization is an act of
misrepresentation, given the finding in CA-G.R. SP No. 109487 that they are managerial
employees; and that the grounds for cancellation of union registration enumerated in Article
239 of the Labor Code are not exclusive.
In its Comment,[29] respondent maintains that the CA was right to treat petition rs case for
cancellation of its union registration with circumspection; that petitioner‘s ground tor tiling the
petition for cancellation is not recognized under Article 239; that petitioner‘s accusation of
misrepresentation is unsubstantiated, and is being raised for the first time at this stage; that
its members are not managerial employees; and that petitioner‘s opposition to respondent‘s
attempts at self-organization constitutes harassment, oppression, and violates the latter‘s
rights under the Labor Code and the Constitution.
Our 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 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.
x x x if a particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that same point or question was in issue and
adjudicated in1he first suit. x x x Identity of cause of action is not required, but merely identity of
issues.[31] (Citation omitted)
WHEREFORE, considering that the outcome of this case depends on the resolution of the
issue relative to the nature of respondent‘s membership pending in G.R. No. 197089, this
case is ordered CONSOLIDATED with G.R. No. 197089.
SO ORDERED.
18 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

Rutcher T. Dagasdas Vs. Grand Placement and

General Services Corporation; G.R. No.
205727; January 18, 2017
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari assailing the September 26, 2012
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set
aside the March 29, 20102 and June 2, 20103 Resolutions of the National Labor Relations
Commission (NLRC) in NLRC LAC OFW-L-02-000071-10, and concomitantly reinstated the
November 27, 2009 Decision4 of the Labor Arbiter (LA) dismissing the Complaint for lack of
merit.
Also challenged is the January 28, 2013 Resolution5 denying the Motion for Reconsideration
filed by Rutcher T. Dagasdas (Dagasdas ).
Factual Antecedents
Grand Placement and General Services Corp. (GPGS) is a licensed
recruitment or placement agency in the Philippines while Saudi Aramco (Aramco) is its
counterpart in Saudi Arabia. On the other hand, Industrial & Management Technology
Methods Co. Ltd. (ITM) is the principal of GPGS, a company existing in Saudi Arabia. 6
In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one-year contract7 with a
monthly salary of Saudi Riyal (SR) 5,112.00. Before leaving the Philippines, Dagasdas
underwent skill training8 and pre-departure orientation as Network Technician.9Nonetheless,
his Job Offer10 indicated that he was accepted by Aramco and ITM for the position of ―Supt.‖
Dagasdas contended that although his position under his contract was as a Network
Technician, he actually applied for and was engaged as a Civil Engineer considering that his
transcript of records, 11 diploma 12 as well as his curriculum vitae 13 showed that he had a
degree in Civil Engineering, and his work experiences were all related to this field.
Purportedly9 the position of Network Technician was only for the purpose of securing a visa
for Saudi Arabia because ITM could not support visa application for Civil Engineers. 14
On February 8, 2008, Dagasdas arrived in Saudi Arabia.15 Thereafter, he signed with ITM a
new employment contract16 which stipulated that the latter contracted him as
Superintendent or in any capacity within the scope of his abilities with salary of SR5,112.00
and allowance of SR2,045.00 per month. Under this contract, Dagasdas shall be placed
under a three-month probationary period; and, this new contract shall cancel all contracts
prior to its date from any source.
On February 11, 2008, Dagasdas reported at ITM‘s worksite in Khurais, Saudi

Arabia. 17 There, he was allegedly given tasks suited for a Mechanical Engineer, which
were foreign to the job he applied for and to his work experience. Seeing that he would not
be able to perform well in his work, Dagasdas raised his conce1n to his Supervisor in the
Mechanical Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil Construction Engineer,
and was issued anidentification card good for one month. Dagasdas averred that on March
9, 2008, he was directed to exit the worksite but Rashid H. Siddiqui (Siddiqui), the Site
Coordinator Manager, advised him to remain in the premises, and promised to secure him
the position he applied for. However, before Dagasdas‘ case was investigated, Siddiqui had
severed his employment with ITM. 18
In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, 11M
gave him a termination notice20 indicating that his last day of work was on April 30, 2008,
and he was dismissed pursuant to clause 17.4.3 of his contract, which provided that ITM
reserved the right to terminate any employee within the three-month probationary period
without need of any notice to the employee.21
Before his repatriation, Dagasdas signed a Statement of Quitclaim22 with Final

Settlement23 stating that ITM paid him all the salaries and benefits for his services from
February 11, 2008 to April 30, 2008 in the total amow1t of SR7,156.80, and ITM was
relieved from all financial obligations due to Dagasdas.
On June 24, 2008, Dagasdas returned to the Philippines.24 Thereafter, he filed an illegal
dismissal case against GPGS, ITM, and Aramco.
Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the
mismatch in the work assigned to him. He contended that such claim was supported by
exchanges of electronic mail (e-mail) establishing that GPGS, ITM, and Aramco were aware
of the job mismatch that had befallen him. 25 He also argued that although he was engaged
as a project employee, he was still entitled to security of tenure for the duration of his
contract. He maintained that GPGS, ITM, and Aramco merely invented ―imaginary cause/s‖
to terminate him. Thus, he claimed that he was dismissed without cause and due process of
law.26
GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained
that Dagasdas was aware that he was employed as Network Technician but he could not
perform his work in accordance with the standards of his employer. They added that
Dagasdas was informed of his poor performance, and he conformed to his termination as
evidenced by his quitclaim. 27 They also stressed that Dagasdas was only a probationary
employee since he worked for ITM for less than three months.28
On November 27, 2009, the LA dismissed the case for lack of merit. The LA pointed out that
when Dagasdas signed his new employment contract in Saudi Arabia, he accepted its
stipulations, including the fact that he had to undergo probationary status. She declared that
this new contract was more advantageous for Dagasdas as his position was upgraded to
that of a Superintendent, and he was likewise given an allowance of SR 2,045.00 aside from
his salary of SR 5,112.00 per month. According to the LA, for being more favorable, this new
contract was not prohibited by law. She also decreed that Dagasdas fell short of the
expected work performance; as such, his employer dismissed him as part of its management
prerogative.
Consequently, Dagasdas appealed to the NLRC.
On March 29, 2010, the NLRC issued a Resolution finding Dagasdas‘ dismissal illegal. The
decretal portion of the NLRC Resolution reads:
WHEREFORE, the decision appealed from is hereby REVERSED, and the respondent[s] are hereby
ordered to pay the complainant the salaries corresponding to the unexpired portion of his contract
amounting to SR 46,008 (SR 5112 x 9 months, or from May 1, 2008 to January 31, 2009), plus ten
percent (10%) thereof as attorney‘s foes. The respondents are jointly and severally liable for the
judgment awards, which are payable in Philippine currency converted on the basis of the exchange
rate prevailing at the time of actual payment.
SO ORDERED.29
The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was ―recruited on
paper‖ by GPGS as Network Technician but the real understanding between the parties was
to hire him as Superintendent. It held that GPGS erroneously recruited Dagasdas, and failed
to inform him that he was hired as a ―Mechanical Superintendent‖ meant for a Mechanical
Engineer. It declared that while ITM has the prerogative to continue the employment of
individuals only if they were qualified, Dagasdas‘ dismissal amounted to illegal termination
since the mismatch between his qualifications and the job given him was no fault of his.
The NLRC added that Dagasdas should not be made to suffer the consequences of the
miscommunication between GPGS and ITM considering that the government obligates
employment agencies recruiting Filipinos for overseas work to ―select only medically and
technically qualified recruits.‖30
On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated
March 29, 2010.
Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion on the part of the NLRC in ruling that Dagasdas was illegally dismissed.
On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA
Decision dismissing the case for lack of merit.
The CA could not accede to the conclusion that the real agreement between the parties was
to employ Dagasdas as Superintendent. It stressed that Dagasdas left the Philippines
pursuant to his employment contract indicating that he was to work as a Network Technician;
when he arrived in Saudi Arabia and signed a new contract for the position of a
Superintendent, the agreement was with no participation of GPGS, and said new contract
was only between Dagasdas and ITM. It emphasized that after commencing work as
Superintendent, Dagasdas realized that he could not perform his tasks, and ―[s]eemingly, it
was [Dagasdas] himself who voluntarily withdrew from his assigned work for lack of
competence.‖31 It faulted the NLRC for falling to consider that Dagasdas backed out as
Superintendent on the excuse that the same required the skills of a Mechanical Engineer.
In holding that Dagasdas‘ dismissal was legal, the CA gave credence to Dagasdas‘
Statement of Quitclaim and Final Settlement. It ruled that for having voluntarily accepted
money from his employer, Dagasdas accepted his termination and released his employer
from future financial obligations arising from his past employment with it.
On January 28, 2013, the CA denied Dagasdas‘ Motion for Reconsideration.
Hence, Dagasdas filed this Petition raising these grounds:
[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN

IT REVERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATION‘S
COMMISSION.32
[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS
THAT THE CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE
ADVANTAGEOUS TO THE LATTER AND THAT IT WAS [H]IS PERSONAL ACT OR
DECISION [TO SIGN] THE SAME.33
[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE
NLRC FOR ITS FAILURE TO INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND
STATEMENT OF QUITCLAIM SIGNED BY [DAGASDAS].34
Dagasdas reiterates that he was only recruited ―on paper‖ as a Network Technician but the
real agreement between him and his employer was to engage him as Superintendent in t‘1e
field of Civil Engineering, he being a Civil Engineering graduate with vast experience in said
field. He stresses that he was terminated because of a ―discipline mismatch‖ as his employer
actually needed a Mechanical (Engineer) Superintendent, not a Civil Engineer.
In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the
discipline mismatch, he could have performed his job as was expected of him. He also
denies that the new employment contract he signed while in Saudi Arabia was more
advantageous to him since the basic salary and allowance stipulated therein are just the
same with that in his Job Offer. He argues that the new contract was even disadvantageous
because it was inserted therein that he still had to undergo probationary status for three
months.
Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void
because it was not approved by the Philippine Overseas Employment Administration
(POEA). He also claims that CA should have closely examined his quitclaim because he
only signed it to afford his plane ticket for his repatriation.
On the other hand, GPGS maintains that Dagasdas was fully aware that he applied for and
was accepted as Network Technician. It also stresses that it was Dagasdas himself who
decided to accept from ITM a new job offer when he arrived in Saudi Arabia. It further
declares that Dagasdas‘ quitclaim is valid as there is no showing that he was compelled to
sign it.
Issue
Was Dagasdas validly dismissed from work?
Our Ruling
The Petition is with merit.
As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of
Court. However, this rule allows certain exceptions, including a situation where the findings
of fact of the courts or tribunals below are conflicting.35 In this case, the CA and the NLRC
arrived at divergent factual findings anent Dagasdas‘ termination. As such, the Court deems
it necessary to re-examine these findings and detemline whether the CA has sufficient basis
to annul the NLRC Decision, and set aside its finding that Dagasdas was illegally dismissed
from work.
Moreover, it is well-settled that employers have the prerogative to impose standards on the
work quantity and quality of their employees and provide measures to ensure compliance
therewith. Non-compliance with work standards may thus be a valid cause for dismissing an
employee. Nonetheless, to ensure that employers will not abuse their prerogatives, the same
is tempered by security of tenure whereby the employees are guaranteed substantive and
procedural due process before they are dismissed from work. 36
Security of tenure remains even if employees, particularly the overseas Filipino workers
(OFW), work in a different jurisdiction. Since the employment contracts of OFWs are
perfected in the Philippines, and following the principle of lex loci contractus (the law of the
place where the contract is made), these contracts are governed by our laws, primarily the
Labor Code of the Philippines and its implementing rules and regulations.37 At the same
time, our laws generally apply even to employment contracts of OFWs as our Constitution
explicitly provides that the State shall afford full protection to labor, whether local or
overseas.38 Thus, even if a Filipino is employed abroad, he or she is entitled to security of
tenure, among other constitutional rights.39
In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to
sign a POEA-approved contract with GPGS, on behalf of ITM; and, upon arrival in Saudi
Arabia, ITM made him sign a new employment contract. Nonetheless, this new contract,
which was used as basis for dismissing Dagasdas, is void.
First, Dagasdas‘ new contract is in clear violation of his right to security of tenure.
Under the Labor Code of the Philippines the following are the just causes for dismissing an
employee:
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 representative; and
(e) Other causes analogous to the foregoing.40
However, per the notice of termination given to Dagasdas, ITM terminated him for violating
clause 17.4.3 of his new contract, viz.:
17.4 The Company reserves the right to terminate this agreement without serving any notice to the
Consultant in the following cases:
xxxx
17.4.3 If the Consultant is terminated by company or its client within the probation period of 3
months.41
Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other
than the exercise of ITM‘s right to terminate him within the probationary period. While our
Civil Code recognizes that parties may stipulate in their contracts such terms and conditions
as they may deem convenient, these terms and conditions must not be contrary to law,
morals, good customs, public order or policy.42 The above-cited clause is contrary to law
because as discussed, our Constitution guarantees that employees, local or overseas, are
entitled to security of tenure. To allow employers to reserve a right to terminate employees
without cause is violative of this guarantee of security of tenure.
Moreover, even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause. As regards a probationary
employee, his or her dismissal may be allowed only if there is just cause or such reason to
conclude that the employee fails to qualify as regular employee pursuant to reasonable
standards made known to the employee at the time of engagement.43
Here, ITM failed to prove that it informed Dagasdas of any predetermined
standards from which his work will be gauged.44 In the contract he signed while still in the
Philippines, Dagsadas was employed as Network Technician; on the other hand, his new
contract indicated that he was employed as Superintendent. However, no job description –

or such duties and responsibilities attached to either position – was adduced in evidence. It
thus means that the job for which Dagasdas was hired was not definite from the beginning.
Indeed, Dagasdas was not sufficiently informed of the work standards for which his
performance will be measured. Even his position based on the job title given him was not
fully explained by his employer. Simply put, ITM failed to show that it set and communicated
work standards for Dagasdas to follow, and on which his efficiency (or the lack thereof) may
be determined.
Second, the new contract was not shown to have been processed through the POEA. Under
our Labor Code, employers hiring OFWs may only do so through entities authorized by the
Secretary of the Department of Labor and Employment.45 Unless the employment contract
of an OFW is processed through the POEA, the same does not bind the concerned OFW
because if the contract is not reviewed by the POEA, certainly the State has no means of
determining the suitability of foreign laws to our overseas workers. 46
This new contract also breached Dagasdas‘ original contract as it was entered into even
before the expiration of the original contract approved by the POEA. Therefore, it cannot
supersede the original contract; its terms and conditions, including reserving in favor of the
employer the right to terminate an employee without notice during the probationary period,
are void.47
Third, under this new contract, Dagasdas was not afforded procedural due process when he
was dismissed from work.
As cited above, a valid dismissal requires substantive and procedural due process. As
regards the latter, the employer must give the concerned employee at least two notices
before his or her termination. Specifically, the employer must inform the employee of the
cause or causes for his or her termination, and thereafter, the employer‘s decision to dismiss
him. Aside from the notice requirement, the employee must be accorded the opportunity to
be heard.48
Here, no prior notice of purported infraction, and such opportunity to explain on any
accusation against him was given to Dagasdas. He was simply given a notice of termination.
In fact, it appears that ITM intended not to comply with the twin notice requirement. As
above-quoted, under the new contract, ITM reserved in its favor the right to terminate the
contract without serving any notice to Dagasdas in specified cases, which included such
situation where the employer decides to dismiss the employee within the probationary
period. Without doubt, ITM violated the due process requirement in dismissing an employee.
Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same
does not preclude him from filing this suit.
Generally, the employee‘s waiver or quitclaim cannot prevent the employee from demanding
benefits to which he or she is entitled, and from filing an illegal dismissal case. This is
because waiver or quitclaim is looked upon with disfavor, and is frowned upon for being
contrary to public policy. Unless it can be established that the person executing the waiver
voluntarily did so, with full understanding of its contents, and with reasonable and credible
consideration, the same is not a valid and binding undertaking. Moreover, the burden to
prove that the waiver or quitclaim was voluntarily executed is with the employer.49
In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its
burden. GPGS and/or ITM failed to show that Dagasdas indeed voluntarily waived his claims
against the employer.
Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and
voluntarily agreed to waive all his claims against his employer. Besides, there was no
reasonable consideration stipulated in said quitclaim considering that it only determined the
actual payment due to Dagasdas from February 11, 2008 to April 30, 2008. Verily, this
quitclaim, under the semblance of a final settlement, cannot absolve GPGS nor ITM from
liability arising from the employment contract of Dagasdas.50
All told, the dismissal of Dagasdas was without any valid cause and due process of law.
Hence, the NLRC properly ruled that Dagasdas was illegally dismissed. Evidently, it was an
error on the part of the CA to hold that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when the NLRC ruled for Dagasdas.
WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and
Resolution dated January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396
are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2, 2010
Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-000071-
10 are REINSTATED.
SO ORDERED.
16 JAN 2017 | SUBJECT | LABOR AND

Turks Shawarma Company/Gem Zeñarosa Vs.

Feliciano Z. Pajaron and Larry A. Carbonilla;
G.R. No. 207156; January 16, 2017
DECISION
DEL CASTILLO, J.:
The liberal interpretation of the rules applies only to justifiable causes and meritorious
circumstances.
By this Petition for Review on Certiorari,[1] petitioner Turks Shawarma Company and its
owner, petitioner Gem Zeñarosa (Zeñarosa), assail the May 8, 2013 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 121956, which affirmed the Orders dated March 18,
2011[3] and September 29, 2011[4] of the National Labor Relations Commission (NLRC)
dismissing their appeal on the ground of non-perfection for failure to post the required bond.
Factual Antecedents
Petitioners hired Feliciano Z. Pajaron (Pajaron) in May 2007 as service crew and Larry A.
Carbonilla (Carbonilla) in April 2007 as head crew. On April 15, 2010, Pajaron and
Carbonilla filed their respective Complaints[5] for constructive and actual illegal dismissal,
non-payment of overtime pay, holiday pay, holiday premium, rest day premium, service
incentive leave pay and 13th month pay against petitioners. Both Complaints were
consolidated.
Pajaron alleged that on April 9, 2010, Zeñarosa asked him to sign a piece of paper [6] stating
that he was receiving the correct amount of wages and that he had no claims whatsoever
from petitioners. Disagreeing to the truthfulness of the statements, Pajaron refused to sign
the paper prompting Zeñarosa to fire him from work. Carbonilla, on the other hand, alleged
that sometime in June 2008, he had an altercation with his supervisor Conchita Marcillana
(Marcillana) while at work. When the incident was brought to the attention of Zeñarosa, he
was immediately dismissed from service. He was also asked by Zeñarosa to sign a piece of
paper acknowledging his debt amounting to P7,000.00.
Both Pajaron and Carbonilla claimed that there was no just or authorized cause for their
dismissal and that petitioners also failed to comply with the requirements of due process. As
such, they prayed for separation pay in lieu of reinstatement due to strained relations with
petitioners and backwages as well as nominal, moral and exemplary damages. Petitioners
also claimed for non payment of just wages, overtime pay, holiday pay, holiday premium,
service incentive leave pay and 13th month pay.
Petitioners denied having dismissed Pajaron and Carbonilla; they averred that they actually
abandoned their work. They alleged that Pajaron would habitually absent himself from work
for an unreasonable length of time without notice; and while they rehired him several times
whenever he returned, they refused to rehire him this time after he abandoned work in April
2009. As for Carbonilla, he was reprimanded and admonished several times for misbehavior
and disobedience of lawful orders and was advised that he could freely leave his work if he
could not follow instructions. Unfortunately, he left his work without any reason and without
settling his unpaid obligation in the an1ount of P78,900.00, which compelled them to file a
criminal case[7] for estafa against him. In addition, criminal complaints[8] tor slander were filed
against both Pajaron and Carbonilla for uttering defamatory words that allegedly
compromised Zeñarosa‘s reputation as a businessman. Petitioners, thus, insisted that their
refusal to rehire Pajaron and Carbonilla was for valid causes and did not amount to dismissal
from employment. Finally, petitioners claimed that Pajaron and Carbonilla failed to
substantiate their claims that they were not paid labor standards benefits.
Proceedings before the Labor Arbiter
In a Decision[9] dated December 102010, the Labor Arbiter found credible Pajaron and
Carbonilla‘s version and held them constructively and illegally dismissed by petitioners. The
Labor Arbiter found it suspicious for petitioners to file criminal cases against Pajaron and
Carbonilla only after the complaints for illegal dismissal had been filed. Pajaron and
Carbonilla were thus awarded the sum of P148,753.61 and P49,182.66, respectively,
representing backwages, separation pay in lieu of reinstatement, holiday pay, service
incentive leave pay and 13th month pay, The dispositive portion of the Labor Arbiter‘s
Decision reads:
WHEREFORE, in light of the foregoing, judgment is hereby rendered declaring respondent TURKS
SHAWARMA COMPANY, [liable] to pay complainants as follows:
I. FELICIANO Z. PAJARON, JR.
1. Limited backwages computed from April 9, 2010 up to the date of this Decision, in the
amount of SIXTY EIGHT THOUSAND NINE HUNDRED NINETY EIGHT PESOS
& 74/100 (Php68,998.74)
2. Separation pay, in lieu of reinstatement equivalent to one month‘s salary for every year
of service computed from May 1, 2007 up to the date of this decision, in the amount of
THIRTY ONE THOUS[A]ND FIVE HUNDRED TWELVE PESOS (Php31,512.00);
3. Holiday pay, in the amount of TWELVE THOUSAND SIX HUNDRED EIGHTY

ONE PESOS (Php12,681.00);
4. Service incentive leave pay, in the amount of FIVE THOUSAND FOUR HUNDRED
THREE PESOS & 46/100 (Php5,403.46); and
5. Thirteenth month pay, in the amount of THIRTY THOUSAND ONE HUNDRED

FIFTY EIGHT PESOS & 41/100 (Php30,158.41).
II. LARRY A. CARBONILLA

1. Separation pay, in lieu of reinstatement equivalent to one month‘s salary for every year
of service computed from April 1, 2007 up to the date of this decision, in the amount
of FORTY TWO THOUSAND AND SIXTEEN PESOS (Php42,016.00);
2. Holiday pay, in the amount of TWO THOUSAND PESOS (Php2,000.00);
3. Service incentive leave pay, in the amount of EIGHT HUNDRED THIRTY THREE
PESOS & 33/100 (Php833.33); and
4. Thirteenth month pay, in the amount of FOUR THOUSAND THREE HUNDRED

THIRTY THREE PESOS & 33/100 (Php4,333.33).
Other claims herein sought and prayed for are hereby denied for lack of legal and factual bases.
SO ORDERED.[10]
Due to alleged non-availability of counsel, Zeñarosa himself filed a Notice of Appeal with
Memorandum and Motion to Reduce Bond[11] with the NLRC. Along with this, Zeñarosa
posted a partial cash bond in the amount of P15,000.00,[12] maintaining that he cannot afford
to post the full amount of the award since he is a mere backyard micro-entrepreneur. He
begged the NLRC to reduce the bond.
The NLRC, in an Order[13] dated March 18, 2011, denied the motion to reduce bond. It ruled
that financial difficulties may not be invoked as a valid ground to reduce bond; at any rate, it
was not even substantiated by proof. Moreover, the partial bond in the amount of
P15,000.00 is not reasonable in relation to the award which totalled to P197,936.27.
Petitioners‘ appeal was thus dismissed by the NLRC for non-perfection.
On April 7, 2011, petitioners, through a new counsel, filed a Motion for Reconsideration (with
plea to give due course to the appeal)[14] averring that the outright dismissal of their appeal
was harsh and oppressive considering that they had substantially complied with the Rules
through the posting of a partial bond and their willingness to post additional bond if
necessary. Moreover, their motion to reduce bond was meritorious since payment of the full
amount of the award will greatly affect the company‘s operations; besides the appeal was
filed by Zeñarosa without the assistance of a counsel. Petitioners thus implored for a more
liberal application of the Rules and prayed that their appeal be given due course. Along with
this motion for reconsideration, petitioners tendered the sum of P207,435.53 representing
the deficiency of the appeal bond.[15]
In an Order[16] dated September 29, 2011, the NLRC denied the Motion for Reconsideration,
reiterating that the grounds for the reduction of the appeal bond are not meritorious and that
the partial bond posted is not reasonable. The NLRC further held that the posting of the
remaining balance on April 7, 2011 or three months and eight days from receipt of the Labor
Arbiter‘s Decision on December 30, 2010 cannot be allowed, otherwise, it will be tantamount
to extending the period to appeal which is limited only to 10 days from receipt of the assailed
Decision.

Petitioners filed a Petition for Certiorari with application for Writ of Preliminary Injunction and
Temporary Restraining Order[17] with the CA. They insisted that the NLRC gravely abused its
discretion in dismissing the appeal for failure to post the required appeal bond.
On May 8, 2013, the CA rendered a Decision[18] dismissing the Petition for Certiorari. It held
that the NLRC did not commit any grave abuse of discretion in dismissing petitioners‘ appeal
for non-perfection because petitioners failed to comply with the requisites in filing a motion to
reduce bond, namely, the presence of a meritorious ground and the posting of a reasonable
amount of bond. The CA stated that financial difficulties is not enough justification to
dispense with the mandatory posting of a bond inasmuch as there is an option of posting a
surety bond from a reputable bonding company duly accredited by the NLRC, which,
unfortunately, petitioners failed to do. The CA noted that the lack of assistance of a counsel
is not an excuse because petitioners ought to know the Rules in filing an appeal; moreover,
ignorance of the law does not excuse them from compliance therewith.
Hence, this present Petition.
Issue
Petitioners insist that the CA erred in affirming the NLRC‘s dismissal of their appeal
for the following reasons: first, there was substantial compliance with the Rules on
perfection of appeal; second, the surrounding facts and circumstances constitute
meritorious grounds to reduce the appeal bond; third, they exhibited willingness and
good faith by posting a partial bond during the reglementary period; and lastly, a
liberal interpretation of the requirement of an appeal bond would serve the desired
objective of resolving controversies on the merits. Petitioners claim that there is a
necessity to resolve the merits of their appeal since the Labor Arbiter‘s Decision
declaring Pajaron and Carbonilla illegally terminated from employment was not
based on substantial evidence.
Our Ruling
The Petition has no merit.

The Court has time and again held that ―[t]he right to appeal is neither a natural right nor is it
a component of due process. It is a mere statutory privilege, and may be exercised only in
the manner and in accordance with the provisions of the law.‖[19] ―The party who seeks to
avail of the same must comply with the requirements of the rules. Failing to do so the right to
appeal is lost.‖[20]
Article 223 of the Labor Code, which sets forth the rules on appeal from the Labor Arbiter‘s
monetary award, provides:
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 finding of facts are raised which would cause grave or irreparable damage
or injury to the appellant.
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.
x x x x. (Emphasis supplied)
Meanwhile, Sections 4 and 6 of Rule VI of the 2005 Revised Rules of Procedure of the
NLRC, which were in effect when petitioners filed their appeal, provide:
Section 4. Requisites for perfection of appeal. – (a) The Appeal shall be: 1) filed within the
reglementary period as provided in Section 1 of this Rule; 2) verified by the appellant himself in
accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a
memorandum of appeal which shall state the grounds relied upon and the arguments in support
thereof, the relief prayed for, and with a statement of the date the appellant received the appealed
decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied
by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in
Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other
parties.
b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.
xxxx
Section 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 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.
xxxx
No motion to reduce bond shall be entertained except on meritorious grounds, and upon the posting of
a bond in a reasonable amount. The mere filing of a motion to reduce bond without complying with
the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal.
―It is clear from both the Labor Code and the NLRC Rules of Procedure that there is
legislative and administrative intent to strictly apply the appeal bond requirement, and the
Court should give utmost regard to this intention.‖ [21]The posting of cash or surety bond is
therefore mandatory and jurisdictional; failure to comply with this requirement renders the
decision of the Labor Arbiter final and executory.[22] This indispensable requisite for the
perfection of an appeal ―is to assure the workers that if they finally prevail in the case[,] the
monetary award will be given to them upon the dismissal of the employer‘s appeal [and] is
further meant to discourage employers from using the appeal to delay or evade payment of
their obligations to the employees.‖[23]
However, the Court, in special and justified circumstances, has relaxed the requirement of
posting a supersedeas bond for the perfection of an appeal on technical considerations to
give way to equity and justice.[24] Thus, under Section 6 of Rule VI of the 2005 NLRC Revised
Rules of Procedure, the reduction of the appeal bond is allowed, subject to the following
conditions: (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.
Compliance with these two conditions will stop the running of the period to perfect an appeal.
In the case at bar, petitioners filed a Motion to Reduce Bond together with their Notice of
Appeal and posted a cash bond ofP15,000.00 within the 10-day reglementary period to
appeal. The CA correctly found that the NLRC did not commit grave abuse of discretion in
denying petitioners‘ motion to reduce bond as such motion was not predicated on
meritorious and reasonable grounds and the amount tendered is not reasonable in relation
to the award. The NLRC correctly held that the supposed ground cited in the motion is not
well-taken tor there was no evidence to prove Zeñarosa‘s claim that the payment of the full
amount of the award would greatly affect his business due to financial setbacks. Besides,
―the law does not require outright payment of the total monetary award; [the appellant has
the option to post either a cash or surety bond. In the latter case, appellant must pay only a]
moderate and reasonable sum for the premium to ensure that the award will be eventually
paid should the appeal fail.‖[25]Moreover, the absence of counsel is not a valid excuse for
non-compliance with the rules. As aptly observed by the CA, Zeñarosa cannot feign
ignorance of the law considering that he was able to post a partial bond and ask for a
reduction of the appeal bond. At any rate, petitioners did not advance any reason for the
alleged absence of counsel except that they were simply abandoned. Neither did petitioners
explain why they failed to procure a new counsel to properly assist them in filing the appeal.
Moreover, the partial bond posted was not reasonable. In the case of McBurnie v.
Ganzon,[26] the Court has set a provisional percentage of 10% of the monetary award
(exclusive of damages and attorney‘s fees) as reasonable amount of bond that an appellant
should post pending resolution by the NLRC of a motion for a bond‘s reduction. Only after
the posting of this required percentage shall an appellant‘s period to perfect an appeal be
suspended. Applying this parameter, the P15,000.00 partial bond posted by petitioners is not
considered reasonable in relation to the total monetary award of P197,936.27.
Petitioners, nevertheless, rely on a number of cases wherein the Court allowed the
relaxation of the stringent requirement of the rule. In Nicol v. Footjoy Industrial
Corporation,[27] the Court reversed the NLRC‘s denial of the appellant‘s motion to reduce
bond upon finding adequate evidence to justify the reduction. In Rada v. National Labor
Relations Commission[28] and Blancaflor v. National Labor Relations Commission,[29] the
NLRC allowed the late payment of the bond because the appealed Decision of the Labor
Arbiter did not state the exact amount to be awarded, hence there could be no basis for
determining the amount of the bond to be filed. It was only after the amount of superseades
bond was specified by the NLRC that the appellants filed the bond. In YBL (Your Bus Line)
v. National Labor Relations Commission,[30] the Court was propelled to relax the requirements
relating to appeal bonds as there were valid issues raised in the appeal. In Dr. Postigo v.
Philippine Tuberculosis Society, Inc.,[31] the respondent therein deferred the posting of the
bond and instead filed a motion to reduce bond on the ground that the Labor Arbiter‘s
computation of the award is erroneous which circumstance justified the relaxation of the
appeal bond requirement. In all of these cases, though, there were meritorious grounds that
warranted the reduction of the appeal bond, which, as discussed, is lacking in the case at
bench.
Petitioners, furthermore, claim that the NLRC‘s outright dismissal of their appeal was harsh
and oppressive since they should still be given opportunity to complete the required bond
upon the filing of their motion for reconsideration. Thus, they insist that their immediate
posting of the deficiency when they filed a motion for reconsideration constituted substantial
compliance with the Rules.
The contention is untenable.
The NLRC exercises full discretion in resolving a motion for the reduction of bond[32] in
accordance with the standards of meritorious grounds and reasonable amount. The
―reduction of the bond is not a matter of right on the part of the movant [but] lies within the
sound discretion of the NLRC x x x.‖[33]
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 tor 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.[34]
The rulings in Garcia v. KJ Commercial[35] and Mendoza v. HMS Credit Corporation[36] cannot
dissuade this Court from relaxing the rules. In Garcia, the NLRC initially denied the appeal of
respondent therein due to the absence of meritorious grounds in its motion to reduce bond
and unreasonable amount of partial bond posted. However, upon the posting of the full
amount of bond when respondent filed its motion for reconsideration, the NLRC granted the
motion for reconsideration on the ground of substantial compliance with the rules after
considering the merits of the appeal. Likewise, in Mendoza, the NLRC initially denied
respondents‘ Motion to Reduce Appeal Bond with a partial bond. Respondents thereafter
promptly complied with the NLRC‘s directive to post the differential amount between the
judgment award and the sum previously tendered by them. The Court held that the appeal
was filed timely on account of respondents‘ substantial compliance with the requirements on
appeal bond. In both Garcia and Mendoza, however, the NLRC took into consideration the
substantial merits of the appealed cases in giving due course to the appeals. It, in fact,
reversed the Labor Arbiters‘ rulings in both cases. In contrast, petitioners in the case at
bench have no meritorious appeal as would convince this Court to liberally apply the rule.
Stated otherwise, petitioners‘ case will still fail on its merits even if we are to allow their
appeal to be given due course. After scrupulously examining the contrasting positions and
arguments of the parties, we find that the Labor Arbiter‘s Decision declaring Pajaron and
Carbonilla illegally dismissed was supported by substantial evidence. While petitioners
vehemently argue that Pajaron and Carbonilla abandoned their work, the records are devoid
of evidence to show that there was intent on their part to forego their employment. In fact,
petitioners adamantly admitted that they refused to rehire Pajaron and Carbonilla despite
persistent requests to admit them to work. Hence, petitioners essentially admitted the fact of
dismissal. However, except tor their empty and general allegations that the dismissal was for
just causes, petitioners did not proffer any evidence to support their claim of misconduct or
misbehavior on the part of Pajaron and Carbonilla. ―In termination cases, the burden of proof
rests on the employer to show that the dismissal is for a Just cause.‖[37] For lack of any clear,
valid, and just cause in terminating Pajaron and Carbonilla‘s employment, petitioners are
indubitably guilty of illegal dismissal.
All told, we find no error on the part of the CA in ruling that the NLRC did not gravely abused
its discretion in dismissing petitioners‘ appeal for non-perfection due to non compliance with
the requisites of filing a motion to reduce bond.
[T]he merit of [petitioners‘] case does not warrant the liberal application of the x x x rules x x x.
While it is true that litigation is not a game of technicalities and that rules of procedure shall not be
strictly enforced at the cost of substantial justice, it must be emphasized that procedural rules should
not likewise be belittled or dismissed simply because their non-observance might result in prejudice to
a party‘s substantial rights. Like all rules, they are required to be followed, except only for the most
persuasive of reasons.[38]
WHEREFORE, the Petition is DENIED. The May 8, 2013 Decision of the Court of Appeals in
CA-G.R SP No. 121956 is AFFIRMED.
SO ORDERED.
23 NOV 2016 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

Interadent Zahntechnik Philippines, Inc., et al.

Vs. Rebecca Simbillo; G.R. No. 207315;
November 23, 2016
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the January 4, 2013 Decision[2] and May 24,
2013 Resolution[3] of the Court of Appeals (CA) in CA G.R SP No. 120474, which set aside
the March 24, 2011[4] and May 19, 2011[5]Resolutions of the National Labor Relations
Commission (NLRC) in NLRC LAC No. 12-003076-10. The NLRC affirmed the October 29,
2010 Decision[6] of the Labor Arbiter declaring respondent Rebecca F. Simbillo‘s (Simbillo)
dismissal by petitioners Interadent Zahntechnik Philippines, Inc. (Interadent) and its officers
Bernardino G. Bantegui, Jr. (Bantegui) and Sonia J. Grandea (Grandea), as President and
Human Resource & Organizational Development Manager, respectively, valid on the ground
of loss of trust and confidence.
Antecedent Facts
Simbillo worked at Interadent as a rank-and-file employee from May 2, 2004 up to March

2006. In April 2008, she was rehired by Interadent as Accounting Manager. On April 16,
2010, she was promoted to the position of Finance and Accounting Manager. She was also
Interadent‘s Treasurer upon being elected by the Board of Directors on March 31, 2010.
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.[7] 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.[8]
On July 29, 2010, petitioners served Simbillo a Memorandum[9] (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[10] 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[11] 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[12] 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[13] 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[14] 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, the following:
Sana maisip din nila na ang kompanya kailangan ng mga taong di tulad nila, nagtatrabaho at di puro
#$,*% ang pinaggagagawa, na kapag super demotivated na yung tao nayun baka iwan narin nya ang
kawawang kumpanya na pinagpepyestahan ng mga b_i_r_. Wala na ngang credibility wala pang
conscience, portraying so respectable and so religious pa. Hay naku talaga, nakakasuka, puro nalang
animus lucrandi ang laman ng isip.[15]
Parties’ Respective Positions
Simbillo asserted that her dismissal was without just cause or compliance with procedural
due process since the alleged loss of trust and confidence was based on self-serving
allegations and mere speculation. She averred that the Facebook entry cannot support the
charge of breach of trust since it did not mention Interadent or any of its personnel. She
maintained that the message actually pertained to a friend‘s predicament in another
company. She explained that the term ―ng mga b_i_r_‖ in the Facebook message was short
for ―bwitre‖ and certainly did not refer to the BIR. She claimed that the sentiments that she
expressed did not refer to herself or her work. She denied having been penalized for a past
infraction which involved disclosure of confidential information.
Petitioners, for their part, denied Simbillo‘s claim of constructive dismissal for absence of
proof. They asserted that the security measures were implemented company-wide without
favoring or discriminating against anyone.
Moreover, Simbillo was terminated for a valid and just cause and with compliance with
procedural due process. As a managerial and confidential employee of Interadent, the
highest degree of professionalism and confidentiality was expected of Simbillo and the
presence of the basis for the loss of the trust and confidence reposed upon her has
warranted her dismissal. Petitioners posited that Simbillo‘s Facebook message implying that
the BIR is ―feasting on‖ the company was derogatory because it compromised the
company‘s reputation, making it vulnerable to ridicule and suspicion particularly in its
dealings with government agencies. Such act violated the company‘s Code of Conduct as
well as the Code of Ethics for Professional Accountants. Furthermore, Simbillo‘s second
infraction of divulging sensitive and confidential financial information has merited the penalty
of termination.
Petitioners maintained that they observed due process by serving Simbillo both the Notice to
Explain and the Second Notice of Termination. Simbillo was afforded the opportunity to
answer but instead waived her chance to do so by opting not to submit an answer and
attend the hearing.
In a Decision[16] dated October 29, 2010, the Labor Arbiter ruled that Simbillo was not
constructively dismissed because she failed to prove her claim of discrimination. The
security measures were implemented as part of management prerogative to preserve the
integrity of Interadent‘s network system and encompassed all employees as gleaned from a
poster[17] Simbillo herself submitted. The Labor Arbiter sustained Simbillo‘s preventive
suspension since her continued presence during investigation posed an imminent threat to
the company‘s confidential information and records.
The Labor Arbiter also ruled that Simbillo was validly dismissed. He held that there was no
need for an actual leakage of confidential information for Simbillo to be held accountable; her
mere laxity and carelessness in posting a statement on her Facebook account that exposed
the company to ridicule already rendered her unworthy of the trust and confidence reposed
on her. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, we uphold the legality of the dismissal of complainant No

pronouncement as to costs.[18]
In a Resolution[19] dated March 24, 2011, the NLRC affirmed the ruling of the Labor Arbiter
that Simbillo was not constructively dismissed but was validly dismissed for loss of trust and
confidence. The NLRC held that the Facebook entry was ―indeed alarming‖ as it
compromised Interadent‘s reputation and was sufficient basis for the finding of willful breach
of trust. It also ruled that Simbillo was not denied due process and that she was the one who
did not avail herself of the opportunity to explain her side. The dispositive portion of the
NLRC ruling reads as follows:
WHEREFORE, premises considered, the appeal is hereby DISMISSED, and the appealed decision
AFFIRMED.
SO ORDERED.[20]
Simbillo filed a Motion for Reconsideration which was, however, denied in the NLRC

Aggrieved, Simbillo filed a Petition for Certiorari[22] before the CA ascribing upon the NLRC
grave abuse of discretion amounting to lack or in excess of jurisdiction in upholding the
legality of her dismissal.
The CA, in a Decision[23] dated January 4, 2013, found merit in Simbillo‘s Petition. It ruled that
to constitute a valid cause for dismissal, the breach of trust should be willful and intentional,
which petitioners failed to prove in this case. It rejected petitioners‘ allegation that Simbillo
divulged confidential company information. It noted that the Facebook entry did not contain
any corporate record or confidential information but was merely ―a vague expression of
feelings or opinion towards a person or entity, which was not even identified with
certainty.‖[24] It pointed out that the term ―b_i_r_‖ in the entry cannot be construed as the
acronym ―B.I.R.‖ or the Bureau of Internal Revenue. Finding no willful breach of trust, the CA
held that Simbillo‘s dismissal was illegal and ordered the payment of her separation pay in
lieu of reinstatement due to strained relations of the parties plus backwages. The dispositive
portion of the CA Decision reads:
WHEREFORE, the instant petition of GRANTED. The Resolutions dated March 24, 2011 and May
19, 2011 of the National Labor Relations Commission, are hereby SET ASIDE. Finding private
respondent InteraDent Zahntechnik Philippines, Inc. to have dismissed petitioner Rebecca Simbillo
without valid or just cause, InteraDent is hereby ordered to pay her a separation pay in lieu of
reinstatement, of one (1) month salary for every year of service plus full backwages, inclusive of
allowances and other benefits or their monetary equivalent from the time her compensation was
withheld until finality of this decision.
SO ORDERED.[25]
Petitioners filed a Motion for Reconsideration but was denied by the CA in its
Hence, petitioners filed this Petition for Review on Certiorari[27] and a Motion for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction [28] to restrain the
implementation of the CA Decision and Resolution.
Issues
Petitioners raise the question on whether the CA may reverse the factual declarations of
both the Labor Arbiter and the NLRC that there was substantial evidence of willful and
intentional breach of trust. According to petitioners, the CA has no power to revisit the
findings of fact of the NLRC by making the following erroneous interpretations in its Decision:
a) that the Facebook entry ―does not contain any corporate record or confidential
information;‖ b) that the entry is ―[a]t worst, x x x a vague expression of feelings or opinion
towards a person or entity, which was not even identified with certainty;‖[29] and (c) that the
term ―b_i_r_‖ ―does not, in any way, represent the acronym ‗B.I.R.‘ or Bureau of Internal
Revenue.‖[30] In essence, they insist that, on account of such Facebook post, Simbillo has
failed to observe the degree of cautiousness expected of a manager like herself and
therefore may be dismissed on the ground of loss of trust and confidence.
Our Ruling
The Petition lacks merit.

As a rule, factual findings of quasi-judicial agencies such as the NLRC are generally
accorded not only respect but also finality because of the special knowledge and expertise
gained by these agencies from handling matters under their specialized
jurisdiction.[31] However, well-settled is the rule that for want of substantial basis, in fact or in
law, these factual findings cannot be given the stamp of finality and conclusiveness normally
accorded to it.[32] Hence, the CA can review the factual findings or legal conclusions of the
NLRC and ―is not proscribed from ‗examining evidence anew to determine whether the
factual findings of the NLRC are supported by the evidence presented and the conclusions
derived therefrom accurately ascertained‘.‖[33] In the exercise of its power to review decisions
of the NLRC, the CA can make its own factual determination when it finds that the NLRC
gravely abused its discretion in overlooking or disregarding the evidence which are material
to the controversy.[34] In the instant case, the Court agrees with the CA that the conclusions
arrived at by the Labor Arbiter and the NLRC are manifestly erroneous because the
evidence does not support their findings.
As a managerial employee, the existence of a basis for believing that Simbillo has breached
the trust of petitioners justifies her dismissal.[35] 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.[36]
It bears emphasizing that the right of an employer to dismiss its employees on the ground of loss of
trust and confidence must not be exercised arbitrarily. For loss of trust and confidence to be a valid
ground for dismissal, it must be substantial and founded on clearly established facts. Loss of
confidence must not be used as a subterfuge for causes which are improper, illegal or unjustified; it
must be genuine, not a mere afterthought, to justify earlier action taken in bad faith. Because of its
subjective nature, this Court has been very scrutinizing in cases of dismissal based on loss of trust and
confidence because the same can easily be concocted by an abusive employer. x x [37]
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.[38] ‖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.‖[39]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.
Petitioners‘ contention that Simbillo‘s second offense of divulging confidential company

information merits her termination deserves scant consideration. Other than self-serving
allegations of petitioners, there was no concrete proof that Simbillo had a past infraction
involving disclosure of confidential information of the company. If indeed Simbillo has been
found guilty for not being trustworthy due to an incident that happened in July 2009 as
alleged by petitioners, she should not have been promoted to a higher position as Finance
and Accounting Manager in April 2010 and elected as Treasurer in March 2010. Moreover,
she was given salary and merit increases for the period covering June 2009-May
2010,[40] which is an indication of her high performance rating.
All told, we find no reversible error on the CA in finding that Simbillo was illegally dismissed.
The allegation of loss of trust and confidence was not supported by substantial evidence,
hence, we find Simbillo‘s dismissal unjustified. A lighter penalty would have sufficed for
Simbillo‘s laxity and carelessness. As this Court has held, termination of employment is a
drastic measure reserved for the most serious of offenses.[41]
WHEREFORE, the Petition is DENIED. The January 4, 2013 Decision and May 24, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 120474 are AFFIRMED.
SO ORDERED.
14 NOV 2016 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C.

DEL CASTILLO | SUBJECT | LABOR AND EMPLOYMENT | NON-
PAYMENT OF SALARIES, BENEFITS AND DAMAGES | SUBJECT | RULES
OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO
THE SUPREME COURT
Juan B. Hernandez Vs. Crossworld Marines

Services, Inc., et al.; G.R. No. 209098;
November 14, 2016
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari1 are the November 29, 2012 Decision2 of
the Court of Appeals (CA) in CA-G.R SP No. 124685 which set aside the February 23, 2012
Decision3 and March 16, 2012 Resolution4 of the National Labor Relations Commission
(NLRC) in NLRC LAC (OFW-M)-11-000995-11 and dismissed herein petitioner‘s Complaint5
in NLRC-NCR Case No. (M) 04-05732-11. Also assailed herein is the CA‘s September 3,
2013 Resolution6 denying reconsideration of its assailed Decision.
Factual Antecedents
The Labor Arbiter, NLRC, and CA adopt an identical narrative of the salient 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 of US$587.00, plus fixed overtime pay, food allowance, leave
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.
On April 8, 2011, petitioner filed a claim for disability benefits, medical expenses,
allowances, damages, and attorney‘s fees against respondents before the Labor Arbiter,
which was docketed as NLRC-NCR Case No. (M) 04-05732-11.
On August 31, 2011, Labor Arbiter Jose G. De Vera issued his Decision7 in the case, which
decreed as follows:
There are formidable grounds why said complainant‘s claims must fail.
First, the complainant was repatriated not on medical grounds but on account of the completion of his
employment contract x x x
Second, it cannot be denied that before complainant was deployed and joined his vessel on October
17, 2008, he was already afflicted with hypertension and diabetes mellitus as found during his pre-
employment medical examination. As a matter of fact, complainant admitted that upon joining the
vessel in France, he had with him various maintenance drugs for his hypertension and diabetes
mellitus. This necessarily indicates that complainant‘s medical condition of hypertension and diabetes
mellitus were pre-existing and contracted during his employment on board the vessel from October
17, 2008 until he finished his contract and eventually repatriated on December 19, 2009. Moreover,
there is no record that while on board the vessel for the entire period of his employment, he was
treated on board the vessel and/or confined in a clinic or hospital in the foreign ports. In short, there is
no proof of any aggravation of his ailments.
Third, the complainant was repatriated not on medical grounds but precisely on account of completion
of his employment contract. Hence, there was no reason for him to submit to post-employment
medical examination within three (3) days from date of his arrival on December 19, 2009. In fact,
there is no record that complainant had reported to the respondents Crossworld for the mandatory
post-employment medical examination preparatory to further treatment and management of his
ailments as contemplated under Section 20 [B] paragraph 3 of the POEA Standard Employment
Contract. If there was any medical examination conducted thereafter, it was not for purposes of the
complainant‘s claim for disability benefit and medical expenses, but precisely for purposes of his
aborted next employment contract sometime in March 2010.
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered dismissing
the complaint for lack of merit.
SO ORDERED.8
Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC (OFW-
M)-11-000995-11.
On February 23, 2012, the NLRC rendered its Decision granting the appeal, thus setting
aside the Labor Arbiter‘s August 31, 2011 Decision and awarding petitioner‘s claims, as
follows:
Complainant claims that as Chief Cook, his duties include the provisioning of the ship, food
preparation and budgeting, cleaning of dining, kitchen, galley and food compartment and work areas;
carrying of ship provisions, and cleaning the heavy cooking utensils used by the vessel‘s cooks;
likewise, he is constantly exposed to the different climates, unpredictable weather and the perils of the
sea.
In general, diabetes mellitus is a group of metabolic diseases which a person has high blood sugar,
either because the body does not produce enough insulin, or because cells do not respond to the
insulin that is produced.
‗What are its risk factors?‘
‗Stress, both physical and mental, cap send the blood sugar out of wreck. x x x Both physical and
emotional stress can prompt an increase in these hormones, resulting in an increase in blood sugars.‘
Day in and day out, with the continuous discharge by complainant of his duties, the increase in his
blood sugar becomes inevitable, thus aggravating his controlled diabetes mellitus.
x x xx
Upon the other hand, high blood pressure is an ailment that is work connected and is listed as a
compensable ailment.
x x xx
Section 20, paragraph (B) sub paragraph 4 of the POEA-SEC provides that those illnesses not listed in
Section 32 of this contract are disputably presumed work related.
x x xx
undeniably, therefore, there is work connection between the complainant‘s aggravation of his illness
and his work.
Capital is being made by respondents, and concurred in by the Labor Arbiter, over the alleged non-
reporting for post employment medical examination within three (3) days from his arrival.
On the other hand complainant claims ‗that he reported his condition to respondents, but the latter
refused to provide him with his needed medical assistance and attention. He was just told to go home
to his province and rest. Complainant then went home to his province and had his condition checked
by a local doctor.
In Interorient Maritime Enterprises, Inc. vs. Leonora Remo,9 it was ruled that where the absence of a
post-employment medical examination was not due to seafarer‘s fault but to the inadvertence or
deliberate refusal of petitioners, this cannot defeat respondent‘s claim.‘
In a change of heart, and after realizing their folly, respondents ordered complainant to undergo a
medical examination by the company doctor on March 22, 20l0 again preparatory to the signing of a
new employment contract.
Under the circumstances, We have no other recourse but to re-echo the Supreme Court ruling that
should doubt exist between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter.
In this regard, We have noted that the claims of the parties (complainant and respondents) were orally
made.
As the records show, the next employment contract was no longer consummated because of the
hypertension and diabetes mellitus. In fact, complainant was never redeployed by respondents.
In Lloreta vs. Philippine Transmarine Carriers, Inc., et al., the Court held that there is permanent
disability where a worker fails to perform his job for more than 120 days, regardless of whether or not
he loses the use of any part of his body, while ‗total disability means that disablement of an employee
to earn wages in the same kind of work of similar nature that he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainments could do. It does not
mean absolute helplessness. In disability compensation, it is not the injury which is compensated, but
rather it is the incapacity to work resulting in the impairment of one‘s earning capacity.‘
Under Section 32 of the POEA-SEC, an impediment grade 1 is equivalent to 120% of US$50,000.00

or US$60,000.00.
Further medical expenses in the sum of ₱3,221.0010 were incurred by complainant as shown by the
receipts attached to the records.
As complainant was assisted by a counsel de parte, attorney‘s fees equivalent to 10% of the money
awards.
WHEREFORE, the judgment on appeal is REVERSED and SET ASIDE and a NEW ONE entered
ordering the respondents, to pay in solidum, in peso equivalent at the time of payment, the following
amounts:
1. US$60,000.00 as disability benefit;
2. 123,721.00 as reimbursement of medical expenses; and
3. 10% of the amounts awarded as attorney‘s fees.
SO ORDERED.11
Respondents moved to reconsider, but the NLRC stood its ground.

In a Petition for Certiorari12 filed with the CA and docketed therein as CA-G.R SP No.
124685, respondents sought to set aside the above NLRC Decision and thus reinstate that
of the Labor Arbiter‘s, arguing mainly that petitioner‘s illness is not compensable, and
consequently, he is not entitled to his other money claims.
Meanwhile, on July 17, 2012, respondents paid petitioner the amount of the
judgment award – or the sum of ₱2,702,766.00. In return, petitioner was made to sign a
Conditional Satisfaction of Judgment (All Without Prejudice to the Pending Petition
for Certiorari in the Court of Appeals),13 Receipt of Payment,14 and Affidavit15 – which
were duly filed with the NLRC and CA. The Conditional Satisfaction of Judgment states, in
part:
1. x x x. That payment is hereby made to complainant only to prevent imminent execution that
this Honorable Office and the complainant are undertaking.
2. xxxx
3. That by virtue of said conditional payment of the judgment award x x x, herein complainant will no
longer pursue the execution proceedings he initiated by virtue of the judgment x x x.
4. That this Conditional Satisfaction of Judgment is without prejudice to herein respondents‘ Petition
for Certiorari pending with the Court of Appeals docketed as CA GR SP No. 124685 x x x; and this
Conditional Satisfaction of Judgment is being made only to prevent imminent execution being
undertaken by this Honorable office and complainant.
5. That Complainant understands that in case of reversal and/or modification x x x by the Court
of Appeals and/or the Supreme Court, he shall return whatever is due and owing to
shipowners/manning agents without need of further demand.16 (Emphasis in the original)
On the other hand, the Affidavit essentially states:
3. x x x. That I understand this payment is being made by the shipowners/manning agents to me

only to prevent further execution proceedings that I have initiated with the National Labor
Relations Commission (NLRC);
4. That I understand that the conditional payment of the judgment award is without prejudice to the
shipowners‘/manning agents‘ Petition for Certiorari pending with the Court of Appeals docketed
as CA GR SP No: 124685 x x x;
5. That I understand that the payment of the judgment award x x x includes all my past, present and
future expenses and claims, and all kinds of benefits due to me under the POEA employment contract
and all collective bargaining agreements and all labor laws and regulations, civil law or any other law
whatsoever and all damages, pains and sufferings in connection with my claim;
6. That I have no further claims whatsoever in any theory of law against the Owners of MV
„NIKOMARIN‟ because of the payment made to me. That I certify and warrant that I will not file
any complaint or prosecute any suit or action in the Philippines, Panama, Japan or any other country
against the shipowners and/or the released parties herein after receiving the payment
of US$66,000.00 or its peso equivalent x x x.17 (Emphasis in the original)
On November 29, 2012, the CA issued the assailed Decision, containing the following
pronouncement:
Before proceeding, this Court must tackle the issue raised by private respondent that the instant
petition has already been rendered moot and academic by virtue of the Conditional Satisfaction of
Judgment, in relation to the pronouncement of the Supreme Court in Career Phils. Shipmanagement,
Inc. vs. Madjus.18 Private respondent‘s contention must be rejected.
First, in Career Phils. Shipmanagement, the Supreme Court no longer passed upon the merits of the
case because of the concurrence between the findings of the Labor Arbiter and the NLRC. The
Supreme Court, not being a trier of facts and taking into account the parallel findings of the two
administrative offices specializing in Labor Cases, invoked the doctrine of finality of judgment with
respect to factual findings of administrative bodies. The same does not hold true in the instant case, as
the NLRC had an opposing view vis-a-vis that of the Labor Arbiter.
Second, the Supreme Court upheld the validity of the conditional settlement of the judgment
in Career Phils. Shipmanagement. However, the Supreme Court opted to render the action therein
moot and academic due to the fact that part of the condition is a prohibition on the part of the seafarer
to pursue further claims. It basically rendered the judgment final and executory as against the seafarer
but not against the employer. The same does not obtain in the present action. Private respondent still
retains the right to judicial recourse in the event the instant petition is granted.
Third, Article 19 of the Civil Code exhorts: ‗[E]very person must, in the exercise of his rights arid in
the performance of his duties, act with justice, give everyone his due, and observe honesty and good
faith.‘ Accordingly, private respondent was expected to honor his covenant with petitioners when he
signed the Conditional Satisfaction of Judgment. To renege thereon constitutes bad faith.
From the foregoing disquisition, it is clear that the present action is not yet moot and academic.
x x xx
There is no question that private respondent was able to finish his contract with petitioners without
any incident, notwithstanding the fact that private respondent was already suffering from hypertension
and diabetes mellitus prior to boarding the latter‘s vessel. x x x
xxxx
On the other hand, this Court disagrees with the NLRC‘s finding that private respondent‘s work
aggravated his condition. As aptly noted by the Labor Arbiter, private respondent was able to finish
his contract without any incident. x xx
x x xx
Likewise, the Court disagrees with the NLRC‘s pronouncement that petitioners had a change of heart
anent private respondent‘s post-employment medical examination when they directed the latter to
undergo medical examination by the company doctor on March 22, 2010 because the said
examination is preparatory to the signing of a new contract. x x x
Indeed, it cannot be concluded that private respondent‘s condition was aggravated after the expiration
of his previous contract, considering that he was still willing to enter into a new contract for
deployment on board one of petitioners‘ vessels. In fact, private respondent indicated in his Exit
Interview dated December 21, 2009 that the condition of the ship, its safety level as well as the food,
was good and that he actually showed willingness to rejoin the vessel.
Accordingly, this Court finds no basis for the NLRC to declare that private respondent‘s work
aggravated his condition. Certainly, there is also no basis for the NLRC to observe that the dietary
provisions on board the ship likewise aggravated private respondent‘s condition, considering that the
latter, as chief cook, prepared the food himself, which he rated as good.
In a plethora of cases, the Supreme Court has ruled that grave abuse of discretion may arise when a
lower court or tribunal violates or contravenes the Constitution, the law or existing jurisprudence. By
grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction.
In fine, We hold that the NLRC committed grave abuse of discretion in rendering/issuing its
said Decision and Resolution.
WHEREFORE, the instant petition is hereby GRANTED. The NLRC Decision dated February 12,
2012 and Resolution dated March 16, 2012 are hereby ANNULLED and SET ASIDE. Accordingly,
private respondent‘s complaint is hereby DISMISSED.
SO ORDERED.19
Petitioner filed a Motion for Reconsideration,20 insisting among others that the Petition
for Certiorari has been rendered moot and academic by the respondents‘ satisfaction of the
judgment in full, and that his illness is compensable. However, the CA denied the same in its
September 3, 2013 Resolution. Hence, the present Petition.
Issues
Petitioner submits the following assignment of errors for resolution:
1. THE HONORABLE COURT OF APPEALS ACTED IN A WAY NOT IN ACCORD WITH THE
DECISIONS OF THE HONORABLE SUPREME COURT IN HOLDING THAT THE PETITION
FOR CERTIORARI WAS NOT RENDERED MOOT AND ACADEMIC BY THE VOLUNTARY
PAYMENT OF THE JUDGMENT AWARD BY THE PETITIONERS WHICH RESULTED IN
THE FULL AND FINAL SATISFACTION OF THE JUDGMENT.
2. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRE110N

IN REVERSING THE NLRC AND DENYING THE CLAIMS OF SEAMAN HERNANDEZ FOR
PERMANENT TOTAL DISABILITY COMPENSATION AND OTHER BENEFITS.21
Praying that the assailed CA pronouncements be set aside and that the NLRC judgment be
reinstated instead, petitioner contends in his Petition and Reply22 that contrary to the ruling
of the CA, the doctrine in Career Phils. Ship Management, Inc. v. Madjus case applies to him
as well, since he is likewise prohibited from pursuing further claims under the documents he
was made to sign; that all these documents – Conditional Satisfaction of Judgment, Receipt
of Payment, and Affidavit – in Career Phils. Ship Management and in this case are identical
and were prepared by one and the same counsel, the del Rosario and del Rosario Law
Offices; that in signing these documents, he did so out of financial necessity and was left
with no other recourse; that nonetheless, even assuming that the CA is correct in not
applying Career Phils. Ship Management, he is still entitled to disability benefits and other
claims awarded by the NLRC, as his illness is work-connected and thus compensable; and
that he has worked for respondents since 2005 – which shows that his hypertension and
diabetes developed and/or were aggravated while working for respondents and having to
contend with the perils of the sea, harsh climate and weather conditions, and emotional
strain of being away from his family.
Respondents’ Arguments
In their joint Comment,23 respondents reiterate the CA pronouncement, adding that in

paying petitioner conditionally, they simply acted in good faith, complied with the execution
proceedings, and wanted to prevent garnishment of their accounts; that petitioner‘s illness
was not contracted during his employment with them; that diabetes is not a compensable
occupational disease; that petitioner‘s failure to submit to a post-employment medical test by
a company-designated physician foreclosed his right to claim disability benefits; and that for
the foregoing reasons, petitioner is not entitled to his other claims.
Our Ruling
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.24 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
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.
6. That I have no further claims whatsoever in any theory of law against the Owners of MV
“NIKOMARIN” because of the payment made to me. That I certify and warrant that I will not file
any complaint or prosecute any suit or action in the Philippines, Panama, Japan or any other country
against the shipowners and/or the released parties herein after receiving the payment
of US$66,000.00 or its peso equivalent x xx.‖25 (Emphasis in the original)
This waiver by petitioner in exchange for nothing has in fact become a reality, since the CA
reversed the NLRC ruling, which means that petitioner would now have to return what he
received from the respondents, and yet he is left with no available recourse since he agreed
that he will not ―prosecute any suit or action in the Philippines x xx against the shipowners
and/or the released parties herein after receiving the payment of US$66,000.00 or its peso
equivalent.‖26 ―Any suit or action‖ literally includes a petition before this Court to review the
CA reversal – or the instant petition. It also covers a claim for interest that may justly
accrue in his favor during the pendency of the case.
In effect, while petitioner27 had the luxury of having other remedies available to it such as its petition
for certiorari pending before the appellate court, and an eventual appeal to this Court, respondent,28
on the other hand, could no longer pursue other claims, including for interests that may accrue during
the pendency of the case.29
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
me 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.30 (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.
In More Maritime Agencies, Inc. v. NLRC,31 the Court ruled that:
The law does not consider as valid any agreement to receive less compensation than what a worker is
entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims
executed by the employees are thus commonly frowned upon as contrary to public policy and
ineffective to bar claims for the full measure of the workers legal rights, considering the economic
disadvantage of the employee and the inevitable pressure upon him by financial necessity. (Citation
omitted)
Respondents could have simply paid the judgment award without attaching conditions that
have far-reaching consequences other than those intended by a simple compliance with
what was required under the circumstances – that is, the mandatory execution proceedings
following a favorable judgment allowed under the Labor Code. But they did not; they had to
find a way to tie petitioner‘s hands permanently, dangling the check as bait, so to speak. To
borrow from a fairly recent ruling of the Court, ‖[t]he execution [of the documents] cannot be
tolerated as it amounts to a deceptive scheme to unconditionally absolve employers from
every liability.32
x x x. As a rule, quitclaims and waivers or releases are looked upon with disfavor and frowned upon
as contrary to public policy. They are thus ineffective to bar claims for the full measure of a
worker‘s legal rights, particularly when the following conditions are applicable: 1) where there is
clear proof that the waiver was wangled from cm unsuspecting or gullible person, or (2) where the
terms of settlement are unconscionable on their face. To determine whether the Quitclaims signed by
respondents are valid, one important factor that must be taken into account is the consideration
accepted by respondents; the amount must constitute a reasonable settlement equivalent to the
full measure of their legal rights. In this case, the Quitclaims signed by the respondents do not
appear to have been made for valuable consideration. x x x33 (Emphasis supplied)
For what they did, respondents are guilty of bad faith, and should suffer the consequences of
their actions. One is that their payment of petitioner‘s claim should properly be treated as a
voluntary settlement of his claim in full satisfaction of the NLRC judgment – which thus
rendered the Petition in CA-G.R. SP No. 124685 moot and academic.
For its part, the CA refused to apply the pronouncement in Career Phils.
Shipmanagement, insinuating that the situation of the parties in said case and in the present
one are different in that, in the instant case, petitioner ―still retains the right to judicial
recourse in the event‖34 that the NLRC decision is reversed, while in Career Phils.
Shipmanagement, ―the Supreme Court opted to render the action therein moot and
academic due to the fact that part of the condition is a prohibition on the part of the seafarer
to pursue further claims‖35 as stated in the same Conditional Satisfaction of Judgment,
Receipt of Payment, and Affidavit which he was made to sign. The appellate court‘s position
is flawed: petitioner‘s situation is no different from that of the seafarer in the Career Phils.
Shipmanagement case. The CA‘s reasoning laid down in its pronouncement is a mere
convenient play on words. Just as in the Career Phils. Shipmanagement case, petitioner is
equally prohibited from pursuing further claims; it is not simply that petitioner ―still retains the
right to judicial recourse‖; what is of significance is that he stands to gain nothing in the end,
and yet is unduly prevented from pursuing further claims – all without the benefit of
receiving, in return, valuable consideration or a reasonable settlement equivalent to the full
measure of his legal rights.
Respondents‘ counsel – the Del Rosario & Del Rosario Law Offices – should have known
better than to once more utilize the Conditional Satisfaction of Judgment, Receipt of
Payment, and Affidavit, knowing that this Court looked upon these very same documents
with disfavor in the Career Phils. Ship Management case and in subsequent dispositions of
the Court,36 insofar as these and similar documents contain terms and conditions that are
unfair to the employee.
Having disposed of the case in the foregoing manner, there is no need to pass upon the
other issues raised by the parties.
WHEREFORE, the Petition is GRANTED. The November 29, 2012 Decision and September
3, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124685
are REVISED and SET ASIDE, and respondents‘ Petition for Certiorari in said case is
considered MOOT and ACADEMIC in view of the full settlement and complete satisfaction of
petitioner‘s claims.
SO ORDERED.
19 OCT 2016 | SUBJECT | LABOR AND

Leo‘s Restaurant and Bar Cafe, et al. Vs.

Laarne C. Densing; G.R. No. 208535; October
19, 2016
DECISION
DEL CASTILLO, J.:
This is a Petition for Review en Certiorari assailing the November 27, 2012 Decision [2] of the
Court of Appeals (CA) in CA GR. SP No, 03222-MIN, The CA set aside the June 4,
2009[3] and July 31, 2009[4] Resolutions of the National Labor Relations Commission (NLRC)
in NLRC Case No. MAC-02-010081-2008, and reinstated the November 28, 2008 NLRC
Resolution[5] finding illegal respondent Laarne C. Densing‘s (respondant) dismissal from
work. Also assailed is the July 12, 2013 CA Resulution[6] denying petitioners‘ Motion for
Reconsideration.
Factual Antecedents
On January 2, 2002, Kimwa Construction & Development Corporation (Kimwa) employed

respondent as liaison officer.[7] 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.[8]
Thereafter, Leo Y. Lua (Leo), the Manager of the Restobar and the Apartelle, issued upon
respondent a Memorandum[9] requesting her to temporarily report at Kimwa‘s Main Office
starting December 30, 2005.
On December 30, 2005, respondent received another Memorandum[10] 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,[11] respondent stated that on October 24, 2005, in the presence of
Jovenal[12] 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[13] 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,[14] 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[15] 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,[16] 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[17] 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.[18]
Respondent thus filed an Amended Complaint[19] for illegal dismissal, illegal suspension, non-
payment of 13th month pay, separation pay in lieu of reinstatement, moral and exemplary
damages, and attorney‘s fees against Kimwa, and herein petitioners, the Restobar, the
Apartelle, Leo, and/or Amelia Y. Lua (Amelia).
In her Position Paper,[20] respondent claimed that petitioners and Kimwa failed to establish
that she was dismissed for valid causes. She argued that as Administrative Officer/HR Head,
she was tasked to oversee the operations of the Restobar and the Apartelle, including the
authority to sign the agreement with Pepsi. According to her, Leo also authorized her to sign
the agreement in his behalf, and such authority was. communicated to her in the presence of
the Sales Manager of Pepsi.
In addition, respondent emphasized that she received no personal benefits in connection

with the Pepsi contract, and there was no proof that she received anything from Pepsi. She
also stressed that Pepsi was delivering its products to the Restobar and the Apartelle, not to
her. In fine, she. argued that her having entered the Pepsi contract was insufficient basis for
petitioners and Kimwa to lose their trust in her, and use the same to terminate her.
For their part, petitioners and Kimwa, in their Position Paper,[21] argued that it was Amelia,
Leo‘s sister, who owned the Restobar and the Apartelle. They averred that these
establishments were separate entities from Kimwa, and Leo was merely its Manager. They
further claimed that on October 15, 2005, respondent resigned from Kimwa and transferred
to the Restobar and the Apartelle for higher pay.
In addition, petitioners and Kimwa asserted that respondent, was validly terminated as she
committed dishonesty, abuse of confidence, and breach of trust against her employer. They
explained that respondent entered into a contract with Pepsi, whereby the Restobar
committed to purchase 2,400 cases of Pepsi products per year for a period of two years or
from October 2005 to October 2007. They stressed that respondent entered this contract
without prior authority from Leo or Amelia, and without disclosure to them of the benefits
arising therefrom. They also alleged that respondent committed dishonesty when she
charged some of her meals and offer/invitation expenses to the Restobar, without approval
of its Owner or Manager. They likewise stated that respondent was given opportunity to
explain her side before she was terminated.
Furthermore, petitioners and Kimwa insisted that while under the employ of Kimwa,
respondent received advance payment of her benefits, separation pay and other claims.
They added that having received monetary benefits, respondent had no more cause of
action against them.
Ruling of the Executive Labor Arbiter
On November 20, 2007, the Executive Labor Arbiter (LA) rendered a Decision[22]dismissing
the Complaint for lack of. merit. The LA, nonetheless, ordered petitioners and Kimwa to pay
respondent separation pay amounting to P15,000.00.
The LA decreed that petitioners and Kimwa validly dismissed respondent on the ground of
loss of trust and confidence. He pointed out that employers cannot be compelled to retain
the services of their employees who were guilty of acts inimical to the interests of the
employer; and, the dismissal of an erring employee was a measure of self-protection,
The LA also declared that respondent committed acts contrary to the interest of her
employer when she charged personal food consumption to the Restobar, entered into an
exclusive contract with Pepsi, and failed to account for the Pepsi products donated to the
Restobar. He further stated that petitioners and Kimwa complied with the required
procedural due process when they issued memoranda informing respondent of the charges
against her and giving her notice of her dismissal.
Nevertheless, the LA granted respondent one month salary as separation pay ratiocinating
that respondent entered the Pepsi contract in good faith and she presumed that she was
authorized to enter the same.
Respondent appealed the LA Decision.
On November 28, 2008, the NLRC issued its Resolution[23] finding respondent‘s dismissal
illegal. It set aside the LA Decision and ordered petitioners to pay respondent backwages,
separation pay, moral and exemplary damages, 13thmonth pay differential, and attorney‘s
fees. The dispositive portion of the NLRC Resolution reads:
WHEREFORE, premises laid, the appealed Decision of the Executive Labor Arbiter dated November
20, 2007 is hereby set aside and a new one is entered finding complainant Laarne Densing illegally
dismissed and respondents Leo Restaurant and Bar Cafe and Mountain Suite Apartelle and/or Leo Y.
Lua and Amelia Y. Lua, proprietors of the said establishment, to be solidarily liable to pay
complainant Laarne Densing‘s backwages, based on her latest salary, to be computed from the date of
her dismissal on January 15, 2006 up to the finality of this resolution; separation pay, based on her
latest salary, to be computed from the inception of her employment on January 2, 2002 up to the
finality of this Resolution; moral and exemplary damages in the amount of Fifty Thousand
(Php50,000.00) each; 13th month pay differential in the amount of Pbp1,250.00; and ten percent (10%)
attorney‘s fees computed from the total monetary awards.
SO ORDERED.[24]
According to the NLRC, respondent‘s claim that she had the authority to enter the contract
with Pepsi was supported by evidence, which included the Sworn Statement of the Sales
Manager of-Pepsi, and a Certification from concerned Pepsi Managers that Pepsi donated
only 10 cases of softdrinks and additional 20 cases of Pepsi 12 oz. to the Restobar.
The NLRC added that even assuming that respondent was without explicit authority from the
owner of the Restobar, she still validly entered the contract with Pepsi as the signing thereof
was within her duty as the one in charge of the operations of the Restobar. It also noted that
there was no showing that respondent was ill-motivated in signing the Pepsi contract; and
she signed it to the best interest of the Restobar.
The NLRC ruled that the imputation that respondent charged food to the Restobar was
related to her representation privilege granted her by the Restobar; and, there was no
evidence that she abused this privilege.
Petitioners and Kimwa moved for a reconsideration of the November 28, 2008 NLRC
Resolution.
On June 4,2009, the NLRC granted the Motion for Reconsideration. It set aside its
November 28, 2008 Resolution, and dismissed the Complaint for lack of merit.[25]
In reversing itself, the NLRC held that respondent‘s functions did not include any authority to
sign or execute contracts for and in behalf of the Restobar. It added that even assuming that
Leo verbally authorized her to sign the Pepsi agreement, respondent signed the same in her
name, as if she was the Restobar‘s owner. It also held that if not for the fact that respondent
was suspended and later dismissed, the whereabouts of the donated Pepsi products would
not have been traced. It likewise faulted respondent for charging 50% of her meals to the
Restobar without approval from its Owner or Chief Officer. It added that respondent was
given opportunity to be heard when various memoranda were issued to her.
On July 31, 2009, the NLRC denied[26] respondent‘s Motion for Reconsideration.

Respondent filed: with the CA a Petition for Certiorari essentially reiterating that she was
illegally dismissed.
On November 27, 2012s the CA rendered the assailed Decision[27] setting aside the June 4,
2009 and July 31, 2009 Resolutions of the NLRC, and reinstating the November 28, 2008
NLRC Resolution.
The CA reasoned that as Administrative Officer/HR Head, respondent held a position of trust
and confidence. Nevertheless, it explained that petitioners failed to prove that respondent
committed any of the following acts imputed against her: a) signing the Pepsi agreement on
behalf of the Restobar without authority from Leo; b) failure to account for the products
donated by Pepsi to the Restobar; and, c) unauthorized charges of food on the account of
the Restobar.
The CA stressed that the foregoing grounds had been adequately passed upon in the NLRC
November 28, 2008 Resolution before it reversed itself and issued its June 4, 2009 and July
31, 2009 Resolutions. It added that even if respondent had no express authority to sign the
agreement with Pepsi, her having entered it was not sufficient to dismiss her from work,
especially in the absence of malicious intent or fraud on her part. It pointed out that the
Restobar did not suffer damage because of respondent‘s act.
According to the CA, respondent even acted in good faith when she signed the contract with
Pepsi on the impression that sit was part of her duties and responsibilities. It also quoted
with approval the November 28, 2003 NLRC Resolution declaring that there was no
evidence that respondent abused her representation privilege, which included the charging
of food expense when entertaining guests of the Restobar. Finally, it held that respondent
did not deserve the penalty of dismissal especially so since she committed no prior
infractions in her more than three years of service.
On July 12,2013, the CA denied[28] petitioners‘ Motion for Reconsideration. Petitioners thus
filed this Petition raising these grounds:
1. [T]he Honorable Appellate Court erred in [accepting the [t]heory of the Respondent
that Kimwa Construction operated Leo‘s Restobar or Leo‘s Restaurant and Bar Cafe,
Mountain Suite Business Apartelle.[29]
2. [T]he Honorable Appellate Court erred when it [h]eld that x x x to justify the dismissal
of an employee base[d], on loss of trust and confidence, the acts of said employee
should be proven by substantial evidence and founded on clearly established facts.[30]
3. [T]he Petition for Review [r]aises a question of law and of facts that justif[y r]eview of
the Appellate Court‘s Decision and its denial of the Motion for Reconsideration.[31]
4. [T]he Appellate Court also erred in [granting] Moral and Exemplary Damages [to
respondent].[32]
Petitioners argue that the CA erred in holding that Kimwa owned and operated the Restobar
and the Apartelle. They assert that these establishments are single proprietorships owned by
Amelia and managed by Leo. They also asseverate that there are sufficient bases to dismiss
respondent as she signed the exclusivity contract with Pepsi as if she was the owner of the
Restobar, and she did not account for the products donated by Pepsi to the latter. Finally,
they submit that respondent is not entitled to moral and exemplary damages as they did not
act in bad faith in dismissing her.
Respondent, on her end, counters that although she held a position of trust and confidence,
there is no showing that she committed willful breach of trust against her employer. She
argued that she acted in good faith when she signed the exclusivity contract with Pepsi such
that there is no reason to hold that she committed any dishonest conduct that would warrant
her employer‘s loss of trust in her.
Issue
Whether respondent was validly dismissed on the ground of loss of trust and
confidence.
Our Ruling

As a rule, the findings of fact of the CA when fully supported by evidence are conclusive and
binding on the parties and are not reviewable by the Court. However, this rule admits of
exceptions including such instance where the factual findings of the CA are contrary to those
of the labor tribunals.[33]
In this case, the LA and the NLRC are one in ruling that respondent was validly dismissed
from work. The CA ruled otherwise, Considering these divergent positions, the Court deems
it necessary to review, re-evaluate, and re-examine the findings of the CA as they are
contrary to those of the LA and the NLRC.[34]
First, petitioners deny that Kimwa owned and operated the Restobar and the Apartelle. They
claim that Amelia owned these establishments, and Leo only managed them.
The Court is unconvinced.
As will be discussed hereunder, 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.
On July 4, 2005, while respondent was still a liaison officer of Kimwa, Leo, as
―Proprietor/Chief Executive Officer of Kimwa Construction & Development Corp./Mountain
Suite Business Apartelle‖ appointed her as Administrative Officer/HR Head of the Restobar
and the Apartelle to be effective as soon as the establishments were officially
operational.[35] On October 19, 2005, Leo, in the same capacity as cited above, confirmed the
appointment of respondent and declared its effectivity beginning October 18, 2005.[36]
Moreover, in his January 2, 2006 Memorandum,[37] while respondent was acting as

Adrninistrative Officer/HR Head of the Restobar and the Apartelle, Leo required her to
temporarily report at Kimwa‘s Main Office. Apart from this, all Memoranda[38] to Explain
issued by Leo to respondent as well as the Notice[39] of her Termination were written under
the heading ―Kimwa Construction & Dev. Corp.‖ It is also worth noting that the Restobar is a
namesake of Leo as the same is named ―Leo‘s Restaurant and Bar Cafe.‖ As regards
Amelia, petitioners repeatedly alleged that she is the owner of the Restobar and the
Apartelle and she never disputed this matter.
At the same time, it is settled that where it shows that business entities are owned,
controlled, and conducted by the same parties, law and equity will disregard the legal fiction
that they are distinct and shall treat them as one entity in order to protect the rights of third
persons. Here, it appearing that Kimwa, Leo, and Amelia owned, controlled and managed
the Restobar and the Apartelle, they are treated as a single entity accountable for the
dismissal of respondent.[40]
Based on the foregoing, petitioners continually employed respondent from the time she was
assigned in Kimwa until she was appointed Administrative Officer/HR Head of the Restobar
and the Apartelle.
Second, petitioners argue that respondent was validly terminated for loss of trust and
confidence.
Such argument is without merit.
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.[41] Such
determination of just cause must also be made with fairness, in good faith, and only after
observance of due process of law.[42]
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.[43]
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.[44]
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.‖[45]
Here, respondent, as Administrative Officer/HR Head of the Restobar and the Apartelle, had
the following duties and functions:
1. Has the authority/information in all operation, administrative and functional matters.
2. Reports directly to the owner.
3. Oversees the entire operations of the business that includes over-all

property/furnitur[e] maintenance & expenditures.
4. Handles all employees of the establishments.

5. Carries out HR policies & procedures[.]
6. Responsible in the recruitment, screening & selection of new employment for vacant
position. .
7. Plans & conducts new employee orientation to foster positive attitude towards
company goals.
8. Develops & maintains a human resourc[e] system that meets top management
information needs.
9. Wage and salary administration.
10. Labor & Employee relations, welfare & benefits. [46]
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.[47]
Nonetheless, the second requirement is wanting since petitioners failed to prove that their
loss of trust on respondent was founded on clearly established facts.
Records show that on December 30, 2005, Leo required respondent to explain her
supposed infractions when she signed, without the approval of the owner, the contract
between the Restobar and Pepsi; and her failure to account the items Pepsi donated to the
Restobar.
Respondent aptly explained these matters to Leo. According to her, Leo verbally authorized
her to sign the agreement with Pepsi. This verbal instruction was given in the presence of
Ablanque, Sales Manager of Pepsi.
In his Affidavit[48] dated February 9, 2006, Ablanque corroborated respondent‘s assertion. He

certified that during his visits in the Restobar, he discussed with Leo his proposal of an
exclusivity contract between Pepsi and the Restobar. In the course of their negotiation in
September 2005, Leo agreed to the contract, and authorized respondent to sign the same.
Also, as declared by the CA, 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.[49]
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.
Notably, although the LA ruled that respondent was validly dismissed, the LA (in granting
separation pay), recognized that respondent acted in good faith when she entered into the
Pepsi contract, viz.:
[Respondent] x x x nonetheless entered into said agreement in good faith. [Respondent] presumed that
she was authorized to enter into said Exclusivity Agreement. In this regard, the undersigned is
inclined to grant [respondent‘s] claim for separation pay considering that her dismissal is premised on
a vague authority, x x x[50]
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.[51]
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.
On January 4, 2006, Pepsi clarified that it donated only 10 cases of its products on the
opening night of the Restobar, and an additional 20 cases of Pepsi 12 oz. on December 7,
2005. It added that Pepsi gave no other donation to the Restobar or its staff. Pepsi admitted
its lapses, and apologized to Leo; it also requested him to disregard the inadvertent entries
in the documents it gave him.
Since Pepsi clarified the matter and as established, there is no unaccounted donation made
by Pepsi to the Restobar, then the allegation – that respondent committed loss of trust
because of unaccounted donation from Pepsi — is untenable. Indeed, petitioners‘ loss of
trust and confidence was merely simulated. It was arbitrarily asserted despite sufficient
evidence to the contrary.[52]
Moreover, the charge of dishonesty against respondent for purportedly charging 50% of the
food she personally ordered to the account of the Restobar is unsubstantiated. This
accusation was cited in Leo‘s January 3,2006 Memorandum but was not at all specified in
the Notice of Termination against respondent as said notice centered on respondent‘s act of
having entered the contract with Pepsi. In any case, as correctly observed in the November
28, 2008 Resolution of the NLRC, Restobar ―was not really saddled by those entertainment
expenses because the foods and meals were eventually deducted against [respondent‘s]
salary, which for one reason or another [respondent] offered no objection.‖[53]
Finally, the Court sustains the grant of moral and exemplary damages, and attorney‘s fees in
favor of respondent.
Moral damages is awarded to an illegally dismissed or suspended employee when the

employer acted in bad faith or fraud, or in such manner oppressive to labor or contrary to
morals, good customs or public policy,[54] as in this case.
As discussed, petitioners primarily charged respondent of having entered the contract with
Pepsi without authority from the Owner or the Manager of the Restobar. Nevertheless, as
also established, Leo was well aware of this contract, as Pepsi itself attested, The Restobar
also directly received the Pepsi products. Moreover, despite respondent having explained
herself, and Pepsi having fully and timely clarified the matters surrounding the contract,
petitioners still dismissed respondent. It thus appears that such dismissal was pre-
determined by petitioners even before respondent explained herself regarding the charges
against her.
For having shown bad faith or such ―conscious and intentional design to do a wrongful act
for a dishonest purpose or moral obliquity,‖[55] petitioners are liable to pay respondent moral
damages amounting to P50,000.00. They are ‗likewise liable to pay respondent exemplary
damages amounting to P50,000.00 as it is also shown that her dismissal was carried out in
such a malicious and oppressive manner. Such grant of exemplary damages is deemed
necessary to deter employers from committing the same or similar acts. The award of
attorney‘s fees is likewise sustained since exemplary damages is awarded here, and
considering further that respondent has been compelled to file this case and incurred
expenses to protect her interest.[56]
To recapitulate, in order to dismiss an employee on the ground of loss of trust and

confidence, the employee must be guilty of an actual and willful breach of duty duly
supported by substantial evidence.57 Since petitioners failed to show that respondent
actually and willfully breached their trust, then the CA properly ruled that petitioners
dismissed her without any valid cause. Henceforth, the CA properly set aside the NLRC
Resolutions dated June 4, 2009 and July 31, 2009, and reinstated the NLRC Resolution
dated November 28,2008.
WHEREFORE, the Petition is DENIED. The Decision dated November 27, 2012 and
Resolution dated July 12, 2013 of the Court of Appeals in CA-G.R SP No. 03222-MIN
are AFFIRMED.
SO ORDERED.
18 APR 2016 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
Doehle-Philman Manning Agency Inc., et al.

Vs. Henry C. Haro; G.R. No. 206522; April
18, 2016
DECISION
DEL CASTILLO, J.:
―[T]he constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not prevent us
from sustaining the employer when it is in the right. We should always be mindful that justice
is in every case for the deserving, to be dispensed with in the light of established facts, the
applicable law, and existing jurisprudence.‖[2]
This Petition for Review on Certiorari assails the July 20, 2012 Decision[3] of the Court of
Appeals (CA) in CA-GR. SP No. 117988. The CA reversed and set aside the September 28,
2010[4] and November 30, 2010[5] Resolutions of the National Labor Relations Commission
(NLRC) in NLRC LAC (OFW) No. 04-000295-10 which affirmed the February 26, 2010
Decision[6] of the Labor Arbiter (LA) dismissing the Complaint in NLRC OFW Case No. 06-
09031-09. Accordingly, the CA ordered Doehle-Philman Manning Agency, Inc. (Doehle-
Philman), Dohle (IOM) Limited (Dohle Ltd.) and Capt. Manolo T. Gacutan (petitioners) to
jointly and severally pay respondent Henry C. Haro permanent and total disability benefits
amounting to US$60,000.00 and attorney‘s fees of 10% of the total monetary award. Also
assailed is the March 27, 2013 CA Resolution[7] denying petitioners‘ Motion for
Reconsideration.
Factual Antecedents
On May 30, 2008, Doehle-Philman, in behalf of its foreign principal, Dohle Ltd., hired
respondent as oiler aboard the vessel MV CMA CGM Providencia[8] for a period of nine
months with basic monthly salary of US$547.00 and other benefits.[9] Before deployment,
respondent underwent pre-employment medical examination (PEME) and was declared fit
for sea duty.[10]
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.[11]
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[12] Hospital and that a heart operation was recommended to him. He nevertheless
admitted that he had not yet undergone any surgery.[13] On April 24, 2009, respondent‘s
personal doctor, Dr. Luminardo M. Ramos (Dr. Ramos), declared him not fit to work.[14]
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.[15] 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 entitled to
permanent and total disability benefits.[16]
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.[17]
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.[18]They averred that despite such declaration,
they still continued with respondent‘s treatment.[19] However, on January 19, 2009, Dr.
Abesamis declared that respondent had not reported for follow up despite repeated
calls.[20] On April 8, 2009, the company-designated doctor reported that respondent refused
surgery.[21] And on April 15, 2009, she reiterated that respondent‘s condition is not work-
related.[22]
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.[23] 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.[24]
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.[25]
On February 26, 2010, the LA dismissed[26] the case for lack of merit. The LA noted that Dr.
Abesamis declared that respondent‘s illness is not work-related; therefore, it is incumbent
upon respondent to prove otherwise. He further held that even respondent‘s personal doctor,
Dr. Ramos, did not state that his illness is work-related as he; only declared that respondent
is not fit for work.
Respondent interposed an appeal. He maintained that he is entitled to permanent and total

disability benefits because he underwent the PEME and was declared fit to work; and his
illness transpired while he was in the performance of his duties and during the effectivity of
his employment contract.
On September 28, 2010, the NLRC dismissed[27] the appeal. It found no sufficient evidence
that respondent‘s illness is work-connected. It decreed that instead of establishing that the
alleged hole in his heart was work-related, respondent focused more on his inability to work
for more than 120 days. It also explained that respondent‘s reliance on his PEME is
misplaced as the same is neither rigid nor exploratory. It likewise reiterated the finding of the
LA that even respondent‘s personal doctor did not pronounce his condition as Work-
connected, and only declared him unfit to resume sea duty.
On November 30, 2010, the NLRC denied[28] respondent‘s Motion for Reconsideration.
Respondent filed a Petition for Certiorari with the CA arguing that the NLRC committed
grave abuse of discretion in finding him not entitled to disability benefits, moral and
exemplary damages, and attorney‘s fees.
On July 20, 2012, the CA granted[29] the Petition and concomitantly reversed and set aside
the September 28, 2010 and November 30, 2010 NLRC Resolutions. The decretal portion of
the CA Decision reads:
WHEREFORE, the foregoing considered, the present petition is hereby GRANTED and the assailed
Resolutions [dated] 28 September 2010 and 30 November 2010 [are] REVERSED and SET ASIDE.
Accordingly, private respondents are hereby held jointly and severally liable to pay petitioner
permanent and total disability benefits in the sum of US$60,000.00 and attorney‘s fees often percent
(10%) of the total monetary award, both at its peso equivalent at the time of actual payment.
SO ORDERED.[30]
According to the CA, the NLRC committed grave abuse of discretion in affirming the LA
Decision dismissing the Complaint. The CA gave credence to respondent‘s arguments that
he acquired his illness during his employment contract with petitioners; and that his illness
has rendered him totally and permanently disabled as he had not been able to perform his
customary work for more than 120 days.
On March 27, 2013, the CA denied[31] petitioners‘ Motion for Reconsideration.
Thus, petitioners filed this Petition stating that:
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS, REVERSIBLE AND

GROSS ERROR IN LAW BASED ON THE FOLLOWING GROUNDS:
1. In failing to uphold the legal and jurisprudential principle that a writ of certiorari may
be issued only for the correction of errors of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction which is absolutely lacking in this case.
2. In utilizing [r]espondent‘s alleged inability to work for a period exceeding 120 days as
sole basis for entitlement to permanent total disability benefits in absolute disregard of
the provisions of the POEA Standard Employment Contract making work-relation as a
condition sine qua non for compensability of an illness or injury.
3. In awarding ten percent (10%) attorney‘s fees in favor of [respondent solely on the
ground that he was constrained to engage the services of counsel contrary to the well-
entrenched principle that attorney‘s fees shall only be awarded upon a showing that the
petitioner acted in gross and evident bad faith.[32]
Petitioners’Arguments
Petitioners posit that no abuse of discretion may be imputed against the NLRC because its
findings and conclusions were based on the facts and evidence on record Thus, they claim
that the CA erred in setting aside the NLRC Resolutions and in not upholding that a writ
of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction.[33]
Additionally, petitioners insisted that the CA erred in granting permanent and total disability
benefits in favor of respondent on the sole basis that he was unable to work for a period
exceeding 120 days.[34] They argue that since respondent‘s illness is not an occupational
disease then there must be causal connection between his work and his illness. They
contend that the burden to prove such connection is upon respondent. They added that
there is no proof that the nature of respondent‘s job increased the risk of his illness.[35]
Lastly, petitioners reiterate that the company-designated doctor continuously treated

respondent for a period of about four months; that nothing in the records disproves the
finding of company-designated physician that respondent‘s condition is not job-related; that
since respondent‘s illness is not work-related then, the company-designated doctor is not
obliged to make a declaration on his fitness or unfitness to work; and, that respondent‘s
personal doctor merely concluded that respondent is ―not fit‖ but he did not also make any
declaration on whether respondent‘s condition is work-related or not.[36]
Respondent contends that the CA properly ruled that he is entitled to permanent and total
disability benefits.[37] He insists that since his illness is not listed as an occupational disease,
he is ―relieved of the burden to show the causation [of] his rights over the disability
benefits‖[38] as his illness is disputably presumed work-related.[39] He maintains that he
sustained his illness while employed as oiler and his condition resulted in the loss of his
earning capacity.[40]
Issue
Is the CA correct in setting aside the NLRC Resolutions denying respondent‘s claim
for permanent and total disability benefits?
Our Ruling
The Court finds merit in the Petition.

This Court does not review factual issues as only questions of law can be raised in a Rule 45
Petition. However, such rule admits of exceptions including a situation where the factual
findings of the tribunals or courts below are conflicting. Here, there being contrary findings of
fact by the LA and NLRC, on one hand, and the CA, on the other, we deem it necessary to
make our own determination and evaluation of the evidence on record.[41]
Essentially, petitioners claim that respondent is not entitled to permanent and total disability
benefits on the sole basis that he was unable to work for more than 120 days.
The Court agrees.
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.[42]
In Jebsen Maritime, Inc. v. Ravena,[43] 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‖[44] that his work conditions caused or at least increased the risk of contracting the
illness.[45]
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.‖[46] 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;[47] 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.[48]
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.,[49] 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.[50] 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.[51]
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. [52] 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.[53]
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.[54] 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 necessarily fail.[55]
WHEREFORE, the Petition is GRANTED. The July 20, 2012 Decision and March 27,2013
ASIDE. Accordingly, the Complaint is DISMISSED for lack of merit.
SO ORDERED.

Lynman Bacolor, et al. Vs. VL Makabali

Memorial Hospital, Inc., et al.; G.R. No.
204325; April 18, 2016
DECISION
DEL CASTILLO, J.:
Rules of procedure must be used to achieve speedy and efficient administration of justice
and not derail it. When strict application of the rules on verification and non-forum shopping
will result in patent denial of substantial justice, these rules may be construed liberally. After
all, the ends of justice are better served when cases are determined on the merits, not on
mere technicality.[1]
This Petition for Review on Certiorari assails the Resolution[2] dated July 12, 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 125333. The CA dismissed the Petition
for Certiorari filed therewith because of the purported defective Verification/Certificate of
Non-Forum Shopping with Undertaking appended to the Petition; and of petitioners‘ violation
of Section 3, Rule 46 of the Rules of Court. Also challenged is, the CA Resolution[3] dated
October 22, 2012 which denied the Motion for Reconsideration for lack of merit.
Factual Antecedents
The case stemmed from an amended Complaint[4] for illegal dismissal and money claims filed
by Drs. Lynman Bacolor (Dr. Bacolor), Jeffrey R. Galura (Dr. Galura), Helen B. Torres (Dr.
Helen), Fritzie C. Villegas (Dr. Villegas), Raymond Canlas (Dr. Canlas), Zheila C. Torres (Dr.
Zheila) and Dax Tidula (Dr. Tidula) against VL Makabali Hospital Inc. (the Hospital),
Alejandro S. Makabali, its owner and President, and Melchor Catambing (Catambing), its
Emergency Room (ER) Manager.[5]
Allegedly, the Hospital engaged Drs. Bacolor, Galura, Villegas and Canlas as resident
physicians assigned in its ER for one year, commencing October 2000 until October 2001. It
engaged Drs. Helen and Zheila, also as ER resident physicians, starting March 2001 until
March 2002, and January 2002 until January 2003, respectively. Despite the expiration of
their contracts, the Hospital continued to employ Drs. Bacolor, Galura, Villegas, Canlas,
Helen and Zheila (petitioners).[6]
Petitioners stated that on May 3, 2006, Catambing and one Dr. Lopez instructed them to
resign, and re-apply to the Hospital as resident physicians under a one-year fixed term
contract. They further alleged that Catambing and Dr. Lopez later directed them to sign a.
waiver and offered them ―gratitude‖ pay of P27,000.00 but they refused to resign; and
because of their refusal, respondents demoted them as assistant physicians in the
Operating-Room (OR) of the Hospital.[7]
Additionally, petitioners insisted that to compel them to resign, respondents issued notices to
explain to Drs. Bacolor, Galura, Helen, Villegas and Canlas. In particular, Drs. Bacolor,
Galura and Helen were charged with dishonesty for allegedly directing patients to secure
laboratory examinations outside the Hospital; while Drs. Villegas and Canlas were charged
with violation of timekeeping procedure and habitual violation of rules and regulations.[8]
Consequently, petitioners filed a case for constructive illegal dismissal against respondents.
They argued that despite their complaint, respondents still conducted an administrative
investigation against them.[9] On June 30, 2006, Drs. Bacolor and Galura received notices of
termination from the Hospital.[10]
Petitioners contended that they were constructively dismissed when respondents demoted
them as assistant physicians in the OR of the Hospital.[11] They stated that such demotion
was neither necessary nor temporary, and was arbitrarily done to force them to resign. They
further averred that Drs. Bacolor and Galura were actually illegally dismissed after they were
given respective notices of termination.[12]
On the other hand, Dr. Tidula stated that the Hospital engaged him as resident physician for
a year commencing on January 1, 2001 to December 31, 2001; the Hospital renewed his
contract for the year 2002 to 2003; and after his contract expired, the Hospital continued to
engage his services.[13]
Dr. Tidula likewise alleged that in 2005, several resident physicians in the Hospital resigned.
As a result, the remaining resident physicians were made to fill in their duties. Allegedly, it
was agreed upon that when a resident doctor was absent, a reliever would take his place;
and the reliever‘s fee would be charged against the salary of the absent doctor. Dr. Tidula
claimed that the reliever shall punch in the time card of the absent doctor for t recording,
accounting and expediency purposes.[14]
Furthermore, Dr. Tidula asserted that in February 2006, Dr. Amelita Lising (Dr. Lising), who
was a resident physician, went on leave. He averred that being the acting Chief Resident, he
implemented the agreement regarding the designation of reliever. He stated that the
relievers of Dr. Lising were made to punch in and out her time card to prove that they had
taken her place; and they received salary from that intended for Dr. Lising.[15]
Dr. Tidula narrated that on May 3, 2006, he and his fellow residents were directed to resign
with the promise that they would be re-engaged under a fixed term of one year. He averred
that Catambing and Dr. Lopez also instructed him and the other resident physicians to
tender their resignation and sign a waiver in favor of the Hospital. He alleged that they were
also offered P27,000.00 as financial assistance; however, he and the other resident
physicians refused to resign.[16]
Additionally, Dr. Tidula alleged that on May 16, 2006, he was ordered to report exclusively at
the OR of the Hospital as assistant physician; and this demotion was a result of his refusal to
resign. Consequently, he filed a complaint for constructive dismissal against the Hospital.[17]
Later, Catambing gave Dr. Tidula a Notice[18] of dismissal for violation of timekeeping
procedure. Dr. Tidula stated that he inquired from Catambing why he was not given any
notice to explain. Purportedly, Catambing informed him that a notice to explain was sent
through a private courier. Upon verification, Dr. Tidula discovered that the notice was
delivered to a person unknown to him. He informed the Hospital about the matter but the
Hospital insisted that he was given the opportunity to explain and was invited to an
investigation, as such, the sanction against him remains.[19]
Dr. Tidula argued that he was illegally dismissed since he did not receive a notice to explain;
and he did not violate any of the company rules.[20]
For their part, respondents asserted that Drs. Tidula, Bacolor and Galura were validly
dismissed. In particular, they alleged that Dr. Tidula violated timekeeping procedure of the
Hospital when he punched in Dr. Lising‘s time card on February 2, 6, 10 and 12, 2006.[21] On
the other hand Drs. Bacolor and Galura were found guilty of referring patients to other clinics
for laboratory examination in February 2006.[22]
Moreover, respondents claimed that the Hospital did not dismiss Drs. Helen, Villegas and
Canlas; thus, they should be dropped from the complaint. They added that Dr. Zheila was
never cited for any infraction but she abandoned her work as she had been absent since
July 2006.[23]
On July 23, 2010, the LA rendered a Decision[24] finding respondents guilty of illegally
dismissing petitioners and Dr. Tidula, as well as ordering respondents to pay them
backwages from the time of their dismissal until finality of the Decision, and separation pay.
The LA also ordered the Hospital to pay petitioners and Dr. Tidula moral damages of
P100,000.00 each and exemplary damages of P100,000.00 each, and attorney‘s fees.
The Hospital appealed to the National Labor Relations Commission (NLRC).[25]
On November 11, 2011, the NLRC reversed and set aside the LA Decision and dismissed
the complaints.[26] It held that there was no showing that petitioners and Dr. Tidula were
demoted, and that such demotion amounted to constructive dismissal. It ruled that ―it would
be difficult to discern the differences between the duties of a resident and assistant
physician, as both indubitably perform doctor‘s duties.‖[27] Also, the NLRC decreed that Dr.
Zheila did not even sign the verification and certificate of non-forum shopping in this case.
Moreover, the NLRC gave credence to respondents‘ position that Drs. Bacolor and Galura
were validly dismissed because they repeatedly referred patients to another clinic for
laboratory examinations. It ruled that such was an act of deceit because the Hospital offered
the same services.
On April 18, 2012, the NLRC denied petitioners and Dr. Tidula‘s motion for
reconsideration.[28]
Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion on the part of the NLRC in giving due course to the appeal despite its alleged lack
of appeal bond; and in reversing the LA Decision.
The Petition was accompanied by three separate Verifications/Certificates of Non-Forum

Shopping signed by Drs. Galura, Bacolor and Helen.[29] Atty. Carlos Raphael N. Francisco
executed and signed a Verification/Certificate of Non-Forum Shopping with Undertaking in

behalf of Drs. Villegas, Canlas and Zheila.[30]
On July 12, 2012, the CA issued the assailed Resolution, the pertinent portions of which
read:
The Petition for Certiorari contains the following infirmities, hence is DISMISSED:
1. The Verification/Certification of Non-Forum Shopping With Undertaking attached to the Petition is

executed by Atty. Carlos Raphael N. Francisco, allegedly [sic] counsel of record of petitioners Fritzie
C. Villegas, Raymond Canlas and Zeila C. Torres, not by the three petitioners themselves, in violation
of Rule 7, Section 5 of the Rules of Court, and the ruling in Far Eastern Shipping Company v. Court
of Appeals et al.
2. The Petition does not indicate in its title that Dax Tidula is a party respondent, although in the
portion entitled ‗Parties‘ he is so named, and does not indicate the address of Dax Tidula, all in
violation of Rule 46, Section 3 of the Rules of Court, in relation to Rule 65 of the same Rules.
SO ORDERED.[31]
On October 22, 2012, the CA denied petitioners‘ Motion for Reconsideration.[32]
Aggrieved, petitioners filed this Petition raising the following assignment of errors:
[1]
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT PROBABLY
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHEN THE COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF THE
PETITIONERS DESPITE THE FACT THAT SEVERAL OF THE PETITIONERS HAD VALIDLY EXECUTED
VERIFICATIONS AND CERTIFICATES OF NON-FORUM SHOPPING WHICH WERE ATTACHED TO
SAID PETITION FOR CERTIORARI;
[2]
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHEN THE COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF THE
PETITIONERS DESPITE THE FACT THAT THE PETITIONERS HAD SUBSTANTIALLY COMPLIED WITH
THE RULES ON THE EXECUTION OF A VERIFICATION AND CERTIFICATE OF NON-FORUM
SHOPPING;
[3]
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE-HONORABLE COURT
WHEN THE COURT OF APPEALS. DISMISSED THE PETITION FOR CERTIORARI OF THE
PETITIONERS DESPITE THE FACT THAT THE ONLY KNOWN ADDRESS OF RESPONDENT TIDULA
WAS INCLUDED IN THE PETITION FOR CERTIORARI AND THAT RESPONDENT TIDULA, THROUGH
HIS COUNSEL, WAS SERVED WITH A COPY OF SUCH PETITION FOR CERTIORARI;
[4]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB. III-
06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS ALLOWED THE NLRC TO VIRTUALLY EXTEND THE PERIOD OF THE
RESPONDENT HOSPITAL TO FILE AN APPEAL FOR ALMOST FOUR MONTHS FROM THE
EXPIRATION OF THE PERIOD TO FILE SUCH APPEAL;
[5]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB.
111-06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS ALLOWED THE NLRC TO GIVE DUE COURSE TO AN APPEAL THAT WAS
CLEARLY FILED OUT OF TIME AND TO MODIFY THE DECISION OF THE LABOR ARBITER THAT
WAS ALREADY FINAL AND EXECUTORY; and
[6]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB. III-
06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS TOLERATED THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION COMMITTED BY THE NLRC IN REVERSING IN TOTO THE DECISION OF
THE LABOR ARBITER DESPITE THE FACT THAT SUCH REVERSAL IS NOT SUPPORTED BY ANY
EVIDENCE ON RECORD AND BY THE APPLICABLE LAWS.[33]
Petitioners argue that the verifications executed by three of the six petitioners and the
verification executed by their counsel constituted full compliance with the required
verification. They contended that the three petitioners who made their verification are real
parties-in-interest, and their counsel who also verified the Petition had been in possession of
authentic and relevant records of the case.
Also, petitioners posit that the failure of Drs. Villegas, Canlas and Zheila to execute a
certificate of non-forum shopping should not have caused the dismissal of the Petition
for Certorari. They insist that under justifiable circumstances, the signature of one of the
petitioners in the certificate against forum shopping substantially complies with the rules.
They further point out that all of them share a common interest and invoke a common cause
of action under the same set of facts.
Moreover, petitioners submit that they complied with Section 3, Rule 46 of the Rules of
Court. They contend that they included Dr. Tidula in the Petition for Certiorari as respondent
because he remains interested in the reversal of the NLRC Decision and Resolution. They
add that from the inception of the case, all pleadings had been coursed through Dr. Tidula‘s
counsel; and they are unaware of the address of Dr. Tidula as he never indicated it in his
position paper. Hence, they maintain that it is fair that in the present proceeding, any
pleading intended for Dr. Tidula be sent to his counsel.
In addition, petitioners state that the non-inclusion of Dr. Tidula is not a fatal defect but a
mere typographical error which does not prejudice the rights of any party.
Finally, petitioners fault the CA in not finding that the NLRC committed grave abuse of
discretion in giving due course to the Hospital‘s appeal despite its failure to post appeal bond
within the period to perfect an appeal. They also maintain that the NLRC committed grave
abuse of discretion in holding that they were not illegally dismissed by respondents.
The Hospital, on the other hand, asserts that the CA correctly dismissed the Petition
because it was filed by a counsel who had no authority from petitioners; and that the
Certificate against Forum Shopping attached thereto was fatally defective. It also declares
that the Petition for Certiorari improperly impleaded Dr. Tidula as respondent. Lastly, it
contends that petitioners are not entitled to money claims.
Our Ruling
The Petition is meritorious.
In Altres v. Empleo,[34] the Court summarized the basic tenets involving non-compliance with
the requirements on, or filing of defective verification and certificate against forum shopping,
to wit:
1) A distinction must be made between non-compliance with the requirement on or submission of

defective verification, and non-compliance with the requirement on or submission of defective
certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The court may order its submission or correction or act on the pleading if
the attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in

verification, is generally not curable by its subsequent submission or correction thereof, unless there is
a need to relax the Rule on the ground of ―substantial compliance‖ or presence of ―special
circumstances or compelling reasons‖.
5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his counsel of record to sign on his behalf.
The CA dismissed the Petition for Certiorari on the ground that the Verification/Certificate of
Non-Forum Shopping executed by petitioners‘ counsel on behalf of Drs. Villegas, Canlas
and Zheila violated Section 5, Rule 7 of the Rules of Court.[35]
As properly pointed out by the CA, the Verification/Certificate of Non-Forum Shopping with
Undertaking executed by petitioners‘ counsel is not valid. As stated in Altres, a certificate
against forum shopping must be signed by the party and in case his counsel signs the same
on his behalf, the counsel must be armed with a special power of attorney. Since petitioners‘
counsel is not shown to have been authorized by Drs. Villegas, Canlas and Zheila to sign a
certificate of non-forum shopping on their behalf, the execution of said certificate by counsel
violates the foregoing rules.
Nonetheless, the CA failed to consider the concept of ―substantial compliance‖ to the

requirements of verification and certificate of non-forum shopping, as it has been shown that
three of the six petitioners executed their own verification and certificate against forum
shopping.
The verification of a pleading is a formal and not a jurisdictional requirement. It is intended to

assure that the allegations in a pleading are true and correct. As such, the court may order
the correction of unverified pleadings, or it may act on them and waive strict compliance with
the rules.[36]
The verification requirement is deemed substantially complied with when a person who has
sufficient knowledge to swear to the truth of the allegations in the complaint or petition signs
the verification; and matters alleged therein have been made in good faith or are true and
correct. Thus, there is substantial compliance if at least one of the petitioners makes a
proper verification.[37]
In Ateneo de Naga University v. Manalo,[38] the signature of one of three petitioners therein
was considered substantial compliance with the verification requirement. The Court held that
Fr. Tabora, the petitioner who signed the verification, has sufficient knowledge to swear to
the truth of the allegations in the petition filed with the CA; and his signature was ample
assurance that the allegations have been made in good faith or are true and correct.
In SKM Art Craft Corporation v. Bauca,[39] the Court held that the verification and certificate
against forum shopping signed by nine out of 23 respondents substantially complied with the
verification requirement since they have common interest and cause of action. The Court
likewise stated that the apparent merit of the petition and the conflicting findings, of the LA
and the NLRC also justified the decision of the CA to resolve the case on the merits.
In this case, three out of six petitioners signed three separate verifications appended to the
Petition for Certiorari. Their signatures are sufficient assurance that the allegations in the
Petition were made in good faith, or are true and correct. Thus, there is substantial
compliance with the verification requirement.
On the other hand, as a rule, the certificate against forum shopping must be signed by all
plaintiffs or petitioners; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable situations, such as when the plaintiffs or petitioners
share a common interest and invoke a common cause of action or defense, the signature of
one of them in the certificate against forum shopping is considered substantial compliance
with the rules.[40]
In Abaria v. National Labor Relations Commission,[41] 47 out of 88 petitioners signed the

certificate against forum shopping. The Court ruled that the petitioning employees shared a
common interest and cause of action when they filed the case for illegal dismissal. The Court
decreed ,that when petitioners therein appealed to the CA, they pursued the case as a
collective body, invoking one argument in support of their cause of action, which is, the
illegal dismissal purportedly committed by their employer when union members resorted to
strike due to the employer‘s refusal to bargain with officers of the local chapter.
Furthermore, in Torres v. Specialized Packaging Development Corp.,[42] the Court allowed

the relaxation of the rules on submission. of certificate against forum shopping. One of the
compelling grounds for the allowance of said certificate therein where only two of 25
petitioners signed the same was the ―apparent merits of the substantive aspects of the
case.‖ It noted that the varying views of the LA and the NLRC give ample basis for the
necessity of a review on the merits and the outright dismissal of the petition was prejudicial
to the substantive rights.
Here, three of six petitioners signed the certificate of non-forum shopping. At the least, the
CA could have ordered that those who did not sign it be dropped as parties, but not the
outright dismissal of the Petition.
The Court, nevertheless, holds that there are justifiable reasons for the relaxation of the
rules on the filing of a certificate of non-forum shopping and that the certificate against forum
shopping signed by three out of six petitioners suffices.
Specifically, petitioners‘ cause of action revolves on the same issue, that is, respondents
illegally dismissed them under similar circumstances. They were all resident physicians who
were purportedly 1) re-employed by the Hospital even after the expiration of their respective
one year contracts; 2) forced to resign and offered to be re-engaged as fixed term
employees but declined; 3) demoted; 4) accused of violations of the Hospital rules and
regulations; and, 5) dismissed.
Moreover, substantial justice dictates that the Petition for Certiorari be given due course and
be resolved on the merits. This is especially so since the findings of the LA are contrary to
those of the NLRC,[43] particularly on the issues of whether respondents illegally dismissed
petitioners and of whether they were afforded due process of law.
The requirement of strict compliance with the rules on filing of certificate against forum
shopping highlights the mandatory character of the submission of such certificate. However,
this mandatory requirement allows substantial compliance provided that there are justifiable
circumstances for the relaxation of the rules.[44]
Furthermore, the CA dismissed the Petition for Certiorari because it did not indicate in its title
that Dr. Tidula is a party respondent and the Petition did not state Dr. Tidula‘s actual
address. The CA held that these omissions violate Section 3,[45] Rule 46 of the Rules of
Court, in relation to Rule 65 thereof.
We do not agree.
Since Dr. Tidula was included as one of the respondents in the body of the Petition, then the
CA could have clarified with petitioners the non-inclusion of Dr. Tidula in the title and could
have ordered the title rectified.
Likewise, the Court finds that the failure to state the address of Dr. Tidula is insufficient to
cause the dismissal of the Petition. The lack of address of Dr. Tidula is not a fatal defect as
he had been represented by his counsel in the case. The indication that the party ―could be
served with process care of his counsel was substantial compliance with the Rules.‖ And,
when a party has appeared through counsel, service is to be made upon the counsel, unless
the court expressly orders that it be made upon the party.[46]
In view of the foregoing, a remand of the case to the CA for proper disposition on the merits
is deemed proper.
WHEREFORE, the Petition is GRANTED. The July 42, 2012 and October 22, 2012
Resolutions of the Court of Appeals in CA-G.R. SP No. 125333 are REVERSED and SET
ASIDE. The case is REMANDED to the Court of Appeals for appropriate disposition.
SO ORDERED.
14 MAR 2016 | JURISPRUDENCE | PONENTE | JUSTICE

COURT | SUBJECT | LABOR AND
EMPLOYMENT | TERMINATION BY EMPLOYER
Tabuk Multi-Purpose Cooperative, Inc.

(TAMPCO), et al. Vs. Magdalena Duclan;
G.R. No. 203005; March 14, 2016
DECISION
DEL CASTILLO, J.:
An employee‘s willful and repeated disregard of a resolution issued by a cooperative‘s board

of directors (BOD) declaring a moratorium on the approval and release of loans, thus placing
the resources of the cooperative and ultimately the hard-earned savings of its members in a
precarious state, constitutes willful disobedience which justifies the penalty of dismissal
under Article 282 of the Labor Code.
Assailed in this Petition for Review on Certiorari[1] are: 1) the September 15, 2011
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 114753, which reversed and set
aside the November 25, 2009 Decision[3] and April 8, 2010 Resolution[4] of the National Labor
Relations Commission (NLRC) in NLRC CA-No. 050848-06 (RA-06-09); and 2) the CA‘s July
11, 2012 Resolution[5] denying reconsideration of its assailed Decision.
Factual Antecedents
Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative

based in Tabuk City, Kalinga. It is engaged in the business of obtaining investments from its
members which are lent out to qualified member-borrowers. Petitioner Josephine Doctor is
TAMPCO Chairperson and member of the cooperative‘s BOD, while petitioner William, Bao-
Angan is TAMPCO Chief Executive Officer.
Respondent Magdalena Duclan was employed as TAMPCO Cashier on August 15, 1989, In
2002, TAMPCO introduced Special Investment Loans (SILs) to its members and prospective
borrowers. Among those who availed themselves of the SILs were Brenda Falgui (Falgui)
and Juliet Kotoken (Kotoken).[6]
In June 2003, the TAMPCO BOD issued Board Action (BA) No. 28 which limited the grant of
SILs to P5 million and instructed management to collect outstanding loans and thus reduce
the amount of loans granted to allowable levels. This was prompted by a cooperative report
stating that too many SILs were being granted, the highest single individual borrowing
reached a staggering P14 million, which thus adversely affected the cooperative‘s ability to
grant regular loans to other members of the cooperative.[7] However, despite said board
action, SILs were granted to Falgui and Kotoken over and above the ceiling set. This
prompted the BOD to issue, on October 26, 2003, BA No. 55 completely halting the grant of
SILs pending collection of outstanding loans.
Despite issuance of BA No. 55, however, additional SILs were granted to Falgui amounting
to P6,697,000.00 and to Kotoken amounting to P3.5 million.[8] Eventually, Falgui filed for
insolvency while Kotoken failed to pay back her loans.
On February 23, 2004, TAMPCO indefinitely suspended respondent and other cooperative
officials pursuant to BA No. 73-03, and required them to replace the amount of P6 million
representing unpaid loans as of February 21, 2004. On March 6, 2004, respondent‘s
suspension was fixed at 15 days, and she was ordered to return to work on March 15, 2004.
The TAMPCO BOD then created a fact-finding committee (committee) to investigate the SIL
fiasco.[9] Respondent and other TAMPCO employees were summoned to the proceedings
and required to submit their respective answers to the committee.[10]
Respondent submitted to the committee an October 21, 2004 letter,[11] admitting that despite
the issuance of BA No. 55, she and her co-respondents approved and released SILs, and
that she acknowledged responsibility therefor.
After conducting hearings, the committee issued its Report on the Special Investment
Loans,[12] which states as follows:
xxxx
a. There are loan notes which do not contain the signature of the spouse of the borrower as mandated
under Chapter 10 of the Policy Manual. This is true in the loan notes of Monica Oras, and Juliet
Kotoken for her loan application sometime on [sic] January 12, 2004;
b. Special loans were still granted even after the setting of the allowable ceiling on June 28, 2003 (BA
No. 28) and even after the Board of Directors stopped the granting of the Special Investment Loan on
October 26, 2003 (BA No. 55);
c. Loans were released even there [sic] were lacking documents. The case of the SIL granted for
example to Mrs. Juliet Kotoken and Mrs. Brenda Falgui on January 12, 2004 were released even
without the required loan note. It was revealed that Mr. Peter Socalo prepared the voucher and Mrs.
Aligo did the releasing of the amount upon the conformity of Mrs. Magdalena Duclan. The loan notes
were made and executed later after the loans were also released;
d. Checks used to secure or postdated checks intended to pay the Special Investment loans were not
presented for payment at the time that they fall [sic] due;
e. Extension of the term of the loan were done through the substitution of the checks without prior
approval of the Board of Directors.
All the above findings were not denied and in fact respondents CEO Rev. Ismael Sarmiento admitted
the charge against him. ―Mea Culpa‖ x x x he said[,] but at the same time prayed for the Committee‘s
and Board‘s understanding and compassion, Magdalena Duclan and Fruto Singwey admitted [their
fault under] command responsibility for the action of their subordinates.
All the other respondents invoked that they just [performed] their duties [or be charged with]
insubordination x x x.
To the issue of the missing check which was raised by Mr. Dulawon in the previous Board meetings,
the committee heard again the side of the cashier [who] denied that tine same is missing. Accordingly,
the same was changed by Mrs. Brenda Falgui, or that a substitute check was issued by Mrs. Falgui.
She [had a] conflicting statement before the Board when she stated that the amount belongs to Juliet‘s
account.
CONCLUSION:
There was indeed an error, mistake, negligence or abuse of discretion that transpired in the grant of
the special investment loans, x x x [T]here are violations of the policies or Board actions which
should be dealt with[.] x x x.
RECOMMENDATIONS:
AS TO THE ACCOUNTABILITY
xxxx
Mrs. Magdalena Duclan
The committee recommended that she will be immediately suspended without pay and for her to
collect the SIL she [had] released even without the loan note and for her to account [for] or pay the
missing value of the check bearing no. 00115533 in the amount of P1,500,000.00 [by] Dec. 31, 2004.
[For failure] to collect or account/pay [by then she] shall be [dismissed] from service with forfeiture
of all benefits.
She violated policies and Board actions, specially 28 and 55 in relation to the manual.[13]
On November 6, 2004. the BOD adopted the report of the committee and ordered that
respondent be suspended from November 8 until December 31, 2004; respondent was
likewise directed to collect, within the said period, the unauthorized SIL releases she made,
otherwise she would be terminated from employment.[14]
Unable to collect or account for the P1.5 million as required, respondent was dismissed from
employment. Thus, in a February 1, 2005 communication,[15] TAMPCO wrote:
Anent your letter dated January 26, 2005, reiterating your plea for a reconsideration of your
suspension for the reason that you were suspended twice on different days for the commission of the
same offense, the following quoted paragraph was lifted from lines 339 through 350 of the minutes of
the regular meeting of the TAMPCO BOD held on November 27, 2004, treating the matter of your
concern for your information, to wit:
―x x x CEO Sarmiento and Cashier Duclan [requested] reconsideration of their suspension pointing
out that they are being suspended twice for the same offense, The Board denied the request, clarifying
that the basis for the second suspension is the discovery of the release of cash to the SIL recipient
without first accomplishing the corresponding loan note and which action is. contrary to the
established processes. It was mentioned that such violation is punishable by outright dismissal but the
policy was humanized with the imposition only of suspension to the violators to give them ample time
to collect the unauthorized disbursement. x x x [The first] suspension was lifted because their services
were urgently needed in the distribution of dividends and patronage refunds. The Board decided to
stand by its decision based on the recommendation of the fact-finding committee.―
[For] failure to comply with the tasks required x x x within the effectivity period of your suspension
as set under Office Orders numbered 001-04 and 002-04, both dated November 6, 2004, the Board,
during its January 29, 2005 regular meeting, decided to terminate your services xxx effective as of the
closing of office hours on February 1, 2005.
On July 12, 2005, respondent filed a complaint for illegal dismissal, with recovery of
backwages; unpaid holiday pay; premium and 13th month pay; moral, exemplary and actual
damages; and attorney‘s fees, against respondents which was docketed in the NLRC RAB,
Cordillera Administrative Region, Bagiuo City as NLRC Case No. RAB-CAR-07-Q344-05 (R-
11-08).
On April 24, 2009, Labor Arbiter Monroe C, Tabingan issued a Decision[16] in the case,
decreeing as follows:
WHEREFORE, all premises duly considered, the respondent is hereby found to have illegally
suspended, then illegally dismissed the herein complainant. In view of the fact that this decision was a
collective act of the Board of Directors and Officers of the respondent, they, as well as the respondent
Cooperative, are hereby jointly and severally held liable to pay to the complainant the following:
1. Her full backwages from the time of her illegal suspension beginning 24 February
2004 to 15 March 2004, and her illegal dismissal from 08 November 2004 to the
finality of this Decision, with legal rate of interest thereon until fully paid, currently
computed at PhP1,188,283.30, subject to re-computation at the time of the payment of
said monetary claim;x x x x
2. Her separation pay in lieu of reinstatement of one (1) month pay for every year of
service beginning at the time of her initial date of hiring, to the finality of this decision,
with legal rate of interest thereon until fully paid, currently computed at
PhP405,002.40, said interest subject to re-computation at the time of the payment;x x x
x
3. Moral damages in the amount of PhP100,000.00 and exemplary damages in the

amount of PhP100,000.00;
4. Her attorney‘s fees of not less than ten (10%) per centum of the total monetary award
hereto awarded, currently computed at P159,329.07, subject to re-computation at the
time of payment.
SO ORDERED.[17]
In ruling that respondent was illegally dismissed, the Labor Arbiter made the following
findings: a) respondent‘s first suspension was for an indefinite period, hence illegal; b)
respondent was not accorded the opportunity to explain her side before she was meted the
penalty of suspension; c) placing respondent on suspension and requiring her to personally
pay the loan is not the proper way to collect irregularly released loans; d) although
respondent‘s indefinite suspension was eventually reduced to 15 days, by that time

respondent was suspended for 20 days already; e) respondent was deprived of the
opportunity to explain her side when she was suspended the second time on November 8,
2004 to December 31, 2004; f) the second suspension was illegal because it was beyond 30
days; g) respondent was suspended twice for the same infraction; h) the February 1, 2005
letter informing respondent of her termination is redundant since respondent has been
deemed constructively dismissed as early as February 23, 2004 when she was indefinitely
suspended; i) as cashier, respondent‘s signing of the check before its release is merely
ministerial; she has no hand in the processing or approval of the loans; j) TAMPCO had
previously tolerated the practice of releasing loans ahead of the processing of vouchers and
board approval and during the prohibited period; and k) petitioners did not terminate
respondent‘s co-workers who were charged with committing the same infraction.[18]
Petitioners filed an appeal before the NLRC, which was docketed as NLRC CA-No. 050848-
06 (RA-06-09). On November 25, 2009, the NLRC issued its Decision[19] containing the
following pronouncement:
Anent respondent‘s first suspension, the NLRC noted that petitioners already modified the
period from being indefinite to only 15 days and that respondent was properly paid her
wages corresponding to said period of suspension. Thus, there was no need to discuss the
validity of said suspension. Regarding the second suspension from November 8 to
December 31, 2004, the NLRC found the same as illegal considering that it was imposed as
a penalty and not as a preventive suspension pending investigation of her administrative
liability. In fact, during her suspension, she was ordered to collect the loan illegally released.
However, as regards her dismissal from service, the NLRC found the same as valid and for
cause. The NLRC opined that respondent was notified of the investigation to be conducted
by the Fact-Finding Committee; the notice apprised her that she was being charged with: (1)
violation of BA No. 55 stopping the giving of SILs; (2) violation of BA No. 28 limiting the
individual grant of SIL to P5 million; and (3) violation of lending policies requiring the consent
of spouse in the granting of loans. Respondent was given the opportunity to answer the
charges against her. In fact, she admitted having released SILs despite the board resolution
discontinuing the same. Despite this admission, petitioners continued with the investigation
and found the following infractions to have been committed by respondent:
1. There were loan notes which did not contain the signature of the borrower‘s spouse as mandated by
the Policy Manual of the Cooperative;
2. SILs were still granted even after the BOD passed BR Nos. 28 and 55 which limited the ceiling of
SILs to be granted and even subsequently stopping the grant of the said loan;
3. Loans were released even [when] there [were] documents [missing]. The cases of Ms. Kotoken and
Falgui were cited where their loans were released despite the absence of loan notes;
4. [Post-dated] checks used to secure the SlLs were not presented at the time they fell due; and
5. Extension of the term of the loans [was] done through substitution of checks without prior approval
of the BOD.[20]
According to the NLRC, the Fact-Finding Committee discovered that respondent unilaterally
altered the terms of the loan by extending the dates of maturity of checks which secured the
loans and that she reported a partial payment, by way of two (2) checks, of the loan of
Kotoken in the amount of P3 million although the subject checks were not yet encashed.
Worse, the checks were later dishonored when presented for payment.
As observed by the NLRC, respondent failed to refute the above findings. In fact, she
admitted having released SILs despite knowledge of board resolutions discontinuing the
grant of SILs and despite the fact that the borrower concerned had exceeded the allowable
ceiling.
The NLRC did not give credence to respondent‘s assertion that as a mere cashier, she has
no discretion at all on the approval of the loans. The NLRC opined that respondent was the
custodian of the entire funds of TAMPCO and also an honorary member of the BOD,
advising the latter on financial matters. The NLRC also held that the release of funds is not
purely ministerial as respondent was expected to check all the supporting documents and
whether pertinent policies regarding the loan had been met by the applicant.
For the NLRC, respondent‘s transgressions were deliberate infractions of clear and
mandatory policies of TAMPCO amounting to gross misconduct.
The dispositive portion of the NLRC Decision reads:
WHEREFORE, premises considered, the appeal of respondents is GRANTED. The Decision of the
Labor Arbiter dated April 24, 2009 is hereby REVERSED AND SET ASIDE, and a new one is
hereby rendered DISMISSING the above-entitled complaint for lack of merit. Respondent Tabuk
Multi-Purpose Cooperative, Inc., is, however, ordered to pay complainant‘s wages for the period of
November 8 to December 31, 2004.
SO ORDERED.[21]
Respondent moved to reconsider. However, in a Resolution dated April 8, 2010, the NLRC
held its ground.[22]
In a Petition for Certiorari[23] filed with the CA and docketed therein as CA-G.R. SP No.
114753, respondent sought to set aside the NLRC dispositions and reinstate the Labor
Arbiter‘s judgment, arguing that she had no discretion in the release of the SILs; that she
was not an ex-officio member of the cooperative‘s BOD; that while she committed a violation
of the cooperative‘s policies, she should be accorded clemency just as her co-respondents
were pardoned and allowed to collect their benefits; that she did not commit gross
misconduct, as she was not solely responsible for the prohibited release of the SILs to
Kotoken and Falgui, since they were previously approved by the loan investigator, the Credit
Committee, and the General Manager prior to their release; that petitioners did not properly
observe the twin-notice rule prior to her dismissal, as she was not given any notice to
present her side – instead, she was dismissed outright when she failed to collect and return
the amount she disbursed via the SILs; that there is no just cause for her dismissal; that her
length of service (15 years) and her unblemished record with the cooperative should merit
the setting aside of her dismissal, and instead, her previous suspensions should suifice as a
penalty for her infraction; that the exoneration of her co-respondents – notably the General
Manager – who was allowed to retire, given a ―graceful exit‖ from the cooperative, honorably
discharged, allowed to collect his benefits in full, and given a certification to the effect that he
did not commit any violation of the cooperative‘s policies, rules, and regulations – constitutes
discrimination, favoritism, evident bad faith, and a violation of her constitutional right to equal
protection; and that the Labor Arbiter‘s decision is entirely correct and should be given full
credence and respect.
In their Comment[24] seeking dismissal of the Petition, petitioners contended that the Petition
was filed to cover up for a lost appeal; that no reversible error is evident; that contrary to
respondent‘s claim, her position as cashier is the ―lifeblood and very existence of the
Cooperative‖ since she was the ―key to the vault and the dispenser of the Cooperative‘s
fund‖; that respondent is responsible and accountable for all disbursements because before
the release of the loan proceeds, she must ensure that all the processes and necessary
documents are duly complied with and tibere are no violations of any of the cooperative‘s
policies and rules; that she is likewise responsible for the collection activities of the
cooperative and the coordination thereof, as required under her job description; that
respondent was customarily appointed by the BOD as its adviser and treasurer – being so,
she very well knew of its policies; that as cashier, her signature to the checks were required
prior to the release thereof to the SIL borrowers – thus, she is liable for signing these checks
and releasing them to the borrowers in disregard of BA No. 55 prohibiting the further release
of loans pending collection of those outstanding; that there is no favoritism or discrimination
when the former General Manager was allowed a graceful exit while respondent was
dismissed, as the decision to allow the former to retire and collect his benefits is a
management prerogative that respondent cannot interfere with; and that ultimately,
respondent was dismissed not for her failure to collect the outstanding loans, but for her
violation of the cooperative‘s policies (BA Nos. 28 and 55); that in dismissing her, due
process was observed.
On September 15, 2011, the CA issued the herein assailed Decision, decreeing as follows:
WHEREFORE, premises considered, the Decision of the NLRC dated 25 November 2009 is hereby
REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated 24 April 2009 in NLRC Case
No. RAB-CAR-07-0344-05 (R-11-18) is hereby REINSTATED.
SO ORDERED.[25]
The CA held that respondent‘s dismissal was illegal; that she was not guilty of violating her
duties and responsibilities as Cashier; that she was under the supervision of the
cooperative‘s Finance and Credit Managers, who are primarily responsible for the approval
of loan applications; that as Cashier, she was a mere co-signatory of check releases and
simply acts as a ―check and balance on the power and authority of the General Manager;‖
that she does not exercise discretion on the matter of SILs – specifically the assessment,
recommendation, approval and granting thereof; that only the Loan Officers, as well as the
Credit, Finance, and General Managers, have a direct hand in the evaluation, assessment
and approval of SEL applications, including their required attachments/documents; that while
the questioned SILs were released without the approval of the BOD, such practice was
sanctioned and had been adopted and tolerated within TAMPCO ever since; that it is unjust
to require respondent to pay the amounts released to SEL borrowers but which could no
longer be collected; that it was unfair to condemn and punish respondent for the anomalies,
while her corespondents, particularly the former General Manager, was given a graceful exit,
honorably discharged, and was even allowed to collect his retirement benefits in full; that
respondent‘s suspension from November 8 to December 31, 2004 was illegal; and that
petitioners failed to comply with the twin-notice rule prior to her dismissal.
Petitioners filed a Motion for Reconsideration,[26] but the CA denied the same in its July 11,
2012 Resolution. Hence, the present Petition.
In a November 11, 2013 Resolution,[27] this Court resolved to give due course to the Petition.
On March 19, 2014, petitioners filed an Urgent Motion[28] seeking injunctive relief to enjoin the
execution of judgment. In a March 24, 2014 Resolution,[29] the motion was denied.
Issues
Petitioners submit the following issues for resolution:

1. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD TO
REVERSE THE DECISION OF THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION THEREBY AFFIRMING THE DECISION OF THE HONORABLE LABOR
ARBITER.
2. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ERROR

WHEN IT DID NOT CONSIDER THE EVIDENCE OF THE PETITIONERS AS IT RULED THAT
THE RESPONDENT WAS REMOVED IN VIOLATION OF THE TWO-NOTICE RULE AND
THAT THERE IS NO JUST CAUSE FOR HER REMOVAL.
3. WHETHER THE HONORABLE COURT OF APPEALS PATENTLY COMMUTED A GRAVE

ERROR WHEN IT RULED THAT THE JOB OF THE RESPONDENT MAGDALENA DUCLAN
INCLUDES CHECK AND BALANCE AND YET IT CONCLUDED THAT HER FUNCTION IS
MERELY MINISTERIAL. THUS, SHE CANNOT BE HELD ACCOUNTABLE FOR HER
[CONDUCT].
4. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT ACTED ON THE

PETITION FOR CERTIORARI (RULE 65) FILED BY THE RESPONDENT DESPITE THE FACT
THAT THE PROPER REMEDY SHOULD [HAVE] BEEN X X X A PETITION FOR REVIEW ON
CERTIORARI.[30]
Praying that the assailed CA pronouncements be set aside and that the NLRC judgment be
reinstated instead, petitioners essentially argue in their Petition and Reply[31] that due process
was observed in the dismissal of respondent; that there was just and valid cause to dismiss
her, as she violated the cooperative‘s policies and board resolutions limiting and
subsequently prohibiting the grant and release of SILs – which actions jeopardized
TAMPCO‘s financial position; that respondent‘s actions constituted serious misconduct and
willful disobedience, justifying dismissal under Article 282 of the Labor Code; [32] that while the
Credit and General Managers possessed discretion in the evaluation and approval of SIL
applications, respondent as Cashier was still accountable as she was duty-bound to check
that the release of the loan amounts was proper and done in accordance with the
cooperative‘s rules and policies; and that there is no basis to suppose that respondent was
unfairly treated, since all those found responsible for the SIL fiasco were dismissed from
service after their respective cases were individually considered and accordingly treated
based on the infractions committed.
In her Comment,[33] respondent counters that the Petition fails to present any cogent
argument that warrants reversal of the assailed CA dispositions; that on the contrary, the CA
correctly upheld her rights to security of tenure and due process; that there was no valid
cause to dismiss her; that as Cashier, she had no power to approve SIL applications, but
only release the loan amounts after the applications are evaluated and approved by the
Credit Manager, and under the supervision of the Finance Manager; and that the respective
decisions of the CA and the Labor Arbiter are correct on all points and must be upheld.
Our Ruling

Under Article 282 of the Labor Code, the employer may terminate the services of its
employee for the latter‘s serious misconduct or willful disobedience of its or its
representative‘s lawful orders. And for willful disobedience to constitute 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, hi 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.‖[34]
The persistent refusal of the employee to obey the employer‘s lawful order amounts to willful
disobedience.[35]Indeed, ―[o]ne of the fundamental duties of an employee is to obey all
reasonable rules, orders and instructions of the employer. Disobedience, to be a just cause
for termination, must be willful or intentional, willfulness being characterized by a wrongful
and perverse mental attitude rendering the employee‘s act inconsistent with proper
subordination. A willful or intentional disobedience of such rule, order or instruction justifies
dismissal only where such rule, order or instruction is (1) reasonable and lawful, (2)
sufficiently known to the employee, and (3) connected with the duties which the employee
has been engaged to discharge.‖[36]
As TAMPCO Cashier, respondent was, among her other designated functions and duties,
responsible and accountable for all disbursements of cooperative funds and the coordination
of delinquency control and collection activities.[37] She was likewise expected to understand
the cooperative‘s operational procedures,[38] and of course, follow its rules, regulations, and
policies.
A year after introducing the SIL program, TAMPCO realized that a considerable amount of
the cooperative‘s loanable funds was being allocated to SILs, which thus adversely affected
its ability to lend under the regular loan program. It further discovered that single individual
borrowings under the SIL program reached precarious levels, thus placing the resources of
the cooperative at risk. Thus, in June 2003, the TAMPCO BOD issued BA No. 28, putting a
cap on SIL borrowings at P5 million. In October of the same year, BA No. 55 was issued,
completely prohibiting the grant of SILs. However, despite issuance of BA Nos. 28 and 55,
respondent and the other officers of the cooperative including its former General Manager,
continued to approve and release SILs to borrowers, among them Falgui and Kotoken, who
received millions of pesos in loans in January and December of 2004, and in January 2005.
Eventually, Falgui claimed insolvency, and Kotoken failed to pay back her loans.
The CA failed to consider that in releasing loan proceeds to SIL borrowers like Falgui and
Kotoken even after the BOD issued BA Nos. 28 and 55, respondent, and the other
cooperative officers, willfully and repeatedly defied a necessary, reasonable and lawful
directive of the cooperative‘s BOD, which directive was made known to them and which they
were expected to know and follow as a necessary consequence of their respective positions
in the cooperative. They placed the resources of the cooperative – the hard-earned savings
of its members – in a precarious state as a result of the inability to collect the loans owing to
the borrowers‘ insolvency or refusal to honor their obligations, Respondent committed gross
insubordination which resulted in massive financial losses to the cooperative. Applying
Article 282, her dismissal is only proper.
Respondent cannot pretend to ignore the clear mandate of BA Nos. 28 and 55 and justify
her actions in releasing the loan proceeds to borrowers by claiming that she had no choice
but to release the loan proceeds after the SIL loan applications were evaluated and
approved by the loan investigator, the Credit Committee, and the General Manager. These
officers were themselves bound to abide by BA Nos. 28 and 55 – they, just as respondent,
are subordinate to the TAMPCO BOD. Pursuant to the Philippine Cooperative Code of 2008,
or Republic Act No. 9520, TAMPCO‘s BOD is entrusted with the management of the affairs
of the cooperative (Article 5 [3]); the direction and management of the cooperative‘s affairs
shall be vested in the said board (Article 37); and it shall be responsible for the strategic
planning, direction-setting and policy-formulation activities of the cooperative (Article 38).
Just the same, respondent could have simply refused to release the loan proceeds even if
the loan applications were duly approved. Had she done so, she would have been excluded
from the indictments. She would have continued with her employment. In this regard, the CA
erred completely in declaring that only the Loan Officers, as well as the Credit, Finance, and
General Managers are primarily responsible since only they exercised discretion over SIL
applications, and respondent had no choice but to perfunctorily release the loan proceeds
upon approval of the applications.
The Court likewise finds that in dismissing respondent, petitioners observed the
requirements of due process. An investigation was conducted by a fact-finding committee;
respondent and her colleagues were summoned and required to explain – and they did;
respondent submitted an October 21, 2004 letter acknowledging and confessing her
wrongdoing – that despite BA No. 55, she and her colleagues continued to approve and
release SILs. After the investigation proceedings, the committee prepared a detailed Report
of its findings and containing a recommendation to suspend the respondent, require her to
restore the amounts she wrongly disbursed – by collecting the credits herself, and in the
event of failure to restore the said amounts, she would be dismissed from the service. The
Report was approved and adopted by the cooperative‘s BOD, which resolved to suspend
respondent from November 8 until December 31, 2004 and ordered her to collect, within the
said period, the unauthorized SIL releases she made; otherwise, she would be terminated
from employment. When respondent failed to restore the amounts in question, the BOD
ordered her dismissal from employment. Respondent was informed of her dismissal in a
February 1, 2005 communication addressed to her; this is the second of the twin notices
required by law. Thus, as to respondent, the cooperative observed the proper procedure
prior to her dismissal.
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. x x x[39]
During the proceedings below, respondent questioned the cooperative‘s decision requiring
her to collect the credits from Falgui and/or Kotoken, claiming this was illegal and improper.
But there is nothing wrong in requiring her to do so; this is simply ordering her to restore the
amounts she unlawfully released. She may do so in any way she deemed best: either by
paying the amounts from her own funds, or by collecting the same from the borrowers
themselves. The cooperative could have rephrased its directive to her by simply ordering her
to restore the lost amounts. This is pretty much standard procedure in cases of this nature:
the accused in malversation cases is required to restore the amount lost, and bank tellers or
cashiers are told to pay back what the banks lose through their willful or negligent acts.
There is also nothing irregular in the cooperative‘s decision to require from respondent and
her colleagues the collection or restoration of the amounts that were illegally released, with a
threat that in case of failure to do so, they would be dismissed from employment.
Respondent and her colleagues were simply given the opportunity to clear themselves from
the serious infractions they committed; their failure to restore the amounts lost in any manner
could not prevent the imposition of the ultimate penalty, since their commission of the
serious offense has been adequately shown. In fact, respondent voluntarily confessed her
crime. To the mind of the Court, respondent and her colleagues were afforded ample
opportunity to clear themselves and thus restore the confidence that was lost, and TAMPCO
was not precluded from testing their resolve.
Finally, while the CA finds that it is unfair for TAMPCO to treat respondent differently from
the former General Manager, who was permitted to retire and collect his benefits in full, the
appellate court must nonetheless be reminded that ―[t]he law protects both the welfare of
employees and the prerogatives of management. Courts will not interfere with prerogatives
of management on the discipline of employees, as long as they do not violate labor laws,
collective bargaining agreements if any, and general principles of fairness and
justice.‖[40] Moreover, management is not precluded from condoning the infractions of its
employees; as with any other legal right, the management prerogative to discipline
employees and impose punishment may be waived.[41] As far as respondent is concerned,
the cooperative chose not to waive its right to discipline and punish her; this is its privilege as
the holder of such right. Finally, it cannot be said that respondent was discriminated against
or singled out, for among all those indicted, only the former General Manager was accorded
leniency; the rest, including respondent, were treated on equal footing. As to why the former
General Manager was allowed to retire, this precisely falls within the realm of management
prerogative; what matters, as far as the Court is concerned, is that respondent was not
singled out and treated unfairly.
WHEREFORE, the Petition is GRANTED. The assailed September 15, 2011 Decision and
July 11, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 114753
are REVERSED and SET ASIDE. The November 25, 2009 Decision of the National Labor
Relations Commission in NLRC CA-No. 050848-06 (RA-06-09)
is REINSTATED and AFFIRMED.
SO ORDERED.
25 JAN 2016 | JURISPRUDENCE | PONENTE | JUSTICE

COURT | SUBJECT | LABOR AND EMPLOYMENT | UNFAIR
LABOR PRACTICE
Allan M. Mendoza Vs. Officers of Manila

Water Employees Union, namely, Eduardo B.
Borela, et al.; G.R. No. 201595; January 25,
2016
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the April 24, 2012 Decision[2] of the Court of
Appeals (CA) which dismissed the Petition for Certiorari[3] in CA-G.R.SP No. 115639.
Factual Antecedents
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 Bob (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.[4]
In an April 11, 2007 letter,[5] 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,[6] 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.[7] 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,[8] Borela informed petitioner and his corespondents of the MWEU
Executive Board‘s ―unanimous approval‖[9] 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[10] to Borela, petitioner and Ms 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,[11] 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,[12] Borela denied petitioner‘s appeal, stating that the prescribed period for appeal
had expired.
Petitioner and his co-respondents sent another letter[13] 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.[14] Thereafter, petitioner was again penalized with a 30-day
suspension through an August 21, 2007 letter[15] by Borela informing petitioner of the
Executive Board‘s ―unanimous approval‖[16] of the grievance committee recommendation to
suspend him effective August 24, 2007, to which he submitted a written reply, [17] 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‖[18] of the members of the Executive
Board. His pleas for an appeal to the General Membership Assembly were once more
unheeded.[19]
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.[20]
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. [21]
On October 13,2008, petitioner filed a Complaint[22] against respondents for unfair labor
practices, damages, and attorney‘s fees before the National Labor Relations Commission
(NLRC), Quezon City, docketed as NLRC Case No. NCR-10-14255-08. In his Position Paper
and other written submissions,[23] petitioner accused the respondents of illegal termination
from MWEU in connection with the events relative to his non-payment of union dues;
unlawful interference, coercion, and violation of the rights of MWC employees to self-
organization – in connection with the proposed CBA submitted by MWEU leadership, which
petitioner claims contained provisions that discriminated against non-MWEU members.
Petitioner prayed in his Supplemental Position Paper that respondents be held guilty of
unfair labor practices and ordered to indemnify him moral damages in the amount of
P100,000.00, exemplary damages amounting to P50,000.00, and 10% attorney‘s fees.
In their joint Position Paper and other pleadings,[24] respondents claimed that the Labor
Arbiter had no jurisdiction over the dispute, which is intra-union in nature; that the Bureau of
Labor Relations (BLR) was the proper venue, in accordance with Article 226 of the Labor
Code[25] and Section 1, Rule XI of Department Order 40-03, series of 2003, of the
DOLE;[26] and that they were not guilty of unfair labor practices, discrimination, coercion or
restraint.
On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga issued her Decision[27] which
decreed as follows:
Indeed the filing of the instant case is still premature. Section 5, Article X-Investigation Procedures
and Appeal Process of the Union Constitution and By-Laws provides that:
Section 5. Any dismissed and/or expelled member shall have the rights to appeal to the Executive
Board within seven (7) days from the date of notice of the 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.
On the basis of the foregoing, the parties shall exhaust first all the administrative remedies before
resorting to compulsory arbitration. Thus, instant case is referred back to the Union for the General
Assembly to act or deliberate complainant‘s appeal on the decision of the Executive Board.
WHEREFORE PREMISES CONSIDERED, instant case is referred back to the; Union level for the
General Assembly to act on complainant‘s appeal.
SO ORDERED.[28]
Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC No. 07-
001913-09. On March 15, 2010, the NLRC issued its Decision,[29] declaring as follows:
Complainant[30] imputes serious error to the Labor Arbiter when she decided as follows:
1. Referring back the subject case to the Union level for the General Assembly to
act on bis appeal.
2. Not ruling that respondents are guilty of ULP as charged.
3. Not granting to complainant moral and exemplary damages and attorney‘s fees.
Complainant, in support of his charges, claims that respondents restrained or coerced him in the
exercise of his right as a union member in violation of paragraph ―a‖, Article 249 of the Labor
Code,[31] particularly, in denying him the explanation as to whether there was observance of the proper
procedure in the increase of the membership dues from P100.00 to P200.00 per month. Further,
complainant avers that he was denied the right to appeal his suspension and expulsion in accordance
with the provisions of the Union‘s Constitution and By-Laws. In addition, complainant claims that
respondents attempted to cause the management to discriminate against the members of WATER-
AFWC thru the proposed CBA.
Pertinent to the issue then on hand, the Labor Arbiter ordered that the case be referred back to the
Union level for the General Assembly to act on complainant‘s appeal. Hence, these appeals.
After a careful look at all the documents submitted and a meticulous review of the facts, We find that
this Commission lacks the jurisdictional competence to act on this case.
Article 217 of the Labor Code,[32] as amended, specifically enumerates the cases over which the Labor
Arbiters and the Commission have original and exclusive jurisdiction. A perusal of the record reveals
that the causes of action invoked by complainant do not fall under any of the enumerations therein.
Clearly, We have no jurisdiction over the same.
Moreover, pursuant to Section 1, Rule XI, as amended, DOLE Department Order No. 40-03 in
particular, Item A, paragraphs (h) and (j) and Item B, paragraph (a)(3), respectively, provide:
“A. Inter-Intra-Union disputes shall include:
―(h) violation of or disagreements over any provision of the Constitution and By-Laws of a Union or
workers’ association.
―(j) violation of the rights and conditions of membership in a Union or workers‘ association.
―B. Other Labor Relations disputes, not otherwise covered by Article 217 of the Labor Code, shall
include –
―3. a labor union and an individual who is not a member of said union.‖
Clearly, the above-mentioned disputes and conflict fall under the jurisdiction of the Bureau of Labor
Relations, as these are inter/intra-union disputes.
WHEREFORE, the decision of the Labor Arbiter a quo dated May 29, 2009 is hereby declared NULL
and VOID for being rendered without jurisdiction and the instant complaint is DISMISSED.
SO ORDERED.[33]
Petitioner moved for reconsideration,[34] but in a June 16, 2010 Resolution,[35] the motion was
denied and the NLRC sustained its Decision.

In a Petition for Certiorari[36] filed with the CA and docketed as CA-G.R. SP No. 115639,
petitioner sought to reverse the NLRC Decision and be awarded his claim for damages and
attorney‘s fees on account of respondents‘ unfair labor practices, arguing among others that
his charge of unfair labor practices is cognizable by the Labor Arbiter; that the fact that the
dispute is inter- or intra-union in nature cannot erase the fact that respondents were guilty of
unfair labor practices in interfering and restraining him in the exercise of his right to self-
organization as member of both MWEU and WATER-AFWC, and in discriminating against
him and other members through the provisions of the proposed 2008 CBA which they
drafted; that his failure to pay the increased union dues was proper since the approval of
said increase was arrived at without observing the prescribed voting procedure laid down in
the Labor Code; that he is entitled to an award of damages and attorney‘s fees as a result of
respondents‘ illegal acts in discriminating against him; and that in ruling the way it did, the
NLRC committed grave abuse of discretion.
On April 24, 2012, the CA issued the assailed Decision containing the following
pronouncement:
The petition lacks merit.
Petitioner‘s causes of action against MWEU are inter/intra-union disputes cognizable by the BLR
whose functions and jurisdiction are largely confined to union matters, collective bargaining registry,
and labor education. Section 1, Rule XI of Department Order (D.O.) No. 40-03, Series of 2003, of the
Department of Labor and Employment enumerates instances of inter/intra-union disputes, viz:
Section 1. Coverage. – Inter/intra-union disputes shall include:
xxxx
(b) conduct of election of union and workers‘ association officers/nullification of election of union
and workers‘ association officers;
(c) audit/accounts examination of union or workers‘ association funds;
xxxx
(g) validity/invalidity of impeachment/expulsion of union and workers‘ association officers and

members;
xxxx
(j) violations of or disagreements over any provision in a union or workers‘ association constitution
and by-laws;
xxxx
(l) violations of the rights and conditions of union or workers‘ association membership;
xxxx
(n) such other disputes or conflicts involving the rights to self-organization, union membership and
collective bargaining –
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers‘ association.
In brief, ―Inter-Union Dispute‖ refers to any conflict between and among legitimate labor unions
involving representation questions for purposes of collective bargaining or to any other conflict or
dispute between legitimate labor unions. ―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 affiliation of union. On the other hand, the circumstances of
unfair labor practices (ULP) of a labor organization are stated in Article 249 of the Labor Code, to
wit:
Article 249. Unfair labor practices of labor organizations. It shall be unlawful for labor organization,
its officers, agents, or representatives to commit any of the following unfair labor practices:
(a) To restrain or coerce employees in the exercise of their right to self-organization; Provided,
That the labor organization shall have the right to prescribe its own rules with respect to the
acquisition or retention of membership;
(b) To cause or attempt to cause an employer to discriminate against an employee, including

discrimination against an employee with respect to whom membership in such organization has
been denied or terminated on any ground other than the usual terms and conditions under which
membership or continuation of membership is made available to other members;
xxxx
Applying the aforementioned rules, We find that the issues arising from petitioner‘s right to
information on the increased membership dues, right to appeal his suspension and expulsion
according to CBL provisions, and right to vote and be voted on are essentially intra-union disputes;
these involve violations of rights ;and conditions of union membership. But his claim that a director of
MWEU warned that non-MWEU members would not receive CBA benefits is an inter-union dispute.
It is more of an ―interference‖ by a rival union to ensure the loyalty of its members and to persuade
non-members to join their union. This is not an actionable wrong because interfering in the exercise of
the right to organize is itself a function of self-organizing.[37] As long as it does not amount to restraint
or coercion, a labor organization may interfere in the employees‘ right to self-
organization.[38] Consequently, a determination of validity or illegality of the alleged acts necessarily
touches on union matters, not ULPs, and are outside the scope of the labor arbiter‘s jurisdiction.
As regards petitioner‘s other accusations, i.e., discrimination in terms of meting out the penalty of
expulsion against him alone, and attempt to cause the employer, MWC, to discriminate against non-
MWEU members in terms of retrenchment or reduction of personnel, and signing bonus, while We
may consider them as falling within the concept of ULP under Article 249(a) and (b), still, petitioner‘s
complaint cannot prosper for lack of substantial evidence. Other than his bare allegation, petitioner
offered no proof that MWEU did not penalize some union members who failed to pay the increased
dues. On the proposed discriminatory CBA provisions, petitioner merely attached the pages
containing the questioned provisions without bothering to reveal the MWEU representatives
responsible for the said proposal. Article 249 mandates that ―x x x only the officers, members of the
governing boards, representatives or agents or members of labor associations or organizations who
have actually participated in, authorized or ratified unfair labor practices shall be held criminally
liable.‖ Plain accusations against all MWEU officers, without specifying their actual participation, do
not suffice. Thus, the ULP charges must necessarily fail.
In administrative and quasi-judicial proceedings, only substantial evidence is necessary to establish

the case for or against a party. Substantial evidence is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. Petitioner failed to discharge the
burden of proving, by substantial evidence, the allegations of ULP in his complaint. The NLRC,
therefore, properly dismissed the case.
FOR THESE REASONS, the petition is DISMISSED.
SO ORDERED.[39]
Thus, the instant Petition.
Issue
In an August 28, 2013 Resolution,[40] this Court resolved to give due course to the
Petition, which claims that the CA erred:
1. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-UNION CONFLICTS
NEGATES THE COMPLAINT FOR UNFAIR LABOR PRACTICES AGAINST A
LABOR ORGANIZATION AND ITS OFFICERS, AND IN AFFIRMING THAT
THE NLRC PROPERLY DISMISSED THE CASE FOR ALLEGED LACK OF
JURISDICTION.
2. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF UNFAIR LABOR

PRACTICES UNDER ARTICLE 249(a) AND (b) OF THE LABOR CODE.
3. IN DECLARING THAT THE THREATS MADE BY A UNION OFFICER

AGAINST MEMBERS OF A RIVAL UNION IS (sic) MERELY AN
―INTERFERENCE‖ AND DO NOT AMOUNT TO ―RESTRAINT‘ OR
―COERCION‖.
4. IN DECLARING THAT PETITIONER FAILED TO PRESENT SUBSTANTIAL

EVIDENCE IN PROVING RESPONDENTS‘ SPECIFIC ACTS OF UNFAIR
LABOR PRACTICES.
5. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY LIABLE TO

PETITIONER FOR MORAL AND EXEMPLARY DAMAGES, AND
ATTORNEY‘S FEES.[41]
Praying that the assailed CA dispositions be set aside and that respondents be declared
guilty of unfair labor practices under Article 249(a) and (b) and adjudged liable for damages
and attorney‘s fees as prayed for in bis complaint, petitioner maintains in his Petition and
Reply[42] that respondents are guilty of unfair labor practices which he clearly enumerated and
laid out in his pleadings below; that these unfair labor practices committed by respondents
fall within the jurisdiction of the Labor Arbiter; that the Labor Arbiter, the NLRC, and the CA
failed to rule on his accusation of unfair labor practices and simply dismissed his complaint
on the ground that his causes of action are intra- or inter-union in nature; that admittedly,
some of his causes of action involved intra- or inter-union disputes, but other acts of
respondents constitute unfair labor practices; that he presented substantial evidence to
prove that respondents are guilty of unfair labor practices by failing to observe the proper
procedure in the imposition of the increased monthly union dues, and in unduly imposing the
penalties of suspension and expulsion against him; that under the union‘s constitution and
by-laws, he is given the right to appeal his suspension and expulsion to the general
membership assembly; that in denying him his rights as a union member and expelling him,
respondents are guilty of malice and evident bad faith; that respondents are equally guilty for
violating and curtailing his rights to vote and be voted to a position within the union, and for
discriminating against non-MWEU members; and that the totality of respondents‘ conduct
shows that they are guilty of unfair labor practices.
In their joint Comment,[43] respondents maintain that petitioner raises issues of fact which are
beyond the purview of a petition for review on certiorari; that the findings of fact of the CA
are final and conclusive; that the Labor Arbiter, NLRC, and CA are one in declaring that
there is no unfair labor practices committed against petitioner; that petitioner‘s other
allegations fall within the jurisdiction of the BLR, as they refer to intra- or inter-union disputes
between the parties; that the issues arising from petitioner‘s right to information on the
increased dues, right to appeal his suspension and expulsion, and right to vote and be voted
upon are essentially intra-union in nature; that his allegations regarding supposed coercion
and restraint relative to benefits in the proposed CBA do not constitute an actionable wrong;
that all of the acts questioned by petitioner are covered by Section 1, Rule XI of Department
Order 40-03, series of 2003 as intra-/inter-union disputes which do not fall within the
jurisdiction of the Labor Arbiter; that in not paying his union dues, petitioner is guilty of
insubordination and deserved the penalty of expulsion; that petitioner 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; and that for his failure to resort to said remedies, petitioner can
no longer question his suspension or expulsion and avail of his right to appeal.
Our Ruling
The Court partly grants the Petition.

In labor cases, issues of fact are for the labor tribunals and the CA to resolve, as this Court
is not a trier of facts. However, when the conclusion arrived at by them is erroneous in
certain respects, and would result in injustice as to the parties, this Court must intervene to
correct the error. While the Labor Arbiter, NLRC, and CA are one in their conclusion in this
case, they erred in failing to resolve petitioner‘s charge of unfair labor practices against
respondents.
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.[44]
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,[45] which provides as follows:
ART. 249. Unfair labor practices of labor organizations. – It shall be unfair labor practice for a labor
organization, its officers, agents or representatives:
(a) To restrain or coerce employees in the exercise of their right to self- organization. However, a
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership;
(b) To cause or attempt to cause an employer to discriminate against an employee, including

discrimination against an employee with respect to whom membership in such organization has been
denied or to terminate an employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or
other things of value, in the nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorney‘s fees from employers as part of the settlement of any
issue in collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers, members of governing
boards, representatives or agents or members of labor associations or organizations who have actually
participated in, authorized or ratified unfair labor practices shall be held criminally liable. (As
amended by Batas Pambansa Bilang 130, August 21, 1981).
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 bylaws. 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 repeal [sic] resolution
and decision of the Executive Board and/or committees upon petition of thirty percent (30%)
of the Union in good standing,‖[46] and under Section 2(d), to ―revise, modify, affirm or reverse
all expulsion cases.‖[47] 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.‖[48] 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.‖[49]
In regard to suspension of a union member, MWEU‘s Constitution and By-Laws provides

under Article X, Section 4 thereof that ―[a]ny suspended member shall have the right to
appeal within three (3) working days from the date of notice of said suspension. In case of
an appeal a simple majority of vote of the Executive Board shall be necessary to nullify the
suspension.‖
Thus, when an MWEU member is suspended, he is given the right to appeal such
suspension within three working days from the date of notice of said suspension, which
appeal the MWEU Executive Board is obligated to act upon by a simple majority vote. When
the penalty imposed is expulsion, the expelled member is given seven days from notice of
said dismissal and/or expulsion to appeal to the Executive Board, which is required to act by
a simple majority vote of its members. The Board‘s decision shall then be
approved/disapproved by a majority vote of the general membership assembly in a meeting
duly called for the purpose.
The documentary evidence is clear that when petitioner received Borela‘s August 21, 2007
letter informing him of the Executive Board‘s unanimous approval of the grievance
committee recommendation to suspend him for the second time effective August 24, 2007,
he immediately and timely filed a written appeal. However, the Executive Board – then
consisting of respondents Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor,
Torres, Quebral, Pagulayan, Cancino, Maga, Cometa, Mancenido, and two others who are
not respondents herein – did not act thereon. Then again, when petitioner was charged for
the third time and meted the penalty of expulsion from MWEU by the unanimous vote of the
Executive Board, his timely appeal was again not acted upon by said board – this time
consisting of respondents Borela, Quebral, Tierra, Imana, Rendon, Yeban, Cancino, Torres,
Montemayor, Mancenido, Mandilag, Fernandez, Buenaventura, Apilado, Maga, Barbero,
Cometa, Bolo, and Manlapaz.
Thus, contrary to respondents‘ argument that petitioner lost his right to appeal when he
failed to petition to convene the general assembly through the required signature of 30% of
the union membership in good standing pursuant to Article VI, Section 2(a) of MWEU‘s
Constitution and By-Laws or by a petition of the majority of the general membership in good
standing under Article VI, Section 3, this Court finds that petitioner was illegally suspended
for the second time and thereafter unlawfully expelled from MWEU due to respondents‘
failure to act on his written appeals. The required petition to convene the general assembly
through the required signature of 30% (under Article VI, Section 2[a]) or majority (under
Article VI, Section 3) of the union membership does not apply in petitioner‘s case; the
Executive Board must first act on his two appeals before the matter could properly be
referred to the general membership. Because respondents did not act on his two appeals,
petitioner was unceremoniously suspended, disqualified and deprived of his right to run for
the position of MWEU Vice-President in the September 14, 2007 election of officers,
expelled from MWEU, and forced to join another union, WATER-AFWC. For these,
respondents are guilty of unfair labor practices under Article 249 (a) and (b) – that is,
violation of petitioner‘s right to self-organization, unlawful discrimination, and illegal
termination of his union membership – which case falls within the original and exclusive
jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.
The primary concept of unfair labor practices is stated in Article 247 of the Labor Code,
which states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. — Unfair labor
practices violate the constitutional right of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.
―In essence, [unfair labor practice] relates to the commission‘ of acts that transgress the
workers‘ right to organize.‖[50] ―[A]ll the prohibited acts constituting unfair labor practice in
essence relate to the workers‘ right to self-organization.‖[51] ―[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.‖[52]
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 serf-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.[53]
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 foil 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.‖[54]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,[55] 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.‖[56] 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.‘[57]
Finally, petitioner is also entitled to attorney‘s fees equivalent to 10per 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.[58]
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed April 24, 2012 Decision
of the Court of Appeals in CA-G.R. SP No. 115639 is hereby MODIFIED, in that all of the
respondents – except for Carlos Villa, Ric Briones, and Chito Bernardo – are declared guilty
of unfair labor practices and ORDERED TO INDEMNIFY petitioner Allan M. Mendoza the
amounts of P100,000.00 as and by way of moral damages, P50,000.00 as exemplary
damages, and attorney‘s fees equivalent to 10 per cent (10%) of the total award.
SO ORDERED.
20 JAN 2016 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
Wallem Maritime Services, Inc., Reginaldo A.

Oben and Wallem Shipmanagement, Ltd. Vs.
Edwinito V. Quillao; G.R. No. 202885;
January 20, 2016
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the May 15, 2012 Decision[1] of the Court of
Appeals (CA) in CA-G.R. SP No. 122787. The CA affirmed the December 8, 2011
Decision[2] of the Panel of Voluntary Arbitrators (PVA), National Conciliation and Mediation
Board in AC-0809-NCR-46-04-07-11, with modification that the amount to be jointly and
severally paid by Wallem Maritime Services, Inc. (WMS) and Wallem Shipmanagement Ltd.
(WSL) to Edwinito V. Quillao (respondent) is US$98,010.00 or its peso equivalent at the time
of payment, instead of US$98,110.00. Also challenged is the August 1, 2012 CA
Resolution[3] denying reconsideration of its Decision.
Factual Antecedents
WMS is a local manning agency, with Reginaldo A. Oben (Oben) as its President and
Manager.[4] 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.[5]
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.[6] He stated that after undergoing
pre-employment medical examination, he was declared fit to work. He joined the vessel on
October 4, 2008.[7]
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.[8]
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. [9] He underwent
carpal tunnel surgery on his left hand, and physical therapy (PT) sessions for his cervical
and lumbar condition.[10]
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.[11] 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.[12]
However, on November 23, 2009, the Legal Affairs Department of AMOSUP informed WMS
of respondent‘s claim for disability benefits[13] 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.[14]
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.[15]
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.[16]
On February 5, 2010, upon referral of Dr. Malaya, respondent underwent EMG-NCV[17] 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.‖[18]
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.[19]
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.[20] 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.[21]
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.[22]
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.[23]
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.[24] 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.[25] 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.[26]
Ruling of the Panel of Voluntary Arbitrators
On December 8, 2011, the PVA rendered its Decision[27] for respondent, the dispositive
portion of which reads:
WHEREFORE, premises considered, a decision is hereby rendered, ORDERING herein respondents

Wallem Maritime Services[,] Inc. and/or Wallem Shipmanagement Ltd., to jointly and severally pay
complainant Edwinito V. Quillao, the amount of Eighty Nine Thousands [sic] One Hundred US
Dollars (US$89,100.00) as disability benefits, plus ten percent thereof as attorney‘s fees, or a total of
Ninety Eight Thousands [sic] One Hundred Ten US Dollars (US$98,110.00) or its peso equivalent
converted at the time of payment.
The complainant‘s prayer for exemplary [damages], moral damages and reimbursement of medical
expenses are dismissed for sheer lack of merit.
xxxx
SO ORDERED.[28]
In ruling that respondent is entitled to permanent and total disability benefits, the PVA held
that despite the lapse of 120 days, the company-designated doctor neither gave respondent
an assessment on his condition nor issued a certificate on his fitness or unfitness for sea
duty. The PVA also declared that the amount of disability should not be based on the
schedule of disability gradings in the Standard Terms and Conditions Governing the
Overseas Employment of Filipino Seafarers On-Board Ocean-Going Vessels of the
Philippine Overseas Employment Administration (POEA-SEC) considering that despite

continuous treatment, he was not restored to his former health condition. The PVA
disregarded petitioner‘s allegation of prematurity or lack of cause of action and medical
abandonment reasoning that no final assessment was issued within 120 days and that Dr.
Estrada discontinued respondent‘s rehabilitation based on his opinion that the latter already
reached the maximum level of medical wellness. Moreover, the PVA lent more credence to
the assessment of Dr. Runas ratiocinating that he is ―an orthopedic surgeon specialist‖ vis-a-
vis Dr. Estrada ―who was not an orthopedic surgeon but a general and colorectal
surgeon.‖[29] Finally, it also decreed that respondent was covered by the CBA from which his
entitlement for disability benefits must be based.
Petitioners filed a Petition for Review with the CA arguing that the PVA seriously erred in
finding them liable to pay respondent total disability benefits and attorney‘s fees.
On May 15, 2012, the CA rendered the assailed Decision,[30] the decretal portion of which
reads:
WHEREFORE, premises considered the Petition is DENIED for lack of merit. The Decision dated 08
December 2011 of the Panel of Voluntary Arbitrators, National Conciliation and Mediation Board
in AC-0809-NCR-46-04-07-11 is AFFIRMED with the correction that total amount to be jointly and
severally paid by petitioners Wallem Maritime Services, Inc. and Wallem Shipmanagement Ltd, to
respondent Edwinito V. Quillao is Ninety Eight Thousand and Ten US Dollars (US$98,010,00) or its
peso equivalent converted at the time of payment, and not US$98,110.00.
Costs against petitioners.
SO ORDERED.[31]
Like the PVA, the CA gave more weight to the opinion of Dr. Runas explaining thus:
While the company-designated physician Dr. Estrada, a general and colorectal surgeon, gave
respondent a Grade 10 disability, he, however, utterly failed to issue any certification as to the fitness
or unfitness of respondent to render further sea duties in any capacity. It was respondent‘s personal
physician Dr. Runas, an orthopedic surgeon, who declared him as not fit for further sea duty
permanently in whatever capacity, and assessed that he has an impediment Grade 8 (33.59%)
moderate rigidity or 2/3 loss of trunk motion or lifting power.[32]
Moreover, the CA affirmed the PVA‘s ruling that respondent has a cause of action against
petitioners ―because they failed to pay his disability benefits.‖[33] It also agreed with the PVA
that respondent is not guilty of medical abandonment because he was already pronounced
to have reached the maximum level of wellness.[34] Finally, it held that in case of conflict
between the medical opinion of the company-designated doctor and that of the seafarer‘s
doctor-of-choice, the latter‘s opinion shall prevail because the ―law looks tenderly on the
laborer.‖[35]
On August 1, 2012, the CA denied petitioners‘ Motion for Reconsideration.[36]
Thus, petitioners filed this Petition stating that:

1. x x x the Court of Appeals [erred] in awarding disability benefits in favor of

respondent x x x despite the ruling of this Honorable Court in the recent case of CF
Sharp Crew Management, Inc. x x x vs. x x x Taok x x x wherein this Honorable Court
dismissed the complaint of seafarer Taok x wherein this Honorable Court dismissed
the complaint of seafarer Taok for lack of a cause of action. At the time of the filing of
the complaint, the seafarer had no cause of action as he was still being treated and it
was still undetermined whether he would be declared fit or permanently disabled by
the company doctor.[37]
2. Assuming x x x respondent is entitled to disability benefits x x x his entitlement to

disability benefits should be limited to Grade 10 as subsequently assessed by the
company-designated physician.[38]
3. x x x the Court of Appeals [erred] in awarding disability benefits in favor of

respondent x x x when it set aside the disability assessments given by the company-
designated physician and gave credence to the assessment of respondent‘s own
physician in clear contradiction of this Honorable Court‘s ruling in Santiago vs
Pacbasin x x x upholding the disability grading assessment of the company-designated
physician in the absence of an examination by a third doctor whose finding shall be
final and binding. As the company-designated physician assessed respondent with a
final disability assessment of Grade 10, respondent is only entitled to [US]$17,954.00
under the CBA.[39]
4. x x x the Court of Appeals [erred] in awarding attorney‘s fees in favor of respondent x

x x. No bad faith attended the denial of respondent‘s claims as the denial was based on
just and legal grounds, to wit: respondent has no cause of action against petitioners as
he was still undergoing treatment when he commenced his claim for permanent total
disability benefits, he was guilty of medical abandonment and assuming respondent is
still entitled to disability benefits despite the foregoing, he was only assessed a
disability of Grade 10 by the company-designated physician.[40]
Issue
Is respondent entitled to permanent and total disability benefits?
Petitioners maintain that respondent‘s right to permanent and total disability benefits only
arises from the moment the company-designated doctor declares him permanently and
totally disabled. Since the company-designated physician has not yet issued any certification
when this case was filed, then, respondent has no cause of action against them. They assert
that assuming they are liable, their liability is limited only to the disability rating as assessed
by the company-designated doctor.
Moreover, petitioners insist that respondent was guilty of medical abandonment because
after November 12, 2009, he stopped reporting to the company-designated physician. They
add that at that time, the company-designated doctor opined that it was possible for
respondent to be declared fit to work had he continued his remaining PT sessions.
Lastly, petitioners assert that they are not in bad faith in denying respondent‘s disability
claims, thus, they should not be held liable for attorney‘s fees.
Respondent counters that he has a cause of action against petitioners. He claims that the
lack of declaration from the company-designated physician prompted him to file a Complaint
for disability benefits.
Respondent states that he is entitled to permanent and total disability benefits because the
company-designated physician only arrived at a final assessment of his condition after more
than 240 days from his repatriation. He argues that notwithstanding the assessments of the
company-designated doctor and his chosen physician, his disability is deemed permanent
and total by reason of his inability to perform customary work for more than 120 days; and
his disability remained beyond 240 days.
Finally, respondent states that the award of attorney‘s fees is proper as he was compelled to
litigate to protect his interest.
Our Ruling
The Court finds merit in the Petition.

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,[41] 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[42] 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.[43] Moreover, he has no basis for claiming permanent and total disability benefits
because he has not yet consulted his doctor-of-choice.
In addition, it is unclear if respondent was in fact medically repatriated or that he returned

home under a finished contract. Respondent commenced his work aboard the vessel on
October 4, 2008. He signed off from the vessel on July 12, 2009 (or July 13, 2009, as
claimed by respondent) and arrived in the country on July 15, 2009. At any rate, considering
that petitioners acknowledged that while still on the vessel, respondent complained of pain
and numbness of hand, and upon his return, they referred him to the company-designated
doctor for treatment, then we hold that petitioners considered respondent as a medically
repatriated seafarer. Under these circumstances, the pertinent provisions of the Labor Code
on disability benefits, including its Implementing Rules and Regulations, as well as those of
the POEA-SEC apply here.
Accordingly, citing Vergara v, Hammonia Maritime Services, Inc.,[44] the Court in Magsaysay
Maritime Corporation v. National Labor Relations Commission[45] 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[46] and Carcedo v. Maine Marine Phils., Inc.,[47] 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 physiatnst and to a
surgeon for his hand operation. The company-designated physiatrist later advised him to
consult an orthopedic specialist. Respondent, nonetheless, failed to abide by the rule that
the company-designated physician is to determine his fitness to return to work or the degree
of his disability within 240 days from his repatriation. As already discussed, respondent
prematurely filed his Complaint for disability benefits prior to the lapse of the 240-day period.
Not only did respondent prematurely file his Complaint, he reneged on his duties to continue
his treatment as necessary to improve his condition. In his Report dated January 9, 2010,
the company-designated doctor made the following pronouncements:
x x x [T]he chance of [respondent‘s] being declared fit to work is quite good on the premise that he
[complete] his remaining therapy sessions (about 4-6 weeks more) for the left hand pain and back
pain. However, in my 8th medical report dated November 12, 2009, I mentioned that during follow-up
evaluation and interview with him, he complained of pain [on] the neck and additional pain of the
lower back which was not originally present at the start of the treatment. I have also mentioned this to
the physiatrist, Dr. Malaya[,] and there seem[s] to be an intent to prolong treatment and seek
disability, respondent] did not report to my clinic after that day until the present time.[48]
As we ruled in Magsaysay,[49] the Court cannot blame petitioners for holding that respondent
abandoned his treatment. Respondent failed to reasonably explain his failure to report to the
company-designated physician after November 12, 2009 until January 9, 2010. The only
clear circumstance that transpired between these periods is that he already filed his
Complaint on November 23, 2009.
Under Section 20(D) of the POEA-SEC ―[n]o compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or
criminal act or intentional breach of his duties, provided however, that the employer can
prove that such injury, incapacity, disability or death is directly attributable to the seafarer.‖
Respondent was duty-bound to comply with his medical treatment, PT sessions, including
the recommended consultation to an orthopedic specialist in order to give the company-
designated doctor the opportunity to determine his fitness to work or to assess the degree of
his disability. His inability to continue his treatment after November 12, 2009 until January 9,
2010, without any valid explanation proves that he neglected his corresponding duty to
continue his medical treatment[50] 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 as follows:
On your query about the effect of the delay in the treatment program, this can prolong the period of
treatment due to the fact that the physical therapy will have to start in accordance with his functional
capacity at the present time.[51]
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.‖[52]
Furthermore, in his Affidavit[53] 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.[54]
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.[55]
Given these, the Court finds that the CA erred in affirming the PVA Decision that respondent
is entitled to permanent and total disability benefits.
WHEREFORE, the Petition is GRANTED. The May 15, 2012 Decision and August 1, 2012
ASIDE. Accordingly, the Complaint is DISMISSED for lack of merit.
SO ORDERED.
09 DEC 2015 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

Vicmar Development Corporation Vs. Camilo

Elarcosa, et al.; G.R. No. 202215; December
9, 2015
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari assailing the November 24, 2009
Decision[9] of the Court of Appeals (CA) in CA-G.R SP No. 01853-MN. The CA granted the
Petition for Certiorari filed therewith, and reversed and set aside the February 2,
2007[10] Resolution of the National Labor Relations Commission (NLRC), Fifth Division,
Cagayan de Oro, which in turn, affirmed the May 25, 2006[11] and May 29, 2006[12] respective
Decisions of Executive Labor Arbiters (LA) Benjamin E. Pelaez (Pelaez) and Noel Augusto
S. Magbanua (Magbanua) dismissing the complaints for lack of merit. Also assailed is the
May 10, 2012 CA Resolution[13] denying the motion for reconsideration.
Factual Antecedents
This case stemmed from a Complaint for illegal dismissal and money claims filed by Ruben
Panes, Ruel Cabanday and Jonard Abugho (respondents) against Vicmar Development
Corporation (Vicmar) and/or Robert Kua (Kua), its owner and Juanito Pagcaliwagan
(Pagcaliwagan), its manager, docketed as NLRC Case No. RAB-10-08-00593-2005;[14] and
consolidated Complaints for illegal dismissal and money claims filed by Camilo Elarcosa,
Marlon Banda, Dante Balamad, Rodrigo Colanse, Chiquito Pacaldo, Robinson Panaga,
Romel Patoy, Wilfredo Ladra, Junie Abugho, Silverio Narisma, Armando Gonzales, Teofilo
Elbina, Francisco Baguio, Gelven Rhyan Ramos, Julito Siman, Recarido Panes, Jesus
Tinsay, Agapito Cañas, Jr., Oliver Lobaynon, Rolando Tacbobo, Simeon Baguio, Roberto
Paguican, Joseph Salcedo, Donil Indino, Wilfredo Gulben, Jesreil Taneo, Renante Pamon,
Richie Gulben, Daniel EUo, Rexy Dofeliz, Ronald Noval, Norberto Belarca, and Allan Baguio
(respondents), among others, against Vicmar, Kua, and Pagcaliwagan (petitioners),
docketed as NLRC Case Nos. RAB-10-09-00603-2004; RAB-10-09-00609-2004; RAB-10-
09-00625-2004; and RAB-10-02-00190-2005.[15]
Respondents alleged that Vicmar, a domestic corporation engaged in manufacturing of

plywood for export and for local sale, employed them in various capacities – as boiler
tenders, block board receivers, waste feeders, plywood checkers, plywood sander, conveyor
operator, ripsaw operator, lumber grader, pallet repair, glue mixer, boiler fireman, steel strap
repair, debarker operator, plywood repair and reprocessor, civil workers and plant
maintenance. They averred that Vicmar has two branches, Top Forest Developers,
Incorporated (TFDI) and Greenwood International Industries, Incorporated (GUI) located in
the same compound where Vicmar operated.[16]
According to respondents, Vicmar employed some of them as early as 1990 and since their
engagement they had been performing the heaviest and dirtiest tasks in the plant
operations. They claimed that they were supposedly employed 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. [17] They
emphasized that the boiler section was necessary to Vicmar‘s business because it was
where pieces of plywood were dried and cooked to perfection.[18] They further stated that a
number of them were also assigned at the plywood repair and processing section, which
required longer working hours.[19]
Respondents declared that Vicmar paid them minimum wage and a small amount for
overtime but it did not give them benefits as required by law, such as Philhealth, Social
Security System, 13th month pay, holiday pay, rest day and night shift differential.[20] They
added that Vicmar employed more than 200 regular employees and more than 400 ―extra‖
workers.[21]
Sometime in 2004, Vicmar allegedly informed respondents that they would be handled by
contractors.[22]Respondents stated that these contractors were former employees of Vicmar
and had no equipment and facilities of their own.[23] Respondents averred that as a result
thereof, the wages of a number of them who were receiving P276.00 as daily wage, were
reduced to P200.00 or P180.00, despite overtime work; and the wages of those who were
receiving P200.00 and P180.00 were reduced to P145.00 or P131.00. Respondents
protested said wage decrease but to no avail. Thus, they filed a Complaint with the
DOLE[24] for violations of labor standards for which appropriate compliance orders were
issued against Vicmar.[25]
Respondents claimed that on September 13, 2004, 28 of them were no longer scheduled for
work and that the remaining respondents, including their sons and brothers, were
subsequently not given any work schedule.[26]
Respondents maintained that they were regular employees of Vicmar; that Vicmar employed
a number of them as early as 1990 and as late as 2003[27] through Pagcaliwagan, its plant
manager; that Vicmar made them perform tasks necessary and desirable to its usual
business; and that Vicmar paid their wages and controlled the means and methods of their
work to meet the standard of its products. Respondents averred that Vicmar dismissed them
from service without cause or due process that prompted the filing of this illegal dismissal
case.[28]
Respondents claimed that they were illegally dismissed after vicmar learned that they
instituted the subject Complaint through the simple expedience of not being scheduled for
work. Even those persons associated with them were dismissed. They also asserted that
Vicmar did not comply with the twin notice requirement in dismissing employees.[29]
Furthermore, respondents contended that while Vicmar, TFDI and Gin were separately
registered with the SEC,[30]they were involved in the same business, located in the same
compound, owned by one person, had one resident manager, and one and the same
administrative department, personnel and finance sections. They claimed that the
employees of these companies were identified as employees of Vicmar even if they were
assigned in TFDI or GIII.[31]
On the other hand, petitioners stated that Vicmar is a domestic corporation engaged in wood
processing, including the manufacture of plywood since 1970;[32] that Vicmar employed
adequate regular rank-and-file employees for its normal operation; and that it engaged the
services of additional workers when there were unexpected high demands of plywood
products and when several regular employees were unexpectedly absent or on leave.[33]
Petitioners pointed out that the engagement of Vicmar‘s ―extra‖ workers was not continuous
and not more than four of them were engaged per section in every shift. They added that
from the time of engagement, respondents were not assigned for more than one year in a
section or a specific activity.[34] They explained that some of Vicmar‘s ―extra‖ workers were
engaged under ―pakyaw‖ system and were paid based on the items repaired or
retrieved.[35]Petitioners also stated that respondents Allan Baguio, Romel Patoy, Rexy
Dofeliz, Marlon Banda, Gulben Rhyan Ramos, Julieto Simon and Agapito Canas, Jr. were
―extra‖ workers of TFDI, not Vicmar.[36] They likewise alleged that a number of respondents
were engaged to assist regular employees in the company,[37] and the others were hired to
repair used steel straps and retrieve useable veneer materials, or to perform janitorial
services.[38]
Moreover, petitioners argued that the engagement of additional workforce was subject to the
availability of forest products, as well as veneer materials from Malaysia or Indonesia and
the availability of workers.[39]
Petitioners further asseverated that sometime in August 2004, they decided to engage the
services of legitimate independent contractors, namely, E.A. Rosales Contracting Services
and Candole Contracting Services, to provide additional workforce.[40] Petitioners claimed that
they were unaware that respondents were dissatisfied with this decision leading to the DOLE
case.[41] They insisted that hiring said contractors was a cost-saving measure, which was part
of Vicmar‘s management prerogative.[42]
Ruling of the Executive Labor Arbiters
On May 25, 2006, ELA Pelaez dismissed the complaints in NLRC Case Nos. RAB-10-09-
00603-2004; RAB-10-09-00609-2004; RAB-10-09-00625-2004; and RAB-10-02-00190-
2005.[43] On May 29, 2006, ELA Magbanua dismissed the complaint in NLRC Case No. RAB-
10-08-00593-2005.[44]
Both ELAs Pelaez and Magbanua held that respondents were seasonal employees of
Vicmar, whose work was ―co-terminus or dependent upon the extraordinary demands for
plywood products and also on the availability of logs or timber to be processed into
plywood.‖[45] They noted that Vicmar could adopt cost-saving measures as part of its
management prerogative, including engagement of legitimate independent contractors.[46]
Consequently, respondents filed a Notice of Appeal with Motion to Consolidate

Cases[47] alleging that the foregoing cases involved same causes of actions, issues,
counsels, and respondents, and complainants therein were similarly situated.
Thereafter, in their Consolidated Memorandum on Appeal,[48] respondents argued that their

work in Vicmar was not seasonal. They averred that since their employment in 1990 until
their termination in 2004, they continuously worked for Vicmar and were not allowed to work
for other companies. They alleged that there was never a decline in the demand and
production of plywood. They also claimed that they continuously worked in Vicmar the whole
year, except in December during which the machines were shut down for servicing and
clean-up. They, nonetheless, stated that some of them were the ones who had been
cleaning these machines.
In addition, respondents averred that even assuming that they were seasonal employees,
they were still regular employees whose employment was never severed during off-season.
Thus, they asserted that the decision to farm them out to contractors was in violation of their
right to security of tenure and was an evidence of bad faith on the part of Vicmar.
On February 2, 2007, the NLRC affirmed the Decisions of ELAs Pelaez and
Magbanua.[49] On April 30, 2007, it denied respondents‘ motion for reconsideration.[50]
Undaunted, respondents filed with the CA a Petition[51] for Certiorari maintaining that they
were regular employees of Vicmar and that the latter illegally dismissed them. They insisted
that the labor contractors engaged by Vicmar were ―labor-only‖ contractors, as they have no
equipment and facilities of their own.
Petitioners, for their part, reiterated that Vicmar employed respondents as additional
workforce when there was high demand for plywood thus, they were merely seasonal
employees of Vicmar. They argued that Vicmar engaged independent contractors as a cost-
saving measure; and these contractors exercised direct control and supervision over
respondents. In conclusion, petitioners declared that respondents were not illegally
dismissed but lost their employment because of refusal to coordinate with Vicmar‘s
independent contractors.
On November 24, 2009, the CA rendered the assailed Decision granting the Petition
for Certiorari, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition is GRANTED. The Resolution dated February 2,
2007 of the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City is
REVERSED and SET ASIDE. Private respondents are ORDERED to reinstate petitioners to their
former positions, without loss of seniority rights, and to pay full backwages from the time they were
illegally dismissed until actual reinstatement.
SO ORDERED.[52]
The CA held that a number of respondents were assigned to the boiler section where
plywood was dried and cooked to perfection; and while the other respondents were said to
have been assigned at the general service section, they were ―cleaners on an industrial level
handling industrial refuse.‖[53] As such, according to the CA, respondents performed activities
necessary and desirable in the usual business of Vicmar, as they were assigned to
departments vital to its operations. It also noted that the repeated hiring of respondents
proved the importance of their work to Vicmar‘s business. It maintained that the contractors
were engaged by Vicmar only for the convenience of Vicmar. In sum, the CA declared that
respondents were illegally dismissed since there was no showing of just cause for their
termination and of compliance by Vicmar to due process of law.
On May 10, 2012, the CA denied petitioners‘ motion for reconsideration.[54]

Petitioners thus filed this Petition raising the sole ground as follows:
THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT AND DEFERENCE,
ERRED IN REVERSING AND SETTING ASIDE THE FINDINGS OF FACTS AND
CONCLUSIONS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC). THE
DECISION AS WELL AS THE RESOLUTION ARE NOT IN ACCORDANCE WITH LAW AND
APPLICABLE JURISPRUDENCE AND IF NOT CORRECTED, WILL CAUSE GRAVE
INJUSTICE AND IRREPERABLE [SIC] DAMAGE TO THE PETITIONERS WHO WILL BE
CONSTRAINED TO ABSORB UNCESSARY [SIC] WORKFORCE, WHICH WILL LEAD TO
THE FURTHER DETERIORATION OF ITS FINANCIAL INSTABILITY [SIC] AND POSSIBLY
TO ITS CLOSURE.[55]
Petitioners contend that it is irregular for the CA to reverse the findings of facts of the NLRC
and the ELAs based on two work schedules of different companies and identification cards
of five respondents. They maintain that said evidence cannot conclusively prove that
respondents were regular employees of Vicmar.[56]
Additionally, petitioners argue that the CA erred in finding that they (petitioners) have the
burden to prove that respondents were hired for only one season to establish that they were
mere seasonal employees. Petitioners emphasize that since the inception of this case, they
have been denying respondents‘ claim that they were working under regular working hours
and working days.[57]
Petitioners maintain that respondents were Vicmar‘s ―extra‖ workers;[58] that the engagement
of independent contractors was a management prerogative exercised in good faith;[59] that
some of the respondents were engaged by TFDI and thus, they have no standing in this
case.[60]
Respondents, on their part, assert that petitioners have the burden to prove that they
(respondents) were seasonal employees because such allegation is a critical fact that must
be substantiated.[61] They likewise restate that they were regular employees of Vicmar
because they had been performing tasks necessary and desirable for the production of
plywood; they continuously worked in Vicmar for more than 11 hours daily until they were
terminated in September 2004; and they were not allowed to work for companies other than
Vicmar.[62]
Respondents claim that assuming that they were ―extra‖ workers, still, their continued and
repeated hiring for more than 10 years made their functions necessary or desirable in the
usual business of Vicmar.[63]
Issue
Did the CA err in finding that the NLRC gravely abused its discretion in affirming the ELAs‘
Decisions dismissing the complaint?
Our Ruling
In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence or such relevant evidence that a
reasonable mind might accept as adequate to support a conclusion.[64] The CA may grant a
Petition for Certiorari if it finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically or arbitrarily disregarding the material evidence decisive of a case.
It cannot ―make this determination without looking into the evidence presented by the
parties. Necessarily, the appellate court can only evaluate the materiality or significance of
the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily
disregarded by the NLRC, in relation to all other evidence on record.‖[65]
In this case, we find that the CA correctly granted respondents‘ Petition

for Certiorari because the NLRC gravely abused its discretion when it affirmed the dismissal
of respondents‘ Complaints.
Section 280 of the Labor Code defines a regular employee as one who is 1) 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.[66]
Here, there is substantial evidence to prove that respondents were regular employees such
that their separation from work without valid cause amounted to illegal dismissal.
To support their illegal dismissal case, respondents listed the date of their hiring, the date
they were terminated and the sections where they were assigned prior to dismissal, to wit:[67]
NAMES DATE HIRED SECTION DATE FIRED
Panes, Ruben June 1990 Boiler Oct. 2004
Panes, Recarido August 1990 Boiler Sept. 2004
Tinsay, Jesus 1991 Boiler Sept. 2004
Gonzales, Armando June 1991 Assy./Fin. Feb. 2004
Patoy, Romel Nov. 1991 Boiler Sept. 2004
Ladra, Wilfredo 1992 Plant Maint. Sept. 2004
Balamad, Dante July 1994 Boiler Sept. 2004

Baguio, Simeon 1995 Boiler Sept. 2004
Baguio, Francisco 1995 Block Board June 2004
Tacbobo, Rolando Jan. 1995 Plant Maint. Sept. 2004
Belarga, Norberto 1995 Boiler July 2004
Elarcosa, Camilo 1995 Boiler Sept. 2004
Abugho, Junie June 1996 Boiler Sept. 2004
Pamon, Renante June 1996 Assy./Fin. Sept. 2004
Abugho, Jonard June 1996 Boiler Oct. 2004
Noval, Ronald 1997 Boiler Aug. 2004
Siman, Julito 1997 Boiler Sept. 2004
Baguio, Allan 1997 Boiler Sept. 2004
Cabanday, Ruel 1998 Assy./Fin. Oct. 2004
Salcedo, Joseph 1998 Assy./Fin. Sept. 2004
Lobaynon, Oliver 1998 Boiler Sept. 2004
Panaga, Robinson 1999 Assy./Fin. March 2004
Paguican, Roberto 1999 Boiler Sept. 2004

Ello, Daniel 1999 Boiler Sept. 2004
Taneo, Jesrile 1999 Plywood Rep. Sept. 2004
Indino, Donil 1999 Plywood Rep. Sept. 2004
Narisma, Silverio July 1999 Assy ./Fin. Sept. 2004
Canas, Agapito Jr. Jan. 2000 Plant Maint. Sept. 2004
Gulben, Wilfredo Dec. 2000 Plywood Rep. Sept. 2004
Gulben, Rechie Mar. 2000 Plywood Rep. Sept. 2004
Pacaldo, Chiquito Mar. 2000 Green End May 2002
Dofeliz, Rexy June 2001 Boiler Aug. 2004
xxxx
Ramos, Gelven Rhyan July 2002 Boiler Sept. 2004
Colansi, Rodrigo Oct. 2002 Assy./Fin. Sept. 2004
xxxx Jan. 2002 Boiler Sept. 2004
Banda, Marlon June 2003 Boiler Sept. 2004
Elbina, Teofilo Nov. 2003 Boiler July 2004
The foregoing allegations were uncontroverted as no relevant employment files, payrolls and
records were submitted by petitioners to refute the information. Being the employer,
petitioners have custody and control of important employment documents. As such, failure to
submit them gives rise to the presumption that their presentation would be prejudicial to
petitioners‘ cause and leads the Court to conclude that the assertions of respondents are
truthful declarations.[68]
Interestingly, in the DOLE case filed by respondents against Vicmar and TFDI, the latter did
not also submit documents to disprove respondents‘ claim for wage differentials, 13th month
pay and holiday pay. Because of this, the DOLE Secretary denied their appeal. In her
February 17, 2006 Order,[69] the DOLE Secretary made the following pronouncements:
In this case, the appellants (Vicmar and TFDI) were given seven x x x days to comply with the Notice
of Inspection Results or to contest the findings therein, but they chose to ignore the directive.
Summary hearings were conducted x x x to give the appellants ample time to submit payrolls, but
they merely promised to do so x x x [A]t the extra hearing on 18 November, they still failed to do so.
x x x There being none, the Director could not but sustain the inspection report.
Neither can the Director be faulted for not referring the case to the NLRC on the ground that material
evidence, namely, the payrolls and the daily time records, were not duly considered during inspection.
The appellants cannot raise this argument because it was they who failed to produce the records for
the consideration of the inspector and the Regional Director[.][70]
Similarly, we cannot fault the CA in the instant case for giving credence to the assertions and
documentary evidence adduced by respondents. Petitioners had the opportunity to discredit
them had they presented material evidence, including payrolls and daily time records, which
are within their custody, to prove that respondents were mere additional workforce engaged
when there are extraordinary situations, such as high demands for plywood products or
unexpected absences of regular employees; and that respondents were not assigned for
more than one year to the same section or activity.
Moreover, respondents were shown to have performed activities necessary in the usual
business of Vicmar. Most of them were assigned to activities essential for plywood
production, the central business of Vicmar. In the list above, more than half of the
respondents were assigned to the boiler, where pieces of plywood were cooked to
perfection. While the other respondents appeared to have been assigned to other sections in
the company, the presumption of regular employment should be granted in their favor
pursuant to Article 280 of the Labor Code since they had been performing the same activity
for at least one year, as they were assigned to the same sections, and there is no indication
that their respective activities ceased.[71]
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.[72] 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.[73]
The Court also holds that Vicmar failed to prove that the contractors it engaged were
legitimate labor contractors.
To determine the existence of independent contractorship, it is necessary to establish that

the contractor carries a distinct and independent business, and undertakes to perform work
on its own account and under its responsibility and pursuant to its own manner and method,
without the control of the principal, except as to the result; that the contractor has substantial
capital or investment; and, that the agreement between the principal and the contractor
assures the contractual employees to all labor and occupational safety and health standards,
to right to self-organization, security of tenure and other benefits.[74]
Other than their respective Certificates[75] of Registration issued by the DOLE on August 12,
2004, E.A Rosales Contracting Services and Candole Labor Contracting Services were not
shown to have substantial capital or investment, tools and the like. Neither was it established
that they owned equipment and machineries for the purported contracted job. Also, the
allegation that they had clients other than Vicmar remained to be bare assertion without
corresponding proof. More importantly, there was no evidence presented that these
contractors undertook the performance of their service contracts with Vicmar pursuant to
their own manner and method, without the control and supervision of Vicmar.[76]
Petitioners cannot rely on the registration of their contractors to prove that the latter are
legitimate independent contractors. Such registration is not conclusive of the status of a
legitimate contractor; rather, it merely prevents the presumption of being a labor-only
contractor from arising. Indeed, to determine whether labor-only contracting exists, the
totality of the facts and circumstances of the case must be considered.[77]
The Court also gives merit to the finding of the CA that Vicmar is the employer of
respondents despite the allegations that a number of them were assigned to the branches of
Vicmar. Petitioners failed to refute the contention that Vicmar and its branches have the
same owner and management – which included one resident manager, one administrative
department, one and the same personnel and finance sections. Notably, all respondents
were employed by the same plant manager, who signed their identification cards some of
whom were under Vicmar, and the others under TFDI.
Where it appears that business enterprises are owned, conducted and controlled by the
same parties, law and equity will disregard the legal fiction that these corporations are
distinct entities and shall treat them as one. This is in order to protect the rights of third
persons, as in this case, to safeguard the rights of respondents.[78]
Considering that respondents were regular employees and their termination without valid
cause amounts to illegal dismissal, then for its contrary ruling unsupported by substantial
evidence, the NLRC gravely abused its discretion in dismissing the complaints for illegal
dismissal. Therefore, the CA Decision setting aside that of the NLRC is in order and must be
sustained.[79]
WHEREFORE, the Petition is DENIED. The Decision dated November 24,2009 and
Resolution dated May 10, 2012 of the Court of Appeals in CA-G.R. SP No. 01853-MIN
are AFFIRMED.
SO ORDERED.
07 DEC 2015 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
Island Overseas Transport Corporation Vs.

Armando N. Beja; G.R. No. 203115;
December 7, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the March 28, 2012 Decision[2] and August 13,
2012 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 113550 affirming the
October 26, 2009 Decision[4] and February 15, 2010 Resolution[5] of the National Labor
Relations Commission (NLRC), which ordered petitioners Island Overseas Transport
Corporation/Pine Crest Shipping Corporation/Capt. Emmanuel L. Regio (petitioners) to pay
respondent Armando M. Beja (Beja) US$110,000.00 as permanent total disability benefits
and 10% thereof as attorney‘s fees.
Antecedent Facts
On March 6, 2007, Beja entered into a Contract of Employment[6] with petitioner Island
Overseas Transport Corp. for and on behalf of its foreign principal, petitioner Pine Crest
Shipping Corporation, for a period of nine months as Second Assistant Engineer for the
vessel M/V Atsuta. Beja underwent the pre-employment medical examination, where he was
declared fit for work. He boarded the vessel on March 14, 2007.
In November 2007, Beja experienced pain and swelling of his right knee, which he
immediately reported to the Master of the vessel. On November 10, 2007, he was brought to
a hospital in Italy and was diagnosed to have Arthrosynovitis. He underwent arthrocentesis
of the right knee, was referred to an orthopedic surgeon and was advised to take a
rest.[7] However, while in Spain, the pain in his right knee recurred and persisted. He was
brought to a physician on November 19, 2007 and was advised to be medically repatriated.
Upon arrival in Manila on November 22, 2007, petitioners referred him to Nicomedes G.
Cruz (NGC) Medical Clinic for evaluation. The Magnetic Resonance Imaging of his right
knee showed Chronic Tenosynovitis with Vertical Tear, Postero-Lateral
Meniscus and Probable Tear Anterior Cruciate and Lateral Collateral Ligaments.[8] Beja
underwent physical therapy and was advised to undergo operation.[9] On April 23, 2008,
Anterior Cruciate Ligament Reconstruction and Partial Menisectomy of the Medial Meniscus
was done on his right knee at Medical Center Manila.[10] After the operation, petitioners sent
him for rehabilitation at St. Luke‘s Medical Center under the supervision of Dr. Reynaldo R.
Rey-Matias (Dr. Matias).
Meantime, while undergoing therapy, or on May 15, 2008, Beja filed a complaint [11] against
petitioners for permanent total disability benefits, medical expenses, sickness allowance,
moral and exemplary damages and attorney‘s fees. Beja alleged that his knee injury resulted
from an accident he sustained on board the vessel when a drainage pipe fell on his knee. He
claimed that from the time of his repatriation on November 22, 2007, his knee has not
recovered which rendered him incapable of returning to his customary work as seafarer.
This, according to him, clearly entitles him to permanent total disability benefits pursuant to
AMOSUP-JSU Collective Bargaining Agreement (CBA) which provides:
Article 28.1:
A seafarer who surfers permanent disability as a result of an accident whilst in the employment of the
Company regardless of fault, including, accidents occurring while travelling to or from the ship, and
whose ability to work as a seafarer is reduced as a result thereof, but excluding permanent disability
due to willful acts, shall in addition to sick pay, be entitled to compensation, according to the
provisions of this Agreement.[12]
He claimed for compensation in the amount of US$137,500.00 in accordance with the

degree of disability and rate of compensation indicated in the said CBA, to wit:
Disability
In the event a seafarer suffers permanent disability in accordance with the provisions of Article 28 of
this Agreement, the scale of compensation provided for under Article 28.3 shall, unless more
favourable benefits are negotiated, be:
xxxx
Effective from 1st January to 31st December, 2007
Degree of Disability Rate of Compensation (US$)
Junior Officers &

% Ratings, AB & Below Senior Officers (4)
Ratings Above AB
100 82,500 110,000 137,500
75 61,900 82,500 103,150
60 49,500 66,000 82,500
50 41,250 55,000 68,750

40 33,000 44,000 55,000
30 24,750 33,000 41,250
20 16,500 22,000 27,500
10 8,250 11,000 13,750
Note: ―Senior Officers‖ for the purpose of this clause means Master, Chief Officer, Chief Engineer
and 1st Engineer.[13]
On May 26, 2008, the company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz),
issued an assessment of Beja‘s disability:
1. Prognosis – guarded.
2. Combined disability grading under the POEA schedule of disabilities:
1. Grade 10 – stretching leg of the ligaments of a knee resulting in instability of the

joint.
2. Grade 13 – slight atrophy of calf muscles without apparent shortening or joint

lesion or disturbance of weight-bearing line.[14]
After more than three months of therapy, Dr. Matias issued on August 28, 2008 a medical
report[15] stating that Beja is still under pain as verified by the Visual Analog System which
measures his pain at 6 out of 10 (10 being the highest measure of pain) and is having
difficulty in his knee movements. Thereafter, on August 30, 2008, Beja consulted an
orthopedic surgeon, Dr. Nicanor F. Escutin (Dr. Escutin), who examined and certified him to
be unfit for sea duty in whatever capacity due to pain and difficulty of the use of his right
knee despite the operation and therapy performed on him.[16]
During the preliminary conference, petitioners offered to pay Beja the amount of
US$13,345.00, corresponding to the combined disability grading given by Dr. Cruz, which is
disability Grade 10 (US$50,000 x 20.15%) and Grade 13 (US$50,000 x 6.72%) under the
Schedule of Disability Allowances in the POEA Standard Employment Contract (POEA-
SEC). Beja, however, rejected petitioners‘ offer and reiterated his claim for total disability
benefits as strengthened by the certification of Dr. Escutin that he suffers from a permanent
total disability, which he claimed, confirmed the findings of Dr. Matias.
Petitioners, however, insisted that the combined disability assessment given by Dr. Cruz,
who for months continuously treated and monitored Beja‘s condition, prevails over that
rendered by Dr. Escutin, who examined Beja only once and whose diagnosis was merely
based on the medical reports and findings of the company-designated physicians.
Petitioners further disclaimed Beja‘s entitlement to disability claim under the CBA as it
expressly requires the parties to consult a third doctor whose opinion shall be binding on
them. Since Beja failed to observe this procedure which is also mandated under the POEA-
SEC, the finding of Dr. Cruz deserves utmost respect. Petitioners also asseverated that Beja
already received his sickness allowance by presenting several vouchers.[17]
In a Decision[18] dated February 27, 2009, the Labor Arbiter awarded Beja maximum disability
benefits under the CBA. The Labor Arbiter did not give credence to the assessment given by
Dr. Cruz as it was issued after the lapse of 120 days which, by operation of law, transformed
Beja‘s disability to total and permanent. Moreover, despite continued physical therapy,
Bejars condition did not improve even beyond the 240-day maximum medical treatment
period. The Labor Arbiter found doubtful Dr. Cruz‘s assessment considering that he was not
the one who performed the operation on Beja‘s knee. The Labor Arbiter denied Beja‘s claim
for sickness allowance since payment thereof was fully substantiated by evidence presented
by petitioners. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered against the above-named

respondents ISLAND OVERSEAS TRANSPORT CORP. and/or PINE CREST SHIPPING CORP.
and/or CAPT. EMMANUEL L. REGIO, who are hereby ordered to pay, jointly and severally,
complainant‘s Permanent Total Disability benefits in the amount of US DOLLARS ONE HUNDRED
THIRTY SEVEN THOUSAND FIVE HUNDRED (US$137,500.00), in Philippine currency at the
prevailing rate of exchange at the time of payment, plus ten percent (10%) thereof as attorney‘s fees.
SO ORDERED.[19]
On appeal, petitioners attributed error in the Labor Arbiter in granting Beja the maximum
disability benefits under the CBA. Petitioners argued that since Dr. Cruz made an
assessment on May 26, 2008 or before the lapse of the maximum 240-day treatment period
from the date of Beja‘s repatriation on November 22, 2007, mere was no factual basis in
ruling that Beja is entitled to full disability benefits. They cited Vergara v. Hammonia Maritime
Services, Inc.,[20] where it was pronounced that only after the lapse of 240 days of continuous
medical treatment without any assessment given by the company doctor that a medically
repatriated seafarer could be adjudged as permanently and totally disabled. They also
claimed that the CBA is inapplicable in Beja‘s case because Beja failed to comply with the
procedure regarding the third doctor referral and more importantly, no proof was adduced to
show that his medical condition resulted from an accident Petitioners presented a
certification[21] of the Master of vessel M/V Atsuta, Captain Henry M. Tejado, and a written
declaration[22] of the vessel‘s Chief Engineer, Ramon B. Ortega, both confirming that Beja
neither met an accident on board nor was injured during his stay in the vessel under their
command. Finally, petitioners contended that assuming that the CBA applies, the award of
US$137,500.00 is erroneous as Beja is not a Senior Officer. In fine, petitioners insisted that
the disability assessment given by Dr. Cruz based on the POEA-SEC is binding and
controlling.
Beja, however, disputed petitioners‘ belated and self-serving denial that an accident took
place and insisted that his failure to resume his work as Second Engineer for more than 240
days resulted in his entitlement to the maximum disability benefit under the CBA, as correctly
ruled by the Labor Arbiter.
In a Decision[23] dated October 26, 2009, the NLRC sustained the Labor Arbiter‘s finding that
Beja is permanently and totally disabled. It found Dr. Cruz‘s disability assessment premature
and inaccurate considering that it was issued only a month after Beja‘s surgery when the
latter was still under medical evaluation and treatment. On the other hand, it found Dr.
Escutin‘s evaluation of Beja‘s condition more credible as it conforms to Dr. Matias‘ medical
report which was rendered after four months of therapy following the operation. The NLRC
likewise ruled that Beja is entitled to compensation under the CBA for an accident-sustained
disability. It noted that his medical records reveal indications of tear and injury on his right
knee that could have resulted from an accident on board. It, however, reduced the award
from US$137,500.00 to US$110,000.00 as Beja was only a Second Engineer and not a
Senior Officer, thus:
WHEREFORE, premises considered, the Decision appealed from is hereby declared Modified to the
extent only that complainant‘s permanent total disability award should be US Dollars 110,000.00
(US$110,000.00). All other dispositions are hereby Affirmed.
SO ORDERED.[24]
Petitioners‘ motion for reconsideration[25] was denied in the NLRC Resolution[26] dated
February 15, 2010.
Petitioners filed a Petition for Certiorari with Prayer for the Urgent Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order[27] to enjoin the enforcement/
execution of the NLRC judgment. In a Resolution[28]dated June 23, 2010, the CA denied
Petitioners‘ application for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.
On March 28, 2012, the CA rendered a Decision[29] denying the Petition for Certiorari and
affirming the NLRC ruling. Trie CA similarly found that Beja‘s injury resulting from an
accident while on board the vessel. It likewise found merit in Dr. Escutin‘s disability report
declaring Beja unfit to work since his injury has prevented him from performing his
customary work as Second Engineer for more than 240 days and thus entitles him to
permanent total disability benefits in accordance with the CBA.
Petitioners sought reconsideration[30] of the CA Decision. In a CA Resolution[31] dated August

13, 2012, petitioners‘ motion was denied.
Issues
Hence, petitioners filed the present Petition for Review on Certiorari raising the
following grounds:
1. In awarding permanent total disability benefits in favor of the Respondent in utter
disregard of extant case laws outlining the instances when and how a temporary total
disability can be converted into a permanent total one.
2. In relying on the opinion of Respondent‘s chosen doctor to justify an award of

disability compensation contrary to the clear edicts of the POEA Contract, the CBA
and of the Supreme Court in jurisprudential precedents on the proper establishment
and/or determination of a seafarer‘s entitlement to disability benefits.
3. In awarding benefits based on the compensation provided in the parties‘ CBA when
the said agreement unequivocally confines compensation to injuries arising from
accident, which is absolutely wanting in this case.
4. In sustaining the award of attorney‘s fees albeit [without] legal and factual
substantiation.[32]
Petitioners assert that Beja cannot be automatically declared as permanently and totally
disabled by the mere lapse of 120 days without any assessment or certification of fit to work
being issued. Citing Vergara, they argue that the 120-day period may be extended up to the
maximum of 240 days if the seafarer requires further medical attention. Since Dr. Cruz‘s
assessment was issued within the 240-day medical treatment period, albeit beyond 120
days, this could serve as the basis for determining Beja‘s disability and the degree thereof.
In short, Beja should have been declared as partially disabled with Grades 10 and 13
disability under the POEA-SEC, as assessed by Dr. Cruz.
Moreover, they posit that Beja‘s complaint was prematurely filed and lacked cause of action
for total and permanent disability benefits. According to petitioners, the lack of a second
opinion from Beja‘s chosen physician at the time of the filing of the complaint and a third-
doctor opinion is fatal to Beja‘s cause, for without a binding third opinion, the assessment of
the company-designated physician stands.
Further, they insist that Beja is not entitled to compensation under the parties‘ CB A which is
only confined to injuries arising from accident.
Our Ruling
The Petition is partially meritorious.

The parties’ CBA is inapplicable.
Beja based his claim for full disability benefits under the CBA, claiming that his disability
resulted from an accident while in the employ of petitioners and that petitioners‘ belated
denial cannot negate the applicability of the CBA provisions.
We are not convinced.
While, indeed, petitioners did not dispute, before the Labor Arbiter, the fact that Beja met an
accident while performing his duties, they, however, disputed the same in their appeal with
the NLRC by submitting the certifications of the Master of the vessel and Chief Engineer that
no accident happened under their command. We have held that ―rules of procedure and
evidence should not be applied in a very rigid and technical sense in labor cases in order
that technicalities would not stand in the way of equitably and completely resolving the rights
and obligations of the parties.‖[33] The Court is, thus, not precluded to examine and admit this
evidence, even if presented only on appeal before the NLRC, if only to dispense substantial
justice.
We, however, note that Beja has not presented any proof of his allegation that he met an
accident on board the vessel. There was no single evidence to show that Beja was injured
due to an accident while doing his duties in the vessel. No accident report existed nor any
medical report issued indicating that he met an accident while on board. Beja‘s claim was
simply based on pure allegations. Yet, evidence was submitted by petitioners disputing
Beja‘s allegation. The certifications by the Master of the vessel and Chief Engineer affirmed
that Beja never met an accident on board nor was he injured while in the performance of his
duties under their command. Beja did not dispute these certifications nor presented any
contrary evidence. ―It is an inflexible rule that a party alleging a critical fact must support his
allegation with substantial evidence, for any decision based on unsubstantiated allegation
cannot stand without offending due process.‖[34]
The Court also takes notice of the fact that Beja‘s medical condition cannot be solely
attributable to accidents. His injury could have possibly been caused by other factors such
as chronic wear and tear[35] and aging.[36] Thus, the NLRC‘s conclusion that the tear and injury
on Beja‘s knee was caused by an accident on board had no factual basis but was anchored
merely on speculation. The Court cannot, however, rest its rulings on mere speculation and
presumption.[37]
Thus, we find the CBA inapplicable; the determination of Beja‘s entitlement to disability
benefits must, consequently, be governed by the POEA-SEC and relevant labor laws.
Beja is entitled to a total and permanent disability compensation of US$60,000.00 under the
POEA-SEC.
Article 192(c)(1) of the Labor Code provides that:
Art. 192. Permanent total disability. – x x x
(c) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as
otherwise provided for in the Rules;
The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended Rules
on Employees Compensation (AREC) implementing Title II, Book IV of the Labor Code,
which states:
Sec. 2. Period of Entitlement — (a) The income benefit shall be paid beginning on the first day of
such disability. If caused by an injury or sickness it shall not be paid longer than 120 consecutive days
except where such injury or sickness still requires medical attendance beyond 120 days but not to
exceed 240 days from onset of disability in which case benefit for temporary total disability shall be
paid. However, the System may declare the total and permanent status at any time after 120 days of
continuous temporary total disability as may be warranted by the degree of actual loss or impairment
of physical or mental functions as determined by the System.
Section 20 B (3) of the POEA-SEC, meanwhile provides that:
on both parties.
In Vergara,[38] this Court has ruled that the aforequoted provisions should be read in harmony
with each other, thus: (a) the 120 days provided under Section 20 B(3) of the POEA-SEC is
the period given to the employer to determine fitness to work and when the seafarer is
deemed to be in a state of total and temporary disability; (b) the 120 days of total and
temporary disability may be extended up to a maximum of 240 days should the seafarer
require further medical treatment; and (c) a total and temporary disability becomes
permanent when so declared by the company-designated physician within 120 or 240 days,
as the case may be, or upon the expiration of the said periods without a declaration of either
fitness to work or disability assessment and the seafarer is still unable to resume his regular
seafaring duties.
Thus, although Section 32[39] of the POEA-SEC states that only those injuries or disabilities
classified as Grade 1 are considered total and permanent, a partial and permanent disability
could, by legal contemplation, become total and permanent.[40] The Court ruled in Kestrel
Shipping Co., Inc. v. Munar,[41] viz.:
Indeed, under Section 32 of the POEA-SEC, only those injuries or disabilities that are classified as
Grade 1 may be considered as total and permanent. However, if those injuries or disabilities with a
disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from
performing his usual sea duties for a period of more than 120 or 240 days, depending on the need for
further medical treatment, then he is, under legal contemplation, totally and permanently disabled. In
other words, an impediment should be characterized as partial and permanent not only under the
Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the relevant
provisions of the Labor Code and the Amended Rules on Employee Compensation (AREC)
implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or
disabled, he is not precluded from earning doing the same work he had before his injury or disability
or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from
engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be
deemed totally and permanently disabled.
Moreover, the company-designated physician is expected to arrive at a definite assessment of the

seafarer‘s fitness to work or permanent disability within the period of 120 or 240 days. That should he
fail to do so and the seafarer‘s medical condition remains unresolved, the seafarer shall be deemed
totally and permanently disabled.[42]
Beja was repatriated on November 21, 2007. Roughly a month after his right knee operation
or on May 26, 2008, Dr. Cruz rendered a Grade 10 and 13 partial disability grading of his
medical condition. Thereafter, Beja‘s medical treatment, supervised by another company-
referred doctor, Dr. Matias, continued. On August 28, 2008, Dr. Matias issued a medical
report declaring that Beja has not yet fully recovered despite continued therapy. Hence,
although he was given Grades 10 and 13 combined disability rating by Dr. Cruz, this
assessment may only be considered as tentative because he still continued his physical
therapy sessions, which even went beyond 240 days.
In Sealanes Marine Services, Inc. v. Dela Torre,[43] the seafarer was repatriated on August 4,
2010 and underwent rehabilitation until July 20, 2011, exceeding the 240 days allowed to
declare him either fit to work or permanently disabled. A partial disability rating of Grade 11
was issued by the company-designated physician on March 10, 2011 but the Court deemed
this assessment only an interim one because of De La Torre‘s continued physical therapy
sessions. The Court then granted De La Torre the maximum disability compensation
because despite his long treatment and rehabilitation, he was unable to go back to work as a
seafarer. In applying the Kestrel ruling, the Court held that if the seafarer‘s illness or injury
prevents him from engaging in gainful employment for more than 240 days, then he shall be
deemed totally and permanently disabled. The Court ratiocinated that while the seafarer is
partially injured or disabled, he must not be precluded from earning or doing the same work
he had before his injury or disability or that which he is accustomed or trained to do.
In Belchem Philippines, Inc. v. Zafra, Jr.,[44] the Court stressed that partial disability exists
only if a seafarer is found capable of resuming sea duties within the 120/240-day period. The
premise is such that partial injuries did not disable a seafarer to earn wages in the same kind
of work or similar nature for which he was trained.
In this case, there was no assessment that Beja was found fit to resume sea duties before the end of the
240-day period. Also Beja‘s allegation that he has not been able to perform his usual activities has not
been contradicted by petitioners or by contrary documentary evidence. In fact, in his medical report
dated August 28, 2008, Dr. Matias opined that there was still difficulty in Beja‘s knee movements.
Beja should, therefore, be deemed to be suffering permanent total disability.
It must also be stressed that Dr. Cruz did not even explain how he arrived at the partial permanent
disability assessment of Beja. Dr. Cruz merely stated that Beja was suffering from impediment Grades
10 and 13 disability but without any justification for such conclusion. Petitioners‘ claim that Beja only
suffered a partial disability has undoubtedly no basis on record.
Petitioners still argue that Beja‘s complaint is premature and as of its filing, no cause of action for
total and permanent disability benefits had set in. They contend that despite the lapse of the 120-day
period, Beja was still considered under a state of temporary total disability at the time he filed his
complaint. In this regard, we quote the following pronouncements in Kestrel, which involved the
same circumstances as in the case at bar:
In this case, the following are undisputed: (a) when Munar filed a complaint for total and permanent
disability benefits on April 17, 2007, 181 days had lapsed from the time he signed-off from M/V
Southern Unity on October 18, 2006; (b) Dr. Chua issued a disability grading on May 3, 2007 or after
the lapse of 197 days; and (c) Munar secured the opinion of Dr. Chiu on May 21, 2007; (d) no third
doctor was consulted by the parties; and (e) Munar did not question the competence and skill of the
company-designated physicians and their familiarity with his medical condition.
It may be argued that these provide sufficient grounds for the dismissal of Munar‘s complaint.
Considering that the 240-day period had not yet lapsed when the NLRC was asked to intervene,
Munar‘s complaint is premature and no cause of action for total and permanent disability benefits had
set in. While beyond the 120-day period, Dr. Chua‘s medical report dated May 3, 2007 was issued
within the 240-day period. Moreover, Munar did not contest Dr. Chua‘s findings using the procedure
outlined under Section 20-B(3) of the POEA-SEC. For being Munar‘s attending physicians from the
time he was repatriated and given their specialization in spine injuries, the findings of Dr. Periquet
and Dr. Lim constitute sufficient bases for Dr. Chua‘s disability grading. As Munar did not allege,
much less, prove the contrary, there exists no reason why Dr. Chiu‘s assessment should be preferred
over that of Dr. Chua.
It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet determined the
nature and extent of Munar‘s disability. Also, Munar was still undergoing physical therapy and his
spine injury had not yet been fully addressed. Furthermore, when Munar filed a claim for total and
permanent disability benefits, more than 120 days had gone by and the prevailing y rule then was that
enunciated by this Court in Crystal Shipping, Inc. v. Natividad that total and permanent disability
refers to the seafarer‘s incapacity to perform his customary sea duties for more than 120 days.
Particularly:
Permanent disability is the inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. As gleaned from the records,
respondent was unable to work from August 18, 1998 to February 22, 1999, at the least, or more than
120 days, due to his medical treatment. This clearly shows that his disability was permanent.
Total disability, on the other hand, means the disablement of an employee to earn wages in the same
kind of work or similar nature that he was trained for, or accustomed to perform, or any kind of work
which a person of his mentality and attainments could do. It does not mean absolute helplessness. In
disability compensation, it is not the injury which is compensated, but rather it is the incapacity to
work resulting in the impairment of one‘s earning capacity.
xxxx
Petitioners tried to contest the above findings by showing that respondent was able to work again as a
chief mate in March 2001. Nonetheless, this information does not alter the fact that as a result of his
illness, respondent was unable to work as a chief mate for almost three years. It is of no consequence
that respondent was cured after a couple of years. The law does not require that the illness
should be incurable. What is important is that he was unable to perform his customary work for
more than 120 days which constitutes permanent total disability. An award of a total and
permanent disability benefit would be germane to the purpose of the benefit, which is to help the
employee in making ends meet at the time when he is unable to work. x x x
Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made any
declaration as to Munar‘s fitness to work and Munar had not yet fully recovered and was still
incapacitated to work sufficed to entitle the latter to total and permanent disability benefits.
In addition, that it was by operation of law that brought forth the conclusive presumption that Munar
is totally and permanently disabled, there is no legal compulsion for him to observe the procedure
prescribed under Section 20-B(3) of the POEA-SEC. A seafarer‘s compliance with such procedure
presupposes that the company-designated physician came up with an assessment as to his fitness or
unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively put, absent a
certification from the company-designated physician, the seafarer had nothing to contest and the law
steps in to conclusively characterize his disability as total and permanent.
This Court‘s pronouncements in Vergara presented a restraint against the indiscriminate reliance
on Crystal Shippingsuch that a seafarer is immediately catapulted into filing a complaint for total and
permanent disability benefits after the expiration of 120 days from the time he signed off from the
vessel to which he was assigned. Particularly, a seafarer‘s inability to work and the failure of the
company-designated physician to determine fitness or unfitaess to work despite the lapse of 120 days
will not automatically bring about a shift in the seafarer‘s state from total and temporary to total and
permanent, considering that the condition of total and temporary disability may be extended up to a
maximum of 240 days.
Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years from the time
Munar filed his complaint and observance of the principle of prospectivity dictates that Vergara
should not operate to strip Munar of his cause of action for total and permanent disability that had
already accrued as a result of his continued inability to perform his customary work and the failure of
the company-designated physician to issue a final assessment.[45](Emphasis in the original)
More importantly, in Montierro v. Rickmers Marine Agency Phils., Inc.[46] and Eyana v.
Philippine Transmarine Carriers, Inc.,[47] the Court applied the ruling in Kestrel, that if the
maritime compensation complaint was filed prior to October 6, 2008, the rule on the 120-day
period, during which the disability assessment should have been made in accordance
with Crystal Shipping, Inc. v. Natividad,[48] that is, the doctrine then prevailing before the
promulgation of Vergara on October 6, 2008, stands; if, on the other hand, the complaint
was filed from October 6, 2008 onwards, the 240-day rule applies.
In the case at bar, Beja filed the complaint on May 15, 2008. Dr. Cruz issued his assessment
only on May 26, 2008 or 187 days from Beja‘s repatriation on November 21, 2007.
Therefore, due to Dr. Cruz‘s failure to issue a disability rating within the 120-day period, a
conclusive presumption that Beja is totally and permanently disabled arose. Consequently,
there was no need for Beja to secure an opinion from his own doctor or resort to a third
doctor as prescribed under Section 20 B (3) of the POEA-SEC.
In sum, the CA is correct in affirming the NLRC‘s award of permanent total disability benefit
to Beja. It, however, erred in pertaining to the parties‘ CBA in granting the award relative to
the amount due. The Schedule of Disability Allowances under Section 32 of the POEA-SEC
should instead apply. Under this section, Beja is entitled to US$60,000.00 (US$50,000.00 x
120%) corresponding to Grade 1 Disability assessment.
The award of attorney‘s fees is likewise justified in accordance with Article 2208 (2) [49] and
(8)[50] of the Civil Code since Beja was compelled to litigate to satisfy his claims for disability
benefits.
WHEREFORE, the Petition is PARTIALLY GRANTED. The March 28, 2012 Decision and
August 13, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 113550
are MODIFIED in that petitioners, Island Overseas Transport Corp./Pine Crest Shipping
Corp./Capt. Emmanuel L. Regio, are ordered to jointly and solidarily pay respondent
Armando M. Beja total and permanent disability benefits in the amount of US$60,000.00 or
its equivalent amount in Philippine currency at the time of payment, plus 10% thereof as
attorney‘s fees.
SO ORDERED.
11 NOV 2015 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
New Filipino Maritime Agencies, Inc. Taiyo

Nippon Kisen Co., Ltd and Angelita T. Rivera
Vs. Vincent H. Datayan; G.R. No. 202859;
November 11, 2015
DECISION
DEL CASTILLO, J.:
As a rule, the death of a seafarer during the term of his employment makes his employer
liable for death benefits. The employer, may, however, be exempt from liability if it can
successfully establish that the seafarer’s death was due to a cause attributable to his own
willful act.[2]
This Petition for Review on Certiorari assails title February 22, 2012 Decision[3] of the Court
of Appeals (CA) in CA-G.R. SP No. 119775. The CA granted the Petition for Certiorari filed
therewith and reversed and set aside the October 28, 2010 Decision[4] and March 15, 2011
Resolution[5] of the National Labor Relations Commission (NLRC) in NLRC LAC No. 07-
000536-10, which, in turn, affirmed the May 31, 2010 Decision[6] of Labor Arbiter Arden S.
Anni (LA) dismissing the complaint in NLRC-NCR OFW Case No. (M)05-07052-09.
Likewise challenged is the July 24, 2012 CA Resolution[7] denying the motion for
reconsideration for lack of merit.
Factual Antecedents
On August 8, 2007, New Filipino Maritime Agencies, Inc. (NFMA), for and on behalf of St.
Paul Maritime Corp. (SPMC), employed Simon Vincent Datayan II (Simon) as deck cadet on
board the vessel Corona Infinity. His employment was for nine months with basic monthly
salary of US$23 5.00.[8] Prior to his deployment, Simon underwent pre-employment medical
examination (PEME) and was declared fit for sea duties. On August 17, 2007, he boarded
the vessel and assumed his duties as deck cadet.[9]
On December 30,2007, at 12:40 a.m., the Master authorized the conduct of an emergency
fire drill in which the crew participated. At about 1:25 a.m., he declared that Simon jumped
overboard. A futile search-and-rescue operation ensued. After a few weeks, Simon was
declared missing and was presumed dead.[10]
Simon‘s father, Vincent H. Datayan (respondent), alleged that he went to NFMA to claim
death benefits but his claim was unheeded.[11] On May 11, 2009, he filed a complaint[12] for
death benefits and attorney‘s fees against NFMA, Taiyo Nippon Kisen Co., Ltd.,[13] and
Angelina T. Rivera (petitioners).
Respondent averred that because Simon died during the term of his employment, the
provisions of the collective bargaining agreement (CBA) among All Japan Seamen‘s Union,
Associated Marine Officers‘ and Seamen‘s Union of the Philippines (AMOSUP), and the
International Mariners Management Association of Japan, must be applied in the grant of
death benefits and burial assistance in his favor, being the heir of Simon.[14]
Respondent also stated that the fire drill was conducted at 12:40 a.m. where there was
heavy concentration of fishing boats in the area; and during which the water temperature
was expected to cause hypothermia. He asserted that petitioners were presumed to be at
fault or had acted negligently, unless they could prove that Simon‘s death was due to causes
not legally compensable.[15] He declared that there was no evidence that Simon committed
suicide and maintained that his death was a result of negligence and reckless instruction of
the Master.[16]
On the other hand, petitioners alleged that on December 29/2007, the crew, except those on
duty, were in the mess hall for a birthday celebration. They stated that Simon was invited by
the Master to join the party but he refused.[17]At about 12:40 a.m. of December 30, 2007, the
Master ordered the conduct of a fire and emergency drill. After the drill, a crew meeting was
held where the Master reprimanded Simon for his poor performance. They stated that Simon
left even before the meeting was concluded. Thus, the Master ordered the crew to search for
him. At about 1:25 a.m. to 1:30 a.m. of December 30, 2007, Raymond Ocleasa (Ocleasa)
saw Simon jump overboard.[18]
Additionally, petitioners declared that they exerted efforts to search, locate and rescue
Simon.[19] They alleged that the vessel retraced its course to where he fell. The Master also
informed the Japan Coast Guard about the incident. In response, the Yokohama Coastguard
Patrol conducted a search-and-rescue operation to no avail.[20]
Petitioners also averred that during a search made on the vessel, a note from Simon was
found.[21]
Petitioners argued that respondent had no cause of action against them because Simon‘s
death was a result of his (Simon‘s) deliberate act. They insisted that based on the Philippine
Overseas Employment Administration (POEA) Standard Employment Contract (SEC) and
CBA, a complainant is not entitled to death benefits when the cause of the seaman‘s death
was the latter‘s willful act.[22] Petitioners added that the Master‘s Report, Statement of Facts,
Marine Note of Protest and Investigation Report conclusively proved that Simon committed
suicide. They stated that this conclusion was bolstered by the suicide note found on the
vessel, signed by Simon himself.[23]
On May 31, 2010, the LA dismissed the complaint.[24] The LA held that Simon‘s suicide was
established by the evidence on record. Specifically, the Master‘s Report, as corroborated by
Simon‘s suicide note, showed that he voluntarily jumped overboard. The LA stated that ‖the
signature of the deceased seafarer in said note and in his POEA Contract would show
similarity, if not identity. To say that it was fabricated or concocted will not lessen the
credibility of the suicide note, absent any concrete evidence to the contrary.‖[25]
On appeal, the NLRC affirmed the LA Decision.[26] Like the LA, the NLRC gave probative
weight to the suicide note, the Master‘s Report, along with other pieces of documentary
evidence adduced, to establish that Simon committed suicide. It held that considering that
the death of the seafarer was due to his willful act, then his heir is not entitled to his death
benefits.
On March 15, 2011, the NLRC denied respondent‘s motion for reconsideration.[27]
Respondent then filed a Petition for Certiorari with the CA maintaining that there was no
evidence that Simon committed suicide hence his death is compensable.
On February 22, 2012, the CA rendered the assailed Decision,[28] finding for respondent, the
decretal portion of which reads:
WHEREFORE, the petition for certiorari is GRANTED. The assailed October 28, 2010 Decision and
March 15,2011 Resolution of public respondent are REVERSED and SET ASIDE. A new judgment
is rendered ordering private respondents New Filipino Maritime Agencies, Inc. and/or Taiyo Nippon
Kisen Co., Ltd. and Angelina T. Rivera to pay petitioner Vincent H. Datayan as heir of Simon
Vincent H. Datayan II, the following:
1. US$50,000.00 or its Philippine currency equivalent as death benefits in accordance

with the 2000 POEA Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean[-]Going Vessels;
2. US$1,000.00 or is [sic] Philippine currency equivalent as burial assistance;
3. P50,000.00 as moral damages and P25,000.00 as exemplary damages;
4. Attorney‘s fees equivalent to 10% of the total monetary awards; and
5. Legal interest on the foregoing amounts from the date of filing of the complaint until
fully paid.
SO ORDERED.[29]
The CA explained that it was beyond question that Simon died aboard the vessel and during
the effectivity of his contract, thus, respondent is entitled to receive death benefits arising
therefrom. It found that petitioners‘ evidence failed to prove that Simon committed suicide;
and ruled that the Master who executed and signed the Master‘s Report, Marine Note of
Protest and Statement of Facts failed to give positive testimony ascertaining Simon‘s actual
suicide. It further pointed out that the crew members who signed the Investigation. Report
had no personal knowledge of Simon‘s suicide. It added that Ocleasa, the alleged witness of
the incident, did not sign the report or issue a sworn statement on the matter.
In addition, the CA stated that Simon underwent PEME and was not declared emotionally
unfit. As such, it gave no probative weight to the alleged suicide note of Simon.
Finally, the CA reasoned that in computing the death benefits in favor of respondent, the
applicable provisions are those under the POEA SEC not the CBA which covers disability
benefits only; moreover, there was no evidence that Simon was an AMOSUP member.
On July 24,2012, the CA denied petitioners‘ motion for reconsideration.[30] Hence, petitioners
filed the instant Petition arguing that:
1. x x x the Court of Appeals committed serious, reversible error of law in awarding

death benefits in favor of respondent Mr. Vincent H. Datayan II despite the ruling of
this Honorable Court in the case of Reyes vs. Maxim‘s Tea House, that findings of fact
of quasi-judicial bodies like the NLRC, particularly when they coincide with those of
the Labor Arbiter and if supported by substantial evidence, are accorded respect and
even finality by appellate courts.[31]
2. x x x the Court of Appeals committed serious, reversible error of law in holding that
the death of the deceased seafarer was compensable as the defense of suicide was not
established with substantial evidence despite the suicide note made by the deceased
seafarer whose authenticity was affirmed by the Labor Arbiter and the First Division
of the NLRC.[32]
3. x x x the Court of Appeals committed serious, reversible error of law in awarding

damages, attorney‘s fees and legal interest in favor of respondent. The award of
damages and attorney‘s fees has no basis as the denial of respondent‘s claim for death
benefits was done in good faith. Further, the award of legal interests has no basis in
fact and in law.[33]
Petitioners submit that the documentary evidence established that Simon killed himself,
which makes respondent not entitled to death benefits. They contend the LA and the NLRC
found said documents to be authentic and are sufficient proof that the cause of Simon‘s
death was his willful act of committing suicide.
Petitioners posit that the CA erred in holding that the best evidence to prove Simon‘s alleged
suicide was his body, which was never found. They added that it would be unjust to hold that
the fact of death was established but its cause was not shown from the evidence on record.
They further aver that to follow this line of reasoning the fact of death must be established by
clear and convincing evidence. As such, according to petitioners, respondent‘s cause of
action would have accrued only after four years from the time Simon was presumed dead on
December 30, 2007.
Likewise, petitioners state that the Marine Note of Protest, Master‘s Report, Statement of
Facts and Investigation Report were not hearsay evidence because they were official
documents issued by the Master. Also, they point out that these documents were notarized
and were authenticated by an affidavit signed by the Master.
Petitioners also explain that the absence of signature of Ocleasa was addressed in the
Investigation Report. The report indicated that Ocleasa had already disembarked when the
investigation was conducted; he, nonetheless, reported to the local agents and narrated
what he witnessed on the vessel.
Petitioners emphasize the finding of the LA that the signatures in the alleged suicide note
and in the POEA contract were the same, if not identical.
Lastly, petitioners allege that damages were improperly awarded in favor of respondent
considering that necessary procedures were undertaken to locate Simon. They also state
that investigation was conducted to gather information from the crew regarding the
circumstances surrounding his death.
For his part, respondent reiterates that there was no evidence that Simon committed suicide
and that his death was a result of the Master‘s negligence. He insists that the alleged suicide
note could not have been written by Simon considering the proximity of events, that is, at
12:40 a.m., the fire drill was conducted and at 1:25 a.m., Simon was said to have jumped
overboard. He asserts that he is entitled to compensation for the death of his son because
he had established that he died during the term of his employment contract with petitioners.
Issue
Is the CA correct in finding that the NLRC committed grave abuse of discretion in
denying respondent‘s claim for death benefits?
Our Ruling
In labor cases, the review of the Court under Rule 45 of the Rules of Court involves
the determination of the legal correctness of the CA Decision. This means that the
Court must ascertain whether the CA properly determined the presence or absence
of grave abuse of discretion in the NLRC Decision. Simply put, ―in testing for legal
correctness, the Court views the CA Decision in the same context that the petition
for certiorari it ruled upon was presented to it.‖[34] It entails a limited review of the acts
of the NLRC, of whether it committed errors of jurisdiction. It does not cover the
issue of whether the NLRC committed any error of judgment, unless there is a
showing that its findings and conclusion were arbitrarily arrived at or were not based
on substantial evidence.[35]
In this case, both the LA and the NLRC ruled that respondent‘s claim for death benefits was
without basis. They agreed that Simon committed suicide, as principally established by the
Master‘s Report and Simon‘s suicide note. The CA ruled otherwise. It gave no weight to the
suicide note because Simon underwent the PEME and was declared fit to work. The CA also
refused to accord probative value to the Master‘s Report, among others, because the Master
gave no positive testimony on Simon‘s actual suicide.
To determine whether the CA correctly found that the NLRC gravely abused its discretion in
finding that there is substantial evidence – or such relevant evidence a reasonable mind
might accept as adequate to support a conclusion[36] – that Simon committed suicide, it
becomes imperative to resolve whether the parties discharged their respective burdens of
proof and the corresponding shift in the burden of evidence in this case.[37]
As claimant for death benefits, respondent has the burden to prove by substantial evidence
that his son‘s death is work-related and that it transpired during the term of his employment
contract. In this respect, respondent has discharged his burden. It is beyond question that
Simon died during the term of his contract. The next question is whether Simon‘s death was
due to his deliberate act. If such is the case, then respondent is not entitled to death
benefits. That Simon‘s death was a result of his willful act is a matter of defense. [38] Thus,
petitioners have the burden to prove this circumstance by substantial evidence.
The Court finds that petitioners discharged their burden to prove that Simon committed
suicide. The Master‘s Report[39] clearly described the situation on the vessel prior to, during
and after the time that Simon went overboard, to wit:
x x x WE CONDUCTED EMERGENCY FIRE DRILL AT NIGHT TIME 0040LT 30th DECEMBER

2007/ 1540TC 29thDECEMBER 2007. AFTER THE DRILL AT ABOUT 0055LT WE
CONDUCTED MEETING AT CREW MESSHALL FOR MASTER‘S EVALUATION AND AT
THE SAME TIME SAFETY MEETING DURING EVALUATION, I STRONGLY MENTIONED
ABOUT HIS (SIMON’S) BEHAVIOUR ON BOARD THE SHIP TO MOTIVATE HIM AND TO
IMPROVE HIS PERFORMANCE SINCE HE IS A DECK CADET AND ABOUT TO BE
PROMOTED AS ORDINARY SEAMAN x x x
x x x AFTER THE MEETING [I] OBSERVED THAT HE WAS NOT AROUND IN THE
MESSHALL. KNOWING THAT HE WAS SLIGHTED I ORDER TO LOOK FOR HIM IN WHICH
THE CREW COMPLIED. ONE OF THE CREW WIPER RAYMOND C. OCLEASA xxx SAW
DECK CADET SIMON VINCENT H. DATAYAN II WAS STANDING [SIC] ON THE
FAIRLEAD PORT QUARTER AND AT THAT POINT HE (WIPER) SAW TORCH LIGHT PASS
HIS (DECK CADET) FACE AND CAUGHT HIS (DECK CADET) ATTENTION THEN WHEN
HE ATTEMPTED TO JUMP, HE (WIPER) CALLED HIS NAME BUT HE (DECK CADET)
JUMPED OVERBOARD. THEN WIPER WENT TO SHIP‘S OFFICE AND DIAL 0 FOR PUBLIC
ADDRESS AND SHOUT MANOVERBOARD PORTSIDE. BUT THAT ANNOUNCEMENT WAS
NOT CLEAR ENOUGH. SO WHEN I REACH THE BRIDGE I ASKED SECOND OFFICER
WHICH SIDE HE FELL OVERBOARD BUT SECOND OFFICER ALSO NOT SURE [SIC]
WHICH SIDE HE FELL. IN ORDER TO RETURN I ORDERED HARD STARBOARD TO
MANEUVER WILLIAMSON TURN AND RETURN TO RECIPROCAL COURSE AND DROP
LIFEBOUY WITH BOUYANT SMOKE SIGNAL AND SELF IGNITING LIGHT. TURN ON ALL
DECK LIGHTS AND POSTED LOOKOUTS x x x[40]
At the same time, the Statement of Facts[41] submitted by petitioners indicated that after the
vessel retraced its course to where Simon fell, the incident was reported to the Japan Coast
Guard and to petitioners‘ local agents in the Philippines. The Yokohama Coastguard Patrol
also conducted search-and-rescue but to no avail.
Moreover, in their Investigation Report,[42] the crew described Simon as a ―very silent person,
bright student, [f]ast learner but very sensitive person and will not talk unless you x x x
question him. No problems with anybody since he embarked the vessel [sic].‖
The Master Report and Statement of Facts were executed by the Ship Master Arthur
Evangelista, who also subscribed and swore to his statements before a Notary Public.[43]
In Unicol Management Services, Inc. v. Malipot,[44] the Court considered the Master‘s Report
and the Investigation Report, among others, in ruling that the seaman‘s beneficiaries were
not entitled to death benefits. It noted that these documents completely detailed the events
that transpired prior to and the circumstances leading to the discovery of his death by
suicide.
Similarly, in the instant case, the Master‘s Report as well as the Statement of Facts
described the events that occurred prior to, during and after the incident when Simon went
overboard. In particular, Simon declined the Master‘s invitation for him to join the party;
thereafter, the Master reprimanded him because he performed poorly in the drill; Simon left
the meeting and was later seen to jump overboard by Ocleasa. Added to this narration is the
statement of the crew in the Investigation Report that Simon was a ―very sensitive‖ person.
Also, the Investigation Report addressed the question on why Ocleasa did not sign said
report. As stated therein, he already disembarked from the vessel when the report was
executed and was investigated at the (local) office, where he stated that he saw Simon jump
overboard.[45]
More importantly, the fact that Simon committed suicide is bolstered by the suicide note that
he executed. His note[46] reads:
0100LT Dec. 30, 2007
Dear loved ones & shipmates,
I cannot take it anymore. Sorry for letting you pay for my shortcomings. I ask you to let me end my
life. I cannot bear the shame of letting you all endure all what is due me. But I happily end my life
because I know it is the only [way] I can repay you [sic]. You suffered for not letting myself obey my
Master for a drink [sic], of which, he commenced a drill w/out anyones [sic] idea[.]
Sayonara & God bless.
w/ you always.
Simon
The suicide note is informative as to why Simon committed suicide. He declined to join the
party held prior to the drill and was reprimanded for his poor performance in said drill. It can,
thus, be inferred from the note that he blamed himself for the difficulties he assumed to have
caused his colleagues.
As such, to refute petitioners‘ position that Simon committed suicide, the burden of evidence
shifts to respondent. Nonetheless, respondent failed to discharge his burden. Respondent
relies on the alleged negligence of the Master in ordering the conduct of the drill and argues
that Simon could not have written a suicide note because of the proximity of the time when
the drill was conducted and the time when Simon jumped overboard. Respondent presented
no proof that said suicide note was fabricated, as no specimen of Simon‘s handwriting was
submitted to prove that it was not written by him.
On the contrary, the Court shares the observation of the LA that the signature [47] in the
suicide note and the signature[48] of Simon in his employment contract appear to be the
same.
Hence, by substantial evidence, there are adequate reasons and proof that Simon
committed suicide.
Under Section 20(D) of the POEA SEC,[49] no compensation or benefits shall arise in case of
death of a seafarer resulting from his willful act, provided that the employer could prove that
such death is attributable to the seafarer.
Although Simon died during the term of his contract with petitioners, still, respondent is not
entitled to receive benefits arising from his death. As clearly established, Simon died by his
willful act of committing suicide and death under that circumstance is not compensable
under the POEA SEC.
In consideration of the foregoing, the Court finds that the CA erred in setting aside the NLRC
Decision which affirmed the LA Decision dismissing the complaint for lack of merit.
WHEREFORE, the Petition is GRANTED. The February 22, 2012 Decision and July 24,
2012 Resolution of the Court of Appeals in CA-G.R. SP No. 119775
are REVERSED and SET ASIDE. The October 28, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 07-000536-10 is REINSTATED and AFFIRMED.
Accordingly, the complaint in NLRC-NCR OFW Case No. (M)05-07052-09 is DISMISSED.
SO ORDERED.
09 NOV 2015 | SUBJECT | LABOR AND

Edilberto P. Etom, Jr. Vs. Aroma Lodging

House; G.R. No. 192955; November 9, 2015
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari[1] is the January 21, 2010 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 110901. The CA granted the Petition
for Certiorari[3] filed therewith and set aside the April 30, 2009 Decision[4] and June 30, 2009
Resolution[5] of the National Labor Relations Commission (NLRC) in NLRC LAC No. 09-
003303-08 which affirmed with modification the August 20, 2008 Decision[6] of Labor Arbiter
(LA) Eduardo G. Magno in NLRC NCR No. 04-05453-08 and found Edilberto Etom
(petitioner) entitled to unpaid wages, 13th month pay and holiday pay. Also assailed is the
July 2, 2010 CA Resolution[7] which denied petitioner‘s motion for reconsideration.
Factual Antecedents
This case stemmed from a complaint[8] dated April 15, 2008 filed by petitioner against Aroma
Lodging House (respondent) for illegal dismissal and money claims. Petitioner alleged that
respondent, a business engaged in providing affordable lodging,[9] employed him as roomboy
in 1997 with a monthly salary of P2,500.00. He averred that his working hours were from
5:00 a.m. to 11:00 p.m. from Monday to Saturday, including holidays. His tasks included
cleaning the lodging house and washing towels and bedsheets.[10]
Petitioner claimed that on February 4, 2008, respondent refused to allow him to report for
work. Petitioner argued that respondent did not inform him of any violation that would
warrant his dismissal. He also claimed that he was not given an opportunity to explain and
answer any imputation against him by his employer.[11]
On the other hand, respondent asserted that it employed petitioner as roomboy in

2000.[12] He was paid salary above the required minimum wage, holiday pay, 13th month pay
and overtime pay. Respondent also stated that it provided petitioner with free meals, allowed
him to receive ―tips‖ from customers, and sell bottles left by customers in the lodge. It also
gave him commission on certain occasions.[13]
Respondent averred that despite its beneficence, petitioner still showed an adverse attitude
in work. In particular, he created trouble within the workplace, stole items from customers
and was even charged with rape in 2003.[14]Petitioner also figured in a fistfight with another
roomboy, Reynaldo Baccus, whom he tried to stab with a knife on September 2, 2006. He
likewise had an altercation with Arnold Sansona (Sansona), a checker in the lodge, who
reprimanded him for watching television during working hours. He also had a quarrel with
another co-worker, Jess Abuca (Abuca). On separate occasions, while purportedly armed
with a knife, petitioner chased Sansona and Abuca.[15]
Respondent averred that it served upon petitioner a memorandum[16] requiring him to explain
why he chased a co-employee with a knife. However, respondent refused to receive said
memorandum. Taking into consideration the safety of its employees and customers, it
terminated petitioner for serious misconduct.[17]
On August 20, 2008, the LA rendered a Decision[18] finding petitioner to have been legally
dismissed. The LA, however, ordered respondent to pay petitioner punitive damages
amounting to P10,000.00 for non-compliance with the termination notice requirement, salary
differential computed at P199,482.80, holiday pay amounting to P3,107.50 and 13th month
pay of P7,150.00.
Respondent appealed to the NLRC arguing that petitioner was not underpaid.[19] It stated that
in a ―Sama-Samang Sinumpaang Salaysay―[20] – which was submitted in another labor case,
– petitioner and another employee averred that they were regular employees of respondent
since 2000 and that they were receiving wages beyond the minimum required by
law.[21] Respondent also claimed that it furnished petitioner with a copy of notice to explain
and notice of termination but the latter refused to receive them.[22]
In its April 30, 2009 Decision,[23] the NLRC affirmed the ruling of the LA but deleted the award
of punitive damages.
The NLRC concurred with the LA ruling that petitioner was underpaid considering that he
was receiving only P2,500.00 as monthly salary. It decreed that petitioner was entitled to
receive salary differential amounting to P166,080.38 for three years computed from February
20, 2005 to February 20, 2008 less 10% thereof for the facilities provided by respondent.
On June 30, 2009, the NLRC denied respondent‘s motion for reconsideration.[24]
Undaunted, respondent filed with the CA a Petition for Certiorari insisting that petitioner was
not entitled to salary differential, 13th month pay and holiday pay because he admitted in an
affidavit that he had been receiving wages and other benefits in accordance with law.[25] It
also asseverated that it was exempt from Minimum Wage Law since it had no more than 10
employees.[26]
For his part, petitioner argued that the Petition for Certiorari should not be entertained for
late filing of the motion for reconsideration of the NLRC Decision. He contended that
respondent received the NLRC Decision on May 13, 2009 but filed a motion for
reconsideration only on May 26, 2009. Thus, he maintained that such filing was three days
late.[27]
On January 21, 2010, the CA rendered the assailed Decision[28] granting the Petition
for Certiorari, the decretal portion of which reads:
FOR THE STATED REASONS, the petition is GRANTED and the assailed decisions, dated April
30, 2009 and June 30, 2009 of the National Labor Relations Commission (Second Division), awarding
private respondent Edilberto Etom of unpaid wages, 13th month pay and holiday pay are hereby
REVERSED and SETASIDE.xxx
SO ORDERED.[29]
The CA held that respondent timely filed a motion for reconsideration of the NLRC Decision.
It added that ―if the motion for reconsideration was filed out of time, the NLRC would have
dismissed it outright, instead of resolving it on its merit.‖[30]
Moreover, the CA explained that for having executed an earlier notarized affidavit stating
that he received wages above the required minimum salary, petitioner could not
subsequently claim that he was underpaid by respondent.[31] It also declared that there is no
factual basis to support the grant of 13th month pay and holiday pay in favor of petitioner.[32]
On July 2, 2010, the CA denied petitioner‘s motion for reconsideration.[33]
Hence, petitioner filed the instant Petition raising the following assignment of errors:
1. THE HONORABLE COURT OF APPEALS COMMITTED A VERY GRAVE

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

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

HEREIN PETITIONER WAS NOT GIVEN THE OPPORTUNITY TO FILE A
REPLY AND SUCH OTHER RESPONSIVE PLEADING TO THE PETITION FOR
CERTIORARI, PURSUANT TO SECTION 6 OF RULE 65, AND/OR
MEMORANDUM PURSUANT TO SECTION 8 THEREOF.[34]
Petitioner reiterates that respondent‘s motion for reconsideration of the NLRC Decision was
filed beyond the reglementary period.[35] He also maintains that he was underpaid, and was
not given 13th month pay and holiday pay by respondent.[36]
In addition, petitioner alleges that his affidavit dated March 19, 2004 was executed during
the pendency of a criminal case against him. He contends that respondent pressured him to
sign it.[37] He likewise avers that he is illiterate and does not understand the implication of said
affidavit.[38] He further explains that he was unable to disclaim the voluntary execution and
authenticity of the affidavit because he was not given the chance to file a memorandum
where he could have discussed all the issues in the Petition for Certiorari.[39]
For its part, respondent reiterates the timely filing of its motion for reconsideration before the
NLRC. It also agrees with the CA ruling giving evidentiary value to petitioner‘s affidavit.[40]
Our Ruling
As a rule, the perfection of appeal within the period required by law is mandatory and
jurisdictional. Failure to appeal within such period results in the assailed decision
becoming final and executory. As regards a motion for reconsideration of a decision
of the NLRC, the same must be filed within 10 days from the receipt of the assailed
decision. It must, nevertheless, be emphasized that the NLRC is not bound by the
technical rules of procedure. Thus, in deciding labor cases, the NLRC is allowed to
liberally apply its rules.[41]
In this case, petitioner alleges that the subject motion for reconsideration was filed beyond
the 10-day reglementary period. However, we note the explanation made by respondent for
the seeming late filing of its motion to wit:
x x x [I]t is public knowledge that May 23, 2009 happens to be a Saturday, hence, under established
rules and relevant jurisprudence, the filing of petitioners‘ (herein respondent) Motion for
Reconsideration should be on May 25, 2009, the next working day after May 23, 2009. On May 25,
2009, Petitioners filed their Motion for Reconsideration before the public respondent, however,
through a glitch in the docket machine date and time puncher of the NLRC at that date and hour, the
petitioners‘ Motion for Reconsideration date of filing was erroneously marked and stamped as May
26, 2009 1:47 A.M. Petitioners only managed to take notice of the mistake in the date and time of the
docket of their Motion for Reconsideration on the following day, May 26, 2009, the real May 26,
2009. Petitioners thence quickly went to the NLRC Docket Section to report the mistake and x x x
was [sic] told by the Docket Section Personnel that they have already corrected the erroneous date and
time of petitioners‘ docketed Motion for Reconsideration to the x x x correct May 25, 2009, 1:47 P.M.
and have forwarded the Motion for Reconsideration of the [petitioners to the NLRC x x x Indeed, it
would be plainly absurd for a government office docket section like that of the public respondent
NLRC to be open for business at such unholy hour of 1:47 A.M. x x x[42]
Based on the foregoing explanation, we are convinced that respondent timely filed its motion
for reconsideration of the NLRC Decision. In fact, the NLRC took cognizance of it and
decided the motion on the merit.
In any event, we held in Opinaldo v. Ravina[43] that the NLRC may liberally apply its rules and
decide a motion for reconsideration on the merits. We upheld the liberal application by the
NLRC of its technical rules to resolve the issues on the merits because ―a full resolution of
the case on the merits is the more palpable explanation for the liberal application of its
rules.‖[44]
Petitioner also argues that he failed to disclaim the voluntary execution of the affidavit –
where he admitted to have been paid wages beyond the minimum required by law –
because he was not given the opportunity to file a memorandum.
His contention is unmeritorious.
Section 6,[45] Rule 65 of the Rules of Court provides that before the court gives due course to
a petition for certiorari, it may require the respondent to file a comment to the petition.
Afterwards, the court may require the filing of a reply and such pleadings as it may deem
necessary. In turn, Section 8[46] of Rule 65 states that after the comment or other pleadings
are filed or the period for their filing has expired, the court may require the parties to file
memoranda.
It is thus clear that the filing of a reply and other subsequent pleading, as well as
memoranda, is subject to the sound judgment of the court. ―The word ‗may‘ when used in a
statute is permissive only and operates to confer discretion x x x.‖ [47] In this case, the CA, in
the exercise of its judgment, may or may not require the filing of any pleading and submit the
case for resolution, after the petition and the comment thereto had been filed.
Anent the substantive issue raised by petitioner, the power of the Court to review a CA
Decision in labor cases is limited. Specifically, in a petition for review under Rule 45 of the
Rules of Court, the Court has to resolve whether the CA properly determined the presence
of grave abuse of discretion on the part of the NLRC in rendering its Decision, and not
whether the NLRC Decision on the merits was correct. However, while the strict inquiry on
the correctness of evaluation of evidence is not required in a certiorari proceeding, it is still
necessary to determine that the conclusions of labor tribunals were supported by substantial
evidence. This is because a decision unsupported by substantial evidence is a judgment
rendered with grave abuse of discretion.[48]
In addition, as a rule, once the employee has asserted with particularity in his position paper
that his employer failed to pay his benefits, it becomes incumbent upon the employer to
prove payment of the employee‘s money claims. In fine, the burden is on the employer to
prove payment, rather than on the employee to establish non-payment.[49]
Both the LA and the NLRC held that respondent did not pay petitioner the required minimum
wage, holiday pay and 13th month pay. The CA, however, overturned the factual findings of
these labor tribunals. Thus, we deem it necessary to review the facts on record.
While a notarized document is presumed to be regular such presumption is not absolute and
may be overcome by clear and convincing evidence to the contrary. The fact that a
document is notarized is not a guarantee of the validity of its contents.[50]
Here, petitioner is an unlettered employee who may not have understood the full import of
his statements in the affidavit. Notably, petitioner, along with a co-worker did not state the
specific amount of what they referred as salary above the minimum required by law. Their
statement only reads as follows:
Na kami ay namamasukan bilang mga ‗roomboy‘ sa naturang Aroma Lodge magmula pa noong taong
2000 at bilang mga regular na mga empleyado nito, kami ay nakakatangap ng pasueldo na lagpas sa
‗minimum wage‘ na takda ng batas, bukod pa sa libreng tirahan (stay-in), pagkain, [paggamit] ng ilaw
at tubig, at mga ‗tips‘ at komisyon sa mga parokyano ng Aroma Lodge.[51]
As found by the LA, respondent did not present substantial evidence that it paid the required
minimum wage, 13thmonth pay and holiday pay in favor of petitioner.[52] Respondent‘s mere
reliance on the foregoing affidavit is misplaced because the requirement of established
jurisprudence is for the employer to prove payment, and not merely deny the employee‘s
accusation of non-payment on the basis of the latter‘s own declaration.
In conclusion, we find that the CA erred in ascribing grave abuse of discretion on the part of
the NLRC in awarding salary differential, 13th month pay and holiday pay in favor of
petitioner.
WHEREFORE, the Petition is GRANTED. The January 21, 2010 Decision and July 2, 2010
ASIDE. Accordingly, the April 30, 2009 Decision and June 30, 2009 Resolution of the
National Labor Relations Commission in NLRC LAC No. 09-003303-08 are REINSTATED
and AFFIRMED.
SO ORDERED.

SUPREME COURT
Maersk-Filipinas Crewing, Inc./A.P. Moller

A/C Vs. Rommel Rene O. Jaleco; G.R. No.
201945; September 21, 2015
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari[1] are: 1) the March 13, 2012 Decision[2] of the
Court of Appeals (CA) granting the Amended and/or Supplemental Petition for Certiorari in
CA-G.R. SP No. 118688; and 2) the CA‘s May 21, 2012 Resolution[3] denying reconsideration
of its assailed Decision.
Factual Antecedents
On December 4, 2006, respondent Rommel Rene O. Jaleco was hired by petitioner Maersk-
Filipinas Crewing, Inc. (Maersk), on behalf of its foreign principal and co-petitioner herein,
A.P. Moller A/S (Moller), as Able Bodied Seaman on board the vessel ―M/T Else
Maersk.‖[4] Respondent boarded ―M/T Else Maersk‖ on January 16, 2007 and commenced
his work.
Sometime in February 2007, respondent complained of intermittent pain on the left buttock
radiating to the. lower back and left groin.[5] When examined in Singapore on April 13, 2007,
his lumbosacral spine x-ray generated normal results but he was diagnosed as having
―suspected prolapsed intervertebral disc.‖ Nonetheless, he was declared fit to sail.[6]
On April 29, 2007, respondent was once more examined in Dubai, United Arab Emirates,
where the doctor diagnosed him with ―acute lumbago with left-sided sciatica r/o disc
prolapsed.‖[7] He was advised to obtain an MRI[8]scan of the lumbar spine, undergo
neurosurgical review, and to avoid lifting heavy objects for one week. Moreover, he was
declared unfit for duty.[9]
Respondent was repatriated on May 1, 2007 and was immediately referred to the company-
designated physician, Dr. Natalio Alegre II (Dr. Alegre), who examined him on May 2 and 3,
2007. He found respondent to be suffering from ―paralumbar spasm and limitation of
movement due to pain. Straight leg raise is normal and sensation intact.‖ [10] He prescribed
medication and physical therapy at three sessions per week.[11]
On May 17, 2007, respondent was again examined, and found to still have ―left buttock pain
radiating to his lower back and lateral side of his left thigh which is most severe at 8/10 on a
pain scale x x x (which) is slightly relieved with intake of his pain medications.‖ MRI scan
was recommended[12] as well as epidural steroid injection and further physical therapy.
When respondent was examined on June 4, 2007, Dr. Alegre found that he ―still has low
back pain radiating to his left lower extremity even with physical therapy. This is associated
with numbness on the lateral aspect of his left leg and paralumbar spasm is still
present.‖[13] Thus, further medication, physical therapy and epidural steroid injection were
recommended.
Respondent was confined at the St. Luke‘s Medical Center from June 13 to 19, 2007 and
from July 24 to 27, 2007.14 On June 16, 2007,[14] he underwent epidural steroid
injection,[15] as well as electromyogram and nerve conduction velocity (EMG-NCV) testing.[16]
Respondent returned on June 20, 2007, complaining of headache and low back pain. He
was diagnosed with stage 1 hypertension and given medication.[17]
On June 29, 2007, respondent was evaluated by a spine surgeon who recommended
provocative discography to find out whether he will need a disc replacement.[18]
In his July 9, 2007 Progress Report,[19] Dr. Alegre noted the evaluation of respondent by a
spine surgeon who declared that the EMG-NCV tests returned normal[20] and ―beginning
L5S1 disc herniation.‖ Dr. Alegre further stated:
The low back pain intensity is not commensurate with the alleged symptoms of back pain so that a
Provocative Discography is recommended and the schedule will follow as the operating room right
now is fully book [sic].
Likewise an incidental note of a probable small cyst in the left kidney was noted. Since this is only an
incidental finding, we would need your approval to evaluate Ms.[21]
On July 26, 2007, respondent underwent Provocative Discography[22] at the St. Luke‘s
Medical Center which generated the following result:
Finding: There is midposterior Grade 1 annular tear with contrast medium leakage more to the left.
CONCLUSION: ELICITED AREAS ARE NOT CONCORDANT WITH USUAL PAIN BASED ON
PATIENT‘S EXPERIENCE.[23]
On July 27, 2007, Dr. Alegre issued another Progress Report[24] stating essentially as follows:
Objective Findings:
Tenderness over the loose paralumbar muscles.

Truncal mobility restricted.
Small Cyst in the left kidney.
Assessment:
Beginning Disk Dessication, L5S1

Small Cyst, Left
Urology evaluated the small kidney cyst and opined that it will be observed as it is small and no
impairment of kidney function is noted.
Provocative Discography was done on 26 July 2007 and showed leakage of contrast material at the
midposterior aspect of the disk more towards the left thru a mild posterior annular tear. It was opined
by Interventional Radiology that the pain complained of is not commensurate with the Discography.
Plans:
As the pain is not commensurate with the discography, personality reasons should be evaluated to rule
out malingering is for your approval the form of [sic] Minnesota Multiphasic Personality Test.
Approximate cost is Phpl0,000.00.[25]
On August 15, 2007, respondent took the Minnesota Multiphasic Personality Inventory – 2
Test[26] (MMPI-2) at the St. Luke‘s Medical Center. The results of the test are contained in Dr.
Alegre‘s August 30,2007 Progress Report,[27]thus:
The MMPI-2 Test provides a number of validity indices that are designed to provide an assessment of
factors that could distort the results of testing. Such factors could include failure to complete test
items properly, carelessness, reading difficulties, confusion, exaggeration, malingering or
defensiveness.
During the interview phase, he was highly defensive finishing the test in more than 5 hours which is
normally completed within P/2 hours. He expressed doubts as to whether his injury or back pain will
be cured doubting about his capacity and fitness to return to work. He already approached an attorney
for disability claims and he is expecting a large sum of money from his claim. According to him, he
was informed and-encouraged by the ship‘s ―Master‖ on board regarding disability benefits.
The test showed that he tried to create a favorable impression of himself by not being honest in
responding to the items. He reported a number of vague physical complaints and the development of
physical problems occur when he is under stress. The medical history is characterized by excessive
and vague physical complaints, weakness and pain. He tends to rely on hysterical defenses or
exaggeration in the face of conflict. The test also showed Mr. Jaleco converting psychological conflict
into physical complaints.
Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and
exaggerating hi [sic] symptoms. The essential feature is the intentional production of exaggerated
physical symptoms motivated by external incentives – obtaining financial compensation and avoiding
work.[28]
On September 4, 2007, respondent underwent another check-up. The results thereof are
contained in Dr. Alegre‘s Progress Report[29] of even date, thus:
Subjective Complaints:
Complained of persistence of back pains
Objective Findings:
1. Slightly spastic paraspinal muscles

2. Truncal mobility functional
3. Straight leg raising test normal
4. Personality test (MMPI) indicates malingering and exaggeration of symptoms
Assessment:
Mild Disc Dessication, L5S1
Plans:
Physical therapy
If a disability is to be assessed now, a disability grade of 11 [would be obtained] based on the POEA
Contract, Chest-Trunk-Spine #6 – Slight Rigidity or 1/3 loss of motion or lifting power of the trunk.[30]
On February 8, 2008, respondent underwent physical examination by an independent

physician, Dr. Ramon Santos-Ocampo (Dr. Santos-Ocampo), at the Department of
Radiology of the Makati Medical Center. Dr. Santos-Ocampo‘s Clinical Abstract[31] of the
examination reads as follows:
Physical Examination:
There is no tenderness elicited when pressing on the left buttock. Slight tenderness and radiating pain
was noted when the L5-S1 facet joints were pressed.
Assessment;
Sacro-iliitis, left and Bilateral facet joint arthropathy, L5-S1
Plan:
Local anesthesia injection into the left sacro-iliac joint to determine significance of the sacro-ilitis. If
there is a slight improvement or complete improvement, then the sacro-iliac joint will be injected with
steroids and long-acting local anesthesia. Then bilateral facet joint injections at L4-5 and L5-S1 will
be performed on the same day.[32]
On April 28, 2008, respondent consulted another independent physician, Dr. Alan Leonardo
R. Raymundo (Dr. Raymundo) – an orthopedic surgeon of the Philippine Orthopedic Institute
– who issued a Medical Report[33] which states:
This 37-year-old seaman was repatriated here last May 2007, because of low back pain after carrying
a heavy load while on board a ship. He was first seen at St. Luke‘s Medical Center when he was
repatriated x x x and has undergone an epidural shot for his low back pain. His MRI plates show no
significant disc protrusion that might be impinging on the nerve and his EMG NCV results were also
normal. However he continuous [sic] to have low back pain whenever he would walk for long
distances and whenever he would sit for long periods. He claims that his pain is actually in the area of
the sacroiliac joint radiating down the buttock area and posterior to the thigh when this would occur.
He was referred to Dr. Ramon Santos Ocampo to look for the pain generator and injection of the Facet
Joint and the Sacroiliac Joint of the Lumbar Spine were done. After the procedure the pain was
relieved, however after three weeks the pain recurred.
Because of the recurrence of the pain and considering the nature of his job as a seaman, I told him that
it would be impossible for him to return to his previous work duties. I would therefore declare him not
fit for duty.[34]
On October 8, 2009, respondent underwent a second MRI of the lumbar spine at the Makati
Medical Center. The results are as follows:
Examination of the sagittal imaging demonstrates normal alignment of the vertebral bodies. The
lumbar curvature is maintained. The conus medullaris is seen to be normal and ends at T12-L1 level.
No abnormal signal is seen within the conus.
Focal T1W/T2W hyperintensity is noted in the anterosuperior corner of the L3 vertebral body. There
is also a Tl W/T2W hyperintense focus in the L5 vertebral body. Examination of the intervertebral
disc reveals no signal abnormality. No paraspinal or intraspinal mass noted.
T12-L1: No evidence of disc bulge or herniation.

LI-2: No evidence of disc bulge or herniation.
L2-3: No evidence of disc bulge or herniation.
L5-S1: Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root.
A 1.0 cm. cyst is noted in the superior pole of the left kidney.
IMPRESSION:
1. Degenerative osteitis, L3 vertebral body

2. L5 vertebral body hemangioma
3. Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root, L5-S1.
4. Above findings are generally unchanged from previous study.
5. Left renal cyst[35]
On October 12, 2009, respondent was again examined by Dr. Raymundo, who thereafter
issued another Medical Report[36] stating as follows:
The patient is here today with his new MRI results showing a disk protrusion at the level of L5-S1
with [sic] mildly abutting the ipsilateral traversing nerve root. I have already given this patient a rating
of grade 8 with a moderate rigidity or % loss of motion or lifting power of the trunk.
If I were to re-evaluate this, the functional capacity of the patient is actually more severe than this
grading. However, the next grading which is grade 6 indicates or points to a fracture of the dorsal or
lumbar spine which the patient does not have. However, the severity of his symptom is almost equal
to a grade 6 with severe or total rigidity or total loss of lifting power of heavy objects.
In my opinion, despite the absence of a fracture of the dorsal lumbar spine, I will still give this patient
a rating of grade 6 in terms of pain and affectation of the spinal cord.[37]
No further attempt to secure the opinion of a third physician was made by the parties.
Instead, respondent filed a complaint for illegal dismissal, nonpayment of salaries/wages and
other benefits, disability claims, medical expenses, damages, and attorney‘s fees against
petitioners and Maersk General Manager Jerome P. delos Angeles (delos Angeles) before
the National Labor Relations Commission (NLRC) docketed as NLRC-NCR Case No. (M)
12-17087-08.
In his Position Paper,[38] respondent claimed that in February 2007, while performing the
difficult task of ship-to-ship mooring on deck – which involved lifting and pulling heavy wires
and ropes thus placing pressure and stress on the back and spine – something in his spine
snapped and he felt terrible lower back pain such mat he could not stand erect or carry
anything for more than a month. He averred that despite his protestations and appeals for
medical intervention, petitioners – in bad faith and acting with inexcusable negligence –
failed and refused to give him immediate medical attention. He was forced to continue
working in spite of his injury and the excruciating pain it caused him. For this reason, his
injury and pain were aggravated. It was only after two months from his injury – or in April
2007 – that he was medically attended to. Despite post-repatriation treatment and
medication by the company-designated physician, his injury persisted and incapacitated him
from returning to work. After consulting an independent physician, he was declared unfit for
sea duty and was given a Grade 6 disability raiting. For petitioners‘ acts and refusal to
compensate him, he suffered injury for which he should be indemnified. Thus, he prayed that
petitioners be declared liable for malice or inexcusable negligence which caused the
aggravation of his injury, and that they be ordered to pay him a) disability benefits
corresponding to a Grade 6 rating, b) reimbursement for his medical and other expenses, c)
compensation for permanent injury based on the Consolidated Workers‘ Compensation Act
of Denmark, d) P1 million actual damages, e) P1 million moral damages, f) P1 million
exemplary damages, g) 20% attorney‘s fees, and h) costs of suit.
In their joint Position Paper,[39] petitioners and delos Angeles sought dismissal of the
complaint, arguing that respondent is not entitled to a Grade 6 disability rating, but only
Grade 11 as determined by the company-designated physician. They argued that it has
been shown that respondent is merely malingering, feigning, and exaggerating his pain; that
assuming arguendo that a different opinion was issued by an independent physician, the
opinion of a third doctor should have been obtained by the parties pursuant to the provisions
of the POEA[40] Standard Employment Contract.[41] Since no third opinion was obtained, then
the company-designated physician‘s opinion prevails over the respondent‘s doctor‘s findings.
They also contended that respondent is not entitled to reimbursement of his medical and
other expenses, which were incurred after the company-designated physician declared his
findings on September 4, 2007. Moreover, respondent is not entitled to his claim for
damages, attorney‘s fees and costs, for being unfounded and in the absence of malice, bad
faith, or negligence on their part.
In his Reply/Comment,[42] respondent insisted that he is entitled to disability benefits based

on his physician‘s recommendation; that the company-designated physician‘s treatment was
inadequate, and his findings inaccurate and based on fraud and malice, which thus
prompted him to secure the opinion of an independent doctor; and that for these reasons, he
should be paid all his claims as prayed for in his Position Paper.
In their Reply[43] to respondent‘s Position Paper, petitioners argued that there is no basis for
the accusation of refusal or failure to give respondent immediate and proper medical
attention after his injury, as he failed to show convincingly that indeed he suffered his injuries
sometime in February 2007. His only basis for such claim – a supposed ―Notification of
Accident at Work‖ marked Annex ―D‖ of his Position Paper[44] — is self-serving and hearsay,
since it was not signed by him. Moreover, there is no truth to his allegation that he protested
and appealed for medical intervention or that he was forced to work and endure excruciating
pain for two months before proper medical intervention was done. On the contrary, he was
able to work until his repatriation in May 2007. In addition, they gave him timely and
extensive medical attention and treatment, with the company-designated physician closely
monitoring his condition all throughout. Also, based on the medical findings of the company-
designated physician, respondent was feigning his illness. Moreover, respondent‘s doctor‘s
opinion cannot prevail over the company-designated physician‘s findings, as it was merely
based on a single MRI report, and not on an extensive treatment and monitoring of
respondent‘s condition over an extended period of time; and that for lack of legal basis,
respondent cannot claim indemnity based on a supposed collective bargaining agreement or
foreign law.
On March 23, 2010, a Decision[45] was rendered by Labor Arbiter Catalino R. Laderas
granting disability benefits and attorney‘s fees in favor of respondent. The Decision decrees
as follows:
Upon his repatriation on 01 May 2007, complainant was assessed and medically treated by
respondents‘ company-designated physician and the latter‘s team of specialists and was never
declared fit to work.
Finding that complainant‘s illness is compensable, we now determine whether the same is permanent
or total in order that he may claim full disability benefits.
xxxx
In the case at bar, x x x while respondents‘ company-designated doctor/s provided a disability rating
for complainant‘s sustained injury, the former, nonetheless failed to make any declaration and/or
assessment as to the latter‘s fitness for work and/or capability to render sea duty.
Indubitably, the failure of respondents‘ company-designated doctor/s to declare complainant‘s fitness

for work reasonably infers a scheme to evade full payment of disability benefits to the complainant,
by merely declaring complainant partially disabled with a Grade 6 Impediment assessment.
Verily, it was undisputed that despite continuous medical treatment, complainant continue[s] to suffer
his ailment and the same remained uncured, until [the] present, which rendered him unable to work
and earn income for his family.
As a result therefore of the injury he sustained while on board the vessel ―ELSE MAERSK
DENMARK‖, complainant was unable to work for more than 120 days that resulted in the
impairment of his earning capacity.
xxxx
Hence, this Office rules that notwithstanding the medical assessment of respondents‘ company-
designated doctors, jurisprudence dictates that complainant be entitled to permanent total disability
benefits by reason of his continued medical condition that rendered him incapacitated for work for
more than 120 days from the date he was medically repatriated x x x to the Philippines.
On the other hand, for lack of particulars, complainant‘s claim for medical expenses and for non-
payment of wages, overtime pay, vacation leave and sick leave pay, the same could not be reasonably
granted under the circumstances for lack of factual basis with which to make an appropriate award.
xxxx
Similarly, for lack of particulars as to complainant‘s claim for damages, the same could not be
reasonably granted under the circumstances for lack of factual basis with which to make an
appropriate award.
xxxx
WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents, jointly
and severally, to pay the complainant total disability benefits corresponding the [sic] schedule of rates
provided for under the CBA between the AMOSUP and respondent manning agency.
Respondents are likewise ordered to pay respondents [sic] attorney‘s fees equivalent to ten (10%)
percent of the total judgment award.
The computation unit of this Office is hereby directed to compute the monetary award of the
complainant which forms part of this decision.[46]
Other claims are DISMISSED.
SO ORDERED.[47]
Petitioners appealed before the NLRC which docketed the case as NLRC LAC No. OFW(M)
07-000539-10.
On November 30> 2010, the NLRC issued a Decision,[48] declaring as follows:
The instant appeal is impressed with merit.
At the outset, it should be pointed out that had the parties in the instant case complied strictly with the
provisions of the POEA Standard Employment Contract, particularly on the appointment of a third
physician in case of disagreement, a lot of controversy would have been averted, x x x
xxxx
We are thus compelled to evaluate the divergent opinions of the company-designated physicians and
complainant‘s private physician.
xxxx
As can therefore be seen from the last MRI of complainant, the findings of the latter are basically
unchanged. However, complainant‘s physician issued a disability grading of Grade 6 ―in terms of pain
and affectation of the spinal cord,‖ observing that the severity of complainant‘s symptom is equivalent
to said grading.
A close perusal of the above finding of Dr. Raymundo shows that there is ―severe or total rigidity or
total loss of lifting power of heavy objects‖ based on complainant‘s symptom, that is, his pain. This
however has been put in issue by the company-designated physician, who earlier observed that:
―Provocative Discography was done on 26 July 2007 and showed leakage of contrast material in the
midposterior aspect of the disk more towards the left thru a mild posterior annular tear. It was opined
by Interventional Radiology that the pain complained of is not commensurate with the Discography.‖
This resulted in the following recommendation:
As the pain is not commensurate with the discography, personality reasons should be evaluated to rule
out malingering is for your approval the form of Minnesota Multiphasic Personality Test [sic].
Approximate cost is Php 10,000.00.‖
And the findings of said Minnesota Multiphasic Personality Test shows that:
Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and
exaggerating hi [sic] symptoms. The essential feature is the intentional production of exaggerated
physical symptoms motivated by external tendencies – obtaining financial compensation and avoiding
work.‖
As the company-designated physician has opined that complainant is malingering and exaggerating
his pain, the same pain made the basis for the disability grading of Dr. Raymundo, it was incumbent
upon complainant to refute the same. He has failed to do so.
xxxx
We therefore uphold the disability grading of Grade 11 as opined by the company-designated

physician, which amounts to US$7,465.00 corresponding to 14.93% disability as provided for in the
POEA Standard Employment Contract.
Likewise, the mere fact that complainant was no longer able to return to work as a seaman, by itself,
is no ground to automatically entitle him to Grade 1 permanent total disability benefits, x x x.
xxxx
As the instant complaint is clearly unfounded, complainant is not entitled to any attorney‘s fees.
WHEREFORE, premises considered, the appealed Decision is hereby MODIFIED, in that

complainant Rommel Rene O. Jaleco is entitled only to disability benefits of US$7,465.00,
corresponding to 14.93% disability (Grade 11) as provided for in the POEA Standard Employment
Contract. The award of 10% attorney‘s fees is DELETED for lack of legal basis.
SO ORDERED.[49]
Respondent moved for reconsideration, but in a February 28, 2011 Resolution,[50] the NLRC
held its ground.
In an Amended and/or Supplemental Petition for Certiorari[51] filed with the CA and docketed
therein as CA-G.R. SP No. 118688, respondent sought to set aside the dispositions of the
NLRC, arguing that since he was incapacitated to work since his repatriation up to the filing
of his Petition, or for a period of more than three years, he should be entitled to permanent
total disability benefits as adjudged by the Labor Arbiter. He also argued that he is entitled to
reimbursement of medical and other expenses incurred for his continued treatment,
rehabilitation and aid even after treatment by the company-designated physician because a)
the company-designated physician‘s services proved to be inadequate and incomplete, and
b) the collective bargaining agreement (CBA) between AMOSUP[52] and the Danish
Shipowners Association, as well as the Consolidated Workers‘ Compensation Act of
Denmark, mandates reimbursement of these expenses. Moreover, as a consequence of
petitioners‘ bad faith and inexcusable negligence, he should also be entitled to moral and
exemplary damages; and that as there is ground to award his pecuniary claims, he should
likewise be awarded attorney‘s fees, since he was compelled to litigate and incur expenses
as a result of petitioners‘ refusal to indemnify him.
On March 13, 2012, the CA issued the assailed Decision which contains the following
pronouncement:
The petition is meritorious.
In this case, Dr. Alegre based his assessment of petitioner Jaleco‘s disability at Grade 11 on the spine
surgeon‘s evaluation conducted on July 9, 2007 finding that the low back pain intensity was not
commensurate to the alleged symptoms of back pain, the opinion of the Interventional Radiology that
the pain complained of was not commensurate with the Provocative Discography performed on July
26, 2007 which showed ―leakage of contrast material in the midposterior aspect of the disk more
towards the left thru a mild posterior annular tear‖, and the Minnesota Multiphasic Personality
Inventory – 2 Test (MMPI-2) which found petitioner Jaleco to be malingering and intentionally
exaggerating his physical symptoms to obtain financial compensation and avoid work.
On the other hand, Dr. Raymundo not only assessed petitioner Jaleco‘s disability at Grade 6 or
Moderate Rigidity or two thirds (%) loss of motion or lifting power of the trunk, but also declared him
to be unfit for duty because of the recurrence of pain and the nature of his job as a seaman.
The law does not require that the illness should be incurable. What is important is that he was unable
to perform his customary work for more than 120 days which constitutes permanent total disability.[53]
Dr. Alegre may have referred petitioner Jaleco‘s case to the proper medical specialist, monitored the
latter‘s case during its progress and issued a certification based on the medical records available and
the results obtained. However, there is no showing that he made a categorical declaration as regards
petitioner Jaleco‘s fitness to resume sea-duty.
The POEA Standard Employment Contract for Seamen is designed primarily for the protection and
benefit of Filipino seaman [sic] in the pursuit of their employment on board ocean-going vessels. Its
provisions must, therefore, be construed and applied fairly, reasonably and liberally in their favor.
Only then can its beneficent provisions be fully carried into effect.
Hence, petitioner Jaleco is entitled to the US$60,000.00 for Impediment Grade 1 award.
As regards the award of attorney‘s fees, this Court finds that petitioner Jaleco is entitled to attorney‘s
fees equivalent to ten percent (10%) of the monetary award.
xxxx
Petitioner Jaleco averred that as a registered member of AMOSUP, he is necessarily covered by the
CBA (Ratings) between the AMOSUP-FIGWO-ITF and the Danish Shipowners Association. But
there is no showing that he was able to prove by substantial evidence his positive assertions that he is
a registered member of the said union and the said CBA is applicable to him in this case.
xxxx
Petitioner Jaleco invokes protection under the Consolidated Workers‘ Compensation Act of Denmark
by merely quoting its pertinent provisions in his position paper, x x x
Foreign laws do not prove themselves in our courts. Foreign laws are not a matter of judicial notice.
Like any other fact, they must be alleged and proven.
Besides, the snap on petitioner Jaleco‘s back was an injury sustained from carrying and pulling the
heavy wires that allegedly got stuck and messed up everything during a mooring operation, which
injury resulted in his disability. The injury cannot be said to be the result of an accident, that is, an
unlooked for mishap, occurrence, or fortuitous event, because the injury resulted from the
performance of a duty. Although petitioner Jaleco may not have expected the injury, yet, it is common
knowledge that carrying heavy objects can cause back injury, as what happened in this case.
xxx
Hence, the injury cannot be viewed as unusual under the circumstances, and is not synonymous with
the term ―accident‖ as defined above.
With respect to the award for moral and exemplary damages, there is no showing of bad faith or
malice on the part of private respondents when they relied on Dr. Alegre‘s assessment of petitioner
Jaleco‘s disability in denying the latter‘s claim.
Petitioner Jaleco‘s claim for actual damages was premised on his bare allegation that he was deprived
of his sole source of livelihood as a consequence of his dismissal without due process, by private
respondents in violation of the Labor Code and their failure and refusal to grant him the correct
disability benefits. A party is entitled to adequate compensation only for such pecuniary loss actually
suffered and duly proved. It is a basic rule that to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with a reasonable degree of certainty, premised
upon competent proof or best evidence obtainable of the actual amount thereof.
WHEREFORE, premises considered, the petition is GRANTED. The Decision dated November 30,
2010 and Resolution dated February 28, 2011 of public respondent NLRC, First Division in NLRC
NCR Case No. OFW(M) 12-17087-08 NLRC LAC No. OFW(M) 07-000539-10 are hereby
REVERSED and SET ASIDE. Judgment is hereby rendered ordering private respondents, jointly and
severally, to pay petitioner Jaleco US$60,000.00 as total permanent disability benefit and to pay him
attorney‘s fees equivalent to ten percent (10%) of the total judgment award.
SO ORDERED.[54]
Petitioners filed a Motion for Reconsideration,[55] but the CA denied the same in its May
21,2012 Resolution. Hence, the present Petition.
Issues
Petitioners submit that –

1. In granting disability benefits based on the erroneous application of the case of

Crystal Shipping v. Natividad (G.R. No. 154798, October 20, 2005) and equally
erroneous interpretation of the case of Jesus Vergara v. Hammonia Maritime Services,
Inc. (G.R. No. 172933, October 6, 2008)
2. In awarding attorney ‗s fees without legal and factual basis.[56]
Praying that the assailed CA pronouncements be set aside and that the NLRC‘s November
30, 2010 Decision be reinstated, petitioners maintain in their Petition and Reply[57] that the
company-designated physician‘s findings and recommendation relative to disability grading
and compensation should be upheld, the same being accurate, reliable, and reflective of
respondent‘s true state of health. They also insist that there should be no reason to doubt
the results of the tests indicating that respondent deliberately exaggerated the physical
symptoms of his illness to obtain financial compensation and avoid work as these tests are
scientific and accurate. They posit that the CA erroneously applied the doctrine in the Crystal
Shipping case and that since the opinion of a third physician was not obtained, the company-
designated physician‘s assessment should prevail. Moreover, what happened to respondent
was not an accident. Since there is no ground to grant respondent‘s claims, and absent bad
faith on their part, no attorney‘s fees may be awarded to him.
In his Comment,[58] respondent counters that his permanent total disability benefits should be
increased to US$105,761.00 in accordance with the Consolidated Workers‘ Compensation
Act of Denmark; that the opinion of Dr. Raymundo should prevail, as it correctly reflects his
true state of health, while the findings of the company-designated physician are inadequate
and inaccurate; that he is likewise entitled to additional reimbursement of medical expenses;
and that he should be paid moral and exemplary damages. Thus, he prays that petitioners
be ordered to pay disability benefits in the amount of US$105,761.00; reimbursement of his
medical expenses; combined actual, moral and exemplary damages in the amount of P3
million; and 10% of said amounts as attorney‘s fees.
Our Ruling
The evidence indicates that contrary to the findings of the CA, the company-designated
physician made a categorical declaration relative to respondent‘s fitness to resume duty –
approximately one hundred and twenty-seven (127) days from his repatriation. Thus, in his
September 4, 2007 Progress Report, Dr. Alegre declared:
If a disability is to be assessed now, a disability grade x x x 11 [would be obtained] based on the

POEA Contract, Chest-Trunk-Spine #6 – Slight Rigidity or 1/3 loss of motion or lifting power of the
trunk.[59]
In addition, Dr. Alegre concluded – after conducting extensive tests – that respondent was
malingering or feigning his illness. For these reasons, respondent sought the opinion of an
independent physician, who came up with a Grade 6 disability rating.
―An employee‘s disability becomes permanent and total [only 1)] when so declared by the
company-designated physician, or, [2)] in case of absence of such a declaration either of
fitness or permanent total disability, upon the lapse of the 120- or 240-day treatment periods,
while the employee‘s disability continues and he is unable to engage in gainful employment
during such period, and the company-designated physician fails to arrive at a definite
assessment of the employee‘s fitness or disability.‖[60] The ―mere lapse of the 120-day period
itself does not automatically warrant the payment of permanent total disability benefits.‖[61] ―If
the 120 days initial period is exceeded and no such declaration is made because the
seafarer requires further medical attention, then the temporary total disability period may be
extended up to a maximum of 240 days, subject to the right of the employer to declare within
this period that a permanent partial or total disability already exists. The seaman may of
course also be declared fit to work at any time such declaration is justified by his medical
condition.‖[62]
Since the company-designated physician, Dr. Alegre, arrived at an assessment that

respondent‘s disability rating was only a Grade 11 prior to the expiration of the maximum
240-day period prescribed, then there is no permanent total disability to speak of. The
appellate court erred in not considering that the mere lapse of the 120-day period itself does
not automatically warrant the payment of permanent total disability benefits, as said period
may be extended up to 240 days.
Moreover, pursuant to Section 20(B)(3) of the POEA Standard Employment Contract, the
parties should have secured the opinion of a third doctor jointly appointed by them, whose
decision shall be final and binding. However, this procedure was not observed, and instead,
respondent went on to file his labor complaint. Such misstep should prove costly for him.
In Philippine Hammonia Ship Agency, Inc. v. Dumadag,[63] it was held that –
We are confronted, once again, with the question of whose disability assessment should prevail in a
maritime disability claim – the fit-to-work assessment of the company-designated physician or the
contrary opinion of the seafarer‘s chosen physicians that he is no longer fit to work. A related
question immediately follows – how are the conflicting assessments to be resolved?
xxxx
The POEA-SEC and the CBA govern the employment relationship between Dumadag and the
petitioners. The two instruments are the law between them. They are bound by their terms and
conditions, particularly in relation to this case, the mechanism prescribed to determine liability for a
disability benefits claim. In Magsaysay Maritime Corp. v. Velasquez, the Court said: ―The POEA
Contract, of which the parties are both signatories, is the law between them and as such, its provisions
bind both of them.‖ Dumadag, however, pursued his claim without observing the laid-out procedure.
He consulted physicians of his choice regarding his disability after Dr. Dacanay, the company-
designated physician, issued her fit-to-work certification for him. There is nothing inherently wrong
with the consultations as the POEA-SEC and the CBA allow him to seek a second opinion. The
problem only arose when he pre-empted the mandated procedure by filing a complaint for
permanent disability compensation on the strength of his chosen physicians‟ opinions, without
referring the conflicting opinions to a third doctor for final determination.
xxxx
The filing of the complaint constituted a breach of Dumadag‟s contractual obligation to have
the conflicting assessments of his disability referred to a third doctor for a binding opinion. The
petitioners could not have possibly caused the non-referral to a third doctor because they were not
aware that Dumadag secured separate independent opinions regarding his disability. Thus, the
complaint should have been dismissed, for without a binding third opinion, the fit-to-work
certification of the company-designated physician stands, pursuant to the POEA-SEC and the CBA. x
xx
xxxx
Whatever his reasons might have been, Dumadag‘s disregard of the conflict-resolution procedure
under the POEA-SEC and the CBA cannot and should not be tolerated and allowed to stand, lest it
encourage a similar defiance. We stress in this respect that we have yet to come across a case where
the parties referred conflicting assessments of a seafarer‘s disability to a third doctor since the
procedure was introduced by the POEA-SEC in 2000 – whether the Court‘s ruling in a particular case
upheld the assessment of the company-designated physician, as in Magsaysay Maritime Corporation
v. National Labor Relations Commission (Second Division) and similar other cases, or sustained the
opinion of the seafarer‘s chosen physician as in HFS Philippines, Inc. v. Filar, cited by the CA, and
other cases similarly resolved. The third-doctor-referral provision of the POEA-SEC, it appears
to us, has been honored more in the breach than in the compliance. This is unfortunate
considering that the provision is intended to settle disability claims voluntarily at the parties‟
level where the claims can be resolved more speedily than if they were brought to court.
Given the circumstances under which Dumadag pursued his claim, especially the fact that he caused
the non-referral to a third doctor, Dr. Dacanay‘s fit-to-work certification must be upheld. In Santiago
v. Pacbasin Ship Management, Inc., the Court declared: ―[t]here was no agreement on a third doctor
who shall examine him anew and whose finding shall be final and binding, x x x [T]his Court is left
without choice but to uphold the certification made by Dr. Lim with respect to Santiago‘s disability.‖
(Emphasis and underscoring supplied)
The above pronouncement was reiterated in subsequent cases, particularly Veritas Maritime
Corporation v. Gepanaga, Jr.;[64] Daraug v. KGJS Fleet Management Manila, Inc.;[65] Bahia
Shipping Services, Inc. v. Hipe;[66]Magsaysay Maritime Corporation v.
Simbajon; and Ayungo v. Beamko Shipmanagement Corporation.[68]
[67]
Thus, following the ruling in Dumadag, this Court rules that for respondent‘s disregard of the
conflict-resolution procedure under the parties‘ POEA Standard Employment Contract, his
claims against petitioners should have been denied, since the company-designated
physician Dr. Alegre‘s assessment necessarily stands. Indeed, since respondent was the
one pursuing a claim, as he did by filing a labor complaint before the NLRC, then it was he –
and not petitioners – who should have taken the initiative to secure the opinion of a third
physician prior to seeking intervention by the labor tribunals.
Besides, there is no reason to doubt Dr. Alegre‘s medical opinion regarding respondent‘s
condition. Prior to his final declaration, he took pains to address respondent‘s condition and
did his best to reconcile the conflicting medical evidence with respondent‘s declared
symptoms. His objective resolve led him so far as to require respondent to undergo a
comprehensive battery of tests – EMG-NCV test, provocative discography, and even MMPI-
2 – just to make sure that respondent‘s complaints are addressed, while at the same time
insure that an objective diagnosis of his illness is obtained. There is thus merit in Dr. Alegre‘s
finding that respondent is malingering; medical evidence obtained after the battery of tests is
to the effect that respondent‘s supposed excruciating back pain is not supported by or
commensurate to the results of the provocative discography and MMPI-2 tests. Being
scientific medical procedures, the accuracy and reliability of these tests cannot be doubted;
besides, they have not been questioned in these proceedings.
As for respondent‘s claim that petitioners should answer for greater amounts than that
adjudged by the appellate court – that is, disability benefits in the amount of US$105,761.00;
reimbursement of his medical expenses; and combined actual, moral and exemplary
damages in the amount of P3 million -this Court may not allow it. In order for such claims to
be considered, respondent should have filed the corresponding petition for review
questioning the judgment of the CA. Settled is the rule that a party is barred from assailing
the correctness of a judgment not appealed from by him. In an appeal, an appellee may
argue only to sustain the appealed judgment, but not introduce arguments that would modify
the same; in order to do that, he likewise should have seasonably filed an appeal. The rule is
rooted in the presumption that a party who did not interpose an appeal is satisfied with the
judgment rendered by the lower court.
WHEREFORE, the Petition is GRANTED. The assailed March 13,2012 Decision and May
21, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 118688
are REVERSED and SET ASIDE. The November 30, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 0FW(M) 07-000539-10 is REINSTATED.
SO ORDERED.

SUPREME COURT
Philippine Transmarine Carriers,

Inc./Norwegian Crew Management Vs. Julia
T. Aligway (as substitute for her deceased
husband, Demetrio Aligway, Jr.); G.R. No.
201793; September 16, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the February 20, 2012 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 120589. The CA granted the Petition for Certiorari filed
therewith and accordingly, nullified the February 24, 2011 Decision[3] and May 11, 2011
Resolution[4] of the National Labor Relations Commission (NLRC) in NLRC LAC No. OFW(M)
12-001028-10 which, in turn, affirmed the August 31, 2010 Decision[5] of Labor Arbiter
Geobel A. Bartolabac (LA) in NLRC NCR Case No. OFW(M) 01-01214-10 dismissing the
Complaint for lack of merit. Also assailed is the May 11,2012 CA Resolution[6] which denied
the Motion for Reconsideration filed by Demetrio Aligway, Jr. (Demetrio).
Factual Antecedents
On November 25, 2008, the Philippine Transmarine Carriers, Inc. (PTC), for and in behalf of
its foreign principal, the Norwegian Crew Management (NCM), employed Demetrio as chief
cook on board the vessel Amasis. Demetrio‘s employment contract was for nine months with
a monthly salary of US$758.00.[7]
Demetrio alleged that prior to his deployment, he underwent pre-employment medical

examination (PEME) and was declared fit to work.[8] Thereafter, while aboard the vessel, he
suffered from ―vomiting, anorexia, weight loss, and palpitations followed by dizziness and a
feeling of lightheadedness.‖[9] As a result, on April 22, 2009,[10] he was medically repatriated.
Demetrio claimed that despite medical examinations by the company-designated physician,

his illness persisted beyond 120 days.[11] This condition allegedly rendered him incapacitated
to work again as a seafarer but the PTC and the NCM refused to pay him disability
benefits.[12]
Consequently, Demetrio filed a Complaint[13] dated January 22, 2010 for disability benefits,
moral and exemplary damages, and attorney‘s fees against the PTC, the NCM, and their
officers. He alleged that his work as chief cook, which involved food intake, contributed to or
aggravated his gastric cancer. He claimed that although the cause of gastric cancer was
unknown, there was speculation that smoked food may be promoting factors.[14]
Demetrio invoked the presumption laid down in the provision of the POEA[15] Standard
Employment Contract (SEC) mat his illness was work-related.[16] He also averred that he
passed the PEME;[17] and that as such, the PTC, the NCM, and their officers were estopped
from claiming that he was unfit to work prior to his deployment or that he did not contract his
illness aboard the vessel.[18] He likewise argued that because the vessel Amasis was covered
by a collective bargaining agreement (CBA), it stands to reason that he was entitled to the
benefits stipulated in that agreement.[19]
The PTC, the NCM and their officers did confirm that on December 25, 2008, Demetrio
boarded the vessel; that on April 20, 2009, he was brought to the Entabeni Hospital in
Durban due to gastritis; and that eventually, he was repatriated for further treatment.[20]
The PTC, the NCM, and their officers however contended that Demetrio was a heavy
smoker, and that he was smoking 12 to 15 cigarette sticks a day;[21] that the company-
designated physician Dr. Susannah Ong-Salvador (Dr. Salvador), declared that Demetrio‘s
condition was not work-related; and that the risk factors in Demetrio‘s condition included
age, diet rich in saturated fat, fatty acid, linoleic acid, and genetic predisposition.[22]
The PTC, the NCM, and their officers also argued that stomach cancer is asymptomatic – or
an illness that has nonspecific symptoms in its early stage and only becomes apparent when
in the advanced stage already; that since Demetrio was only about four months aboard the
vessel when the symptoms of his cancer manifested, then it could not be inferred that he
acquired it during his employment with them;[23] and, that while Demetrio‘s contract was
covered by an AMOSUP[24] CBA, this CBA did not include non-occupational illnessess, such
as gastric cancer.[25]
In sum, the PTC, the NCM, and their officers maintained that Demetrio‘s work involved food
preparation and not food intake;[26] that the company-designated doctor found that the cause
of his illness was not work-related;[27] that there was no evidence to indicate that his working
conditions increased the risk of contracting it; that there was no evidence that his illness was
caused by the food being served on the vessel;[28] and, that no causal connection was
established between Demetrio‘s work as chief cook and his gastric or stomach cancer.[29]
On August 31, 2010, the LA rendered a Decision[30] dismissing the Complaint for lack of
merit. The LA held that the company-designated physician declared that Demetrio‘s illness
was not work-related; and that because of this, the burden fell on the latter to disprove the
finding of the company-designated doctor. The LA ruled that Demetrio failed to discharge
this burden because he adduced no evidence proving that his work increased the risk of
contracting stomach cancer.
On appeal, the NLRC affirmed the Decision of the LA.[31] It gave credence to the medical
opinion of the company-designated physician. It opined that aside from bare allegations,
Demetrio adduced no competent evidence to prove that his stomach cancer was caused or
aggravated by the working conditions on the vessel.
On May 11, 2011, the NLRC denied[32] Demetrio‘s Motion for Reconsideration.
Demetrio thereafter filed a Petition for Certiorari with the CA imputing grave abuse of
discretion against the NLRC in not granting him full disability benefits despite his alleged
work-related illness that manifested during his last contract with the PTC and the NCM.
On February 20,2012, the CA rendered the assailed Decision,[33] the decretal portion of which
reads:
ACCORDINGLY, the petition is GRANTED. The Decision dated February 24, 2011 and Resolution
dated May 11, 2011 are nullified and [a] new one rendered, directing private respondents to pay
petitioner full disability benefits and attorney‘s fees equivalent to 10% thereof.
The Motion for Substitution of Parties dated January 25, 2012, praying that Mrs. Julia T. Aligway be
substituted as petitioner, in lieu of her husband Demetrio Aligway Jr., who died on December 26,
2011, is granted. The caption of the case is amended to reflect the name of Mrs. Julia T. Aligway, as
substitute petitioner.
SO ORDERED.[34]
The CA decreed that the LA and the NLRC improperly relied on the findings of the company-
designated physician. It held that said doctor merely referred to medical literature to explain
Demetrio‘s condition without personally examining him; that Dr. Salvador did not discuss
how Demetrio‘s work and working environment could have caused or aggravated his illness;
that the opinion of Dr. Salvador lacked accuracy and was hypothetical, if not purely
academic; and that Dr. Salvador was not Demetrio‘s original attending physician.
In conclusion, the CA held that the presumption of compensability prevails and that Demetrio
is entitled to full disability benefits pursuant to the CBA.
On May 11, 2012, the CA denied[35] the Motion for Reconsideration. Hence, the PTC and the
NCM filed this Petition contending that:

1. In ignoring the legal precept that findings of facts of the NLRC are accorded respect
and finality when supported by substantial evidence[.]
2. In ignoring the declaration of the company[-]designated physician finding the illness

to be not work[-]related thereby violating the terms of the POEA contract giving
authority to the company[-designated] doctor to assess the illness involved.
3. In profoundly relying on inapplicable jurisprudence which finds no parallelism to the

instant case.
4. In upholding the applicability of the alleged CBA in awarding USD$ 110,000.00 even
if its provisions limit the liability of the Employer to work[-]related accidents only.
5. In awarding attorney‘s fees without legal and factual basis.[36]
The PTC and the NCM insist that the medical opinion of the company-designated physician
stood unchallenged since Demetrio did not consult his own physician for a contrary opinion;
that the opinion of the company-designated doctor cannot be superseded or rescinded by
mere speculation that the seafarer‘s illness was work-connected; and, that prior to the
aforesaid declaration of the company-designated doctor, Demetrio underwent a series of
examinations and treatments, which tended to show that the declaration of the company-
designated physician was not arrived at capriciously.
The PTC and the NCM moreover fault the CA for holding that Dr. Salvador was not the
original doctor who examined Demetrio; that the medical opinion of the company-designated
doctor should not be taken singly but as the collective opinion of a team of doctors who
worked together in arriving at a declaration regarding the seafarer‘s condition; and, that Dr.
Salvador merely reported the conclusion reached collectively by the medical experts in the
team.
The PTC and the NCM insist that stomach cancer is often asymptomatic; that since
Demetrio was only about four months aboard the vessel when the symptoms of his stomach
cancer manifested, then it is an open question whether he acquired his illness on board the
vessel; that the burden of proof to establish work-relation is upon the seafarer; and, that in
this case, there is no showing that the nature of Demetrio‘s work as well as the working
conditions in the vessel increased the risk of his acquiring stomach cancer.
Finally, the PTC and the NCM take the position that the CBA does not apply here because
its provisions limit the employer‘s liability to occupational injury as a result of an accident or
to occupational disease suffered by the employee; and, that given that stomach cancer is not
listed as an occupational disease, it would be erroneous to award disability benefits pursuant
to the CBA; hence, the CA improperly awarded attorney‘s fees considering that the CA gave
no explanation for that award.
For her part, Julia Aligway (Julia), as substitute for her deceased husband Demetrio,
contends that Dr. Salvador did not explain why Demetrio‘s illness was not work-related; that
there is in fact substantial evidence that Demetrio‘s illness was work-related; that
environmental factors, which include conditions in oceangoing vessels, contributed to
Demetrio‘s illness; that Demetrio had passed his PEME and was aboard the vessel when he
suffered from his illness; and, that his work as chief cook was all about food intake and this
circumstance did contribute to and aggravate his stomach cancer.
Issue
In fine, the core issue before us is whether the CA erred in holding that the NLRC
committed grave abuse of discretion in denying Demetrio‘s appeal and in affirming
the dismissal of the complaint for lack of merit.
Our Ruling
As a rule, in a petition for review under Rule 45 of the Rules of Court, only questions
of law can be raised and be reviewed by this Court. However, this rule admits of
exceptions and one such exception is where the Court may make its own evaluation
of the evidence adduced by the parties because the factual findings of the tribunals
or courts a quo are in conflict with each other.[37] In this case, the LA, as affirmed by
the NLRC, found that Demetrio was not entitled to disability benefits, among other
claims, and dismissed his complaint for lack of merit. The CA ruled otherwise. Thus,
because of the conflicting findings of fact of the LA and NLRC, on one hand, and of
the CA, on the other, this Court has to exercise its mandated authority to examine
the evidence on record.
We stress that entitlement of seafarers to disability benefits is governed by medical findings,
law and contract. Articles 191 to 193 under Chapter VI (Disability Benefits) of Book IV of the
Labor Code set forth the applicable provisions concerning disability benefits. Also, the
POEA-SEC and the CBA bind the seafarer and his employer to each other.[38]
In this case, considering that Demetrio did not surfer from an occupational disease – or such
diseases listed under Section 32-A of the 2000 POEA-SEC – it stands to reason that to be
entitled to disability benefits, he must establish that he suffered from a work-related injury or
illness.
Under Section 20(B) of the 2000 POEA SEC, for disability to be compensable, (1) the
seafarer‘s injury or illness must be work-related; and (2) the work-related injury or illness
must have existed during the term of his employment contract. Hence, the seafarer must not
only show that he suffers from an illness or injury that rendered him permanently or partially
disabled, but he must also prove that there is a causal relation between his illness or injury
and the work for which he had been engaged.[39]
This Court has held that a person who claims entitlement to the benefits provided by law
must establish his right thereto by substantial evidence or ―such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.‖[40] This Court cannot
grant a claim for disability benefits without such substantial evidence because to do so would
be offensive to due process. Hence, the burden is on the seafarer to prove that he suffered
from a work-related injury or illness during the term of his contract.[41]
In this case, Demetrio failed to discharge this burden. He failed to prove the required causal
connection between his stomach cancer and his work as chief cook aboard the vessel.
In his Position Paper,[42] Demetrio admitted that the cause of stomach cancer was unknown,
but stressed that there is speculation that smoked food may be promoting its development;
that his illness is presumed to be work-related; and that since he had passed the PEME, this
estopped the PTC and the NCM from claiming that he was unfit to work prior to his
deployment or that he did not contract his illness on board the vessel.
Additionally, in the Comment[43] to the Petition filed before this Court, Demetrio‘s widow, Julia,
averred that the company-designated doctor, Dr. Salvador, failed to explain how or why
Demetrio‘s illness was not work-related; and that the latter‘s work as chief cook was all about
food intake and that this contributed to his becoming afflicted with stomach cancer.
Against this backdrop, the basic issue that clamors for resolution is how Demetrio‘s work, as
chief cook, contributed to or aggravated his illness; and definitely this was an issue that was
not addressed or explained by both Demetrio and Julia. All we have on record is the fact that
Demetrio died of stomach cancer plus the claim that his work involved food intake which
according to him caused or aggravated his stomach cancer.
Demetrio and later, Julia, issued general statements that we deem self-serving because they
are unproved or uncorroborated allegations that simply raised the possibility that Demetrio‘s
stomach cancer could have been or might have been work-related. At any rate, even if the
seafarer erects his claim on the probability of work-connectedness, such claim would still fail.
―Probability of work-connection must at least be anchored on credible information and not on
self-serving allegations.‖[44]
Thus, this Court agrees with the finding of the NLRC that there is no substantial evidence to
support the allegation that Demetrio‘s stomach cancer was caused by work-connected
factors.
In addition, Julia cannot point to Demetrio‘s having successfully passed the PEME as basis
for the conclusion that he acquired his illness on board the vessel. This is a non-sequitur.
The PEME conducted upon a seafarer would not or could not necessarily reveal or disclose
his illness because such examination is not at all fool-proof or thoroughly exploratory.[45]
Here, stock can be taken of the fact that the company-designated doctor treated Demetrio
from his repatriation until the time that he was undergoing chemotherapy. Even then, the
company-designated physician categorically stated that Demetrio‘s medical condition was
not work-related or work-aggravated.
Indeed, in her October 9, 2009 Medical Report,[46] Dr. Salvador enumerated the causes of
stomach cancer to wit:
1. Diet (nitrates, nitrites, cured or picked foods)
2. Environmental factors (smoke, dust, cigarettes and alcohol)
3. Chronic gastritis (atrophic, hypertrophic gastritis, gastric ulcers, achlorhydia,

pernicious anemia, and prior gastric resection)
4. Genetic factors (blood group A)
5. H. pylori infection
6. Previous gastric surgery
7. Obesity
8. Radiation exposure[47]
The company-employed physician opined that stomach cancer ―[may be] more often
multifactoral in origin involving both inherited predisposition and environmental
factors.‖[48] She concluded that in the case at bench, Demetrio‘s stomach cancer was not
work-related.
In the absence of a second opinion from Demetrio‘s own physician of choice, this Court may
not arbitrarily disregard the finding of the company-designated doctor, Dr. Salvador. If
anything, we hew close to the jurisprudential teaching that the seafarer is not entitled to
disability benefits if he does not adduce substantial evidence of a medically-established
connection between his work and his illness.[49] This is as it should be. For, unopposed and
uncontradicted by equally credible and trustworthy countervailing substantial evidence from

herein respondents-spouses who, as the original suitors-at-law in this indemnity-recovery
suit, had the onus to establish their suit by the presentation of such specie of substantial
evidence called for by this case: this Court is not at liberty to reject, with no show of reason,
the unopposed and uncontradicted testimony of the company-designated physician.
All told, this Court finds that the CA erred in setting aside the NLRC Decision which affirmed
the Decision of the LA dismissing the Complaint for lack of merit.
WHEREFORE, the Petition is GRANTED. The Decision dated February 20, 2012 and
Resolution dated May 11,2012 of the Court of Appeals in CA-G.R. SP No. 120589
are REVERSED and SET ASIDE. Accordingly, the Complaint in NLRC NCR Case No.
OFW(M) 01-01214-10 is DISMISSED. Without costs.
SO ORDERED.
16 SEP 2015 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL

45 - APPEAL BY CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND EMPLOYMENT | TERMINATION BY
EMPLOYER
Gerardo A. Carique Vs. Philippine Scout

Veterans Security and Investigation Agency,
Inc. and/or Ricardo Bona, et al.; G.R. No.
197484; September 16, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the November 30, 2010 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 99967, which denied the Petition for Certiorari filed
therewith and affirmed the October 30, 2006 Decision[3] of the National Labor Relations
Commission (NLRC) dismissing petitioner Gerardo A. Carique‘s (petitioner) Complaint for
illegal dismissal against respondents Philippine Scout Veterans Security and Investigation
Agency, Inc. (respondent agency) and/or Ricardo Bona (Bona) and Severo Santiago
(Santiago). Also assailed is the June 22, 2011 Resolution[4] of the CA denying petitioner‘s
Motion for Reconsideration.[5]
Antecedent Facts
On November 8,1990, petitioner was hired as security guard by respondent agency owned
by respondent Santiago and managed by respondent Bona. He was thereafter
assigned/posted to respondent agency‘s several clients, the last of which was at National
Bookstore – Rosario, Pasig Branch.[6] On October 28, 2002, petitioner was relieved from his
post at the National Bookstore – Rosario, Pasig Branch and was replaced by Security Guard
Roel Juan pursuant to a rotation policy being implemented by respondent agency.
On May 6, 2003, petitioner filed an illegal dismissal case against respondents before the
Labor Arbiter, docketed as NLRC NCR Case No. 00-05-05393-2003. The complaint was
subsequently amended to include his claims for illegal deduction, damages and refund of
cash bond.[7]
Petitioner alleged that on October 30, 2002, shortly after his relief, he reported to respondent
agency‘s office and inquired about his next assignment. He was, however, informed of the
lack of available assignment. He then reported continuously but was repeatedly advised to
wait for a new posting. He was thus surprised when on March 9, 2003, he received a
memorandum[8] from respondent agency requiring him to explain his Absence Without Leave
(AWOL) since November 30, 2002. He submitted an explanation[9] on the charge, but no
assignment at all was given to him. On May 5, 2003, he again returned, but was compelled
to acknowledge receipt of a memorandum[10] dated April 30, 2003 requiring him to explain his
unjustified refusal to accept the posts offered to him and his AWOL. Attached to the
memorandum were three Special Security Detail (SSD)[11] which required him to report for
assignment at the National Bookstore, SM Bicutan, Taguig on March 11, 2003 and at East
Asia Diesel Power Corporation and Country Space Condominium on March 17, 2003.
Contending that the SSDs attached to the memorandum were fabricated by respondent
agency in order to evade liability, petitioner refused to acknowledge receipt of the said
memorandum. These events led him to file an illegal dismissal case against respondents.
Respondents denied having dismissed petitioner, let alone illegally, and alleged that
petitioner was relieved from his post because of a rotation policy being implemented as
required by respondent agency‘s clients; that this lawful practice of relieving security
personnel from their posts did not amount to terminating the security personnel from
employment but was simply meant to place them on floating status while awaiting a new
assignment; that petitioner was offered an assignment for posting at the National Bookstore
– SM Bicutan Branch as evidenced by SSD[12]dated March 11, 2003 some five months after
his relief; that this offer was, however, refused by petitioner for no known reason; and, that
after five days, petitioner was again offered another assignment at the Country Space
Condominium at Buendia, Makati as shown in the SSD[13] dated March 17, 2003 but
petitioner rejected this second offer anew for no reason at all. Hence, respondents issued a
memorandum dated April 30, 2003 requiring petitioner to explain his actions. Two officers of
respondent agency, Ermelo Basal (Duty Officer Basal) and Fernando Amor (Investigator
General Amor), submitted sworn statements[14] attesting to the fact that the offers for posting
were refused by petitioner.
In his reply, petitioner averred that he did not consider the SSDs as valid offers for his
posting; that there were apparent discrepancies between the three SSDs submitted by him
and the two SSDs presented by respondents; and, that the conflicting entries between the
SSDs submitted by him vis-a-vis those submitted by respondents were suggestive of
irregularities in their issuances.
In a Decision[15] dated April 30, 2004, the Labor Arbiter declared petitioner to have been
illegally dismissed on the ground that respondents repeatedly denied petitioner‘s
demands/requests for assignment/posting. The Labor Arbiter thus ordered respondents to
pay petitioner separation pay of P45,000.00, partial backwages of P90,000.00, and to refund
petitioner‘s cash bond in the amount of P17,840.00.
In their appeal before the NLRC, respondents averred that the Labor Arbiter gravely erred in
relying on petitioner‘s baseless allegations and disregarding their convincing countervailing
evidence consisting of the SSDs and the sworn statements of respondent agency‘s officers
attesting to the fact that petitioner refused to accept his new assignment. Respondents thus
sought the invalidation of the Labor Arbiter‘s award for separation pay, backwages, and the
refund of cash bond.
In a Decision[16] dated October 30, 2006, the NLRC granted respondents‘ appeal and
annulled the Labor Arbiter‘s judgment. The NLRC was convinced that petitioner had refused
new assignments. The NLRC found that petitioner never denied having received copies of
the SSDs as well as the memorandum asking him to explain his refusal to accept the offered
assignments. The NLRC noted that petitioner, far from complying with the memorandum
directing him to explain his alleged refusal, chose to ignore the memorandum and instead
filed a case against respondents. The NLRC stressed that all that petitioner did was to point
out alleged discrepancies and conflicting entries in the SSDs but did not categorically deny
that he received these detail orders. The NLRC also noted that petitioner even adopted
these documents as part of the evidence he submitted before the Labor Arbiter. The NLRC,
thus, concluded that petitioner was not at all dismissed; instead, he rejected the assignments
given to him.
In any event, the NLRC ordered the refund of petitioner‘s cash bond in view of respondents‘
admission that the cash bond should be remitted upon severance of employment and upon
petitioner‘s manifestation that he was no longer interested to work for respondent agency.
The dispositive portion of the NLRC Decision reads:
WHEREFORE, respondents‘ appeal is hereby GRANTED, the appealed Decision is hereby SET
ASIDE and a new one entered dismissing the complaint for lack of merit. Respondents are, however,
ordered to refund to complainant his cash bond in the amount of P17,840.00.
SO ORDERED.[17]
Petitioner moved for reconsideration which was denied by the NLRC in its Resolution[18] of
June 12, 2007.
Via a Petition for Certiorari,[19] petitioner appealed the NLRC Decision to the CA. Petitioner
reiterated that he was illegally dismissed and that he continuously pleaded for new
assignments but was not given any by respondent agency; that the SSDs issued to him by
respondent agency were fabricated and were merely prepared by respondent agency in
order to evade liability. Petitioner prayed for the reinstatement of the Labor Arbiter‘s
Decision.
In a Decision[20] dated November 30, 2010, the CA denied the Petition for Certiorari and
affirmed the NLRC Decision. The CA ruled that when petitioner was relieved from his post at
the National Bookstore Rosario, Pasig Branch on October 28, 2002, he was merely placed
on floating status or temporary off-detail and was not dismissed. His floating status did not
exceed six months as he was in fact given new assignments within five months from his
alleged relief but he refused these new assignments.
Petitioner moved for reconsideration which was denied by the CA in its Resolution[21] of June
22, 2011.
Issue
Hence, this Petition raising the issue of whether petitioner was illegally dismissed.
Petitioner maintains that the evidence he adduced before the Labor Arbiter compels the
conclusion that he was illegally dismissed, respondents‘ evidence notwithstanding. Petitioner
avers that his 12 years of service with respondent agency as well as the filing the instant
complaint, belied any intention on his part to forego or abandon his employment. Petitioner
insists that, in any event, he was constructively dismissed because respondent agency‘s
alleged offerings of new assignments did not effectively toll the six-months floating period,
because first, his relief did not arise from a bonafide suspension of the company‘s operation
as contemplated in Article 286 of the Labor Code[22] effectively placing him on temporary off-
detail for a period not exceeding six months. The reason for his relief, i.e. rotation policy, was
for regulatory purpose only and presupposed available assignments under other existing
service contracts. Secondly, the new assignments offered to him were temporary reliever
positions, and did not reinstate him to his former position with a regular status.
Our Ruling
The Petition is without merit.
We find no cogent reason to depart from the factual finding of both the NLRC and the CA
that petitioner was not illegally dismissed. The evidence on record clearly shows that
respondents did offer petitioner new assignments. The SSDs and the affidavits executed by
Duty Officer Basal and by Investigator General Amor attest to this incontrovertible fact.
This Court is not unmindful of the rule that the employer has the burden of proving that the
employee‘s termination was for a valid or authorized cause. However, before the employer is
tasked to discharge this burden, it is incumbent upon the employee to prove by substantial
evidence the fact that he was indeed illegally dismissed from employment.[23] Illegal dismissal
must be established by positive and overt acts clearly indicative of a manifest intention to
dismiss. This critical affirmative fact must be proved by the party alleging the same with
substantial evidence as required by the nature of this case.[24] Mere allegation is neither proof
nor evidence.[25]
Here, we find that petitioner anchored his claims on unfounded and unproven allegations. No
positive or direct evidence was adduced to show that he was indeed illegally dismissed from
employment, either factually or constructively. If anything, the evidence on record showed
that petitioner was relieved from his last assignment because of the implementation of a
rotation policy by respondent agency which was requested by its clients; and that as
correctly found by the CA, petitioner, from that point on, was considered on floating status or
on temporary off-detail which is not an unusual occurrence for security guards given that
their assignments primarily depend on the contracts entered into by the agency with third
parties.[26] Placing petitioner on floating or off-detail status for not more than six months is not
prohibited by law and did not amount to dismissal.[27]
Petitioner‘s insistence that he was not given any new assignment after his relief was not
corroborated by any evidence. Significantly, both the NLRC and the CA noted that petitioner
never denied or disputed having received copies of the SSDs directing him to report to his
new assignments. Indeed, the duty officer who issued the SSDs attested that petitioner was
offered postings on March 11, 2003 and on March 17, 2003, but were refused by petitioner
without any justifiable reason. The respondent agency‘s investigator general corroborated
this fact in an Affidavit where he affirmed that he was present when the assignments were
offered to petitioner, but that petitioner turned these down. Petitioner never denied or
contested these assertions. If at all, he simply shrugged off the SSDs, claiming that these
SSDs were fabricated and contained inaccurate and falsified entries. Confronted with these
conflicting claims, this Court finds no difficulty in upholding the claims of the duty officer and
the investigator general because these claims square with the facts on record.
Petitioner also avers that his alleged refusal to accept his new assignment is utterly
immaterial to the resolution of the issue on the validity of the rotation policy implemented by
respondents. In fine, petitioner assails the propriety of the rotation policy being implemented
by respondent agency, claiming that this did not toll the allowable six-months floating period,
on account of which he must be deemed to have retained the regular status he enjoyed in
his former assignments.
Notably, these issues are raised for the first time on appeal. In fact, it was only in his motion
for reconsideration[28]before the CA where he belatedly insisted that assuming that he
received the SSDs, his receipt thereof would not mean that he was not illegally dismissed as
the new assignments embodied in the detail orders were only ―reliever‖ or temporary
positions meant to defeat his right to security of tenure. Needless to say, issues and
arguments not raised before the original tribunal cannot be raised for the first time on
appeal.[29] To entertain this new theory for the first time on appeal is unfair to the other
party[30] and is offensive to the rudimentary rules of fair play, justice and due process.[31]
At any rate, even if timely raised, such arguments will not hold. The implementation of the
rotation policy by respondent agency is within the ambit of management prerogative. The
employer has the inherent right to regulate all aspects of employment, according to his own
discretion and judgment, including the right to transfer an employee as long as the transfer is
not unreasonable, inconvenient, prejudicial and does not involve a demotion in rank or a
diminution of the employee‘s salaries, benefits, and other privileges.[32] In the absence of
evident bad faith or a manifest intent to circumvent the factors and conditions just
mentioned, this Court is not prepared to invalidate respondents‘ stance that this policy
reflects the essence of security planning and the importance of discouraging familiarity
between security personnel and the premises they are guarding. Thus, we here reiterate that
contracts for security services may stipulate that the clients may request the agency for the
replacement of the guard/s assigned to it even for want of cause;[33] and that such replaced
security guard/s could be placed on temporary ―off-detail‖ or ―floating status‖ which is the
period of time when such security guard/s are in between assignments or when they are
made to wait after being relieved from a previous post until they are transferred to a new
one.[34]
As a matter of record, respondent agency had been consistently rotating its security guards.
Petitioner had been assigned and periodically transferred to different clients since 1992; and
there is no indication in the records that petitioner resisted or opposed these postings.
Petitioner therefore had effectively consented to this rotation policy, hence, he cannot now
claim that such rotation policy was an assault on his right to security of tenure. Petitioner is
therefore estopped from denouncing such rotation policy as an infraction of his right to
security of tenure.
Neither may petitioner claim that the new assignments offered to him were ―reliever‖
positions that were irregular in nature as those new assignments allegedly interrupted or
temporarily halted his regular employment, because even if his employment was regular or
had been temporarily halted, the employment is nonetheless deemed regular if the
employee has rendered at least one year of service.[35] More importantly, the primary
standard for determining regular employment is the reasonable connection between the
activity performed by the employee vis-a-vis the business or trade of the employer.[36] Here,
the new assignment/s offered as ―reliever assignments‖ were not merely temporary
assignment/s but regular ones as the assignment/s were necessary to and essential in the
usual business of respondent agency. In that context, petitioner‘s repeated refusal of the
new assignments offered to him was not justified.
All told, the Labor Arbiter erred in finding that petitioner was illegally dismissed, no
substantial evidence having been adduced to sustain this finding. On the other hand, both
the NLRC and the CA correctly found that petitioner was not dismissed but that petitioner
instead unjustifiably refused to accept the new assignments offered to him. His conduct or
action negated his claim that he was illegally dismissed.
WHEREFORE, this Petition is DENIED. The November 30, 2010 Decision and the June
22,2011 Resolution of the Court of Appeals in CA-G.R. SP No. 99967 are AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
09 SEP 2015 | SUBJECT | LABOR AND EMPLOYMENT | CONSTRUCTIVE

ICT Marketing Services Inc. (now known as

Skykes Marketing Services, Inc.) Vs. Mariphil
L. Sales; G.R. No. 202090; September 9, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails: 1) the January 10, 2012 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 109860 nullifying and setting aside the February
16, 2009[3] and May 20, 2009[4] Resolutions of the National Labor Relations Commission
(NLRC) in NLRC LAC CN. 07-002404-08(7)/(8) and reinstating with modification the April 30,
2008 Decision[5] of the Labor Arbiter in NLRC-NCR Case No. 10-11004-07; and 2) the CA‘s
May 28, 2012 Resolution[6] denying petitioner‘s Motion for Reconsideration[7] of the herein
assailed Decision.
Factual Antecedents
Petitioner ICT Marketing Services, Inc. (ICT) – now known as Sykes Marketing Services, Inc.
– is a duly registered domestic corporation engaged in the business of providing outsourced
customer relations management and business process outsourcing solutions to various
clients in government and in the financial services, insurance, telecommunications, health
care, information technology, media, energy, and hospitality industries.
On February 22, 2006, petitioner hired respondent Mariphil L. Sales as its Customer Service
Representative (CSR) or Telephone Service Representative (TSR), and assigned her to its
Capital One account. On August 21, 2006, respondent became a regular employee, and her
monthly base salary was increased to P16,350.00 and she was given monthly transportation
and meal allowances.
On February 21, 2007, respondent was assigned to the Washington Mutual account, where
she was awarded with a certificate for being the ―Top Converter/Seller (Second Place)‖ for
the month of April 2007.[8]
On July 3, 2007, respondent wrote to Glen Odom (Odom) – petitioner‘s Vice President –
complaining about supposed irregularities in the handling of funds entrusted to petitioner by
Washington Mutual which were intended for distribution to outstanding Washington Mutual
CSRs and TSRs as prizes and incentives. However, no action appears to have been taken
on her complaint.
Respondent was then transferred to the Bank of America account on July 30, 2007. Without
prior notice to respondent, petitioner scheduled her for training from July 30 to August 6,
2007 on the very same day of her transfer. On the third day of training (August 1),
respondent was unable to attend. When she reported for training the next day, respondent
was informed that she could not be certified to handle calls for Bank of America due to her
failure to complete the training. From then on, respondent was placed on ―floating status‖
and was not given any work assignment.
In a September 28, 2007 letter[9] to petitioner‘s Human Resource (HR) Manager, respondent
tendered her resignation from work, effective upon receipt of the letter. Respondent wrote:
I was forced to resign due to the reason that my employment was made on ―floating status‖ effective
August 4, 2007 and up to present (almost two months)
I haven‘t receive [sic] any notice from you or the HR department to report for work despite my
repeated follow-up [with] your office thru telephone and mobile phone text messages. Hence, I
consider your inaction to my follow-up as an indirect termination of my work with ICT.
The reason I was placed [on] floating status is that, I was absent during the third day of my training
with Bank of America, the account to which I was transferred from Washington Mutual (WaMu).
However, my absence during such period was justified by the fact that I was sick and I need [sic] to
undergo a medical check-up on that date.
Furthermore, I see my transfer from WaMu Account to Bank of America and the continued floating
status of my work was prompted by the fact that I lodged a complaint against managers/supervisors
assigned in WaMu account regarding irregularities in the handling of funds given by ICT clients
which were supposed to be distributed as prizes to TSR‘s assigned with WaMu. After the filing of the
said complaint, through your office, I was transferred to another account (Bank of America) for no
apparent reason. I was not even included in the original list of those who were supposed to be
transferred because my performance record with WaMu is satisfactory as proven by the fact that I was
even awarded with a certificate as ―top converter (seller)‖ for the month of April and was supposed to
be included again in the top three highest converters] for the month of May, but unfortunately
irregularities were committed, that is why I filed the aforementioned complaint [with] your office.
On August 1, 2007, a few days after my transfer [to] Bank of America, my coach, angelo [sic],
informed me that I will be having a training on that same day with Bank of America which is really
unexpected. I was not given a notice in advance about the training. My coach informed me only three
hours before the said training. Later on during my training with Bank of America I was [placed on
floating status] indefinitely due to a single absence even though I am a regular employee having
worked in ICT for almost two years. Another instance [of] discrimination [sic] and bad faith on the
part of ICT management is that, all my fellow agents who were [placed on floating status] for the
same reason were all ordered to return to work except me [sic]. Moreover, ICT is continuously hiring
TSR‘s which only shows that there are still accounts open or work available in ICT. However despite
the availability of work, I was still on floating status.
Based on the aforementioned facts and circumstance[s], it is very clear that the harassment, pressure,
and indefinite floating of my employment with ICT are retaliatory acts perpetrated by the company
because of my complaint/ request for investigation on the irregularities being committed by certain
company officials.
Thus, I can no longer bear the above-mentioned abuses and discrimination committed against me by
ICT management. Therefore, I have no option but to sever my relationship with the company, as my
continued floating status had already prejudiced me emotionally and financially.[10]
Riding of the Labor Arbiter
On October 2, 2007, respondent filed a complaint for constructive dismissal against

petitioner and Odom before the NLRC NCR, Quezon City, docketed as NLRC-NCR Case
No. 10-11004-07.
In her Position Paper,[11] Reply,[12] Rejoinder,[13] and Surrejoinder,[14] respondent claimed that for
complaining about the supposed irregularities in the Washington Mutual account, petitioner
discriminated against her and unduly punished her. Although she was not included in the
original list of CSRs/TSRs for program transfer, she was transferred to another account, and
then placed on ―floating status,‖ which is tantamount to suspending her indefinitely without
due process, despite her satisfactory performance. Respondent averred that petitioner‘s
claim of multiple absences is not true, because not once was she penalized therefor,
assuming such charge is true. Respondent also alleged that her one-day absence during the
training for the Bank of America program cannot justify her being placed on a ―floating
status‖ because the ―no-absence during training‖ requirement cited by petitioner – using her
employment contract[15] and the ―New Hire Training Bay‖[16] as bases – applies only to new
hires on probationary status, and not to regularized employees. In any case, the ―New Hire
Training Bay‖ used by petitioner was for the Capital One program. She also pointed out that
during her indefinite suspension or ―floating status,‖ petitioner continued to hire new CSRs,
as shown by its newspaper advertisements during the period.[17]Finally, she asserted that her
resignation was not voluntary, but was forced upon her by petitioner as a result of its
unlawful acts. Thus, respondent prayed for the recovery of backwages, separation pay,
P100,000.00 combined moral and exemplary damages, and attorney‘s fees equivalent to 10
per cent (10%) of the total award.
In its Position Paper,[18] Reply,[19] Rejoinder,[20] and Surrejoinder,[21] petitioner prayed for the
dismissal of the complaint, arguing that respondent was transferred from the Washington
Mutual account as an exercise of management initiative or prerogative, and due to
infractions[22] committed by her, as well as attendance and punctuality issues that arose. It
claimed that respondent could not be certified for the Bank of America account for failing to
complete the training. It maintained that respondent was placed on standby status only, and
not suspended or constructively dismissed. In fact, she was directed to report to its HR
department, but she did not do so. It also insisted that respondent resigned voluntarily. It
denied committing any act of discrimination or any other act which rendered respondent‘s
employment impossible, unreasonable or unlikely. Finally, it claimed that prior notice of her
transfer to the Bank of America account was made through an electronic mail message sent
to her; and that respondent has no cause of action since she resigned voluntarily, and thus
could not have been illegally dismissed.
On April 30, 2008, the Labor Arbiter rendered a Decision[23] finding complainant to have been
constructively dismissed and awarding separation pay, moral and exemplary damages, and
attorney‘s fees to respondent. The Labor Arbiter held:
xxx Complainant was indeed constructively dismissed from her employment and she quitted [sic]
because her continued employment thereat is rendered impossible, unreasonable or unlikely.
Complainant‘s resignation was sparked by her transfer of assignment and eventual placing her [sic] by
the respondent company of [sic] a ―on floating‖ status.
xxx [T]here was no x x x evidence xxx that complainant‘s transfer was due to the request of a client.
Further, if complainant was indeed remised of [sic] her duties due to her punctuality and attendance
problem of committing twelve (12) absences alone incurred in July 2007 [sic], why was there no
disciplinary action taken against her like reprimand or warning[?]
xxxx
And its effect, complainant is entitled to her claim of separation pay, moral and exemplary damages
of P50,000.00 pesos [sic] including an award of attorney‘s fees.
WHEREFORE, premises considered, judgment is rendered ordering the respondents to pay

complainant of [sic] one month pay per year of service as separation pay in the total amount of
P32,700.00, P50,000.00 moral and exemplary damages plus 10% of the award as attorney‘s fees,
hereunder computed:
I Separation Pay
2/21/06-8/4/07 = 2yrs.
P16,350.00 x 2yrs.= P32.700.00
II Damages P50,000.00
P82,700.00
10% Attorney’s Fees P8.270.00 P90,970.00
SO ORDERED.[24]
Riding of the National Labor Relations Commission
Petitioner appealed before the NLRC arguing that the Labor Arbiter erred in ruling that
respondent was constructively dismissed. It also argued that Odom was not personally liable
as he was merely acting in good faith and within his authority as corporate officer.
Respondent likewise interposed an appeal[25] arguing that the award of backwages should be
computed from the date of her dismissal until finality of the Labor Arbiter‘s Decision; and that
the proportionate share of her 13th month pay should be paid to her as well.
On February 16, 2009, the NLRC issued a Resolution,[26] declaring as follows:
We reverse.
Upon an examination of the pleadings on file, We find that in the past the complainant had been
transferred from one program to another without any objection on her part. Insofar as the instant case
is concerned, it appears that the complainant, aside from having been given a warning for wrong
disposition of a call, had been absent or usually late in reporting for work, constraining the respondent
ICT to transfer her to another program/account. Required of the complainant was for her to undergo
Product Training for the program from July 30 to August 6,2007, and the records indicate that she
attended only two (2) days of training on July 30 and 31, 2007, did not report on August 1, 2007 and
again reported for training on August 2, 2007. It was then that ICT‘s Operations Subject Matter
Expert, Ms. Suzette Lualhati, informed the complainant that she cannot be certified for the program
because she tailed to complete the number of training days, and there was a need for her to report to
Human Resources for further instructions. As the complainant did not report to Human Resources,
and due to her derogatory record, the respondent company could not find another program where the
complainant could be transferred.
From what has been narrated above, We come to the conclusion that the respondent company cannot
be faulted for placing the complainant on ―floating state.‖ And there does not appear to be any ill will
or bad faith that can be attributed to the respondent.
Finally, it is well to emphasize that the complainant tendered her resignation on October 1, 2007.
There is no evidence that the complainant has presented that would indicate that duress or force has
been exerted on her.
All told, We are of the opinion that the findings of the Labor Arbiter are in stark contrast to the
evidence on record.
WHEREFORE, in view of the foregoing, the decision appealed from is hereby reversed and set aside.
Addordingly [sic], a new one is entered dismissing the complaint for lack of merit.
SO ORDERED.[27]
Respondent filed a Motion for Reconsideration,[28] but in a May 20, 2009 Resolution,[29] the
motion was denied.
In a Petition for Certiorari[30] filed with the CA and docketed as CA-G.R. SP No. 109860,
respondent sought a reversal of the February 16, 2009 and May 20, 2009 Resolutions of the
NLRC.
Petitioner filed its Comment,[31] to which respondent interposed a Reply.[32]
On January 10, 2012, the CA issued the assailed Decision containing the following
pronouncement:
This Court finds the petition meritorious.
While it is true that management has the prerogative to transfer employees, the exercise of such right
should not be motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. When the transfer is unreasonable, unlikely, inconvenient,
impossible, or prejudicial to the employee, it already amounts to constructive dismissal. In
constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds, such as genuine business necessity. Should the employer fail
to overcome this burden of proof, the employee‘s transfer shall be tantamount to unlawful
constructive dismissal.
In the case at bench, private respondent corporation failed to discharge this burden of proof
considering the circumstances surrounding the petitioner‘s July 2007 transfer to another account. Prior
to her reassignment, petitioner‘s annual performance merited increase in her salary effective February
2007 and was also awarded a certificate of achievement for performing well in April 2007. Her
transfer was also abrupt as there was no written transfer agreement Morming her of the same and its
requirements unlike her previous transfer from Capital One to Washington Mutual account. It is
therefore difficult to see the reasonableness, urgency, or genuine business necessity to transfer
petitioner to a new account. While it may be true that petitioner has attendance and punctuality issues,
her over-all performance as a CSR/TSR cannot be said to be below par given the annual merit
increase and the certificate of achievement awarded to her. If indeed, private respondent corporation
had trouble transferring the petitioner to another post because of her derogatory record, the
corporation could just have dismissed her for cause.
After petitioner‘s unjustified transfer, she was informed by private respondent corporation that she
could not be ―certified‖ or allowed to handle calls for the new account because of her absence during
training. She was later placed on a floating status and was not given another post.
The Court considers placing the petitioner on a floating status as another unjustified action of the
private respondent corporation prejudicial to petitioner as employee. In this case, except for private
respondent corporation‘s bare assertion that petitioner no longer reported to the human resources
department as instructed, no proof was offered to prove that petitioner intended to sever the employer-
employee relationship. Private respondent corporation also offered no credible explanation why it
failed to provide a new assignment to petitioner. Its assertion that it is petitioner‘s derogatory record
which made it difficult for the corporation to transfer her to another account despite its efforts is not
sufficient to discharge the burden of proving that there are no posts or no accounts available or willing
to accept her.
In Nationwide Security and Allied Services, Inc. vs. Valderama,[33] the Supreme Court declared that
due to the grim economic consequences to the employee of being placed on a floating status, the
employer should bear the burden of proving that there are no posts available to which the employee
temporarily out of work can be assigned.
These acts by the private respondent corporation, of transferring petitioner to another account without
sufficient cause and proper notice and its subsequent failure to provide a new post for her for two
months without credible explanation, constitute unjustified actions prejudicial to the petitioner as an
employee, making it unbearable for her to continue employment.
Thus, petitioner opted to resign, albeit involuntarily. The involuntariness of her resignation is evident
in her letter which states categorically:
―I was forced to resign due to the reason that my employment was made on ‗floating status‘ effective
August 4, 2007 and up to the present (almost two months) I haven‘t receive [sic] any notice from you
or the HR department to report for work despite my repeated follow-up to your office thru telephone
and mobile phone text messages. Hence, I consider your inaction to my follow-up as an indirect
termination of my work with ICT.‖
Further, petitioner immediately filed a complaint for illegal dismissal. Resignation, it has been held, is
inconsistent with the filing of a complaint. Thus, private respondent corporation‘s mere assertion that
petitioner voluntarily resigned without offering convincing evidence to prove it, is not sufficient to
discharge the burden of proving such assertion. It is worthy to note that the fact of filing a resignation
letter alone does not shift the burden of proof and it is still incumbent upon the employer to prove that
the employee voluntarily resigned.
Therefore, we believe and so hold that petitioner was constructively dismissed from employment.
Constructive dismissal exists when the resignation on title part of the employee was involuntary due
to the harsh, hostile and unfavorable conditions set by the employer. The test for constructive
dismissal is whether a reasonable person in the employee‘s position would feel compelled to give up
his employment under the prevailing circumstances. With the decision of the private respondent
corporation to transfer and to thereafter placed [sic] her on floating status, petitioner felt that she was
being discriminated and this perception compelled her to resign. It is clear from her resignation letter
that petitioner felt oppressed by the situation created by the private respondent corporation, and this
forced her to surrender her position.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.
As petitioner did not pray for reinstatement but only sought payment of money claims, the labor
arbiter is correct in awarding separation pay equivalent to one month pay for every year of service.
We also do not find any cogent reason to disturb the award of damages and attorney‘s fees since we
have found bad faith on the part of the private respondent corporation to abruptly [sic] transfer and
place the petitioner on floating status. Individual respondent Glen Odom is however, exonerated from
any liability as there was no clear finding that he acted with malice or bad faith. Backwages and other
monetary benefits must also be included in compliance with the above-mentioned provision of labor
law which shall be reckoned from the time her constructive dismissal took effect until the finality of
this decision.
WHEREFORE, premises considered, the Resolutions dated February 16, 2009 and May 20, 2009
respectively, issued by the public respondent National Labor Relations Commission (NLRC) in
NLRC CA No. 07-002404-08 are REVERSED and SET ASIDE. The decision of the Labor Arbiter
dated April 30, 2008 is REINSTATED with MODIFICATION that the petitioner Mariphil L. Sales,
be awarded backwages and other monetary benefits from the date of her constructive dismissal up to
the finality of this Decision.
SO ORDERED.[34]
Petitioner filed a Motion for Reconsideration, but the same was denied in a May 28,2012
Resolution. Hence, the present Petition.
In a November 11, 2013 Resolution,[35] this Court resolved to give due course to the Petition.
Issues
Petitioner submits that –
A.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT RESPONDENT‘S TRANSFER WAS
UNJUSTIFIED NOTWITHSTANDING EVIDENCE TO SHOW THAT RESPONDENT WAS NOT
DEMOTED AND WAS EVEN GIVEN THE SAME RANK AND PAY.
B.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT RESPONDENT‘S PLACEMENT

UNDER FLOATING STATUS WAS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL AS
THIS IS CONTRARY TO NUMEROUS DECISIONS OF THE HONORABLE COURT.
C.
THE COURT OF APPEALS ERRED WHEN IT REINSTATED LABOR ARBITER MACAM‘S

DECISION DATED 30 APRIL 2008 WHICH DECLARED THAT RESPONDENT WAS
CONSTRUCTIVELY DISMISSED, NOTWITHSTANDING EVIDENCE THAT CLEARLY
SHOWS THAT RESPONDENT VOLUNTARILY RESIGNED.
D.
THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT SEPARATION PAY,

BACKWAGES, MORAL AND EXEMPLARY DAMAGES AND ATTORNEY‘S FEES.[36]
Praying that the assailed CA dispositions be set aside and that the NLRC‘s February 16,
2009 and May 20, 2009 Resolutions be reinstated instead, petitioner maintains in the
Petition and Reply[37] that respondent‘s transfer to another account was done as a valid
exercise of management prerogative, which allows it to regulate all aspects of employment.
Her transfer was done in good faith, and without diminution in rank and salary. It contends
that respondent knew very well that any CSR/TSR may be transferred to another
program/account anytime for business reasons; in fact, respondent herself was transferred
from Capital One to Washington Mutual, and she did not complain. Moreover, she knew as
well that ―schedule adherence‖ or attendance/punctuality is one of the ―metrics‖ or standards
by which the performance of a CSR is measured, and that she failed to comply in this
regard. It claims that the decision to place her on ―floating status‖ instead of dismissing her
was an accommodation and should not be treated as an illegal or unjustified act; that being
on ―floating status‖ is not tantamount to constructive dismissal, and the failure to place or
transfer respondent to another account was due to her derogatory record, and not
petitioner‘s bad faith or inaction. It insists that the placing of an employee on ―floating status‖
for up to six months is allowed in the event of a bona fide suspension of the operations or
undertaking of a business.[38] In any event, respondent‘s voluntary resignation prior to the
expiration of the allowable six-month ―floating status‖ period cannot constitute constructive
dismissal, and her immediate filing of the labor case thereafter is thus premature. Finally,
petitioner posits that since there is no illegal dismissal but rather a voluntary relinquishment
of respondent‘s post, then there is no basis for the pecuniary awards in her favor.
In her Comment[39] praying for dismissal of the Petition and the corresponding affirmance of
the assailed dispositions, respondent insists that she was illegally dismissed. She reiterates
that her transfer to the Bank of America account was an undue penalty for her complaining
about supposed anomalies in the Washington Mutual account. She avers that the
documentary evidence of her supposed unauthorized absences were manufactured to
support petitioner‘s false allegations and mislead this Court into believing that she was
delinquent at work. She argues that assuming that these absences were true, then they
should have merited her dismissal for cause – yet the fact is she was not dismissed nor
punished for these supposed absences. She asserts that petitioner‘s claim that she was
transferred on the recommendation of a client is untrue and self-serving, and is unjustified
since the client has no authority to order or recommend her transfer. She maintains that her
being placed on ―floating status‖ was illegal, since a) there is no evidence to prove her
alleged ―attendance and punctuality issues,‖ and b) there was no bona fide suspension of
petitioner‘s business or undertaking for a period not exceeding six months, as prescribed
under Article 286 of the Labor Code,[40] which would justify the suspension of her employment
for up to months. As enunciated in the Philippine Industrial Security Agency Corp. v.
Dapiton[41] case which petitioner itself cited, Article 286 applies only when there is
a bonafide suspension of the employer‘s operation or undertaking for a period not exceeding
six months, due to dire exigencies of the business that compel the employer to suspend the
employment of its workers. Respondent points out that petitioner continued with its business,
and worse, it in fact continued to hire new CSRs/TSRs during the period of respondent‘s
suspension from work. In fine, respondent alleges that she was constructively dismissed and
forced to resign, rather than continue to subject herself to petitioner‘s discrimination,
insensibility, harassment, and disdain; and that for such illegal acts, she is entitled to
indemnity from petitioner.
Our Ruling
Respondent’s Transfer
Under the doctrine of management prerogative, every employer has the inherent right to regulate,
according to his own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, the time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations
to the exercise of this prerogative are those imposed by labor laws and the principles of equity and
substantial justice.
While the law imposes many obligations upon the employer, nonetheless, it also protects the
employer‘s right to expect from its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty, hi fact, the Labor Code does not excuse employees from
complying with valid company policies and reasonable regulations for their governance and guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer
is a movement from one position to another of equivalent rank, level or salary without break in the
service or a lateral movement from one position to another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or reassign an employee for legitimate business purposes;
(c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a
form of punishment or is a demotion without sufficient cause; (d) the employer must be able to show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.[42]
While the prerogative to transfer respondent to another account belonged to petitioner, it

weilded the same unfairly. The evidence suggests that at the time respondent was
transferred from the Washington Mutual account to the Bank of America program, petitioner
was hiring additional CSRs/TSRs.[43] This simply means that if it was then hiring new
CSRs/TSRs, then there should be no need to transfer respondent to the Bank of America
program; it could simply train new hires for that program. Transferring respondent – an
experienced employee who was already familiar with the Washington Mutual account, and
who even proved to be outstanding in handling the same – to another account means
additional expenses for petitioner: it would have to train respondent for the Bank of America
account, and train a new hire to take her place in the Washington Mutual account. This does
not make sense; quite the contrary, it is impractical and entails more expense on petitioner‘s
part. If respondent already knew her work at the Washington Mutual account very well, then
it is contrary to experience and logic to transfer her to another account which she is not
familiar with, there to start from scratch; this could have been properly relegated to a new
hire.
There can be no truth to petitioner‘s claim either that respondent‘s transfer was made upon
request of the client. If she was performing outstanding work and bringing in good business
for the client, there is no reason – indeed it is beyond experience and logic – to conclude
that the client would seek her transfer. Such a claim could only be fabricated. Truly,
Experience which is the life of the law — as well as logic and common sense — militates against the
petitioners‘ cause.[44]
Moreover, as the appellate court correctly observed, even if respondent had attendance and
punctuality issues, her overall performance as a CSR/TSR was certainly far from mediocre;
on the contrary, she proved to be a top performer. And if it were true that respondent
suddenly became lax by way of attendance in July 2007, it is not entirely her fault. This may
be attributed to petitioner‘s failure to properly address her grievances relative to the
supposed irregularities in the handling of funds entrusted to petitioner by Washington Mutual
which were intended for distribution to outstanding Washington Mutual CSRs and TSRs as
prizes and incentives. She wrote petitioner about her complaint on July 3, 2007; however, no
explanation was forthcoming from petitioner, and it was only during these proceedings – or
after a case had already been filed – that petitioner belatedly and for no other useful purpose
attempted to address her concerns. This may have caused a bit of disillusionment on the
part of respondent, which led her to miss work for a few days in July 2007. Her grievance
should have been addressed by petitioner; after all, they were serious accusations, and have
a bearing on the CSRs/TSRs‘ overall performance in the Washington Mutual account.
Respondent‘s work as a CSR – which is essentially that of a call center agent – is not easy.
For one, she was made to work the graveyard shift – that is, from late at night or midnight
until dawn or early morning. This certainly takes a toll on anyone‘s physical health. Indeed,
call center agents are subjected to conditions that adversely affect their physical, mental and
emotional health; exposed to extreme stress and pressure at work by having to address the
customers‘ needs and insure their satisfaction, while simultaneously being conscious of the
need to insure efficiency at work by improving productivity and a high level of service;
subjected to excessive control and strict surveillance by management; exposed to verbal
abuse from customers; suffer social alienation precisely because they work the graveyard
shift – while family and friends are at rest, they are working, and when they are at rest, family
and friends are up and about; and they work at a quick-paced environment and under
difficult circumstances owing to progressive demands and ambitious quotas/targets set by
management. To top it all, they are not exactly well-paid for the work they have to do and the
conditions they have to endure. Respondent‘s written query about the prizes and incentives
is not exactly baseless and frivolous; the least petitioner could have done was to timely
address it, if it cared about its employee‘s welfare. By failing to address respondent‘s
concerns, petitioner exhibited an indifference and lack of concern for its employees –
qualities that are diametrically antithetical to the spirit of the labor laws, which aim to protect
the welfare of the workingman and foster harmonious relations between capital and labor. By
its actions, petitioner betrayed the manner it treats its employees.
Thus, the only conceivable reason why petitioner transferred respondent to another account
is the fact that she openly and bravely complained about the supposed anomalies in the
Washington Mutual account; it is not her ―derogatory record‖ or her ―attendance and
punctuality issues‖, which are insignificant and thus irrelevant to her overall performance in
the Washington Mutual account. And, as earlier stated, respondent‘s ―attendance and
punctuality issues‖ were attributable to petitioner‘s indifference, inaction, and lack of
sensitivity in failing to timely address respondent‘s complaint. It should share the blame for
respondent‘s resultant delinquencies.
Thus, in causing respondent‘s transfer, petitioner clearly acted in bad faith and with
discrimination, insensibility and disdain; the transfer was effected as a form of punishment
for her raising a valid grievance related to her work. Furthermore, said transfer was
obviously unreasonable, not to mention contrary to experience, logic, and good business
sense. This being the case, the transfer amounted to constructive dismissal.
The managerial prerogative to transfer personnel must be exercised without grave

abuse of discretion, bearing in mind the basic elements of justice and fair play. Having
the right should not be confused with the manner in which that right is exercised. Thus, it
cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee’s transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because
continued employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay. Likewise, constructive dismissal
exists when an act of clear discrimination, insensibility or disdain by an employer has
become so unbearable to the employee leaving him with no option but to forego with
his continued employment[45] (Emphasis and underscoring supplied)
The instant case can be compared to the situation in Veterans Security Agency, Inc. v.
Gonzalvo, Jr.,[46] where the employee concerned – a security guard who was brave enough
to complain about his employer‘s failure to remit its employees‘ Social Security System
premiums – was ―tossed around‖ and finally placed on floating status for no valid reason.
Taking the poor employee‘s side, this Court declared:
True, it is the inherent prerogative of an employer to transfer and reassign its employees to meet the
requirements of its business. Be that as it may, the prerogative of the management to transfer its
employees must be exercised without grave abuse of discretion. The exercise of the prerogative
should not defeat an employee‘s right to security of tenure. The employer‘s privilege to transfer its
employees to different workstations cannot be used as a subterfuge to rid itself of an undesirable
worker.
Here, riled by respondent‟s consecutive filing of complaint against it for nonpayment of SSS
contributions, VSAI had been tossing respondent to different stations thereafter. From his
assignment at University of Santo Tomas for almost a year, he was assigned at the OWWA main
[o]ffice in Pasig where he served for more than three years. After three years at the OWWA main
office, he was transferred to the OWWA Pasay City parking lot knowing that the security services
will end forthwith. VSAI even concocted the reason that he had to be assigned somewhere because his
spouse was already a lady guard assigned at the OWWA main office. Inasmuch as respondent was
single at that time, this was obviously a mere facade to [get] rid of respondent who was no longer in
VSAIs good graces.
The only logical conclusion from the foregoing discussion is that the VSAI constructively
dismissed the respondent. This ruling is in rhyme with the findings of the Court of Appeals and the
NLRC. Dismissal is the ultimate penalty that can be meted to an employee. Inasmuch as petitioners
failed to adduce clear and convincing evidence to support the legality of respondent‘s dismissal, the
latter is entitled to reinstatement and back wages as a necessary consequence. However, reinstatement
is no longer feasible in this case because of the palpable strained relations, thus, separation pay is
awarded in lieu of reinstatement.
xxxx
Indeed, the Court ought to deny this petition lest the wheels of justice for aggrieved
workingmen grind to a halt. We ought to abate the culture of employers bestowing security of
tenure to employees, not on the basis of the latter‟s performance on the job, but on their ability
to toe the line set by their employer and endure in silence the flagrant incursion of their rights,
zealously protected by our labor laws and by the Constitution, no less.[47] (Emphasis and
underscoring supplied)
Respondent’s Floating Status
In placing respondent on ―floating status,‖ petitioner further acted arbitrarily and unfairly,
making life unbearable for her. In so doing, it treated respondent as if she were a new hire; it
improperly disregarded her experience, status, performance, and achievements in the
company; and most importantly, respondent was illegally deprived of her salary and other
emoluments. For her single absence during training for the Bank of America account, she
was refused certification, and as a result, she was placed on floating status and her salary
was withheld. Clearly, this was an act of discrimination and unfairness considering that she
was not an inexperienced new hire, but a promising and award-winning employee who was
more than eager to succeed within the company. This conclusion is not totally baseless, and
is rooted in her outstanding performance at the Washington Mutual account and her
complaint regarding the incentives, which only proves her zeal, positive work attitude, and
drive to achieve financial success through hard work. But instead of rewarding her, petitioner
unduly punished her; instead of inspiring her, petitioner dashed her hopes and dreams; in
return for her industry, idealism, positive outlook and fervor, petitioner left her with a legacy
of, and awful examples in, office politicking, intrigue, and internecine schemes.
In effect, respondent‘s transfer to the Bank of America account was not only jinreasonable,
unfair, inconvenient, and prejudicial to her; it was effectively a demotion in rank and
diminution of her salaries, privileges and other benefits. She was unfairly treated as a new
hire, and eventually her salaries, privileges and other benefits were withheld when petitioner
refused to certify her and instead placed her on floating status. Far from being an
―accommodation‖ as petitioner repeatedly insists, respondent became the victim of a series
of illegal punitive measures inflicted upon her by the former.
Besides, as correctly argued by respondent, there is no basis to place her on ―floating

status‖ in the first place since petitioner continued to hire new CSRs/TSRs during the period,
as shown by its paid advertisements and placements in leading newspapers seeking to hire
new CSRs/TSRs and employees.[48] True enough, the placing of an employee on ―floating
status‖ presupposes, among others, that there is less work than there are employees;[49] but if
petitioner continued to hire new CSRs/TSRs, then surely there is a surplus of work available
for its existing employees: there is no need at all to place respondent on floating status. If
any, respondent – with her experience, knowledge, familiarity with the workings of the
company, and achievements -should be the first to be given work or posted with new
clients/accounts, and not new hires who have no experience working for petitioner or who
have no related experience at all. Once more, experience, common sense, and logic go
against the position of petitioner.
The CA could not be more correct in its pronouncement that placing an employee on floating
status presents dire consequences for him or her, occasioned by the withholding of wages
and benefits while he or she is not reinstated. To restate what the appellate court cited,
―[d]ue to the grim economic consequences to the employee, the employer should bear the
burden of proving that there are no posts available to which the employee temporarily out of
work can be assigned.‖[50] However, petitioner has failed miserably in this regard.
Resignation
While this Court agrees with the appellate court‘s observation that respondent‘s resignation
was involuntary as it became unbearable for her to continue with her employment,
expounding on the issue at length is unnecessary. Because she is deemed constructively
dismissed from the time of her illegal transfer, her subsequent resignation became
unnecessary and irrelevant. There was no longer any position to relinquish at the time of her
Pecuniary Awards
With the foregoing pronouncements, an award of indemnity in favor of respondent should be

forthcoming. In case of constructive dismissal, the employee is entitled to full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, as well as
separation pay in lieu of reinstatement. The readily determinable amounts, as computed by
the Labor Arbiter and correspondingly reviewed and corrected by the appellate court, should
be accorded finality and deemed binding on this Court.
Settled is the rule that that an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges, and to his full backwages, inclusive
of allowances and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld up to the time of actual reinstatement. If reinstatement is not possible,
however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed
employee in order to alleviate the economic damage brought about by the employee‘s dismissal.
―Reinstatement is a restoration to a state from which one has been removed or separated‖ while ―the
payment of backwages is a form of relief that restores the income that was lost by reason of the
unlawful dismissal.‖ Therefore, the award of one does not bar the other.
In the case of Aliling v. Feliciano, citing Golden Ace Builders v. Talde, the Court explained:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The
two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.
The normal consequences of respondents‘ illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of backwages.[51]
WHEREFORE, the Petition is DENIED. The assailed January 10, 2012 Decision and May
28, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 109860 are AFFIRMED,
with MODIFICATIONS, in that petitioner ICT Marketing Services, Inc., now known as Sykes
Marketing Services, Inc., is ordered to PAY respondent Mariphil L. Sales the following:
1) Backwages and all other benefits from July 30,2007 until finality of this Decision;
2) Separation pay equivalent to one (1) month salary for every year of service;
3) Moral and exemplary damages in the amount of P50,000.00;
4) Attorney‘s fees equivalent to ten percent (10%) of the total monetary award; and
5) Interest of twelve per cent (12%) per annum of the total monetary awards, computed from
July 30, 2007 up to June 30, 2013, and thereafter, six per cent (6%) per annum from July
1,2013 until their full satisfaction.
The appropriate Computation Division of the National Labor Relations Commission is hereby
ordered to COMPUTE and UPDATE the award as herein determined WITH DISPATCH.
SO ORDERED.
09 SEP 2015 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C.

DEL CASTILLO | SUBJECT | LABOR AND EMPLOYMENT | NON-
PAYMENT OF SALARIES, BENEFITS AND DAMAGES | SUBJECT | RULES
OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO
THE SUPREME COURT
Grace Marine Shipping Corporation and/or

Capt. Jimmy Boado Vs. Aron S. Alarcon; G.R.
No. 201536; September 9, 2015
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari[1] are: 1) the December 8, 2011 Decision[2] of
the Court of Appeals (CA) dismissing the petition for review in CA-G.R. SP No. 109238; and
2) the CA‘s April 12, 2012 Resolution[3]denying reconsideration of its assailed Decision.
Factual Antecedents
In 2006, respondent Aron S. Alarcon was hired by petitioner Grace Marine Shipping
Corporation (Grace Marine Shipping) for its foreign principal, Universal Marine Corporation.
He was assigned as Messman onboard the vessel ―M/V Sunny Napier II.‖ His nine-month
Employment Contract[4] dated November 28, 2006 stated among others that he was to
receive a monthly salary of US$403.
After undergoing the mandatory pre-employment medical examination, respondent was

declared fit to work and, on January 11, 2007, he boarded ―M/V Sunny Napier II.‖
As Messman, respondent maintained messroom sanitation, washed clothes and dishes,

cleaned the area on board and was in charge of general cabin sanitation. He used cleaning
agents such as surfactants, alkalines, phosphates, acids, complexing and bleaching agents,
enzymes and other strong chemical substances.[5]
On August 6, 2007, while aboard ―M/V Sunny Napier II,‖ respondent developed a skin
condition. He was examined by a physician in New Zealand, and was diagnosed as having
―infected fungal dermatitis.‖[6] On August 27, 2007, respondent was diagnosed by another
doctor as having ―eczema squamosum‖ and declared unfit for duty.[7]
Respondent was repatriated on August 29, 2007 and was immediately referred to the
company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz). On August 30, 2007,
respondent was diagnosed with ―nummular eczema‖ on his arms, body, legs and scalp by
the company-designated dermatopathologist, Dr. Eileen Abesamis-Cubillan (Dr. Abesamis-
Cubillan).
Respondent underwent treatment, but his condition was characterized by recurring lesions
all over his body.
On January 21, 2008, Dr. Cruz declared respondent‘s condition as a Grade 12 disability –
―slight residuals or disorder of the skin.‖[8]
On January 31, 2008, respondent was declared fit to work, although it was noted that he still
had ―minimal and resolving‖ skin lesions. In his letter-report[9] to petitioner Capt. Jimmy
Boado (Capt. Boado), Grace Marine Shipping‘s General Manager for Crewing, Dr. Cruz
wrote:
Patient was repatriated due to skin lesions incurred last July 2007 x x x.
He had his follow-up today. The skin lesions are minimal and resolving. Our dermatologist have [sic]
cleared him to go back to work.
DIAGNOSIS:
Nummular Eczema,
Psoriasis
RECOMMENDATION:
He is fit to work effective January 31, 2008
Likewise, in a January 31, 2008 letter[10] to Dr. Cruz, Dr. Abesamis-Cubillan wrote:
Lesions are resolving but due to inability to procure meds, residual lesions are present. Patient may
resume work at this time but is advised to continue medications so as to completely resolve lesions
and to continue treatment while on board.
In February 2008, respondent again consulted with Dr. Abesamis-Cubillan, who certified that
respondent was suffering from nummular dermatitis which can be recurrent depending on
exposure to various factors such as cold temperature, use of harsh soaps like detergents
and dishwashing soaps, use of chemicals, and stress.[11]
In April 2008, respondent consulted an independent physician, Dr. Glenda A. Fugoso (Dr.
Fugoso), who declared that he was unfit to work and was suffering from subacute to chronic
spongiotic dermatitis which may require lifetime treatment.[12]
In another letter[13] to Capt. Boado dated June 4, 2008, Dr. Cruz wrote:
This is in response to your query about the above patient.[14]
Our dermatologist said that the patient‘s condition was due to the sensitivity of his skin. The
dermatologist also noted that there was recurrence and flare-up of lesions even when the patient is not
on board ship.
During the patient‘s last follow-up, when he was cleared for work, the lesions were minimal and are
resolving hence he was advised to continue his medication while on board for the lesion to completely
resolve.
Petitioners offered to compensate respondent in the amount of US$5,225.00 based on a

Grade 12 disability rating, but respondent claimed entitlement to Grade 5 disability benefits
with a higher indemnity. Petitioners insisted on their offer.
Ruling of the National Conciliation and Mediation Board
Respondent filed a complaint against petitioners for the recovery of US$60,000.00

permanent total disability benefits; P100,000.00 moral and exemplary damages; and 10%
attorney‘s fees before the National Conciliation and Mediation Board (NCMB). The case was
docketed as MVA Case No. AC-890-36-05-07-08.
In his Position Paper[15] and Reply,[16] respondent stated that his illness entitles him to
permanent and total disability benefits and other claims. He argued that such illness is work-
related, dermatitis being an occupational disease under Section 32-A of the Philippine
Overseas Employment Administration- Standard Employment Contract (POEA-SEC); that
his illness was caused by his handling of and exposure to chemical agents at work; and that
said chemicals are skin irritants and sensitizers which triggered his condition. He averred
that prior to his employment, he was not suffering from skin disease as shown by the results
of his pre-employment medical examination which declared him as fit to work for petitioners.
He asserted that the company-designated doctor‘s January 31, 2008 declaration of his
fitness to work is not valid, since it is stated therein that he still had to continue medication
and treatment to completely resolve his lesions which were not yet healed. Considering that
he was medically advised to avoid working in an environment that would aggravate his
condition, this meant that he may no longer return to duty under the same conditions he was
exposed to.
Petitioners, on the other hand, claimed in their Position Paper[17] and Reply[18] that respondent
is not entitled to his claims since his ailment – nummular eczema -was caused by his ―innate
skin sensitivity‖ and not his work on board ―M/V Sunny Napier II.‖ They pointed out that
respondent had been declared fit for work by Drs. Cruz and Abesamis-Cubillan; also it
cannot be said that respondent‘s ailment was work-related since it recurred even after he
was no longer exposed to the working conditions on board the vessel. They claimed that
assuming respondent is entitled to disability benefits, such is limited to only US$5,225.00 in
accordance with the Grade 12 disability assessment issued by Dr. Cruz; and that respondent
is not entitled to damages and attorney‘s fees since he has no valid claim against them.
Petitioners thus prayed for dismissal of the complaint, and in the alternative, that they be
held liable only to the extent of US$5,225.00.
On May 22, 2009, the NCMB issued its Decision,[19] decreeing as follows:
The main issue to be resolved is whether or not complainant is entitled to disability benefit and
attorney‘s fees.
The Panel of Voluntary Arbitrators herein supports complainant‘s view.
Indeed Complainant‘s illness manifested during the term of his employment with respondents as
messman as he was exposed to surfactant, alkaline, phosphates, acids, complexing agents, bleaching
agents, enzymes and other strong chemical substances. Complainant was also constantly exposed to
stress and strain because of long hours of work and low staffing level thus contributing to the decline
of his health and resistance to the illness.
Our own research confirms that complainant‘s illness can be reasonably related to his work as
messman and not everyone who has the gene mutations gets nummular eczema or dermatitis as there
are several forms of eczema or dermatitis that people can develop. Certain ―environmental triggers‖
play a role in causing skin disorder in people who have the gene mutations. Also, psychological stress
has long been understood as a trigger for skin flares, but scientists are still unclear about exactly how
this occurs. Studies do show that not only can a sudden, stressful event trigger a rash or worsen; daily
hassles of life can also trigger a flare. In addition, one study showed that people who are categorize
[sic] as ―huge worriers‖ were almost two times less likely to respond to treatment compared to ―low
worriers.‖ Sometime [sic] even mild injuries to the skin such as abrasions can trigger skin flares. This
is called the koebner[20] phenomenon.
The Panel of Voluntary Arbitrators finds no convincing evidence to show that complainant‘s illness
was caused by genetic predisposition or drug addiction. Having ruled out these reasons, what remain
[sic] is the environmental factor such as complainant‘s constant exposure to chemicals while on board
the vessel such as surfactant, alkaline, phosphates, acids, complexing agents, bleaching agents,
enzymes and other strong chemical substances that caused the skin injury in addition to the stress and
strain which are present in his work area.
While treatment can help control symptoms of Nummular Eczema/Psoriasis, there is yet no cure for
the illness. Complainant‘s continued employment on board is deleterious to his health because he will
again be exposed to factors that increases [sic] the risk of further recurrence and aggravation of the
skin problem such as strong chemical substances, stress and including changes in season and climate.
This office finds merit in the contention of complainant that as a result of his work-connected illness,
he suffered permanent disability as he could not return to his work as messman and earn wages in the
same kind of work of similar nature [sic] that he was trained for. In awarding disability compensation,
it is not the injury which is compensated, but rather the incapacity to work resulting in the impairment
of one‘s earning capacity.
The High Tribunal consistently ruled that neither is it necessary, in order for an employee to recover
compensation, that he must have been in perfect condition or health at the time he recurred the injury
[sic], or that he be free from disease. Every workingman brings with him to his employment certain
infirmities, and while the employer is not the insurer of the health of his employees, he takes them as
he finds them, and assumes the risk of having a weakened condition aggravated by some injury which
might not hurt or bother a perfectly normal, healthy person (More Maritime Agencies, Inc. vs. NLRC,
307 SCRA 189).
As ruled in Marcopper Manning Corporation vs. NLRC, 200 SCRA 167, the Arbitration Branch is
mindful that all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer, contractual rights and duties, such as these arising from the provisions of
the POEA Standard Employment Contract and/or the Collective Bargaining Agreement, should be
voluntarily stipulated in good faith and must constitute the law between the parties.
Despite the inability to resume sea duty, this Panel award [sic] Grade 5 disability only to complainant.
He is still physically capable of performing other tasks or jobs besides being a messman even with the
skin disorder although not of the same position as messman. To this panel, despite declaration of
fitness to resume work by the company-designated physician in his 11th report, there is no concrete
evidence indicated that respondent allowed him to resume sea duty on January 31, 2008. Likewise,
both the company-designated physician and the independent dermatologist consulted by complainant
agree that the illness is recurrent and would be considered as unemployable as this illness would entail
lifetime treatment. With that, we considered his inability to resume x x x sea duty as justification to
award x x x disability compensation based on Grade 5 as evaluated by his attending physician.
For having been compelled to litigate and incur expenses, complainant‘s claim for attorney‘s fees is
also granted. Other claims however are dismissed for lack of factual and legal basis.
WHEREFORE, premises considered, respondents are hereby ordered to pay complainant jointly and
severally the amount of US$29,480.00 representing his disability benefit based on the POEA Standard
Employment Contract plus (10%) ten percent attorney‘s fees, Philippine Currency or the amount of
US$2,948.00 at the rate of exchange prevailing at the time of actual payment. All other claims are
dismissed.
SO ORDERED.[21] (Underscoring in the original.)
In a Petition for Review[22] filed with the CA and docketed therein as CA-G.R. SP No. 109238,
petitioners sought to set aside the above NCMB Decision, reiterating mainly their arguments
in their pleadings filed with the NCMB. In addition, petitioner claimed that the NCMB did not
provide the medical basis for its findings; that there is no basis to conclude that respondent
is entitled to benefits corresponding to a Grade 5 disability; that on the contrary, it is the
opinion of the company-designated physician, Dr. Cruz, that is the best and most reliable
determinant of respondent‘s fitness to work or degree of disability. Petitioners argued that
the NCMB committed grave abuse of discretion in disregarding the opinion of Dr. Cruz; and
that the opinion of the independent physician consulted by respondent cannot determine his
fitness or disability. Petitioners likewise sought injunctive relief.
On December 8, 2011, the CA issued the herein assailed Decision containing the following
pronouncement:
Entitlement of seamen on overseas work to disability benefits is a matter governed, not only by
medical findings, but by law and contract. Articles 191 to 193 of the Labor Code of the Philippines
provide the basis for the worker‘s entitlement to disability benefits. The said provisions equally
[apply] to employees actually working in the Philippines and to seafarers. The respondent claims
permanent disability, hence, we should refer to Article 192(c)(l) of the Labor Code which provides:
ART. 192. Permanent Total Disability, x x x
(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as
otherwise provided for in the Rules;
By contract, the Philippine Overseas Employment Administration -Standard Employment Contract

(POEA-SEC), as provided under Department Order No. 4, Series of 2000 of the Department of Labor
and Employment, and the parties‘ Collective Bargaining Agreement (CBA) bind the seaman and his
employer to each other. Section 20 (B) of the 2000 POEA-SEC governs the compensation and
benefits to which a seafarer is entitled in case of injury or illness, viz[.]:
“Section 20-B. Compensation and Benefits for Injury or Illness.
The liabilities of the employer when the seafarer suffers work-related injury or illness during the term
of his contract are as follows:
xxxx
xxxx
6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the
seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 32 of
this Contract. Computation of his benefits arising from an illness or disease shall be governed by the
rates and the rules of compensation applicable at the time the illness or disease was contracted.‖
To be entitled to compensation and benefits under the foregoing provision, it is not sufficient to
establish that the seafarer‘s illness or injury has rendered him permanently or partially disabled, it
must also be shown that there is a causal connection between the seafarer‘s illness or injury and the
work for which he had been contracted. Work-related injury is defined under the 2000 POEA-SEC as
an injury resulting in disability or death arising out of or in the course of employment. Work-related
illness, on the other hand, is any sickness resulting in disability or death as a result of an occupational
disease listed under Section 32-A of this contract with the conditions set therein satisfied.
Whether the illness of the respondent is work-related x x x does not seem to be an issue in the instant
case. As x x x can be gathered from the pleadings of the petitioners and the position papers submitted
by them before the labor tribunal, what they are only after is the proper determination of the degree of
disability of the respondent. Moreover, the company-designated physician himself did not
categorically state that the illness of the respondent is not work-related.
Be that as it may, the records will show that the respondent was treated of nummular dermatitis by the
company-designated physician Nicomedes Cruz.
Dermatitis is listed as an occupational disease under Section 32-A. It is appreciated as an occupational

disease if the nature of employment involves the use or handling of chemical agents which are skin
irritants and sensitizers.
The respondent alleged that M/V Sunny Napier II is a chemical tanker[, fjhat he worked therein as a
Messman. That being such, he was in charged [sic] of washing clothes and dishes, cleaning the area
on board, the general sanitation using cleaning agents such as surfactant, alkaline, phosphates, acids,
complexing agents, bleaching agents, enzymes, and other strong chemical substances. The petitioners
did not seem to have ever disputed the said claims of the respondent. Based on the foregoing, it
cannot be denied that there is causal connection between the nature of job of the respondent and the
illness he contracted while employed with the petitioners.
The respondent was first seen by the company-designated physician on August 30, 2007. In the course
of his treatment, the respondent was asked several times to return for follow-up check-ups so that his
progress could be monitored. On January 31, 2008, he was finally declared fit to work. But despite the
pronouncement of the company-designated physician, it appears that the illness of the respondent was
not completely healed since he had to consult two physicians afterwards. One of the physicians that he
consulted, Dr. Glenda A. Fugoso, contradicted the findings of the company-designated physician and
declared the respondent unfit to work. It was further added that his condition might require a lifetime
treatment. In view thereof, the respondent claims permanent total disability benefits from the
petitioners.
Permanent total disability means disablement of an employee to earn wages in the same kind of work
or work of a similar nature that he was trained for or accustomed to perform, or any kind of work
which a person of his mentality and attainment can do. It does not mean state of absolute helplessness
but inability to do substantially all material acts necessary to the prosecution of a gainful occupation
without serious discomfort or pain and without material injury or danger to life. In disability
compensation, it is not the injury per se which is compensated but the incapacity to work.
Permanent total disability refers to the inability of a worker to perform his job for more than 120 days,
regardless of whether he loses the use of any part of his body. Otherwise stated, what determines the
worker‘s entitlement to permanent disability benefits is his inability to work for more than 120 days.
In this jurisdiction, jurisprudence abounds holding that failure of the company-designated physician to
pronounce a seafarer fit to work within 120 days entitles the latter to permanent total disability. This
was the very ruling in Abante v. KJGS Fleet Management Manila:[23]
“It is gathered from the documents emanating from the Office of Dr. Lim that petitioner was seen by
him from July 24, 2000 up to February 20, 2001 or a total of 13 times; and except for the medical
reports dated February 5, 2001 and February 20, 2001 (when the doctor finally pronounced
petitioner fit to work), Dr. Lim consistently recommended that petitioner continue his physical
rehabilitation/therapy and revisit clinic on specific dates for re-evaluation, thereby implying that
petitioner was not yet fit to work.
Given a seafarer‘s entitlement to permanent disability benefits when he is unable to work for more
than 120 days, the failure of the company-designated physician to pronounce petitioner fit to work
within the 120-day period entitles him to permanent total disability benefit in the amount of
US$60,000.00.‖
The same ruling is echoed in the case of Oriental Shipmanagement Co., Inc. v. Bastol:[24]
“In all, after his repatriation on March 7, 1997, Bastol went to see Dr. Peralta on March 8, 1997, and
until the last examination by Dr. Lim on October 28, 1997, he had been treated by these company-
designated doctors for a period spanning around seven months and 20 days or for approximately 230
days. Clearly then, the maximum period of 120 days stipulated in the SEC for medical treatment and
the declaration or assessment by the company-designated physician of either being fit to work or the
degree of permanent disability had already lapsed. Thus, by law, if Bastol’s condition was with the
lapse of the 120 days of post-employment medical examination and treatment, which actually lasted
as the records show for at least over eight months and for over a year by the time the complaint was
filed, without his being employed at his usual job, then it was certainly total permanent disability.”
In the case at bar, the respondent was under the treatment of the company-designated physician for
five (5) months, or 154 days to be exact, from the time he was taken to the latter for an examination
on August 30,2007 until he was declared fit to work on January 31, 2008. Applying the foregoing
jurisprudence in the case at bar, there is no doubt that the respondent is entitled to permanent total
disability benefits. The petitioners cannot take advantage of the pronouncement of the company-
designated physician that the respondent was already fit to work to evade their liability. Indeed, the
respondent has been eventually declared fit to work but the same came only after more than 120 days.
The law and jurisprudence is very clear on the matter, if the company-designated physician failed to
declare the seafarer fit to [work] within 120 days, the latter is entitled to a permanent total disability
benefits [sic].
For obvious reason, the company-designated physician did not determine the degree of disability of
the respondent. But being the expert on the matter, we defer to the finding of the public respondent
that the respondent is entitled to permanent disability benefits equivalent to Grade 5 disability under
the POEA contract.
The Court also sustains the award of attorney‘s fees in favor of the respondent. The claim for
attorney‘s fees is granted following Article 2208 of the New Civil Code which allows its recovery in
actions for recovery of wages of laborers and actions for indemnity under the employer‘s liability
laws. The same fees are also recoverable when the defendant‘s act or omission has compelled the
plaintiff to incur expenses to protect his interest as in the present case following the refusal by the
petitioners to settle the respondent‘s claims. Pursuant to prevailing jurisprudence, the respondent is
entitled to attorney‘s fees of ten percent (10%) of the monetary award.
WHREFORE [sic], premises considered, the instant petition for review is DISMISSED for lack of
merit.
SO ORDERED.[25]
Petitioners filed a Motion for Reconsideration,[26] but the CA denied the same in its April 12,
2012 Resolution. Hence, the present Petition.
Issues
Petitioners submit the following issues for resolution:
1. Whether x x x the Court of Appeals had legal basis in awarding US$29,480.00.
2. Whether x x x petitioners are liable to private respondent for disability benefits amounting to
US$29,480.00 despite the fact that he was declared fit to work by the company-designated physician.
3. Whether x x x the medical findings of the company-designated physician should be given more
weight than that of the physician appointed by the seafarer.
4. Whether x x x the private respondent is entitled to attorney‘s fees.[27]
Praying that the assailed CA pronouncements be set aside and that a new judgment be
rendered absolving them from the payment of disability benefits and attorney‘s fees and
dismissing MVA Case No. AC-890-36-05-07-08, petitioners maintain in their Petition and
Reply[28] that there is no substantial medical evidence to support the award of indemnity to
respondent. Since he was declared fit to work by the company-designated physician, he
should not be entitled to disability benefits. Moreover, respondent‘s illness is not work-
connected, and he failed to prove that it is so. Petitioners insist that the findings of the
company-designated physician, and his recommendation relative to disability grading and
compensation, should be upheld; that such findings should be the sole basis for determining
whether respondent is fit to work; and that since there is no basis for an award of disability
benefits, respondent‘s claim for attorney‘s fees should fail as well, and instead his labor case
should be dismissed.
In his Comment,[29] respondent counters that there is substantial evidence to prove that he is
entitled to a Grade 1 disability rating, and not merely Grade 5, which thus entitles him to an
award of US$60,000.00 in accordance with the POEA contract provisions. He maintains that
his ailment rendered him unemployable since it is recurrent and requires lifetime treatment;
that such finding was arrived at by the company-designated physician, Dr. Abesamis-
Cubillan; and that his illness was caused by his handling of irritating chemicals during his
stint on board the vessel of petitioners‘ principal.
Our Ruling
Respondent was diagnosed by the company-designated physicians, Drs. Cruz and

Abesamis-Cubillan to be suffering from nummular eczema and psoriasis. Although he was
initially cleared of psoriasis, the final diagnosis of the said doctors as contained in Dr. Cruz‘s
January 31, 2008 letter-report to Capt. Boado indicates that respondent suffered from said
skin disease, apart from nummular eczema. Moreover, said letter-report indicated that
respondent‘s illness has not completely healed, and that there were still ―minimal and
resolving‖ lesions. Another letter of Dr. Abesamis-Cubillan to Dr. Cruz dated January 31,
2008 declared that as of said date, ―residual lesions are present‖ and respondent was
―advised to continue medications so as to completely resolve lesions and to continue
treatment while on board.‖ This only means that respondent‘s condition has not been
completely addressed and his illnesses persisted even after a period of treatment spanning
five (5) months or approximately 150 days, or from August 30, 2007 up to January 31, 2008.
In another handwritten certification dated February 12, 2008, the same company-designated
physician Dr. Abesamis-Cubillan confirmed that respondent‘s condition can be recurrent
depending on exposure to various factors such as cold temperature, use of harsh soaps like
detergents and dishwashing soaps, use of chemicals, and stress. And then again, in an April
1, 2008 certification, Dr. Fugoso – an independent physician consulted by respondent -
declared that respondent was unfit to work and was suffering from subacute to chronic
spongiotic dermatitis which may require lifetime treatment.
Respondent‘s condition was diagnosed to be psoriasis and nummular eczema by the

company-designated doctors, while it was found to be chronic spongiotic dermatitis by an
independent doctor. The conflict in diagnoses can be resolved, as petitioners correctly
argue, by adherence to the company-designated physicians‘ findings. Thus, for purposes of
the present case, respondent suffered from psoriasis and nummular eczema. Nonetheless,
while respondent was declared fit to return to work, the obvious fact remains that at the time
of such declaration, his illness has not been cured, as he continued to suffer from recurrent
lesions – as Drs. Cruz and Abesamis-Cubillan themselves acknowledged in their written
communications and certifications. Thus, Dr. Cruz‘s declaration of fitness is a nullity.
The evidence further suggests that before respondent was employed by petitioners, he did
not suffer from psoriasis and nummular eczema; if he had been afflicted with these ailments
prior to employment, surely he would not have been taken in. He was given a clean bill of
health through the standard pre-employment physical examination. Besides, in any of their
pleadings, petitioners did not contest this fact; nor did they claim that respondent had these
conditions prior to his employment.
The evidence shows that during his eight-month stint aboard ―M/V Sunny Napier II,‖
respondent was constantly exposed to chemicals. His sole responsibility as messman was to
maintain overall sanitation – cleaning the messroom, the area on board, the cabins, washing
dishes, clothes, etc.; this cannot be done without the aid of cleaning agents, substances, and
chemicals. Thus, he inhaled and came into direct skin or body contact with such irritating
and injurious chemicals and fumes. Certainly, as with any other seafarer, he was subjected
to stress at work, climate changes, and other environmental factors or elements. As a result,
he contracted nummular eczema and psoriasis which spread all over his body.
There is no validity to petitioners‘ argument that respondent‘s ―innate skin sensitivity‖ caused
his illness. If this were true, then it did not have to take eight months before he became ill,
considering the level of exposure he was subjected to, daily for at least eight hours.
Respondent‘s immune system was able to ward the disease for quite some time but
respondent is not superhuman; his body can only take so much. At some point, continuous
direct exposure to irritating – if not deadly, harmful or toxic – chemicals can only lead to the
inevitable and unfortunate condition he now finds himself in.
Nummular eczema, ―also known as discoid eczema and nummular dermatitis, is a common
type of eczema that can occur at any age. It is notable because it looks very different [from]
the usual atopic dermatitis and can be much more difficult to treat. The word ―nummular‖
comes from the Latin word for ―coin‖ as the spots can look coin-shaped x x x. They tend to
be well-defined, [and] may be very itchy or not x x x at all. They can be very dry and scaly or
x x x wet and open. The cause of nummular eczema is unknown, but it tends to be more
isolated than atopic dermatitis and does not seem to run in families. Sometimes there is a
triggering event such as: a. an insect bite; b. a reaction to inflammation (including atopic
dermatitis) elsewhere on the body; c. dry skin in the winter.‖[30] Direct exposure to cleaning
agents and other chemicals and the fumes thereof – which naturally cause irritation and thus
inflammation as a physiological reaction, as well as climate or temperature changes, can be
said to have triggered respondent‘s nummular eczema.
In Maersk Filipinos Crewing, Inc./Maersk Services Ltd. v. Mesina,[31] this Court held that there
is a reasonable connection between the nature of one‘s work and his contracting psoriasis
when, in the performance of his duties, strong detergents, fabric conditioners, special soaps,
and other chemicals are used. The Court therein declared that —
The 2000 POEA-SEC defines “work-related illness” as “any sickness resulting to disability or
death as a result of an occupational disease listed under Section 32-A of this contract with the
conditions set therein satisfied.”
In interpreting the said definition, the Court has held that for disability to be compensable under
Section 20(B) of the 2000 POEA-SEC, it is not sufficient to establish that the seafarer‘s illness or
injury has rendered him permanently or partially disabled; it must also be shown that there is a causal
connection between the seafarer‘s illness or injury and the work for which he had been contracted.
The Court has likewise ruled that the list of illnesses/diseases in Section 32-A does not preclude other
illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be presumed to
contain all the possible injuries that render a seafarer unfit for further sea duties. This is in view of
Section 20(B)(4) of the POEA-SEC which states that ―those illnesses not listed in Section 32 of this
Contract are disputably presumed as work-related.‖
Concomitant with such presumption is the burden placed upon the claimant to present substantial
evidence that his working conditions caused or at least increased the risk of contracting the disease.
Substantial evidence consists of such relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion that there is a causal connection between the nature of his
employment and his illness, or that the risk of contracting the illness was increased by his working
conditions. Only a reasonable proof of work-connection, not direct causal relation is required to
establish compensability of a non-occupational disease.
xxxx
Psoriasis comes from the Greek word “psora” which means itch. It is a common disfiguring and
stigmatising skin disease associated with profound impaired quality of life. People with psoriasis
typically have sharply demarcated erythematous plaques covered by silvery white scales, which
most commonly appear on the elbows, knees, scalp, umbilicus, and lumbar area. Chronic
plaque psoriasis (psoriasis vulgaris) is the most common type of the disease which manifests
thru plaques of varying degrees of scaling, thickening and inflammation [on] the skin. The
plaques are typically oval-shaped, of variable size and clearly distinct from adjacent normal
skin.
As a result of the chronic, incurable nature of psoriasis, associated morbidity is significant. Patients in
primary care and hospital settings have similar reductions in quality of life specifically in the
functional, psychological and social dimensions. Symptoms specifically related to the skin (i.e.,
chronic itch, bleeding, scaling, nail involvement), problems related to treatments (mess, odor,
inconvenience, time), arthritis, and the effect of living with a highly visible, disfiguring skin disease
(difficulties with relationships, difficulties with securing employment, and poor self- esteem) all
contribute to morbidity. About one in four patients experience major psychological distress, and the
extent to which they feel socially stigmatized and excluded is significant.
Current available treatments for the disease are reasonably effective as short-term therapy. Extended
disease control is, however, difficult to achieve as the safety profile of most therapeutic agents limit
their long-term use.
Until now, the exact cause of psoriasis remains a mystery. But several family studies have provided
compelling evidence of a genetic predisposition to psoriasis, although the inheritance pattern is still
unclear. Other environmental factors such as climate changes, physical trauma, infections of the upper
respiratory tract, drugs, and stress may also trigger its onset or development.
After a circumspect evaluation of the conflicting medical certifications of Drs. Alegre and Fugoso, the
Court finds that serious doubts pervade in the former. While both doctors gave a brief description of
psoriasis, it was only Dr. Fugoso who categorically stated a factor that triggered the activity of the
respondent‘s disease – stress, drug or alcohol intake, etc. Dr. Alegre immediately concluded that it
is not work-related on the basis merely of the absence of psoriasis in the schedule of
compensable diseases in Sections 32 and 32-A of the POEA-SEC. Dr. Alegre faUed to consider
the varied factors the respondent could have been exposed to while on board the vessel.At best,
his certification was merely concerned with the examination of the respondent for purposes of
diagnosis and treatment and not with the determination of his fitness to resume his work as a seafarer
in stark contrast with the certification issued by Dr. Fugoso which categorically declared the
respondent as ―disabled.‖ The certification of Dr. Alegre is, thus, inconclusive for purposes of
determining the compensability of psoriasis under the POEA-SEC. Moreover, Dr. Alegre‘s
specialization is General Surgery while Dr. Fugoso is a dermatologist, or one with specialized
knowledge and expertise in skin conditions and diseases like psoriasis. Based on these observations, it
is the Court‘s considered view that Dr. Fugoso‘s certification deserves greater weight.
It remains undisputed that the respondent used strong detergent, fabric conditioner, special
soap and chemicals in performing his duties as a steward. Stress and climate changes likewise
permeate his working environment as with that of any other seafarer. These factors, taken
together with Dr. Fugoso‟s certification, confirm the existence of a reasonable connection
between the nature of respondent‟s work and the onset of his psoriasis.
At any rate, even in the absence of an official finding by the company-designated physician or the
respondent‘s own physician, he is deemed to have suffered permanent total disability pursuant to the
following guidelines in Fil-Star Maritime Corporation v. Rosete, thus:
Permanent disability is inability of a worker to perform his job for more than 120 days, regardless of
whether or not he loses the use of any part of his body.
Total disability, on the other hand, means the disablement of an employee to earn wages in the same
kind of work of similar nature that he was trained for, or accustomed to perform, or any kind of work
which a person of his mentality and attainments could do.
A total disability does not require that the employee be completely disabled, or totally paralyzed.
What is necessary is that the injury must be such that the employee cannot pursue his or her usual
work and earn from it. A total disability is considered permanent if it lasts continuously for more than
120 days. x x x.
It is undisputed that from the time the respondent was medically repatriated on October 7,2005 he was
unable to work for more than 120 days. In fact, Dr. Alegre‘s certification was issued only after 259
days with the respondent needing further medical treatments thus rendering him unable to pursue his
customary work. Despite the declaration in the medical reports that psoriasis is not contagious,
no profit-minded employer will hire him considering the repulsive physical manifestation of the
disease, its chronic nature, lack of long-term cure and the vulnerability of the patient to
cardiovascular diseases and some cancers. Its inevitable impact [on] the respondent‟s chances of
being hired and capacity to continue working as a seaman cannot be ignored. His permanent
disability thus effectively became total in nature entitling him to permanent total disability
benefits as correctly awarded by the LA and the CA.[32] (Emphasis supplied)
Adopting the pronouncement in Maersk in its entirety and applying it to the present case, the
Court finds that respondent‘s psoriasis and nummular eczema, which have not been cured,
are work-connected and thus compensable. He is unfit to continue his duties as messman,
as his illness prevents him from performing his functions as such. Up to this point, it does not
appear that petitioners took him back to work for their principal, or that a declaration of
fitness to work or that his condition has been resolved or cured has been issued. ―[A]n
employee‘s disability becomes permanent and total when so declared by the company-
designated physician, or, in case of absence of such a declaration either of fitness or
permanent total disability, upon the lapse of the 120 or 240-day treatment period under
Article 192 (c) (1) of the Labor Code[33] and Rule X, Section 2 of the Amended Rules on
Employees‘ Compensation Commission,[34] while the employee‘s disability continues and he
is unable to engage in gainful employment during such period, and the company-designated
physician fails to arrive at a definite assessment of the employee‘s fitness or disability. This
is true regardless of whether the employee loses the use of any part of his body or if the
injury or disability is classified as Grade 1 under the POEA-SEC.‖[35]
On the issue covering the pecuniary award, the Court finds the need to modify the award.
Since respondent is entitled to a declaration of permanent total disability, the corresponding
benefit attached thereto in the amount of US$60,000.00 should be given to him‘ This is in
line with the Maersk pronouncement. Thus, on this score, both the NCMB and the CA
patently erred. Besides, petitioners came to this Court arguing mainly that respondent should
not be awarded indemnity because his illness is not work-connected and not compensable;
alternatively, they contend that only the disability grading provided by the company-
designated physician – that is, Dr. Cruz‘s January 21, 2008 recommendation of a Grade 12
disability rating – should be recognized.[36] Thus, apart from the issue of compensability, it
became necessary for the Court to determine the degree of compensability; the facts further
indicate that respondent‘s condition has not been resolved. The fact that respondent did not
interpose a corresponding appeal is therefore of no moment. In any case, petitioner‘s
―appeal, once accepted by this Court, throws the entire case open to review, and that this
Court has the authority to review matters not specifically raised or assigned as error by the
parties, if their consideration is necessary in arriving at a just resolution of the case.‖[37]
As compensability has been established, entitlement to attorney‘s fees follows since it is

evident that respondent had to litigate to claim his rightful indemnity. On this score, the
NCMB and the CA are correct in their pronouncements cited elsewhere herein; there is no
need to further elaborate.
WHEREFORE, the Petition is DENIED. The assailed December 8, 2011 Decision and April
12, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 109238 are AFFIRMED,
with the MODIFICATION that petitioners Grace Marine Shipping Corporation and/or Capt.
Jimmy Boado are ordered to jointly and severally pay respondent Aron S. Alarcon the
amounts of US$60,000.00 as disability compensation and US$6,000.00 as attorney‘s fees in
Philippine pesos, computed at the exchange rate prevailing at the time of payment.
SO ORDERED,
07 SEP 2015 | SUBJECT | LABOR AND

INC Shipmanagement, Inc., et al. Vs. Ranulfo

Camporedondo; G.R. No. 199931; September
7, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the July 29, 2011 Decision[2] of the Court of
Appeals (CA) in CA-GR. SP No. 112079 which annulled and set aside the July 31, 2009
Decision[3] and October 23, 2009 Resolution[4] of the National Labor Relations Commission
(NLRC) and reinstated the April 27, 2009 Decision[5] of Labor Arbiter (LA) Thelma M.
Concepcion in OFW (M) 08-12020-08 (LAC No. 06-000303-09). Likewise assailed is the
January 2, 2012 Resolution[6] of the CA which denied petitioners‘ Motion for
Reconsideration.[7]
Factual Antecedents
On July 19, 2007, INC Shipmanagement, Inc. (INC), for and in behalf of Interorient
Navigation Company Ltd. (Interorient), hired respondent Ranulfo Camporedondo
(respondent) as chief cook on board the vessel M/V Fortunia for a period of 10 months with
a monthly salary of US$578.50 and allowance of US$80.00.[8] On July 25, 2007, respondent
boarded the vessel.[9]
As chief cook, respondent‘s tasks included food preparation and meals of the ship crew,
custody, inventory, and budgeting of food supplies of the vessel.[10] Allegedly, keeping in
mind his duties, respondent inquired from the captain the budget for the vessel; he also
reported to the latter the insufficiency and poor quality of some of the supplies. These
inquiries enraged the captain. As a result, he reprimanded respondent on a daily basis.[11]
Furthermore, respondent stated that on September 11, 2007, the captain gave him a return
ticket to the Philippines to take a vacation. He was purportedly promised to be transferred to
another vessel.[12] On September 12, 2007 or about a month and a half into his contract,
respondent was given a report[13] of dismissal, which he refused to accept.[14]
On August 27, 2008, respondent filed a Complaint[15] for illegal dismissal, non-payment of
overtime pay and attorney‘s fees against INC, Interorient and Reynaldo Elamirez, corporate
officer of INC[16] (collectively referred hereunder as petitioners).
In his Position Paper,[17] respondent alleged that he began working as seafarer in August
2001. From 2001 to 2005, he worked for other employers and finished his contracts with
them in good standing. In August 2005, he started working for INC and prior to his July 19,
2007 contract, he completed two contracts with INC without issue. He stated that petitioners
were claiming that he was dismissed due to his stiff arm. However, he contended that he
passed the medical and physical examination and despite his condition, petitioners engaged
his services. Furthermore, he asserted that he was made to sign a report that terminated his
contract without giving him the opportunity to explain or defend himself.
For their part, petitioners stated in their Position Paper[18] that respondent joined the vessel
on July 25, 2007 but was repatriated on December 12, 2007.
They contended that the captain complained about his incompetence and/or poor
performance. In particular, due to his stiff right hand, respondent was allegedly unable to
serve meals and maintain the cleanliness of the kitchen, store room and mess room. They
averred that eventually the captain served upon him the above-cited Report entitled as
―Report of incompetent action/insubordination/ indiscipline‖ which he refused to receive.
In addition, petitioners stated that the previous ship captain, under whom respondent was
deployed, likewise complained about his poor performance. They asserted that because
they wanted to give respondent another chance, they deployed him to M/V Fortunia.
Allegedly, respondent was allowed to re-apply for assignment in another vessel and he
readily agreed to be repatriated.
Petitioners argued that respondent admitted his faults as he did not outrightly file a case; he
even followed up his re-deployment with their fleet personnel officer. They also emphasized
that the complaint against them was barred by respondent‘s voluntary execution of a
quitclaim;[19] and that respondent‘s complaint was ―absolutely malicious and an afterthought
on his part because if he was truly aggrieved by his repatriation, he should not have
executed such quitclaim.‖[20]
Ruing of the Labor Arbiter
On April 27, 2009, the LA rendered a Decision declaring that petitioners illegally dismissed
respondent, the decretal portion of which reads:
WHEREFORE, foregoing premises considered, we find the complaint against respondents impressed
with merit. Accordingly the latter is held liable to pay complainant the salaries equivalent to eight
months unexpired portion of the ten[-]month employment contract. Further awarded is ten percent of
the total judgment award as attorney‘s fees, the computation of which is shown in Annex ‗A‘ and
made an integral part hereof.
The rest of complainant‘s monetary claims are dismissed for lack of merit including respondents‘
counterclaim against the complainant.
SO ORDERED.[21]
In its Decision dated July 31, 2009, the NLRC set aside the Decision of the LA and
dismissed the case for lack of merit.
The NLRC was convinced that respondent‘s performance as chief cook was below the
company‘s standard. It declared that the delay in filing the case proved the weakness of
respondent‘s claim. It likewise held against respondent his execution of a quitclaim
discharging petitioners from any liability in his favor.
The NLRC also denied respondent‘s Motion for Reconsideration[22] in a Resolution dated
October 23, 2009.
Respondent thus filed a Petition for Certiorari[23] before the CA ascribing grave abuse of
discretion on the part of the NLRC in finding that he was legally dismissed and was afforded
due process of law.
On July 29, 2011, the CA rendered the assailed Decision, the dispositive portion of which
reads:
FOR THESE REASONS, the petition is GRANTED. The NLRC Decision and Resolution dated July
31, 2009 and October 23, 2009, respectively, are ANNULLED and SET ASIDE. The Decision of
Labor Arbiter Thelma M. Concepcion dated April 27, 2009 is REINSTATED.
SO ORDERED.[24]
The CA noted that petitioners dismissed respondent because of his alleged incompetence
and/or poor performance, as indicated in the Report of incompetent
action/insubordination/indiscipline. The CA, however, found that this Report was neither
authenticated nor supported by credible evidence. It also found that the Report did not
explain or give details as regards the circumstances surrounding the supposed
incompetence and poor performance of respondent.
The CA further emphasized that electronic evidence, such as electronic mails (e-mails),
must first be proved and authenticated before they are received in evidence. It also held that
even if such e-mails were admitted in evidence, they could not support respondent‘s
dismissal as they were based upon the self-serving statements of the officers of petitioners.
The CA likewise held that the subject quitclaim did not preclude the filing of an illegal
dismissal case against petitioners. It also held that while respondent executed a quitclaim,
the same was invalid for want of fair and credible consideration.
In the assailed Resolution dated January 2, 2012, the CA denied petitioners‘ Motion for
Reconsideration.[25]
Hence, petitioners filed this Petition raising the following issues:
Issues
1. WHETHER xxx THE RESPONDENT IS ESTOPPED OR BARRED BY LACHES
FROM CLAIMING THAT HE WAS ILLEGALLY DISMISSED SINCE IT TOOK
HIM ALMOST TWO (2) YEARS TO MAKE SUCH CLAIM AGAINST THE
PETITIONERS.
2. WHETHER xxx RESPONDENT‘S CLAIMED ILLEGAL DISMISSAL IS

NEGATED BY HIS ACT OF APPLYING FOR RE-DEPLOYMENT WITH THE
PETITIONERS AND WHICH HE EVEN ARBITRARILY DECLINED WHEN HE
WAS SO SCHEDULED TO JOIN THE CROWLEY VESSEL.
3. WHETHER xxx RESPONDENT‘S CLAIMED ILLEGAL DISMISSAL IS

NEGATED BY HIS VOLUNTARILY EXECUTED QUITCLAIM AFTER HIS
REPATRIATION AND IN FAVOR OF THE PETITIONERS.
4. WHETHER xxx PETITIONERS‘ ADDUCED EVIDENCE WOULD NOT

CONSTITUTE AS SUBSTANTIAL EVIDENCE TO PROVE THE
RESPONDENT‘S INCOMPETENCE AND POOR PERFORMANCE AND xxx
JUSTIFIED HIS DISMISSAL FROM EMPLOYMENT.[26]
Petitioners maintain that respondent was aware of the reason for his repatriation and
accepted the cause thereof as shown by his failure to immediately file a claim against them.
Besides, he repeatedly followed up his possible redeployment with them. He was in fact
scheduled for deployment in January 2008, but declined it.
Petitioners also contend that respondent voluntarily executed a quitclaim. This quitclaim was
based on sufficient consideration because they paid him his accrued benefits.
Petitioners likewise posit that respondent‘s incompetence and poor performance were
supported by substantial evidence; that even in his Position Paper respondent admitted that
his work performance did not sit well with the captain; that if it were not for his poor work
performance then the captain would have no reason to reprimand him everyday; and that
respondent could not deny that he was hampered by his stiff right arm in performing his
duties. Petitioners assert that they informed respondent of his poor performance through the
aforesaid Report which he declined to receive. They likewise argue that the entries in the
Report were based on entries in the vessel‘s logbook that deserve consideration.
Petitioners moreover argue that the captain of the previous vessel where respondent was
deployed also complained about his poor performance.
Respondent counters that petitioners illegally dismissed him on September 12, 2007 and he
filed a Complaint against them on August 27, 2008 and that in the intervening dates he
claimed from petitioners what was rightfully his but to no avail; and that the filing of this case
against petitioners after more than one year from his repatriation did not prove that his action
was weak.
Respondent also argues that the allegation that he repeatedly followed up his possible re-
deployment was petitioners‘ very own uncorroborated assertion; and that what he actually
followed up with petitioners was his monetary claim for benefits unjustifiably withheld; that
even assuming that he did follow up his possible re-deployment, that does not amount to a
waiver of his right to contest his illegal termination.
More than that, respondent avers that the sum he received pursuant to the quitclaim was
much less than what was due him; that he still had at least eight months of salary and
allowance due him amounting to more than US$5,200.00; and that the settlement of only
P32,693.63 was way below the amount he deserved to receive from them.
Respondent takes issue with petitioners‘ claim that there was substantial evidence to
support petitioners‘ allegation of his incompetence and poor performance; that the above-
cited Report was not credible evidence because the same was not authenticated; and that
for the same reason, the unsigned e-mails relied upon by petitioners were not credible as
these were also unauthenticated.
Our Ruling
It is axiomatic that this Court is not a trier of facts; it reviews only questions of law. As
such, in petitions for review on certiorari, only questions of law may be raised. This
rule, nevertheless, admits of exceptions, as in this case where the factual findings of
the LA and the CA, on one hand, and the NLRC, on the other, are at odds. There
being contradictory findings of facts, the Court deigns it right to evaluate the pieces
of evidence adduced by the parties and draw conclusions from them. [27]
It is settled that the employer has the burden to prove that the dismissal of an employee is
based on a valid cause. To discharge this burden, the employer must present substantial
evidence – or such amount of relevant evidence that a reasonable mind might accept as
adequate to support a conclusion – that the cause of the employee‘s dismissal was
valid.[28] Specifically, the employer must comply with the following requisites: (1) the dismissal
must be for a just or authorized cause, and (2) the employee to be dismissed must have
been afforded due process of law.[29]
In this case, petitioners failed to discharge this burden.
Petitioners failed to prove just or authorized cause.
First off, we hold that the due execution of the Report of incompetent
action/insubordination/indiscipline was established considering that both parties adduced it
to support their respective positions. On one hand, petitioners relied on this Report to prove
that respondent was validly dismissed. On the other hand, respondent admitted that he was
furnished a copy of this Report but he declined to receive it. Thus, as regards the existence
of the subject Report, We find that the same was duly proved here.
However, the contents of this Report were insufficient bases to dismiss respondent. As
stated therein, respondent was dismissed for the following reasons:
DISMISSAL (Brief Details):

HE HAS AN OBVIOUS HANDICAP WHICH IS A STIFF RIGHT ARM. THIS HANDICAP
ALLOWS HIM TO COOK, BUT [REGRETABLY] IT MAKES MR. CAMPOREDONO [sic]
UNABLE TO ALSO SERVE THE MEALS AND CLEAN THE KITCHEN, MESSROOMS,
STORES RESPECTABLE [sic]. WITH ASSISTENCE [sic] OF A MESSMAN HE CAN DO HIS
JOB RESPECTIVE [sic].[30]
As found by the CA, the Report provided no detailed explanation as regards respondent‘s
supposed incompetence and poor performance. The CA observed that the Report ―did not
particularly describe such inability that would lead to the conclusion that he was
incompetent.‖[31] With this observation of the CA, we fully agree.
As a general concept, poor performance is tantamount to inefficiency and incompetence in

the performance of official duties. An unsatisfactory rating can be a just cause for dismissal
only if it amounts to gross and habitual neglect of duties. Poor or unsatisfactory performance
of an employee does not necessarily mean that he is guilty of gross and habitual neglect of
duties.[32]
To ascribe gross neglect, there must be lack of or failure to exercise slight care or diligence,
or the total absence of care in the performance of duties. In other words, there is gross
neglect when the employee exhibits thoughtless disregard of consequences without exerting
effort to avoid them.[33] On the other hand, habitual neglect involves repeated failure to
perform duties for a certain period of time, depending upon the circumstances, and not mere
failure to perform duties in a single or isolated instance.[34]
As above-discussed, the Report of incompetent action/insubordination/indiscipline against

respondent did not describe the specific acts that would establish his alleged poor
performance, or his want of even slight care in the performance of his official tasks as chief
cook for a certain period of time; hence, even assuming that respondent‘s performance was
unsatisfactory, petitioners failed to show that his poor performance amounted to gross and
habitual neglect of duties.
Moreover, as correctly pointed out by the CA, no credence can be given to the e-mails
presented by petitioners to support respondent‘s purported incompetence because these e-
mails were unauthenticated. In addition, they pertained to the previous contract of
respondent, which is unrelated to this present case.
Petitioners did not comply with the two-notice rule required in dismissing an employee.
To amount to a valid dismissal, an erring seafarer must be handed a written notice of the
charge against him and must be given the opportunity to explain himself unless of course
there is a clear and existing danger against the safety of, the crew or the vessel in which
case notice may be dispensed with.[35] Needless to say, this is not the situation here.
Section 17 of the Philippine Overseas Employment Administration-Standard Terms and

Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels
(Disciplinary Measures) specifically provides that before an erring seafarer can be validly
dismissed, he must be given by the master of the vessel a written notice stating the charge
or charges against him; and, the date, time and place for a formal investigation of such
charge. Thereafter, an investigation or hearing, duly documented and entered in the ship‘s
logbook, must be conducted to give the seaman the opportunity to explain or defend himself.
If found guilty, the seaman shall be given a written notice of the penalty meted out against
him. with the specific reasons for the penalty so imposed. ―Dismissal for just cause may be
affected by the Master without furnishing the seafarer with a notice of dismissal if there is a
clear and existing danger to the safety of the crew or the vessel.‖[36]
In this case, no hearing was conducted respecting respondent‘s alleged incompetence and
poor performance, and granting him opportunity to present countervailing evidence to
disprove the charge against him. There was also no showing of imminent danger to the crew
or the vessel, so that the required notice may be dispensed with. True, as stated elsewhere,
the above-mentioned Report could somehow pass as a notice of respondent‘s dismissal.
Nevertheless, as earlier discussed, the allegations in this Report do not permit the
conclusion that respondent was guilty of poor performance and incompetence that would
amount to gross and habitual neglect of duties.
Lastly, the quitclaim that respondent executed did not bar him from filing a complaint for
illegal dismissal against petitioners. Said quitclaim was invalid because it did not fully or
completely give or grant respondent what was due him as a matter of law and justice. It only
covered respondent‘s accrued leave credits and his 3-day travel pay. Such payment
involved only a part or portion of the amount of money actually and justly due him under the
law; it was not a full and complete satisfaction of what is due him under the law.[37]
In view thereof, we find that the CA did not err in setting aside the Decision of the NLRC and
in reinstating that of the LA, which found respondent to have been illegally dismissed and
entitled to his salaries for the unexpired portion of his employment contract and to attorney‘s
fees of 10% of the total award.[38]
WHEREFORE, the Petition is DENIED. Accordingly, the Decision dated July 29, 2011 and
Resolution dated January 2, 2012 of the Court of Appeals in CA-G.R. SP No. 112079
are AFFIRMED.
SO ORDERED.
13 JUL 2015 | SUBJECT | LABOR AND

U-Bix Corporation and Edilberto B. Bravo Vs.

Valerie Anne H. Hollero; G.R. No. 199660;
July 13, 2015
RESOLUTION
DEL CASTILLO, J.:
This is a Petition for Review on Certiorari[1] of the Court of Appeals (CA) Decision[2] dated
August 9, 2011 and Resolution[3] dated December 7, 2011 in CA-G.R. SP No. 117199, which
affirmed the National Labor Relations Commission (NLRC) Resolution[4] dated June 29, 2010
and Resolution[5] dated September 27, 2010 denying the appeal of petitioners U-Bix
Corporation and Edilberto B. Bravo (petitioners) from Labor Arbiter Enrique S. Flores, Jr.‘s
(Labor Arbiter Flores) Order[6] dated April 16, 2010 approving the recomputation of the
monetary award in favor of respondent Valerie Anne, H. Hollero (respondent) and ordering
the issuance of a writ of execution.
Factual Antecedents
Petitioners filed a complaint against respondent for reimbursement of training costs plus
interest, exemplary damages, attorney‘s fees and litigation expenses, docketed as NLRC-
NCR-Case No. 00-05-03696-97. On the other hand, respondent filed against petitioners a
complaint for illegal dismissal, unpaid wages, backwages, moral and exemplary damages,
and attorney‘s fees, docketed as NLRC-NCR-Case No. 00-08-05988-97. The two complaints
were later on consolidated.
In a Decision[7] dated February 8, 1999, the Labor Arbiter found respondent‘s dismissal to be
valid; she was also ordered to reimburse the amount spent by petitioners for her training,
with interest at the rate of 12% per annum.[8]
On appeal, the NLRC reversed the Labor Arbiter‘s Decision. Finding respondent to have
been illegally dismissed, it awarded her backwages from the date of her dismissal up to the
date of the NLRC Decision and separation pay in lieu of reinstatement due to strained
relations. Anent petitioners‘ complaint for reimbursement, the NLRC held that the same is
one for collection of sum of money over which it has no jurisdiction. Hence, the dispositive
portion of the NLRC Resolution dated July 12, 1999:[9]
WHEREFORE, premises considered, the assailed decision dated February 8, 1999, is hereby
REVERSED and SET ASIDE and a new one entered as follows:
A. Dismissing the complaint of the [petitioner] U-BFX CORPORATION, in NLRC NCR Case No.
00-05-03696-97 for lack of jurisdiction; and
B. Finding the dismissal of [respondent] Valerie Anne H. Hollero in NLRC NCR Case No. 00-08-
05988-97 to be illegal thereby ordering [petitioners] U-BIX CORPORATION/Edilberto B. Bravo to
pay the former the following:
1.
P520,000.00
Backwages
2.
Separation 60,000.00; and
Pay
TOTAL P580,000.00
All other claims for damages are dismissed for insufficiency of evidence.
SO ORDERED.[10]
Petitioners‘ Petition for Certiorari before the CA was dismissed through a Decision[11] dated
January 8, 2007. Since petitioners‘ motion for reconsideration thereto was likewise denied by
the CA,[12] they elevated the case before this Court.
In a Decision[13] dated October 31, 2008, the Court affirmed the CA Decision. This became
final and executory on March 12, 2009.[14]
Subsequently, respondent filed a Motion for Issuance of Writ of Execution before the Labor
Arbiter.[15] In the course of the pre-execution conferences, petitioners moved for the
recomputation of the monetary award. Acting on the same, Labor Arbiter Elizabeth C.
Avedoso (Labor Arbiter Avedoso) came up with a re-computed total monetary award of
P3,330,512.82.[16] Petitioners opposed this re-computation for lack of legal basis.[17] Thus, a
second re-computation in the reduced amount of P3,270,512.82[18] was presented to the
parties in a conference held on February 18, 2010. Still, they failed to reach an agreement.
In the meantime, respondent filed a Supplemental Motion for Issuance of Writ of

Execution[19] to which petitioners filed an Opposition.[20]
In an Order[21] dated April 16, 2010, Labor Arbiter Flores found the recomputation of the total
award at P3,270,512.82 correct. Hence, he ruled:
Finding the Motion for Issuance of Writ of Execution to be well taken, the same is hereby
GRANTED.
WHEREFORE, the corresponding Writ of Execution be issued pursuant to the re-computed monetary
award in the amount of P3,270,512.8[2].
SO ORDERED.[22]
Accordingly, Labor Arbiter Flores issued a Writ of Execution[23] dated April 20, 2010.
Petitioners filed before the NLRC a Notice and Memorandum of Appeal.[24] At the same time,
they posted a corresponding supersedeas bond issued by Mapfre Insular Insurance
Corporation (Mapfre) in the amount of P3,270,512.82. Subsequently, petitioners also filed an
Omnibus Motion to Quash Writ of Execution and to Lift Order of Garnishment.
In a Resolution[25] dated June 29, 2010, the NLRC denied for lack of merit petitioners‘ Appeal
and their Omnibus Motion to Quash Writ of Execution and to Lift Order of Garnishment.
With respect to the appeal, the NLRC held that the supersedeas bond posted by petitioners
has no force and effect, viz.:
A perusal of the bond, however, revealed that the Certification of Accreditation and Authority of Jose
Midas P. Marquez, Supreme Court Administrator, covers an authority to transact surety business in
relation to CIVIL/SPECIAL PROCEEDINGS CASES ONLY filed/pending before the Regional
Trial Courts of Caloocan City, City of Manila, Las Piñas City, Makati City, Marikina City,
Mandaluyong City, Muntinlupa City, Parañaque City, Pasay City, Pasig City and Quezon City x x
x.[26] Clearly, the authority does not include labor cases filed before the NLRC. Thus, as far as the
NLRC is concerned, the [s]upersedeas bond posted by U-Bix Corporation has no force and effect.
Assuming only that it is authorized, it failed to present proof of security deposit or collateral securing
the bond as required by Section 6(c) of Rule 6, NLRC Rules of Procedure. U-Bix failed to perfect its
appeal. Therefore, the Order appealed from has attained finality.[27]
Anent the Motion to Quash Writ of Execution and to Lift Order of Garnishment, it held as
follows:
As mentioned earlier, the Order approving the judgment award has become final and executory, thus,
the issuance of the writ of execution is proper. There is nothing more left to be done except its
execution.[28]
Hence:
WHEREFORE, premises considered, the Appeal, Omnibus Motion to Quash Writ of Execution and to
Lift Order of Garnishment filed by U-Bix Corporation and Edilberto Bravo are DENIED for lack of
merit.
SO ORDERED.[29]
Petitioners moved for reconsideration which was dismissed in a Resolution[30] dated

September 27, 2010.

Thus, petitioners sought recourse from the CA through a Petition for Certiorari with Prayer
for the Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction. They
imputed upon the NLRC grave abuse of discretion amounting to lack or in excess of
jurisdiction when it denied their appeal outright on the ground that the supersedeas bond
accompanying the appeal has no force and effect. They argue that: (1) Mapfre is a bonding
company accredited by this Court and the NLRC; (2) petitioner Bravo‘s signature in the
indemnity agreement constitutes his personal guarantee of the supersedeas bond; and (3)
the grounds relied upon in their memorandum of appeal are meritorious.[31]
In a Decision[32] dated August 9, 2011, the CA denied the Petition. Citing Article 223[33] of the
Labor Code and Section 6[34] Rule VI of the New Rules of Procedure of the NLRC, it
emphasized that the filing of a supersedeas bond for the perfection of an appeal is
mandatory and jurisdictional. In this case, the CA found the supersedeas bond posted by
petitioners to be irregular in view of the Certification of Accreditation and Authority issued by
the Office of the Court Administrator (OCA) that Mapfre‘s authority to transact business was
limited only to Civil/Special cases and does not cover labor cases. Besides, the said court
found no meritorious ground to relax the requirement of posting a supersedeas bond. Thus:
WHEREFORE, in view of the foregoing premises, the petition filed in this case is hereby DENIED
for lack of merit. The Resolutions issued by the Third Division of the National Labor Relations
Commission dated June 29, 2010 and September 27, 2010 in NLRC NCR Case No. 00-05-03696-97
is hereby AFFIRMED.
SO ORDERED.[35]
As petitioners‘ Motion for Reconsideration[36] was likewise denied in a Resolution[37] dated

December 7, 2011, they are now before this Court through this Petition for Review
on Certiorari.
Issues
THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN

AFFIRMING THE NLRC‘S DECISION DISMISSING OUTRIGHT PETITIONERS‘
APPEAL ON THE GROUND THAT THE ACCOMPANYING SUPERSEDEAS BOND
WAS INVALID, CONSIDERING THAT:
1. MAPFRE INSULAR INSURANCE CORPORATION IS A BONDING COMPANY
ACCREDITED BY BOTH THE NLRC AND THE SUPREME COURT.
2. PETITIONER BRAVO‘S SIGNATURE IN THE INDEMNITY AGREEMENT

CONSTITUTES HIS PERSONAL GUARANTEE OF THE SUPERSEDEAS BOND.
3. PETITIONERS‘ MEMORANDUM OF APPEAL IS IMPRESSED WITH MERIT

SUCH THAT A RESOLUTION OF THE SUBSTANTIAL ISSUES RAISED
THEREIN WAS WARRANTED.[38]
Our Ruling
Perfection of an appeal in the manner

and within the period prescribed by law
is not only mandatory and jurisdictional
and failure to conform to the rules will

render the judgment sought to be
reviewed final and unappealable.
Petitioners argue that the CA erred in concluding that the supersedeas bond they posted
was irregular and therefore has no force and effect based on the OCA certification that
Mapfre‘s authority to transact business as a bonding company refers only to civil and special
cases. They call attention to the Memorandum[39] dated June 8, 2010 issued by the NLRC‘s
Legal and Enforcement Division for the information and guidance of all
Presiding/Commissioners and Executive/Labor Arbiters regarding the list of bonding
companies accredited by this Court with respect to criminal and civil cases, which include
Mapfre. Petitioners assert that the NLRC‘s endorsement of the said list to all Presiding
Commissioners and Executive/Labor Arbiters could only mean that the bonding companies
therein listed can also well be considered for labor cases.
The Court agrees with petitioners. In the 2013 Guidelines for Accreditation of Surety
Companies[40] of the NLRC, one of the requirements for the accreditation of a bonding
company is the submission of a valid Certificate of Accreditation and Authority issued by the
OCA. Upon a bonding company‘s submission of the same and compliance with the other
requirements, the Legal and Enforcement Division of the NLRC shall furnish all
Presiding/Commissioners and Deputy/ Executive Clerks of Court a copy of the Certificate of
Accreditation and Authority and a list of accredited surety companies and their agents. While
the said guidelines were issued only in 2013, it is logical to conclude that the Memorandum
dated June 8, 2010 was for the same purpose mentioned, i.e., to furnish all
Presiding/Commissioners and Executive/Labor Arbiters a list of accredited bonding
companies. For one, the said Memorandum was issued by the Legal and Enforcement
Division to all Presiding/Commissioners and Executive/Labor Arbiters or similar to what is
outlined under the aforementioned guidelines. For another, and as aptly pointed out by
petitioners, there could have been no other plausible reason for the said issuance but to
apprise the concerned labor officials of the list of bonding companies which they may
consider in transacting business in their respective offices.
Nevertheless, the Court still finds that petitioners failed to comply with the bond requirement
in perfecting their appeal. Article 223 of the Labor Code provides in part:
Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
decisions, awards, or orders. x x x
xxxx
appealed from. (Emphasis supplied)
In case of a surety bond, the applicable Section 6, Rule VI of the 2005 Revised Rules of
Procedure of the NLRC requires that the same should be accompanied by original and
certified true copies of the following:
a) a joint declaration under oath by the employer, his counsel and the bonding company, attesting
that the bond posted is genuine, and shall be in effect until final disposition of the case;
b) an indemnity agreement between the employer-appellant and bonding company;
c) proof of security deposit or collateral securing the bond; provided, that a check shall not be
considered as an acceptable security;
d) a certificate of authority from the Insurance Commission;
e) certificate of registration from the Securities Exchange Commission;
f) certificate of authority to transact surety business from the Office of the President;
g) certificate of accreditation and authority from the Supreme Court; and
h) notarized board resolution or secretary‘s certificate from the bonding company showing its
authorized signatories and their specimen signatures.
Here, petitioners did not submit any proof of security deposit or collateral securing the bond.
They themselves admit this in their Petition by stating that they no longer attached a
separate document of security deposit or collateral securing the bond because Mapfre did
not find it necessary to require them to give a security deposit and/or collateral. According to
them, Mapfre finds it sufficient that the Indemnity Agreement attached to the Memorandum
of Appeal was signed by petitioner Bravo, the president of petitioner U-Bix, in his personal
capacity.
The Court, however, cannot accept such flimsy excuse of petitioners.
It must be noted that right from the start, petitioners were well represented by counsel who is
presumed to know the explicit requirement under the aforementioned Section 6 that a surety
bond should be accompanied by a proof of security deposit or collateral. Hence, petitioners
cannot reason out that they were not able to submit the same because Mapfre did not
require them to give such a deposit or collateral. What appears here instead is that while
petitioners seem to be aware of the said requirement, they risked dispensing with the same
and chose to stand by the alleged word of Mapfre that they need not submit any proof of
security deposit or collateral. It is well to remind petitioners that parties are not at a liberty to
choose which rule of technicality to comply with or not. To stress, ―[t]he requirements for
perfecting an appeal must, as a rule, be strictly followed. Such requirements are considered
indispensable interdictions against needless delay and are necessary for the orderly
discharge of the judicial business.‖[41]
In the same vein, petitioners are clutching at straws in impressing upon this Court that
petitioner Bravo, in signing the Indemnity Agreement in his personal capacity, has already
bound himself to be jointly and severally liable with Mapfre for the monetary award and this
has the effect of securing the bond. Suffice it to say that ―[t]he obvious purpose of an appeal
bond is 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.‖[42] To the Court‘s mind, the intention in requiring a security deposit or collateral to
secure the bond, apart from the indemnity agreement between the employer-appellant and
the bonding company, is to further ensure recovery by the employee of the judgment award
should the same be affirmed, in any and all eventualities. This is also in keeping with the
purpose of the bond requirement which is to ―discourage employers from using the appeal to
delay, or even evade, their obligation to satisfy their employee‘s possible just and lawful
claims.‖[43] Besides, it is an ail-too familiar rule in statutory construction that when a rule is
clear and unambiguous, interpretation need not be resorted to.[44] Since Section 6, Rule VI of
the 2005 NLRC Rules of Procedure requires that a surety bond should be accompanied by
both an indemnity agreement and proof of security deposit or collateral securing the bond,
among others, that two must be presented. The submission of one cannot be considered
sufficient as to dispense with the other. No resort to any interpretation is necessary, there is
only room for application.[45]
It is a settled rule that ―the perfection of an appeal in the manner and within the period
prescribed by law is, not only mandatory, but jurisdictional, and failure to conform to the rules
will render the judgment sought to be reviewed final and unappealable.‖ [46] As can be gleaned
from the foregoing, petitioners failed to perfect their appeal in the manner prescribed by the
rules. Hence and as correctly ruled by the NLRC and affirmed by the CA, the April 16, 2010
Order of Labor Arbiter Flores approving the recomputation of the money award and ordering
the issuance of a writ of execution has already attained finality and this warranted the
dismissal of petitioners‘ appeal therefrom before the NLRC.
It is worth stating that indeed in several cases, the Court –
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. Technicality
and procedural imperfections should thus not serve as bases of decisions. 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.[47]
It must be emphasized, however, that ―the policy of liberal interpretation is qualified by the
requirement that there must be exceptional circumstances to allow the relaxation of the
rules. Absent exceptional circumstances, [the Court adheres] to the rule that certain
procedural precepts must remain inviolable x x x.‖[48] After all, an ―appeal is not a
constitutional right, but a mere statutory privilege. Thus, parties who seek to avail
themselves of it must comply with the statutes or rules allowing it.‖[49] The Court adheres to
the strict interpretation of the rule in this case in the absence of exceptional circumstance or
compelling reason to depart from the same.
The questioned recomputation of monetary award is in order.

Petitioners argue that the recomputation of the monetary award in the sum of P3,270,512.82
is erroneous. In particular, they assail the computation of backwages from the time of
respondent‘s dismissal up to the finality of the Court‘s October 31, 2008 Decision in the
illegal dismissal case on March 12, 2009. They point out that full backwages is computed
from the time an illegally dismissed employee‘s compensation is withheld up to the time of
his actual reinstatement. And since the July 12, 1999 Decision of the NLRC awarded
separation pay in lieu of reinstatement, petitioners argue that backwages should no longer
accrue beyond the date of the said NLRC Decision. This is because when the NLRC
awarded separation pay in lieu of reinstatement in its Decision, the employment tie between
petitioners and respondent was already effectively severed.
This Court has already meticulously explained in Bani Rural Bank Inc. v. De Guzman[50] that:
The computation of separation pay is based on the length of the employee‘s service; and the
computation of backwages is based on the actual period when the employee was unlawfully prevented
from working.
The basis of computation of backwages
The computation of backwages depends on the final awards adjudged as a consequence of

illegal dismissal, in that:
First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as
amended, computes the backwages from the time of dismissal until the employee‘s reinstatement. The
computation of backwages (and similar benefits considered part of the backwages) can even continue
beyond the decision of the labor arbiter or NLRC and ends only when the employee is actually
reinstated.
Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of
the case is disputed) or reinstatement is waived by the employee (in the event that the payment
of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal
until the finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by
reason of a supervening event that makes the award of reinstatement no longer possible x x x
backwages is computed from the time of dismissal until the finality of the decision ordering
separation pay.
The above computation of backwages, when separation pay is ordered, has been the Court‟s
consistent ruling. In Session Delights Ice Cream and Fast Foods v. Court Appeals Sixth Division,
we explained that the finality of the decision becomes the reckoning point because 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.
We may also view the proper computation of backwages (whether based on reinstatement or an order
of separation pay) in terms of the life of the employment relationship itself.
When reinstatement is ordered, the employment relationship continues. Once the illegally dismissed
employee is reinstated, any compensation and benefits thereafter received stem from the employee‘s
continued employment. In this instance, backwages are computed only up until the reinstatement of
the employee since after the reinstatement, the employee begins to receive compensation from his
resumed employment.
When there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is
waived or subsequently ordered in light of a supervening event making the award of reinstatement no
longer possible), the employment relationship is terminated only upon the finality of the decision
ordering the separation pay. The finality of the decision cuts-off the employment relationship
and represents the final settlement of the rights and obligations of the parties against each
other. Hence, backwages no longer accumulate upon the finality of the decision ordering the
payment of separation pay since the employee is no longer entitled to any compensation from
the employer by reason of the severance of his employment.[51] (Citations omitted; emphases and
underscoring supplied)
Clearly, therefore, respondent is entitled to backwages computed from the time she was
illegally dismissed up to the date of the finality of the Court‘s October 31, 2008 Decision in
the illegal dismissal case on March 12, 2009. The Court, thus, finds the subject
recomputation of money award to be in order.
WHEREFORE, premises considered, the Petition is hereby DENIED. The Decision dated
August 9, 2011 and the Resolution dated December 7, 2011 of the Court of Appeals in CA-
G.R. SP No. 117199 are hereby AFFIRMED.
SO ORDERED.

SUPREME COURT
Centennial Transmarine, Inc., et al. Vs. Pastor

M. Quiambao; G.R. No. 198096; July 8, 2015
DECISION
DEL CASTILLO, J.:
―[T]he company-designated physician is expected to arrive at a definite assessment of the

seafarer‘s fitness to work or permanent disability within the period of 120 or 240 days. That
should he fail to do so and the seafarer‘s medical condition remains unresolved, the seafarer
shall be deemed totally and permanently disabled,‖[1] as in this case.
This is a Petition for Review on Certiorari[2] assailing the February 28, 2011 Decision[3] and
August 9, 2011 Resolution[4] of the Court of Appeals (CA) in CA-G.R. SP No. 104798, which
affirmed the April 23, 2008[5] and May 30, 2008[6] Resolutions of the National Labor Relations
Commission (NLRC). The aforesaid NLRC Resolutions affirmed the July 31, 2007
Decision[7] of the Labor Arbiter which ordered petitioners Centennial Transmarine, Inc. and/or
Mr. Eduardo Jabla, Centennial Marine Services and MV Bonnie Smithwick (petitioners) to
pay respondent Pastor Quiambao (Pastor) total and permanent disability benefits amounting
to US$78,750.00 and attorney‘s fees equivalent to 10% thereof.
Antecedent Facts
Since 2004, Pastor was continuously employed by petitioner Centennial Transmarine, Inc.
as a messman for and on behalf of its foreign principal, petitioner Centennial Maritime
Services. His last contract of employment[8] of six months on board the vessel MV Bonnie
Smithwick was approved by the Philippine Overseas Employment Administration (POEA)
and was covered by the International Transport Workers‘ Federation-Collective Bargaining
Agreement (ITF-CBA).[9]
Pursuant to the aforementioned contract, Pastor boarded MV Bonnie Smithwick on June 5,

2006. Shortly thereafter or during the first week of August 2006, however, he figured in an
accident while carrying heavy food provisions. This caused him to suffer excruciating pain in
his upper back. When he consulted the ship doctor, Pastor was prescribed with oral pain
killer, but the same only offered temporary relief. As his condition continued to worsen, he
was referred on September 5, 2006 to City Med Health Associates in Singapore for further
evaluation and treatment. The result of the x-ray examination conducted on him revealed
that he has lumbar muscular spasm with disc degeneration at L2/L3 and L5/S1 levels and
thoracic spondylosis with disc degeneration from T4/T5 to T7/T8.[10] While the attending
physician declared him fit for light duties only,[11] he was subsequently recommended for
repatriation to Manila for further treatment.[12]
Upon Pastor‘s arrival in the Philippines on September 18, 2006, he was referred to the
company-designated physician, Dr. Leticia Abesamis (Dr. Abesamis). On October 2, 2006,
Dr. Abesamis diagnosed him to have Thoraco Lumbar spine nerve impingement, R/O
herniated disc.[13] She then referred Pastor for Magnetic Resonance Imaging (MRI) at the
Makati Medical Center and to Dr. Antonio Acosta, Jr., who later advised him not to carry
heavy objects as it might collapse his T-5 vertebral body.
While undergoing treatment, or on November 7, 2006, Pastor filed a complaint [14] against
petitioners for permanent disability compensation in the sum of US$78,750.00 pursuant to
the Associated Marine Officers‘ and Seamen‘s Union of the Philippines (AMOSUP)/ ITF
TCCC CBA,[15] sickness wages for 120 days, moral and exemplary damages, attorney‘s fees
and other benefits as provided by law.
Parties’ Respective Positions
Pastor claimed that the lapse of 120 days from the time of bis repatriation without any
disability grading being issued by the company-designated physician, coupled by his
worsening lumbar pain despite continuous treatment, rendered him permanently unfit for sea
duties. In support of this, he presented a medical certificate dated April 17, 2007[16] issued by
the Seamen‘s Hospital attesting to his unfitness for sea service due to work-related total
disability.
For their part, petitioners countered that except for his bare allegations, Pastor had not
proffered sufficient evidence to support his claim that his spinal disc degeneration or
osteoarthritis is work-related or was aggravated by his working conditions. While admitting
that osteoarthritis is considered as a work-related disease under the provisions of the POEA-
Standard Employment Contract (SEC), they argued that Pastor has not satisfactorily
established any of the conditions for compensability. For one, his work as a messman does
not entail heavy physical labor as to have caused his illness. This only means that his
ailment is a pre-existing disease.
Petitioners also asserted that Pastor cannot claim permanent disability compensation based
on his mere inability to work for more than 120 days because a seafarer is only entitled to full
disability benefits if he has been assessed with Grade I disability. If no such assessment has
been made, the seafarer is not entitled to disability compensation even if he was unable to
perform his job for more than 120 days. Petitioners further asserted that they are not liable
for sickness allowance, damages and attorney‘s fees for they have already fulfilled their
obligations in good faith by providing Pastor with medical assistance.
In a Decision[17] dated July 31, 2007, the Labor Arbiter ruled that when an ailment is not listed
as an occupational disease under the POEA-SEC or the conditions set forth therein for
compensability have not been met, the ailment is nevertheless disputably presumed as
work-related. Hence, it was not for Pastor to prove that his illness is work-related; rather, it
behooved upon the petitioners to rebut such presumption. The Labor Arbiter, however, found
that petitioners failed to discharge their burden and, therefore, held that Pastor‘s illness is
work-related and compensable. Anent the nature of Pastor‘s disability, the Labor Arbiter
considered the same as permanent and total per the medical certificate issued by the
Seamen‘s Hospital. Thus:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
the [petitioners] to pay [Pastor] the sum of US$78,750.00 as disability benefits, plus ten percent
(10%) thereof as and for attorney‘s fees.
SO ORDERED.[18]
Petitioners appealed to the NLRC.
In its Resolution[19] of April 23, 2008, the NLRC sustained the Labor Arbiter‘s finding that
Pastor‘s ailment is work-related and compensable as, in fact, its proximate cause was the
accident he figured in while on duty and his duties as messman show direct connection with
his illness. It likewise gave weight and credence to the medical certificate issued by the
Seamen‘s Hospital attesting to Pastor‘s disability as permanent since it observed that at the
time the said certificate was issued, Pastor had actually been incapable of working for more
than 120 days already. Moreover, aside from the fact that the findings contained in the said
certificate appeared to be consistent with the findings and prognosis of the company-
designated physician, it can be gleaned therefrom that Pastor was already under the care of
the certifying doctor for a considerable length of time and his certification was not based on a
mere one-time consultation. Ultimately, the NLRC ruled, viz:
WHEREFORE, premises considered, we deny the appeal and AFFIRM the decision of the Labor
Arbiter.
SO ORDERED.[20]
Petitioners moved for reconsideration,[21] but the same was denied in the NLRC
Hence, petitioners filed a Petition for Certiorari[23] before the CA.
On February 28, 2011, the CA rendered a Decision[24] holding that Pastor is suffering from
osteoarthritis, an ailment listed as an occupational disease under the POEA-SEC. It
concluded that the said ailment developed in the course of Pastor‘s employment and
progressed due to the conditions of his job as a messman. Accordingly, the CA ruled that
Pastor‘s illness is work-related. Moreover, it declared his disability as permanent and total
given that his ailment resulted in the impairment of his earning capacity. Hence:
IN VIEW OF THE FOREGOING, the petition is dismissed.
SO ORDERED.[25]
Petitioners filed a Motion for Reconsideration[26] where they pointed out that the CA
incorrectly declared Pastor as suffering from osteoarthritis. They maintained that his ailment
is actually spinal disc degeneration, an illness completely different from osteoarthritis and is
not listed as an occupational disease under the POEA-SEC. Moreover, Pastor failed to
sufficiently meet the conditions for compensability as set forth in the POEA-SEC.
In a Resolution[27] dated August 9, 2011, the CA denied petitioners‘ Motion for

Reconsideration.
Hence, this Petition for Review on Certiorari.
Issues
1. What is the actual illness of the private respondent on board the vessel;
2. Whether the Court of Appeals decided in a way not in accord with law or with the
applicable decisions of the Supreme Court in affirming the Decision and Resolution of
the NLRC despite the glaring fact that the actual illness of the private respondent is not
work-related;
applicable decisions of the Supreme Court in awarding US$78,750.00 despite the fact
that the private respondent has failed to adduce evidence that he is suffering from a
Grade 1 disability;
applicable decisions of the Supreme Court in awarding attorney‘s fees.[28]
In the main, petitioners argue that Pastor suffers not from osteoarthritis but from spinal disc
degeneration, an illness not listed under the POEA-SEC as occupational disease and is
neither work-related nor compensable. They likewise insist that without any medical or
factual evidence of total and permanent disability, there is no sufficient basis to award him
Grade 1 disability compensation. Citing Vergara v. Hammonia Maritime Services, Inc.,[29] they
aver that an illness which lasted for more than 120 days does not necessarily mean that a
seafarer is entitled to full disability benefits because a seafarer‘s degree of disability is not
measured by the length of time he is under treatment, but by the assessment of the
company-designated physician, who, in this case, found Pastor‘s illness as not work-related.
Pastor, therefore, is not entitled to disability compensation.
Our Ruling
The Petition lacks merit.

Pastor suffers from a work-related and compensable illness.
The Court notes that while petitioners impute error upon the CA in declaring Pastor‘s illness
as osteoarthritis, it is extant on the records that they themselves, in the numerous pleadings
they filed before the labor tribunals, consistently referred to his diagnosed ailment as
osteoarthritis. It was only after the CA rendered its assailed Decision that petitioners
contradicted this and now claim that Pastor‘s illness is actually spinal disc degeneration
which, according to them, is a completely different illness from osteoarthritis. Suffice it to
state, however, that petitioners cannot now take a contrary view as to Pastor‘s actual illness
in view of their previous admission that he was suffering from osteoarthritis. It is settled that
statements made in the pleadings in the course of judicial proceedings are considered
judicial admissions.[30] Judicial admissions cannot be controverted by the party making the
admissions.[31] They are conclusive and legally binding as against the pleader who cannot
subsequently take a position contrary to or inconsistent with what was pleaded.[32]
At any rate, in medical parlance, spinal disc degeneration/desiccation and osteoarthritis can
be taken as the same. Degenerative disc disease is a spinal condition caused by the
breakdown of the intervertebral discs which results in the loss of flexibility and ability to
cushion the spine.[33] When discs degenerate, the vertebral bodies become closer together
and this increased bone on bone friction causes the wearing away of protective cartilage and
results in the condition known as osteoarthritis.[34] The degenerating discs place excessive
stress on the joints of the spine and the supporting ligaments, which, overtime, can lead to
the formation of osteoarthritis.[35] Osteoarthritis is a stage of degenerative disc disease.[36]
Here, as revealed by Pastor‘s medical records, he was found suffering from acute thoracic
and lumbar spondylosis before he was repatriated for medical reasons.[37] When he returned
to the Philippines, he was then diagnosed with thoraco lumbar spine nerve infringement, R/O
herniated disc on October 2, 2006 by Dr. Abesamis, the company-designated
physician.[38] When made to undergo MRI of the thoraco lumbar area a few days later, the
result thereof revealed that the said area has a slightly straightened lumbar lordosis. He was
thus advised to undergo physiotherapy. On November 6, 2006, Dr. Abesamis found Pastor
positive for carpal tunnel syndrome.[39] He was then subjected to further medical evaluation
and treatment for the recurrent pain that he was experiencing.[40]Through all these, no
medical assessment of his fitness to resume work or disability grading was ever issued by
Dr. Abesamis such that Pastor sought the opinion of an independent physician. He was then
diagnosed to have chronic back pain and impending vertebral collapse T5 with thoracic and
lumbar spondylosis and was assessed to be permanently unfit for sea duties due to a work-
related total disability. This is evidenced by a medical certificate dated April 17, 2007 issued
by the Seamen‘s Hospital.
Notably, the above-mentioned findings on Pastor‘s illness indicate that he was suffering from
lumbar spondylosis. Spondylosis is a term used to describe osteoarthritis of the
spine.[41] Clearly therefore, the CA‘s declaration of Pastor‘s actual illness as osteoarthritis is
supported by the findings of the company-designated physician, whose prognosis, as aptly
observed by the NLRC, appear to be consistent with the findings contained in the medical
certificate issued by the Seamen‘s Hospital.
Petitioners argue against the work-relatedness and compensability of Pastor‘s illness. They
harp on the alleged finding of the company-designated physician that his ailment is not work-
related and this, according to them, should be given more weight than that of Pastor‘s
independent physician. The argument, however, is untenable. The Court has gone over the
records and found that the same is bereft of any evidence that Dr. Abesamis or any other
doctor designated by the company ever rendered an assessment categorically declaring
Pastor to be suffering from an illness which is not work-related.
Moreover, a seaman‘s entitlement to disability benefits, is governed, not only by medical

findings, but by law (the Labor Code) and by contract (the POEA-SEC and the parties‘
CBA).[42] Here, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of
the Department of Labor and Employment, which contains the Standard Terms and
Conditions Governing The Employment of Filipino Seafarers On-Board Ocean-Going
Vessels, governs the employment contract between Pastor and petitioners. Section 20(B),
paragraph 6 thereof reads:
Section 20 (B) – COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

xxxx
rates and rules of compensation applicable at the time the illness or disease was contracted.
―Pursuant to the aforequoted provision, two elements must concur for an injury or illness to
be compensable. First, that the injury or illness must be work-related; and second, that the
work-related injury or illness must have [arisen] during the term of the seafarer‘s employment
contract.‖[43] For disability to be compensable under Section 20(B) of the 2000 POEA-SEC, it
must be the result of a work-related injury or a work-related illness, which are defined as
―injury(ies) resulting in disability or death arising out of and in the course of employment‖ and
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 said Section 32-A provides:
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.
As previously mentioned, Pastor was found to be suffering from osteoarthritis. Under Section
32-A(16) of the 2000 POEA-SEC, for osteoarthritis to be considered as an occupational
disease, the same must have been contracted in any occupation involving:
a) joint strain from carrying heavy loads, or unduly heavy physical labor, as among laborers and
mechanics;
b) minor or major injuries to the joint;
c) excessive use or constant strenuous usage of a particular joint, as among sportsmen, particularly
those who have engaged in the more active sports activities;
d) extreme temperature changes (humidity, heat and cold exposures); and

e) faulty work posture or use of vibratory tools.
To recapitulate, the Labor Arbiter ruled that Pastor‘s illness is work-related. The NLRC
affirmed this finding by holding that the accident he met while carrying heavy food provisions
was the proximate cause of his injury. For its part, the CA ultimately concluded that the
illness was acquired by Pastor due to his work as a messman whose primary duties and
responsibilities include cleaning accommodations, galley, pantries, alleys, storerooms,
salons and messrooms, washing, cleaning and preparing tables, collecting and laundering
dirty linen, serving food and restocking supplies in pantries, engine room, bridge, etc. It
further ruled that Pastor was able to prove the conditions necessary for osteoarthritis to be
considered as having arisen in the course of his employment either by direct causation or
aggravation due to the nature of his work. The Court is not inclined to depart from the
aforementioned findings of the Labor Arbiter, NLRC and the CA. As it has been held, ―where
the factual findings of the labor tribunals or agencies conform to, and are affirmed by the CA,
the same are accorded respect and finality and are binding upon this Court.‖[44] Besides, that
Pastor figured in an accident while performing his duties on board the vessel was not at all
disputed by petitioners. It is also plain from his duties and responsibilities as enumerated in
the Company Standing Instructions Manual[45] that his work involved carrying heavy loads
and the performance of other strenuous activities such that it can reasonably be concluded
that his work caused or at least aggravated his illness. In view of these, the Court sustains
the uniform findings of the Labor Arbiter, the NLRC and the CA that Pastor‘s ailment is work-
related and compensable.
Pastor’s disability became permanent

and total as no declaration of fitness to
work was issued upon the expiration of
the maximum 240-day medical treatment period.
Article 192(c)(l) of the Labor Code provides that:
Art. 192. Permanent total disability. – x x x

(1) Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided for in the Rules
xxxx
Meanwhile, Rule X, Section 2 of the Amended Rules on Employees Compensation provides:
RULE X
Temporary Total Disability
xxxx
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 anytime 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.
Based on the foregoing provisions, 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 days, which was further extended to 240 days. The Court pronounced in Vergara v.
Hammonia Maritime Services, Inc., et al.[46] that a temporary total disability becomes
permanent when so declared by the company-designated physician within the period
allowed, or upon expiration of the maximum 240-day medical treatment period in case of
absence of a declaration of fitness or permanent disability.
In this case, Pastor was repatriated on September 18,2006. He was given a specific
diagnosis as to his ailment by the company-designated physician, Dr. Abesamis, on October
6, 2006. Thereafter, he continuously received medical treatment from Dr. Abesamis.
However and as earlier mentioned, nowhere in the records does it show that Dr. Abesamis
arrived at a definite assessment of respondent‘s fitness to work or a declaration of the
existence of a permanent disability before the expiration of the maximum 240-day medical
treatment period. In fact, as of the date of the Rejoinder[47] they filed before the Labor Arbiter
(June 25, 2007) or 281 days after Pastor‘s repatriation, petitioners themselves stated that no
disability grading has yet been issued by Dr. Abesamis.[48] Clearly at that time, the period of
240 days had already lapsed without the company-designated physician issuing a
declaration of Pastor‘s fitness to work or of the existence of his permanent disability. This
only means that his condition remained unresolved even after the lapse of the said period
and, consequently, his disability is deemed permanent and total.[49] No error, therefore, can
be attributed to the Labor Arbiter, NLRC and CA in declaring Pastor‘s disability as
permanent and total. In view of the foregoing, the Court sustains the CA in awarding Pastor
disability compensation in the amount of US$78,750.00 pursuant to the AMOSUP/ITF TCCC
CBA that governed his contract of employment with petitioners.
As to the award of 10% attorney‘s fees, the same is justified pursuant to paragraphs 2 and 8
of Article 2208 of the Civil Code which provide that:
Article 2208. In the absence of stipulation, attorney‘s fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
xxxx
(2) When the defendant‘s act or omission has compelled the plaintiff to litigate with third persons or
to incur expenses to protect his interest;
xxxx
(8) In actions for indemnity under workmen‘s compensation and employer‘s liability laws;
xxxx
WHEREFORE, the Petition is DENIED. The February 28, 2011 Decision and August 9, 2011
Resolution of the Court of Appeals in CA-G.R. SP No. 104798 are AFFIRMED.
SO ORDERED.
22 JUN 2015 | SUBJECT | LABOR AND

Marlon Beduya, Rosario Dumas, Alex

Leonoza, et al. Vs. Ace Promotion and
Marketing Corporation and Glen Hernandez;
G.R. No. 195513; June 22, 2015
DECISION
DEL CASTILLO, J.:
Procedural rules should be relaxed if only to serve the ends of justice.
of Appeals (CA) in CA-G.R. SP No. 111536 affirming the February 23, 2009 Decision[3] and
August 4, 2009 Resolution[4] of the National Labor Relations Commission (NLRC), which
granted respondents‘ appeal from the April 24, 2008 Decision[5] of the Labor Arbiter and
ordered the dismissal of petitioners‘ complaint for illegal dismissal. Likewise assailed is the
February 3, 2011 CA Resolution[6] which denied petitioners‘ Motion for Reconsideration of the
said CA Decision.
Antecedent Facts
Respondent Ace Promotion and Marketing Corporation (APMC), with respondent Glen
Hernandez as its President, is a contractor engaged in the deployment of workers to various
companies to promote the latters‘ products through promotional and merchandising services.
In pursuance of its business, APMC entered into a Promotional Contract[7]with Delfi
Marketing, Inc.[8] (Delfi) whereby the former undertook to conduct promotional activities for
the latter‘s confectionery products. For this purpose, APMC employed workers, including
petitioners Marlon Beduya, Rosario Dumas, Alex Leonoza, Alvin Abuyot, Dindo Ursabia,
Bernie Bosona, Romeo Onanad, Armando Liporada, Frankfer Odulio, Marcelo Mata, Alex
Colocado, Jojo Pacatang, Randy Genodia and Isabino B. Alarma, Jr. (petitioners), as
merchandisers and assigned them to various retail outlets and supermarkets under fixed-
term employment contracts. The last contracts of employment[9] that petitioners signed were
until January 30, 2007.
In a letter[10] dated December 27, 2006, Delfi notified APMC that their Promotional Contract
will expire effective January 31, 2007. On January 29, 2007, APMC informed petitioners,
among other workers, that their last day of work would be on January 30, 2007.

Before the Labor Arbiter, three separate complaints[11] for illegal dismissal and money claims
against respondents were filed by petitioners and by other employees (complainants) whose
employment was terminated allegedly by reason of the expiration of APMC s contract with
Delfi. The said complaints, docketed as NLRC-NCR Case Nos. 00-02-01022-07, 00-02-
0185-07 and 00-03-02756-07, were consolidated.
In their Position Paper,[12] complainants alleged that: they are regular employees of APMC,
having continuously worked in APMC since 1997; they are bonafide members of the Social
Security System (SSS) and the company‘s Home Development Mutual Fund (HDMF); the
expiration of the Promotional Contract between APMC and Delfi does not automatically
result in their dismissal; and, the said Promotional Contract is still subsisting as new workers
were hired as their replacements. All of the complainants asked for wage differentials,
claiming that part of their wages were unlawfully withheld unless they sign a waiver and
quitclaim in favor of APMC, while 18 of them additionally prayed for recovery of unpaid
ECOLA.
Respondents, on the other hand, countered that APMC is a legitimate job contractor that
hires employees for a specific job on a contractual basis. With respect to complainants,
respondents claimed that they were duly apprised of the contractual nature of their
employment, its duration, working hours, basic salaries, and the basic work policies as
stipulated in their contracts of employment. And since complainants were hired as
merchandisers for Delfi, their employment automatically ended when APMC‘s Promotional
Contract with Delfi expired. On the complainants‘ allegation of continuous employment,
respondents explained that, indeed, complainants were previously engaged as
merchandisers for a client, Goya, Inc. (Goya). But when Goya‘s business interest was sold
to Delfi, complainants‘ fixed-term employment contracts also accordingly expired. They were
then rehired and reassigned to Delfi, again on a fixed-term basis, which employment was
necessarily terminated upon the end of the term. In view of this, respondents denied liability
over complainants‘ money claims, damages, and attorney‘s fees.
In a Decision[13] dated April 24, 2008, the Labor Arbiter, after finding no credible evidence to
prove that they were employed on a contractual basis, declared complainants to have been
illegally dismissed. He found unconvincing APMC‘s allegation that complainants‘
employment was terminated due to the expiration of its contract with Delfi considering that it
continued to hire new employees as replacements for complainants. This, the Labor Arbiter
opined, infringed upon complainants‘ right to security of tenure. On the other hand, he
viewed complainants‘ continuous employment with APMC for a considerable length of time
and the fact that they are SSS and HDMF members, as indications of their being regular
employees. Thus, he ordered complainants‘ reinstatement or payment of separation pay,
payment of backwages, unpaid wages, ECOLA, moral and exemplary damages, and
attorney‘s fees. The dispositive portion of the Labor Arbiter‘s Decision reads:
WHEREFORE, premises all considered, judgment is hereby rendered finding the dismissal illegal and
ordering respondents, as follows:
1. To reinstate complainants to their former position with full backwages to be reckoned

from the date of their dismissal up to the finality of this decision.
2. In the alternative, to pay them x x x their backwages plus separation pay equivalent to
half month salary for every year of service if employment is no longer tenable.
3. To pay the named eighteen (18) employees x x x their unpaid ECOLA for one (1)
year.
4. To pay complainants x x x their unpaid wages for fifteen (15) days.
5. To pay moral damages in the amount of P10,000.00 each.
6. To pay exemplary damages [in] the [amount] of P5,000.00 each.
7. To pay attorney‘s fees equivalent to 10% of the total monetary award.
The computation of the monetary award as computed by the Computation Division of this Office is
attached hereto and forms part of this decision.
SO ORDERED.[14]
Respondents filed a Memorandum of Appeal with Motion for Reduction of Bond[15] with the
NLRC. They maintained that complainants were contractual employees. As such, their
contracts of employment were terminated upon the expiration of APMC s Promotional
Contract with Delfi. Anent their motion for reduction of appeal bond, respondents contended
that the awards granted to complainants amounting to P6,269,856.89 should be decreased
considering that:
(1) eight complainants did not sign the position paper submitted to the Labor Arbiter and
therefore, the monetary awards given in their favor should be excluded in the computation of
the total award; (2) nine complainants already withdrew their complaints as shown by their
Affidavits of Desistance;[16] (3) assuming that separation pay was correctly awarded, the
computation thereof should start from year 2003 when complainants started working for
Goya and not from year 1997 as computed by the Labor Arbiter; and (4) the backwages
should be computed only up to January 31, 2007 or up to the expiration of the Promotional
Contract with Delfi and not until July 31, 2008. Respondents attached a supersedeas
bond[17] in the amount of P437,210.00 along with their appeal.
In their Opposition with Motion to Dismiss Appeal,[18] complainants prayed for the dismissal of
respondents‘ appeal based on insufficiency of the bond posted. This thus resulted in the
non-perfection of the appeal, and consequently, the Labor Arbiter‘s Decision had become
final and executory.
Without acting on respondents‘ motion for reduction of bond and the complainants‘
opposition thereto, the NLRC rendered a Decision[19] on February 23, 2009 finding
complainants to be contractual employees hired for a specific duration. The NLRC noted that
complainants were duly informed at the commencement of their employment that they were
hired for a definite period and for a specific project, i.e., Delfi, and that they voluntarily
agreed to these and the other terms of their employment contracts. Hence, when the specific
project or undertaking for which they were hired ceased, their employment also ceased.
They were therefore not illegally dismissed. In the ultimate, the NLRC reversed the Labor
Arbiter‘s Decision and dismissed the complaints for illegal dismissal. It, however, affirmed
the awards of unpaid wages and ECOLA in favor of complainants. Thus:
WHEREFORE, premises considered, judgment is hereby rendered GRANTING the instant appeal.
The Decision of the Labor Arbiter dated 24 April 2008 is hereby reversed and set aside, and a new
one is issued dismissing the complaint. Respondents-Appellants are, however, directed to cause the
immediate satisfaction of complainants-appellees‘ unpaid wages for fifteen (15) days and ECOLA for
one (1) year.
SO ORDERED.[20]
In their Motion for Reconsideration,[21] complainants maintained that the P437,210.00 appeal
bond is insufficient and unreasonable in relation to the total monetary award of
P6,269,856.89, which should have warranted the dismissal of respondents‘ appeal.
Complainants likewise pointed out that the NLRC gravely abused its discretion when it did
not resolve respondents‘ motion to reduce bond and their opposition thereto with motion to
dismiss before rendering its decision granting the appeal. Complainants‘ Motion for
Reconsideration was, however, denied by the NLRC in its Resolution[22] dated August
4,2009.
Some of the complainants, including petitioners, filed a Petition for Certiorari[23] with the CA.
They insisted that the NLRC gravely abused its discretion in granting respondents‘ appeal
despite the latter‘s failure to perfect the same since the appeal bond filed was grossly
insufficient and inadequate. Consequently, the Labor Arbiter‘s Decision had already become
final and executory.
On November 30, 2010, the CA rendered a Decision[24] dismissing the petition. It found
respondents‘ willingness and good faith in complying with the requirements as sufficient
justification to relax the rule on posting of an appeal bond. Moreover, the CA agreed with the
NLRC in finding that complainants were not illegally dismissed. The termination of their
employment was simply brought about by the expiration of the fixed period stipulated in their
contracts that they voluntarily signed after the terms thereof were fully explained to them.
Complainants‘ Motion for Reconsideration[25] was denied by the CA in its Resolution[26] of February 3,
2011.
Thus, petitioners, from among all the complainants, are now before this Court through the
present Petition.
Issues
(a)
WHETHER XXX THE FILING OF APPEAL WITH MOTION TO REDUCE APPEAL BOND
WILL TOLL THE RUNNING OF THE PERIOD TO PERFECT AN APPEAL
(b)
WHETHER X X X AN APPEAL BOND IN THE AMOUNT OF P473,210.00 IS

REASONABLE IN RELATION TO [A POSSIBLE] MONETARY AWARD OF
P6,269,856.00
(c)
WHETHER XXX THE DECISION RENDERED BY THE LABOR ARBITER IS DEEMED

FINAL AND EXECUTORY AS THE APPEAL WAS NOT PERFECTED
(d)
WHETHER X X X IT IS PROCEDURALLY CORRECT TO PASS JUDGMENT ON A

CASE WHEN THERE IS STILL A PENDING MOTION TO BE RESOLVED[27]
For respondents‘ alleged failure to comply with the jurisdictional requirements on appeal
bonds, petitioners maintain that the NLRC did not acquire jurisdiction over respondents‘
appeal. Moreover, they claim that the NLRC erred in resolving the merits of the appeal
without first ruling on respondents‘ motion to reduce appeal bond and their opposition
thereto with motion to dismiss.
Our Ruling

Article 223 of the Labor Code provides:
ART. 223. Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and executory unless
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 finding of facts are raised which would cause grave or irreparable damage
or injury to the appellant.
appealed from.
x x x x. (Emphasis supplied)
While Sections 4(a) and 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC
provide:
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. – (a) The Appeal shall be: 1) filed
within the reglementary period as provided in Section 1 of this Rule; 2) verified by appellant himself
in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a
memorandum of appeal which shall state the grounds relied upon and the arguments in support
thereof, the relief prayed for, and with a statement of the date the appellant received the appealed
decision, resolution or order; 4) in three (3) legibly written or printed copies; and 5) accompanied by
i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in
Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other
parties.
xxxx
SECTION 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 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.
xxxx
No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the
posting of a bond in a reasonable amount in relation to the monetary award.
The mere filing of a motion to reduce bond without complying with the requisites in the preceding
paragraphs shall not stop the running of the period to perfect an appeal.
It is thus clear from the foregoing that the filing of supersedeas bond for the perfection of an
appeal is mandatory and jurisdictional and failure to comply with this requirement renders
the decision of the Labor Arbiter final and executory.[28] However, this Court, in many
cases,[29] has relaxed this stringent requirement whenever justified. Thus, the rules,
specifically Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
allows the reduction of the appeal bond 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 a motion to
reduce bond shall not stop the running of the period to perfect an appeal. Still, 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.[30] The Court may relax the rule under certain exceptional
circumstances which include fundamental consideration of substantial justice, prevention of
miscarriage of justice or of unjust enrichment and special circumstances of the case
combined with its legal merits, and the amount and the issue involved. [31] Indeed, in
meritorious cases, the Court was propelled to relax the requirements relating to appeal
bonds such as when there are valid issues raised in the appeal[32] and in the absence of any
valid claims against the employer.[33]
In the case at bench, the Court finds that respondents‘ motion to reduce appeal bond was
predicated on meritorious and justifiable grounds. First, the fact that eight complainants
failed to verify or affix their signatures on the position paper filed before the Labor Arbiter
merits the exclusion of the monetary awards adjudged to them. In Martos v. New San Jose
Builders, Inc.,[34] it was held that the failure of some of the complainants therein to verify their
position paper submitted before the Labor Arbiter brought about the dismissal of the
complaint as to them who did not verify. The Court went on to say that their negligence and
passive attitude towards the rule on verification amounted to their refusal to further
prosecute their claims. Second, the withdrawal of seven complainants[35] in this case likewise
warrants the reduction of the monetary award rendered against respondents. Suffice it to say
that the said seven complainants are bound by the Affidavits of Desistance which are
presumed to have been freely and voluntarily executed by them. Accordingly, they no longer
participated in the subsequent proceedings after having received their last salaries and due
benefits.
Petitioners, however, posit that the amount of the appeal bond posted, i.e., P437,210.00, is
unreasonable and inadequate vis-a-vis the total monetary award of P6,269,856.83. What
they consider as reasonable percentage of the total monetary award is at least 30% thereof.
In the recent case of Mcburnie v. Ganzon,[36] the Court has set a provisional percentage of
10% of the monetary award, exclusive of damages and attorney‘s fees, as a reasonable
amount of bond that an appellant should post pending resolution by the NLRC of a motion to
reduce bond. It is only after the posting of this bond that an appellant‘s period to perfect an
appeal is suspended. Here, after deducting from the total monetary award the amount of
attorney‘s fees and the amounts awarded to those complainants who did not verify their
position papers and those who had withdrawn their complaints, the total monetary award
amounts to only more than P3 million.[37]Hence, the appeal bond of P437,210.00 posted by
respondents is in fact even more than 10% of the said total monetary award. Thus, applying
the same parameter set in Mcburnie, the Court finds the amount of bond posted by
respondents in the present case to be reasonable.
In any event, the Court notes that in Mcburnie, it was held that the required 10% of the
monetary award as appeal bond is merely provisional given that the NLRC still retains the
authority to exercise its full discretion to resolve a motion for the reduction of bond and
determine the final amount of bond that should be posted by an appellant in accordance with
the standards of meritorious grounds and reasonable amount.[38]
In consideration of the foregoing, the Court finds no merit in petitioners‘ contention that the
NLRC failed to establish its jurisdictional authority over respondents‘ appeal. Again, the filing
of a motion to reduce bond predicated on meritorious grounds coupled with the posting of a
reasonable amount of cash or surety bond suffice to suspend the running of the period within
which to appeal. As discussed, respondents in this case have substantially complied with
these requirements and, on account thereof, their appeal from the Labor Arbiter‘s Decision
was timely filed. Clearly, the NLRC was conferred with jurisdiction over respondents‘ appeal
thus placing the same within the power of the said labor tribunal to review.
With respect to the NLRC‘s failure to initially act upon respondents‘ motion to reduce bond
and petitioners‘ opposition thereto with motion to dismiss, suffice it to say that the same did
not divest the NLRC of its authority to resolve the appeal on its substantive matters. After all,
the NLRC is not bound by technical rules of procedure and is allowed to be liberal in the
application of its rules in deciding labor cases.[39] Further, the NLRC is mandated 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, all in the interest of due process.[40]
Coming now to the substantive matters, the Court finds that the CA correctly affirmed the
NLRC Decision which granted respondents‘ appeal and dismissed the illegal dismissal
complaints. As aptly found by them, petitioners were fixed-term employees whose respective
contracts of employment had already expired. Therefore, there can be no illegal dismissal to
speak of. The following observations made by the CA were supported by substantial
evidence on record, viz:
We find and so rule that private respondents are independent contractors, and petitioners were
deployed to Delfi Foods to render various services. This was admitted by petitioners during the
proceedings before the labor tribunal. The relationship between the parties is governed by
the Employment Contract which petitioners voluntarily signed before being deployed at Delfi Foods.
The NLRC extensively quoted the aforesaid contract which primarily provided that petitioners‘
employment was for a fixed period, that is, from 1 December 2006 until 30 January 2007.
Significantly, no allegations were made that petitioners were forced or pressured into affixing their
signatures upon the contract. There is likewise no concrete proof that private respondents prevailed
upon petitioners, exercising moral dominance over the latter, to accept the conditions set forth in the
said contract. Having accepted the terms thereof, petitioners were bound by its unequivocal stipulation
that their employment was not permanent, but would expire at the end of the fixed period.[41]
WHEREFORE, the Petition is DENIED. The November 30, 2010 Decision and February 3,
2011 Resolution of the Court of Appeals in CA-G.R. SP No. 111536 are AFFIRMED.
SO ORDERED.
17 JUN 2015 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
Dohle-Philman Manning Angency, Inc., et al.

Vs. Heirs of Andres Gazzingan represented by
Lenie L. Gazzingan; G.R. No. 199568; June
17, 2015
DECISION
DEL CASTILLO, J.:
Under the Philippine Overseas Employment Administration-Standard Employment Contract

(POEA-SEC), an illness suffered by a seafarer during the term of his contract is presumed to
be work-related and compensable. This rule is in consonance with the POEA‘s mandate to
secure the best terms and conditions of employment of Filipino contract workers and to
promote and protect their well-being.
By this Petition for Review on Certiorari,[1] Dohle-Philman Manning Agency, Inc., Dohle (IOM)
Limited and/or Capt. Manolo T. Gacutan (petitioners) assail the May 26, 2011 Decision[2] and
November 25, 2011 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 103580,
which nullified the January 31, 2008 Decision[4] and March 12, 2008 Resolution[5] of the
National Labor Relations Commission (NLRC) and ordered petitioners to pay respondents,
as legal heirs of Andres G. Gazzingan (Gazzingan), total permanent disability benefits in the
amount of US$50,000.00 and sickness allowance of US$1,300.00 plus 10% thereof as
attorney‘s fees.
Antecedent Facts
On October 14, 2005, petitioners hired Gazzingan as a messman for a period of nine months
on board the vessel M/V Gloria with a basic monthly salary of US$325.00.[6] Prior to his
engagement, Gazzingan underwent a pre-employment medical examination (PEME) which
yielded normal results except for a finding of left ventricular hypertrophy in his
electrocardiogram test (ECG). Gazzingan was thus pronounced fit for sea duty[7] and on
November 4, 2005, he boarded the vessel M/V Gloria.
In May 2006, while M/V Gloria was docked at the port of Cartagena, Colombia, Gazzingan
experienced chest pains. On July 16, 2006, he was confined at the Cartagena de Indias
Hospital due to chest pain, shortness of breath and back pain. The hospital‘s cardiovascular
and thoracic surgeon, Dr. Hernan Fernandez Cuartas, diagnosed him to have Acute Type-B
Dissection.[8] On August 3, 2006, Gazzingan was medically repatriated.
Upon arrival in Manila on August 5, 2006, Gazzingan was brought directly to Manila Doctors
Hospital for further medical evaluation under the care of Dr. Justo Cammayo (Dr.
Cammayo). On August 8, 2006, petitioners received a letter from its company-designated

physician, Dr. Raymond C. Banaga (Dr. Banaga), stating that Gazzingan is suffering from a
non-work-related illness. Thus:
DATE: AUGUST 08, 2006

TO: DOHLE PHILMAN MANNING AGENCY, INC.
ATTN: Ms. Estrella R. Aguilar
GM-Finance Admin
FROM: PHYSICIANS DIAGNOSTIC SERVICES CENTER, INC.
RE: Mr. Andres Gazzingan
Dear Ms. Aguilar,
This is with [regard] to your request for our opinion if the subject seafarer‘s illness is work-related or
not.
Mr. Gazzingan is presently confined at Manila Doctors Hospital because of Aortic Dissection. Aortic
Dissection results from [a] tear in the inner walls lining this great artery. This condition has potential
for rupture or tamponade. Based on his pre-employment medical examination dated August 30, 2005
he was not found to be hypertensive with normal blood pressure at 110/70. The other risk factors
associated with this condition like Marfans Syndrome, Coarctation of the Aorta, Aortic valve
abnormalities are congenital in nature and are not work related in this case (for a ship messman).
Truly yours,
(Signed)
RAYMOND C. BANAGA, M.D.
Noted by,
(Signed)
PEDRO S. DE GUZMAN, M.D., FPCOM
Medical Director[9]
At the Manila Doctors Hospital, Gazzingan underwent numerous diagnostic tests and
treatment.[10] However, his confinement thereat lasted only until September 9, 2006 as
Gazzingan had no financial capacity to defray his hospital expenses since petitioners
refused to further shoulder the same in view of Dr. Banaga‘s declaration that his illness is not
work-related. He was discharged from the hospital over the objection of his physician. In a
medical certificate dated October 7, 2006,[11] Dr. Cammayo‘s final diagnosis of Gazzingan‘s
illness was Dissecting Aneurysm.
On August 25, 2006, Gazzingan filed a Complaint[12] for non-payment or under payment of
salaries/wages, sickness allowance, disability benefits and reimbursement of medical
expenses and attorney‘s fees.
Petitioners disclaimed Gazzingan‘s entitlement to his claims by arguing that his medical
condition is pre-existing for which no compensation is warranted under the POEA-SEC.
They alleged that the ECG test conducted during his PEME confirmed that his illness was
brought about by a physiological abnormality from birth. This, coupled with Gazzingan‘s
admission of being a smoker,[13] proved that his illness is not work-related. Besides,
Gazzingan‘s work could not have in any way contributed to the development of his condition
because his work as a messman created no risk to produce such. Petitioners further pointed
out that they shouldered Gazzingan‘s medical expenses; however, when Dr. Banaga
declared his condition as not work-related and therefore not compensable, their obligation to
provide medical assistance ceased. Petitioners explained that under the POEA-SEC, the
company-designated physician is the one mandated to assess the medical condition of a
seafarer upon medical repatriation.
Gazzingan, on the other hand, disputed Dr. Banaga‘s declaration for being self-serving and
for lack of basis. He asseverated that his illness is not congenital but was caused by
hypertension which was not immediately detected for being asymptomatic. He emphasized
that during the previous deployments abroad, he was declared fit for sea duties therefore,
his illness could not be pre-existing. Gazzingan attributed his sickness to his work as a
messman which entailed waking up very early in the morning, lifting heavy stocks/supplies
and serving the crew members on board, and being on-call for the arrival of supplies. Thus,
Gazzingan invoked his right to compensation for his ailment which he claimed to be work-
connected.
In a Decision[14] dated September 18, 2007, the Labor Arbiter opined that although the cause
of or the risk of contracting aortic dissection is uncertain, this uncertainty does not, however,
eliminate the probability that such illness is work-connected. And since actual proof of
causation is not necessary to justify compensability and it is enough that the nature of the
seafarer‘s work had contributed even in a small degree to the development of the disease,
as in this case, the Labor Arbiter granted Gazzingan‘s claims, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering the [petitioners] to pay
jointly and solidarily, [Gazzingan] his total permanent disability benefits in the amount of
US$50,000.00 and his sickness allowance of US$1,300.00, in Philippine currency, at the rate of
exchange prevailing at the time of payment. [Petitioners] are likewise ordered to pay [Gazzingan]
attorney‘s fees equivalent to 10% of the total monetary awards.
All other claims are dismissed.
SO ORDERED.[15]
In their appeal to the NLRC, petitioners claimed that the Labor Arbiter erred (1) in declaring
Gazzingan‘s illness as work-related despite the contrary opinion of the company-designated
physician who is the one mandated by law to determine and assess a seaman‘s disability;
(2) in disregarding Gazzingan‘s failure to challenge Dr. Banaga‘s declaration by not seeking
the opinion of another doctor in accordance with the procedure laid down in the POEA-SEC;
(3) in awarding US$50,000.00 to Gazzingan as permanent total disability benefits since the
POEA-SEC provides for the grant of such amount only for death benefits; (4) in awarding
sickness allowance when the same has already been paid by petitioners to Gazzingan; and,
(5) in awarding attorney‘s fees.
On January 30, 2008, Gazzingan died of hemorrhagic shock secondary to dissecting aortic
aneurysm.[16]
In a Decision[17] dated January 31, 2008, the NLRC gave weight to the opinion of the
company-designated physician that Gazzingan‘s illness is not work-related. It ruled that the
Labor Arbiter‘s Decision is not rooted on legal and factual basis. It explained that as
Gazzingan did not seek and present a second opinion from another physician, he left the
NLRC with no option but to consider the certification issued by Dr. Banaga as an accurate
assessment of his medical condition. The NLRC took note that Gazzingan is a smoker and
has a prior surgery for the excision of lipoma, a hereditary disease. Thus, it concluded that
his aortic dissection developed due to hereditary susceptibility, is not work-related and,
consequently, not compensable. The NLRC disposed of the appeal as follows:
WHEREFORE, on the basis of the foregoing, the decision appealed from is hereby reversed and set
aside. A new one is entered dismissing the complaint for lack of merit.
SO ORDERED.[18]
Gazzingan‘s counsel filed a motion for reconsideration which was denied for lack of merit in
the NLRC Resolution[19]of March 12, 2008.
Respondents, as heirs of Gazzingan, filed a Petition for Certiorari[20] with the CA. They
imputed grave abuse of discretion amounting to lack of jurisdiction on the NLRC in ruling that
Gazzingan‘s illness is congenital and not compensable; and in giving credence to Dr.
Banaga‘s assessment, which was not based on a thorough, exhaustive and complete
examination of Gazzingan but is merely an opinion on the nature of the illness. Respondents
further argued that compensability of disability claims is presumed and this presumption
cannot be defeated by an opinion plucked out of thin air just to favor the employer.
On May 26, 2011, the CA rendered a Decision[21] granting the Petition, setting aside the
NLRC ruling, and reinstating the Labor Arbiter‘s Decision. It found no substantial evidence to
prove that the illness of Gazzingan is congenital. It noted that Gazzingan, who had
previously worked abroad for a similar job, had no record of having suffered from, or was
treated for, dissecting aneurysm or any other heart ailment. The CA thus concluded that his
illness is presumed to have been acquired or aggravated by his strenuous job on board M/V
Gloria. In view of the same, it upheld the Labor Arbiter‘s awards of permanent disability
benefits, sickness allowance and attorney‘s fees in favor of respondents.
Petitioners sought reconsideration of the CA Decision. They argued that Gazzingan‘s

smoking habits and history of a congenital condition of lipoma, as both revealed in his
PEME, and the unchallenged expert opinion of Dr. Banaga constitute more than enough
substantial evidence to conclude that his ailment is not work-related.
In a Resolution[22] dated November 25, 2011, the CA denied petitioners‘ Motion for
Reconsideration. It noted that Gazzingan‘s lipoma has no relation or causal connection to
the ailment that caused his death. Anent Dr. Banaga‘s assessment, the CA ruled that it
cannot be relied upon because it was a mere opinion based solely on the PEME results. Dr.
Banaga did not perform any prior assessment of Gazzingan‘s health condition while he was
confined at Manila Doctors Hospital or any exhaustive post-employment medical
examination on him. The CA reiterated that the physical stress that Gazzingan suffered while
he performed a strenuous job on board the vessel exposed him to injuries caused by
dissecting aneurysm.
Issues
Hence, the present Petition raising the following issues:

1. WHETHER THE DECEASED‘S ILLNESS IS WORK-RELATED.
2. WHETHER THE COMPANY-DESIGNATED PHYSICIAN, TO WHICH GROUP

DRS. BANAGA AND CAMMAYO ARE PART OF, HAS THE AUTHORITY TO
ESTABLISH IF THE ILLNESS IS NOT WORK[-]RELATED.
3. WHETHER RESPONDENTS HAVE THE BURDEN OF PROOF TO PROVE

WORK RELATION.
4. WHETHER RESPONDENTS COULD RELY ON THE DISPUTABLE

PRESUMPTION OF WORK RELATION TO SUPPORT THEIR CASE WITHOUT
ANY MEDICAL EVIDENCE TO CONTRADICT THE COMPANY DOCTOR‘S
OPINION.
5. WHETHER PAYMENT OF SICKNESS ALLOWANCE UNTIL SUCH TIME THAT

THE NATURE OF THE ILLNESS HAS BEEN ESTABLISHED AS NOT WORK
CONNECTED EXTINGUISHED PETITIONERS‘ OBLIGATIONS AS REGARDS
THE PAYMENT THEREOF.
6. WHETHER RESPONDENTS ARE ENTITLED TO 10% ATTORNEY‘S FEES IN

THE ABSENCE OF BAD FAITH ON THE PART OF THE PETITIONERS.[23]
Petitioners maintain that there is substantial evidence to support their contention that
Gazzingan‘s ailment has no work-connection. They contend that Gazzingan‘s condition was
caused, not by hypertension, but by atherosclerosis, a congenital disease, the development
of which was hastened by Gazzingan‘s smoking habits. The congenital nature of
Gazzingan‘s ailment is further buttressed by the result of his PEME indicating a history of
lipoma excision and a finding of left ventricular hypertrophy. Petitioners aver that
respondents cannot simply rely on the presumption of work-relation; they have to present
adequate evidence to overcome Dr. Banaga‘s declaration that Gazzingan‘s ailment is
congenital. However, they failed to present evidence to prove that Gazzingan‘s work caused
or contributed to the development of his ailment.
Our Ruling
The Petition is devoid of merit.

The core issue to be resolved is whether Gazzingan‘s illness is work-related and therefore
compensable.
Deemed written in the contract of employment between Gazzingan and petitioners is the
2000 POEA-SEC,[24] which was issued pursuant to Department Order No. 4 of the
Department of Labor and Employment and POEA Memorandum Circular No. 09, both series
of 2000. Section 20(B) thereof provides:
xxxx
rates and rules of compensation applicable at the time the illness or disease was contracted.
―Pursuant to the aforequoted provision, two elements must concur for an injury or illness of a
seafarer to be compensable. First, the injury or illness must be work-related; and second, x x
x the work-related injury or illness must have existed during the term of the seafarer‘s
employment contract.‖[25] The 2000 POEA-SEC defines work-related injury and work-related
illness as –
―‗injuries resulting in disability or death arising out of and in the course of employment‖ and 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.‘
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; and
4. There was no notorious negligence on the part of the seafarer.‖[26]
Here, it was shown that Gazzingan suffered recurring and intense chest and back pains
associated with acute type-B aortic dissection during the term of his employment contract
that led to his immediate medical repatriation to the Philippines. Upon arrival on August 5,
2006 and after medical evaluation at the Manila Doctor‘s Hospital, Gazzingan was
diagnosed by Dr. Cammayo to have dissecting aneurysm. Records also bear that he sought
consultation and treatment at St. Paul Hospital in Tuguegarao City from September 13 to 14,
2006, whereby he was also found to be suffering from aortic aneurysm by Dr. George
Ramos.[27] He then finally succumbed to death on January 30, 2008 because of ruptured
dissecting aortic aneurysm.
Aortic dissection, also called dissecting aneurysm,[28] is a potentially life-threatening condition

in which there is bleeding into and along the wall of the aorta, the major artery leaving the
heart.[29] The condition starts with a tear in the wall of the major artery carrying blood out of
the heart and as the tear extends along the wall of the aorta, blood enters the aortic wall and
―dissects‖ or separates the layers of the aorta from one another which leads to aortic rupture
or decreased blood flow to the organs.[30] This can then result in heart attacks, strokes,
paralysis, and renal failure among other medical conditions.[31] The ailment‘s risk factors,
which include but are not limited to aging, connective tissue and rare genetic disorders,
atherosclerosis, inflammation, trauma, high blood pressure, heart surgery/procedures, and
pregnancy,[32] do not seem to be direct causes of the disease, such that having one makes
the chances of getting the condition higher but does not always lead to aortic
dissection.[33] Thus, the exact cause of aortic dissection is still unknown and remains under
investigation.[34] Nonetheless, the progression of this ailment is oftentimes caused by the
increased stress in the aortic wall attributed to strenuous physical activities. [35] Patients are
strongly advised to refrain from strenuous physical exertion and are often required to
undertake lifestyle modification, such as change of occupation to sedentary jobs, in order to
reduce the risk of enlargement of an already weakened aorta that might eventually lead to
rupture, a fatal condition.[36]
Gazzingan averred that his duties as a messman entailed work of an assistant chef steward
which aggravated his health condition. Concomitantly, the Labor Arbiter opined that although
the cause of the illness is unknown, there is probability that Gazzingan‘s illness was brought
about by the nature of his work as a messman, which included lifting heavy objects
compounded by lack of sleep and the pressure of serving the entire crew with efficiency.
While the NLRC found doubtful the connection between Gazzingan‘s illness and his work,
the CA affirmed the findings of the Labor Arbiter and ruled that Gazzingan‘s activites while
on board the vessel caused physical stress and exposed him to injuries.
Indeed, the causal connection between the illness contracted and the nature of work of a
seaman is a factual question, which is not a proper subject of this Court‘s
review.[37] Nonetheless, considering the conflicting findings of the tribunals below, this Court
is constrained to dwell on factual matters involved in this case and reassess the evidence on
record.[38]
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 thus
performed most if not all the duties in the ship‘s steward department. In the performance of
his duties, he is bound to suffer chest and back pains, which could have caused or
aggravated his illness. As aptly observed by the CA, Gazzingan‘s strenuous duties caused
him to suffer physical stress which exposed him to injuries. It is therefore reasonable to
conclude that Gazzingan‘s employment has contributed to some degree to the development
of his disease.
It must also be pointed out that Gazzingan was in good health and fit to work when he was
engaged by petitioners to work on board the vessel M/V Gloria. His PEME showed
essentially 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 stating that Gazzingan suffered intense
chest and back pains, shortness of breath and a slightly elevated blood pressure while
performing his duties. Therefore, even assuming that Gazzingan had a pre-existing
condition, as alleged by petitioners, this does not totally negate the probability and the
possibility that his aortic dissection was aggravated by his work conditions. The stress
caused by his job actively contributed to the progression and aggravation of his illness. In
compensation cases, ―[i]t 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.‖[39]
More importantly, 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.[40] As discussed above, a causal link was
established between Gazzingan‘s employment and his ailment. In view thereof, the
presumption now operates in favor of respondents and the burden is shifted to the
petitioners to overcome the statutory presumption. However, in the case at bench,
petitioners failed to discharge such burden as will be discussed below.
First, petitioners insist that Gazzingan‘s genetic predisposition has caused his ailment and
that his smoking habits hastened its development. We are not persuaded. As stated earlier,
the specific cause of aortic dissection is still unknown and the risk factors may only seem to
be associated in some way with the disease. Thus, petitioners‘ theory cannot be completely
correct. Besides, no medical certification was presented by petitioners to substantiate their
bare allegation that Gazzingan‘s left ventricular hypertrophy and lipoma excision found in his
PEME had a causal relation with the disease that caused his death. As aptly held by the CA,
there was no evidence to prove the causal connection between Gazzingan‘s lipoma, which
was already removed, and his dissecting aneurysm. With respect to left ventricular
hypertrophy, the same does not automatically suggest the presence of a pre-existing
congenital disease. It is not an illness but a mere condition that involves the thickening of the
muscle wall of the heart‘s left pumping chamber that can be well-managed and usually only
develops overtime.[41] Also, smoking, by itself, can neither be a factor that bars compensation
for the illness.[42] While smoking may contribute to the development of the disease, it is not
the only possible cause. Other factors such as working and living under stressful conditions
also contribute to its development.
Next, petitioners strongly rely on Dr. Banaga‘s opinion that Gazzingan‘s condition is not
work-related. They insist that Dr. Banaga‘s assessment is conclusive in the absence of a
contrary opinion rendered by a separate physician. The Court, however, agrees with the CA
that such opinion is inconclusive for purposes of determining the compensability of
Gazzingan‘s illness.
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
is deemed compliance. Failure of the seafarer to comply with the mandatory reporting requirement
on both parties.
―It is beyond cavil that it is the company-designated physician who is entrusted with the task
of assessing the seaman‘s disability.‖[43] It is the company-designated physician‘s findings
which should form the basis of any disability claim of the seafarer. Such assessment is
arrived at after the seafarer submits himself to the company-designated physician for a post
employment medical examination within three days from his repatriation. It is significant to
note, however, that courts are not bound by the assessment of the company-designated
physician.[44]While the company-designated physician must declare the nature of a seafarer‘s
disability, the former‘s declaration is not conclusive and final upon the latter or the court.[45] Its
inherent merit will still be weighed and duly considered.
In Racelis v. United Philippine Lines, Inc.,[46] the medical opinion presented by the employer
stating that the seafarer‘s ailment is congenital in origin was discarded by the Court because
the opinion came from a physician who did not personally attend to the seafarer in the
course of the latter‘s medical treatment and for being unsubstantiated by any medical
findings. The ailment which caused the seafarer‘s death was held by the Court to be work-
related for failure of the employer to overcome the statutory presumption of work-
relatedness. Similarly, in Jebsens Maritime, Inc. v. Babol,[47] the Court did not give probative
weight on the company doctor‘s opinion that the seafarer‘s condition is not work-related as
the wordings used in the doctor‘s report did not make a categorical statement confirming the
total absence of work relation but only a mere probability. Again, the Court upheld the
presumption of work-relation. In Magsaysay Mitsui Osk Marine, Inc. v. Bengson,[48] the Court
disregarded the company-designated physician‘s categorical declaration that the seafarer‘s
illness is not work-related for being self-serving. As the facts of the case clearly showed the
contributory factor of the seafarer‘s daily working conditions to the illness suffered, even in
the absence of a contrary opinion of other doctors, the Court sustained the illness‘ work-
connection. Also, in Teekay Shipping Philippines, Inc. v. Jarin,[49] the Court ruled that it was
unnecessary for the seafarer therein to consult and provide a contrary opinion from his own
doctors since the causal connection between the illness and the work for which he had been
contracted was clearly detailed and convincingly established by him.
Here, while petitioners were quick to point out that Dr. Banaga is a company-designated
physician, the latter, however, could not have possibly arrived at a reliable diagnosis of
Gazzingan‘s condition. His assessment, based merely on Gazzingan‘s PEME, did not reflect
the true state of health of the seafarer. As the Court has previously ruled, a PEME is not
exploratory in nature and cannot be relied upon to arrive at a seafarer‘s true state of
health.[50]The NLRC erred in stating that this opinion can be relied upon as an accurate
assessment of Gazzingan‘s illness on the sole reason that no contrary opinion was
rendered. The fact that there was no contrary opinion of another physician is of no moment.
To repeat, Dr. Banaga‘s opinion is not an accurate appraisal of the extent of Gazzingan‘s
disability. It was not based on the post-employment medical examination conducted on
Gazzingan after his medical repatriation. In the absence of reasonable findings, diagnostic
tests and procedures to support the assessment, the same cannot be simply taken at face
value. Moreover, Dr. Banaga hastily concluded that aortic dissection is hereditary without
necessarily considering other varied factors that can contribute to the development of the
disease. Consequently, his medical opinion cannot be given credence or serve as basis to
deny Gazzingan‘s disability claims.
In view of the above, the Court holds that the CA correctly found the NLRC to have gravely
abused its discretion amounting to lack or in excess of jurisdiction in declaring that the illness
suffered by Gazzingan is not work-related.
Anent the nature of disability caused by his work-related illness, the Court notes that
Gazzingan was no longer provided work after being diagnosed with aortic
dissection/dissecting aneurysm. He was constrained to seek further medical attention at his

own expense and was continuously unable to work until his death. Thus, the Court is
inclined to rule that Gazzingan suffered from a permanent total disability as he was unable to
return to his regular job for more than one hundred twenty days. [51] Accordingly, his
permanent total disability benefits should be US$60,000.00 or 120% of US$50,000.00,
pursuant to the Schedule of Disability Allowances under the POEA-SEC. The Labor Arbiter
thus erred in fixing his disability benefits at US$50,000.00. As regards sickness allowance,
the award of US$1,300.00 for his incapacity to work for 120 days was proper. The grant of
attorney‘s fees is likewise affirmed for being justified in accordance with Article 2208(2)[52] of
the Civil Code since respondents were compelled to litigate to satisfy their claims for
Gazzingan‘s disability benefits.[53]
WHEREFORE, the Petition is DENIED. The May 26, 2011 Decision and November 25, 2011
Resolution of the Court of Appeals in CA-G.R. SP No. 103580 are AFFIRMED with the
MODIFICATION that petitioners are ordered to jointly and solidarily pay respondents total
and permanent disability benefits in the amount of US$60,000.00 or its equivalent amount in
Philippine currency at the time of payment.
SO ORDERED.
15 JUN 2015 | SUBJECT | LABOR AND

Petron Corporation Vs. Armz Caberte, et al.;

G.R. No. 182255; June 15, 2015
DECISION
DEL CASTILLO, J.:
of Appeals (CA) in CA-G.R. SP No. 82356 which reversed the May 14, 2003 Decision[3] and
November 27, 2003 Resolution[4] of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-000329-2002. The NLRC affirmed the March 7, 2002 Decision[5] of the
Labor Arbiter dismissing the Complaints for illegal dismissal and payment of monetary
claims filed by respondents Armz Caberte (Caberte), Antonio Caberte, Jr. (Caberte Jr.),
MichaeServicio (Servicio), Ariel Develos (Develos), Adolfo Gestupa (Gestupa), Archie
Ponteras (Ponteras), Arnold Blanco (Blanco), Dante Mariano (Mariano), Virgilio Galorosa
(Galorosa) and Camilo Te (Te) against petitioner Petron Corporation (Petron), ABC
Contracting Services (ABC), and its owner Antonio B. Caberte, Sr. (Caberte Sr.). Likewise
assailed is the CA Resolution[6] dated March 4, 2008 which denied Perron‘s Motion for
Reconsideration.
Factual Antecedents
Petron is a domestic corporation engaged in the manufacture and distribution to the general
public of various petroleum products. In pursuance of its business, Petron owns and
operates several bulk plants in the country for receiving, storing and distributing its products.
On various dates from 1979 to 1998, respondents were hired to work at Petron‘s Bacolod
Bulk Plant in San Patrick, Bacolod City, Negros Occidental as LPG/Gasul fillers,
maintenance crew, warehousemen, utility workers and tanker receiving crew.
For the periods from March 1, 1996 to February 28, 1999 and November 1, 1996 to June 30,
1999, Petron and ABC, a labor contracting business owned and operated by Caberte Sr.,
entered into a Contract for Services[7] and a Contract for LPG Assistance Services.[8] Under
both service contracts, ABC undertook to provide utility and maintenance services to Petron
in its Bacolod Bulk Plant.
On July 2, 1999, respondents Caberte, Caberte Jr., Servicio, Develos, Gestupa, Ponteras,
Blanco and Mariano filed before the Labor Arbiter a Complaint[9] for illegal dismissal,
underpayment of wages and non-payment of allowances, 13th month pay, overtime pay,
holiday pay, service incentive leave pay, moral and exemplary damages and attorney‘s fees
against Petron, ABC and Caberte Sr., docketed as NLRC RAB VI Case No. 06-07-10588-99.
Subsequently, respondents Galorosa and Te separately filed similar Complaints[10] docketed

as NLRC RAB VI Case No. 06-07-10675-99 and RAB Case No. 06-09-10785-99,
respectively. The three Complaints were consolidated in an Order[11] dated October 25, 1999
of the Labor Arbiter.
Respondents averred that even before Petron engaged ABC as contractor in 1996, most of
them had already been working for Petron for years. However, every time Petron engages a
new contractor, it would designate such new contractor as their employer. Despite such
arrangement, Petron exercised control and supervision over their work, the performance of
which is necessary and desirable in its usual trade and business. Respondents added that
ABC is a mere labor-only contractor which had no substantial capital and investment, and
had no control over the manner and method on how they accomplished their work. Thus,
Petron is their true employer. On July 1, 1999, however, Petron no longer allowed them to
enter and work in the premises of its Bacolod Bulk Plant. Hence, the complaints for illegal
dismissal.
On the other hand, Petron asserted that ABC is an independent contractor which supplied
the needed manpower for the maintenance of its bulk handling premises and offices, as well
as for tanker assistance in the receiving and re-filling of its LPG products; that among the
workers supplied by ABC were respondents, except Caberte Jr., who does not appear to be
one of those assigned by ABC to work for it; that it has no direct control and supervision over
respondents who were tasked to perform work required by the service contracts it entered
into with ABC; and, that it cannot allow the continuous employment of respondents beyond
the expiration of the contracts with ABC. To prove the legitimacy and capacity of ABC as an
independent contractor, Petron submitted the following documents: (1) Contractor‘s Pre-
Qualification Statement;[12] (2) Petron‘s Conflict of Interest Policy signed by Caberte Sr., as
proprietor of ABC;[13] (3) ABC‘s Certificate of Registration issued by the Bureau of Internal
Revenue (BIR);[14] (4) Value-Added Tax Return for the year 1995;[15] (5) BIR Confirmation
Receipt;[16] (6) Caberte Sr.‘s Tax Identification Number (TIN) issued by the BIR; [17] (7) Caberte
Sr.‘s Individual Income Tax Return for the years 1993[18] and 1994;[19] (8) ABC‘s Audited
Financial Statements for the years 1992,[20] 1993[21] and 1994;[22] (9) ABC‘s Mayor‘s Permit for
the year 1995;[23] and, (10) ABC‘s Certificate of Registration of Business Name issued by the
Department of Trade and Industry (DTI).[24] In addition, it averred that ABC, as a contractor,
had duly posted a performance bond[25] and took out insurance policies[26] against liabilities.
Petron likewise presented affidavits[27] of two Petron employees stating that respondents do
not perform activities related to Petron‘s business operation but only tasks which are
intermittent and which can be contracted out. Also submitted were affidavits[28] of three former
employees of ABC attesting to the fact that during their stint in Petron, they used materials
such as floor polisher, floor wax, broom, dustpan, cleaning rags and other equipment owned
by ABC to accomplish their tasks and that they worked under the supervision of Caberte Sr.,
through the latter‘s designated overall supervisor, respondent Caberte. Petron further
revealed that ABC/Caberte Sr. has the power to hire and fire respondents and was the one
paying their wages.
In a Decision[29] dated March 7, 2002, Executive Labor Arbiter Danilo C. Acosta (LA Acosta)
held that ABC is an independent contractor that has substantial capital and that respondents
were its employees. He likewise ruled that ABC‘s cessation of operation is a force majeure
that justifies respondents‘ dismissal. Nonetheless, LA Acosta awarded respondents
separation pay based on the applicable minimum wage rate at the time of expiration of the
contracts of service. He, however, denied the claims for overtime pay and night shift
differential pay for lack of merit. The dispositive portion of the Decision reads:
Conformably with the foregoing, respondent ABC is hereby ORDERED TO PAY EACH
COMPLAINANT, namely, complainants Antonio Caberte, Jr., Armz M. Caberte, Michael Servicio,
Ariel Develos, Adolfo Gestupa, Archie Ponteras, Arnold Blanco, Dante Mirano, Virgilio Galorosa
and Camilo Te, separation pay of one month for every year of service.
All other claims and the claims against respondent PETRON are hereby ORDERED DISMISSED for
lack of merit.
SO ORDERED.[30]
Respondents appealed to the NLRC where they insisted that they are regular employees of
Petron since ABC is a labor-only contractor.
In a Decision[31] dated May 14, 2003, the NLRC affirmed the ruling of the Labor Arbiter after it
found that ABC is not a mere labor contractor but a legitimate independent contractor. In so
ruling, the NLRC took into account the following: (1) ABC/Caberte Sr. has the power of
control over respondents as Caberte Sr. was the one controlling and supervising
respondents in their work. While Petron intervened at times, the same was limited to safety
precautions due to the hazardous nature of the products the workers were dealing with; (2)
ABC possessed sufficient capital and equipment per the various documents that Petron
submitted showing the former‘s financial capability to maintain its status as an accredited
contractor of the latter. In fact, Caberte Sr. was even able to establish ABC‘s Bacolod City
Office; and, (3) ABC/Caberte Sr. has the power to hire and dismiss respondents. Hence, the
dispositive portion of the Decision, viz:
WHEREFORE, premises considered, this appeal is DISMISSED and the decision of the Executive
Labor Arbiter is AFFIRMED.
SO ORDERED.[32]
Respondents filed a Motion for Reconsideration which was, however, denied in the NLRC
Resolution[33] dated November 27, 2003.
Aggrieved, respondents filed a Petition for Certiorari[34] before the CA ascribing upon the
NLRC grave abuse of discretion amounting to lack or in excess of jurisdiction in holding that
they are not employees of Petron.
The CA, in a Decision[35] dated November 14, 2007, found merit in respondents‘ Petition. It
ruled that ABC is engaged in labor-only contracting because: first, it did not have substantial
capital or investment in the form of tools, equipment, implements, machineries and work
premises, actually and directly used in the performance or completion of the job it contracted
out from Petron; second, the work assigned to respondents were directly related to Petron‘s
business; and, third, the nature of Petron‘s business requires it to exercise control over the
performance of respondents‘ work. Consequently, the CA declared respondents as Petron‘s
regular employees. And since Petron did not comply with the requirements under the Labor
Code when it terminated their employment, respondents were illegally dismissed and
therefore entitled to reinstatement without loss of seniority rights and other privileges, with
the alternative relief of separation pay in lieu of reinstatement, and to full backwages,
inclusive of allowances, and to other benefits or their monetary equivalent computed from
the time compensation was withheld up to the time of actual reinstatement. The CA,
however, denied respondents‘ claims for moral and exemplary damages in the absence of
bad faith in Petron‘s act of dismissing them but awarded respondents 10% attorney‘s fees
for having to litigate to protect their interests. The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, the decision of the National Labor Relations Commission
dated May 14, 2003, in NLRC Case No. V-000329-2002, affirming the March 7, 2002 Decision of
Executive Labor Arbiter Danilo C. Acosta of the Sub-Regional Arbitration Branch VI, Bacolod City,
is hereby REVERSED.
Respondent Petron Corporation is ordered to reinstate Armz Caberte, Antonio Caberte, Jr., Michael
Servicio, Ariel Develos, Adolfo Gestupa, Archie Ponteras, Arnold Blanco, Dante Mirano, Virgilio
Galorosa and Camilo Te to their former positions with the same rights and benefits and the same
salary rates as its regular employees.
Respondent Petron Corporation is likewise ordered to pay petitioner‘s attorney‘s fees equivalent to ten
percent (10%) of the monetary award.
Costs against private respondent Petron.
SO ORDERED.[36]
Petron‘s Motion for Reconsideration[37] was denied by the CA in its Resolution[38] dated March
4, 2008. Hence, this present recourse.
Issues
Petron presents the following grounds for review:

XXX THE COURT OF APPEALS SERIOUSLY ERRED AND DECIDED A QUESTION OF
SUBSTANCE IN A MANNER NOT IN ACCORD WITH LAW AND WITH APPLICABLE
JURISPRUDENCE IN FINDING THAT ABC CONTRACTING SERVICES IS A MERE LABOR-
ONLY CONTRACTOR AND IN HOLDING THAT RESPONDENTS ARE THUS REGULAR
EMPLOYEES OF THE COMPANY CONSIDERING THAT:
1. THERE IS A LEGITIMATE SERVICE CONTRACTING AGREEMENT

BETWEEN THE COMPANY AND ABC CONTRACTING SERVICES;
2. THE CONTRACTED SERVICES THAT RESPONDENTS PERFORMED ARE

NOT DIRECTLY RELATED AND NECESSARY OR DESIRABLE TO THE
COMPANY‘S PRINCIPAL BUSINESS;
3. ABC CONTRACTING SERVICES CARRIES ON AN INDEPENDENT BUSINESS

AND POSSESSES SUBSTANTIAL CAPITAL AND INVESTMENT;
4. RESPONDENTS ARE EMPLOYEES OF ABC CONTRACTING SERVICES.[39]

Petron asserts that ABC, as an independent contractor, rendered janitorial, utility and LPG
assistance services by virtue of legitimate contracts entered into by and between them. As
such, the services rendered by respondents were purely maintenance and utility works
which are not directly related, necessary and desirable to Petron‘s main business.
Petron likewise insists that ABC is not a labor-only contractor as it carries on an independent
business and uses its own equipment, tools, materials and supplies in the performance of its
contracted services. Further, it asserts that ABC wielded and exercised the power of
selection or engagement, payment of wages, discipline or dismissal, and of control over
respondents.
Our Ruling

Labor-only contracting and permissible job contracting, defined; a contractor is presumed by
law to be a labor-only contractor; anyone claiming the supposed status of an independent
contractor bears the burden of proving the same.
As defined under Article 106 of the Labor Code, labor-only contracting, a prohibited act, is an
arrangement where the contractor, who does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, supplies workers
to an employer and the workers recruited are performing activities which are directly related
to the principal business of such employer.
Permissible or legitimate job contracting or subcontracting, on the other hand, ―refers to an

arrangement whereby a principal agrees to put out or farm out with the contractor or
subcontractor the performance or completion 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. A person is
considered engaged in legitimate job contracting or subcontracting if the following conditions
concur: (a) the contractor carries on a distinct and independent business and partakes 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 the contractor or subcontractor assures the contractual employees‘ entitlement to all
labor and occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social welfare benefits.‖[40]
To determine whether a contractor is engaged in labor-only contracting or permissible job

contracting, ―the totality of the facts and the surrounding circumstances of the case are to be
considered.‖[41]
Petron contends that the CA erred in ruling that ABC is a labor-only contractor since
respondents failed to prove that ABC is not an independent contractor. The contention,
however, is incorrect. The law presumes a contractor to be a labor-only contractor and the
employees are not expected to prove the negative fact that the contractor is a labor-only
contractor.[42] Thus, it is not respondents but Petron which bears the burden of establishing
that ABC is not a labor-only contractor but a legitimate independent contractor. As held
in Alilin v. Petron Corporation,[43] ―where the principal is the one claiming that the contractor is
a legitimate contractor, the burden of proving the supposed status of the contractor rests on
the principal.‖
Petron failed to overcome the presumption that ABC is a labor-only contractor.
Foremost, Petron banks on the contracts of services it entered into with ABC. It contends
that the said contracts were legitimate business transactions and were not only for the
purpose of ABC providing manpower or labor-only to Petron, but rather for specific services
pertaining to janitorial, utility and LPG assistance.
Suffice it to state, however, that Petron cannot place reliance on the contracts it entered into
with ABC since these are not determinative of the true nature of the parties‘ relationship. As
held in Babas v. Lorenzo Shipping Corporation,[44] the character of the business, whether as
labor-only contractor or as a job contractor, should be determined by the criteria set by
statute and the parties cannot dictate by the mere expedience of a unilateral declaration in a
contract the character of their business.
Next, Petron endeavours to prove that ABC is a legitimate independent contractor.
To restate, a contractor is deemed to be a labor-only contractor if the following elements are

present: (i) the contractor does not have substantial capital or investment to actually perform
the job, work or service under its own account and responsibility; and (ii) the employees
recruited, supplied or placed by such contractor are performing activities which are directly
related to the main business of the principal.[45] Conversely, in proving that ABC is not a
labor-only contractor, it is incumbent upon Petron to show that ABC has substantial capital
or investment and that respondents were performing activities which were not directly related
to Petron‘s principal business.
To show that ABC has substantial capital or investment, Petron submitted, among others,
ABC‘s BIR Certificate of Registration, VAT Return, BIR Confirmation Receipt, TIN, Individual
Income Tax Return, Mayor‘s Permit and DTI Certificate of Registration. However, the Court
observes that these documents are not conclusive evidence of ABC‘s financial capability. At
most, they merely show that ABC is engaged in business and licensed by the appropriate
government agencies.
As for the financial statements presented, it appears that only the audited financial
statements of ABC for the years 1992, 1993 and 1994 were submitted. As aptly observed by
the CA, these documents cannot be given much credence considering that the service
contracts between Petron and ABC commenced in 1996 and ended in 1999. However, no
audited financial statements for the years material to this case (1996, 1997, 1998 and 1999)
were submitted. Also, as per record, ABC was obligated to submit to Petron at least once
every two years its latest audited financial statements, among others, as a requirement for
the retention of its status as an accredited contractor of Petron.[46] If it is true that ABC
continued to possess its financial qualification after 1994, Petron should have presented
ABC‘s financial statements for the said years which are presumed to be in Petron‘s
possession considering that they are part of the requirements that it itself set for its
accredited contractors.
Neither does the performance bond taken out by ABC serve as significant evidence of its
substantial capital. As aptly explained by the CA:
The performance bond posted by ABC Contracting Services likewise fails to convince us that the
former has substantial capital or investment inasmuch as it was not shown that the performance bond
in the amount of P596,799.51 was enough to cover not only payrolls, rentals and equipment but also
possible damages to the equipment and to third parties and other contingent liabilities. Moreover, this
Court takes judicial notice that bonds of this nature are issued upon payment of a small percentage as
premium without necessarily requiring any guarantee.
If at all, the bond was a convenient smoke screen to disguise the real nature of ABC‘s employment as
an agent of Petron.[47]
Anent substantial investment in the form of equipment, tools, implements, machineries and
work premises, Petron likewise failed to show that ABC possessed the same. Instead, what
is evident in the records was that ABC had been renting a forklift from Petron in order to
carry out the job of respondents.[48] This only shows that ABC does not own basic equipment
needed in the performance of respondents‘ job. Similarly and again as correctly held by the
CA, the fact that ABC leased a property for the establishment of its Bacolod office is
immaterial since it was not shown that it was used in the performance or completion of the
job contracted out. ―Substantial capital or investment,‖ under Section 5, Rule VIII-A, Book III
of the Omnibus Rules Implementing the Labor Code (Implementing Rules), as amended by
Department Order No. 18-02,[49] does not include those which are not actually and directly
used in the performance of the job contracted out.
Going now to the activities performed by respondents, Petron avers that the same were not
necessary or desirable to its principal business. In fact, the service contracts it entered into
with ABC clearly referred to respondents‘ functions as maintenance and utility works only
which are remote to its principal business of manufacturing and distributing petroleum
products.
The Court finds otherwise. Gestupa, Ponteras, Develos, Blanco and Mariano were LPG
fillers and maintenance crew; Caberte was an LPG operator supervisor; Te was a
warehouseman and utility worker; and Servicio and Galorosa were tanker receiving crew
and utility workers. Undoubtedly, the work they rendered were directly related to Petron‘s
main business, vital as they are in the manufacture and distribution of petroleum products.
Besides, some of the respondents were already working for Petron even before it engaged
ABC as a contractor in 1996. Albeit it was made to appear that they were under the different
contractors that Petron engaged over the years, respondents have been regularly
performing the same tasks within the premises of Petron. This ―the repeated and continuing
need for the performance of the job is sufficient evidence of the necessity, if not
indispensability of the activity to the business.‖[50]
What further militates against Perron‘s claim that ABC, as an alleged independent
contractor, is the true employer of respondents, is the fact that Petron has the power of
control over respondents in the performance of their work. It bears stressing that the power
of control merely calls for the existence of the right to control and not necessarily the
exercise thereof.[51] Here, Petron admitted in its Position Paper that the supervision of a
Petron employee is required over LPG and tanker assistance jobs for inventory control and
safety checking purposes. It explained that due to the hazardous nature of its products,
constant checking of the procedures in their handling is essential considering the high
possibility of fatal accidents. It also admitted that it was the one supplying the needed
materials and equipment in discharging these functions to better insure the integrity, quality
and safety of its products.
From the foregoing, it is clear that Petron failed to discharge its burden of proving that ABC
is not a labor-only contractor. Consequently, and as warranted by the facts, the Court
declares ABC as a mere labor-only contractor. ―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, and the ‗labor-only‘
contractor is considered as a mere agent of the principal, the real employer.‖ [52] Accordingly
in this case, Petron is declared to be the true employer of respondents who are considered
regular employees in view of the fact that they have been regularly performing activities
which are necessary and desirable to the usual business of Petron for a number of years.
Respondents, except Antonio Caberte, Jr., were illegally dismissed.
With respect to respondents‘ dismissal, Petron claimed that the same sprang from the
termination or conclusion of the service contracts it entered into with ABC. As earlier held,
respondents are considered regular employees. In cases of regular employment, an
employer may only terminate the services of an employee for just or authorized causes
under the law.[53] As the reason given by Petron dismissing respondents does not constitute a
just or authorized cause for termination,[54] the latter are declared to have been illegally
dismissed. Respondents are thus entitled to all the remedies of an illegally dismissed
employee, i.e., backwages and reinstatement, or if no longer feasible, separation pay. The
CA is thus correct in ruling that respondents are entitled to reinstatement without loss of
seniority rights and other privileges. However, if reinstatement is no longer feasible,
respondents are entitled to receive separation pay equivalent to one month salary for every
year of service. In addition, respondents are entitled to full backwages from the time they
were not allowed to work on July 1, 1999 up to actual reinstatement or finality of this
Decision as the case may be.
An exception must be taken, however, with respect to Caberte Jr. From the beginning,
Petron disputes the fact he ever worked for Petron. Therefore, before his case against
Petron can prosper, Caberte Jr. must first establish that an employer-employee relationship
existed between them since it is basic that the issue of illegal dismissal is premised on the
existence of such relationship between the parties.[55] Unfortunately, nowhere in the records
does it show that he indeed worked for Petron. Consequently, his complaint should be
dismissed.
WHEREFORE, the petition is DENIED. The November 14, 2007 Decision and the March 4,
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 82356 are MODIFIED in that: (1)
the Complaint of respondent Antonio Caberte, Jr. against petitioner Petron Corporation is
dismissed; and (2) petitioner Petron Corporation is ordered to reinstate all of the
respondents, except for Antonio Caberte, Jr., to their former positions with the same rights
and benefits and the same salary rates as its regular employees, or if reinstatement is no
longer feasible, to separation pay equivalent to one month salary for every year of service
and to pay them their full backwages from July 1, 1999 until actual reinstatement or upon
finality of this Decision as the case may be, as well as attorney‘s fees equivalent to 10% of
the monetary award, with costs against Petron Corporation.
SO ORDERED.

CASTILLO | SUBJECT | LABOR AND EMPLOYMENT | NON-PAYMENT OF
SALARIES, BENEFITS AND DAMAGES | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO
THE SUPREME COURT
Litex Glass and Aluminum Supply and/or

Ronald Ong-Sitco; G.R. No. 198465; April 22,
2015
DECISION
DEL CASTILLO, J.:
Before us is a Petition for Review on Certiorari[1] seeking to set aside the May 11, 2011
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 113840, which dismissed the
petition for certiorari filed therewith and affirmed the October 30, 2009[3] and February 18,
2010[4] Resolutions of the National Labor Relations Commission (NLRC), which in turn,
affirmed in toto the June 18, 2009 Decision[5] of the Labor Arbiter declaring respondent
Dominador B. Sanchez (Sanchez) to have been illegally dismissed from employment by
petitioners Litex Glass and Aluminum Supply (Litex) and Ronald Ong-Sitco (Ong-Sitco).
Likewise assailed is the August 31, 2011, Resolution[6] of the CA denying petitioners‘ Motion
for Reconsideration.[7]
Antecedent Facts
This case arose from a Complaint[8] for illegal dismissal and non-payment of holiday pay,
premium for holiday pay, service incentive leave pay and attorney‘s fees filed by Sanchez
against petitioners on February 18, 2009 before the Labor Arbiter, docketed as NLRC NCR
Case No. 02-02975-09.
Sanchez alleged that since 1994, he was employed as driver and aluminum installer in
several companies owned and managed by Ong-Sitco, the last of which was with Litex.
Since February 1996, Ong-Sitco had been remitting his Social Security System (SSS)
monthly contributions.[9] Sanchez averred that he has no record of any work related offense
for which he has been reprimanded, suspended or warned and that for the past 15 years, he
has been diligently serving his employer. He was thus surprised when on December
23,2008, Ong-Sitco and his wife scolded and threw insulting words and invectives upon him
and then ordered him to go on indefinite leave. Due to the incident, he decided to just leave
the work premises with the hope that the animosity between him and his employer would
eventually subside. On December 28, 2008, he went back to the office to talk to Ong-Sitco,
but the latter just ignored him. He again returned on January 2, 2009 to purportedly discuss
his employment status, but Ong-Sitco was again unwilling to talk to him. The same thing
happened after he went back a week later. These, thus, led Sanchez to file a case for illegal
dismissal and non-payment of benefits against petitioners.
Subsequent to the filing of the said complaint, Sanchez received two memorandum-letters
from petitioners. The first one was dated January 7, 2009[10] but mailed on February 23,
2009,[11] and received by Sanchez on February 26, 2009. It contained a directive for Sanchez
to report for work and to explain his continued absence from December 22, 2008 to January
7, 2009, after he was allegedly given verbal warning for committing the following infractions:
1) going home early without justification on December 3, 2008; 2) exhibiting erratic behavior
and threatening to file a case against petitioners after being summoned to explain his
unjustified leave from work on December 9, 2008; and, 3) unauthorized use of company
vehicle for personal benefit on December 20, 2008. The second memorandum-letter[12] dated
January 22, 2009 which was sent on March 10, 2009,[13] and received by Sanchez on March
22, 2009, contained a warning that his refusal to follow the earlier directive to report and
explain his continued absence within 24 hours would constitute abandonment of work on his
part.
Sanchez‘s legal counsel, Atty. Osias M. Merioles, Jr., on the other hand, wrote petitioners a
letter[14] dated March 20, 2009 informing them that his client would not report for work as the
first memorandum-letter was a mere afterthought to cover up their act of illegal termination.
Petitioners, on the other hand, negated all of Sanchez‘s claims. They denied having
employed him in 1994 since, according to them, Litex was only registered on April 5,
2002.[15] Petitioners also denied having dismissed Sanchez. They averred that it was
Sanchez who abandoned his job by not reporting for work.
Petitioners then presented their own version of the facts. They averred that based on
company records, the January 7, 2009 memorandum-letter was sent on January 8, 2009
and not on February 23, 2009 to Sanchez‘s last known address. The same, however, was
returned to sender. On the other hand, the January 22, 2009 memorandum-letter was sent
to Sanchez on January 23, 2009 and not on March 10,2009. These memorandum-letters are
not termination letters as claimed by Sanchez, but notices for him to report for work and to
explain several infractions that he committed on December 3, 9 and 20, 2009. But instead of
complying, Sanchez refused to go to work as evidenced by his counsel‘s letter. To
petitioners, this intimated Sanchez‘s lack of interest to work. Petitioners further averred that
they have no reason to terminate Sanchez especially since the latter has pending obligations
with the company consisting of P39,449.20 worth of materials and money amounting to
P6,500.00.
hi a Decision[16] dated June 18,2009, the Labor Arbiter declared Sanchez to have been
illegally dismissed by petitioners. This was after he found Sanchez‘s version of facts more
credible. He observed that the original copies of the registry receipts which were attached to
the envelopes of the January 7 and January 22, 2009 memorandum-letters show that they
were mailed only on February 23, 2009 and March 10, 2009, respectively, or after the filing
of the complaint for illegal dismissal on February 18, 2009. Thus, said memorandum-letters
were made and sent by petitioners ―to evade the consequences of illegal termination by
showing seeming compliance with the notice requirement and likewise to demonstrate the
absence of dismissal.‖[17] Moreover, the Labor Arbiter pointed out that the alleged infractions
imputed against Sanchez are not sufficient grounds to warrant his dismissal.
For having been illegally dismissed, Sanchez was awarded separation pay computed from
the date of hiring in 1994 up to the finality of the Decision, and foil backwages computed
from the date of dismissal also up to the finality of the Decision. [18] He was also granted his
claims for holiday pay, service incentive leave pay and attorney‘s fees. Thus:
WHEREFORE, premises considered, judgment is hereby rendered finding Complainant to have been
illegally dismissed and, in conformity therewith, holding Respondents jointly and severally liable to
pay Complainant his separation pay and full backwages counted from date of dismissal until finality
of this Decision, including the awards [for] holiday pay and service incentive leave pay, as currently
contained in Computation and Examination Unit‘s schedule of computation herein adopted and
marked as Annex ―A‖, plus attorney‘s fee equivalent to 10% of the judgment award.
SO ORDERED.[19]
On appeal with the NLRC, petitioners averred that the Labor Arbiter erred in: (1) not ruling
that Sanchez abandoned his work; (2) awarding separation pay even if not sought in the
complaint and despite the absence of strained relations; (3) computing separation pay based
on Sanchez‘s length of service of 15 years despite the fact that he was only hired in 2002;
(4) not ruling on Sanchez‘ indebtedness to petitioners in the total sum of P45,494.20; and,
(5) awarding attorney‘s fees despite the absence of bad faith on their part.
In a Resolution[20] dated October 30, 2009, the NLRC dismissed the appeal and affirmed the
Labor Arbiter‘s judgment. It: (1) ruled that Sanchez cannot be said to have abandoned his
job as there is no showing of an intention to resign or forego with his employment; (2) upheld
the grant of separation pay and other monetary awards; and, (3) sustained the Labor Arbiter
in not deducting from Sanchez‘s monetary awards his alleged obligations to petitioners on
the ground that the said liabilities were not fully substantiated and that they arose from a
different contractual relation.
Petitioners filed a motion for reconsideration reiterating their previous arguments and adding
that the award of backwages should be computed only until March 20, 2009 when Sanchez
manifested his refusal to report for work. This motion was, however, denied in the NLRC
Resolution[21] of February 18, 2010.
Petitioners‘ next recourse was a Petition for Certiorari[22] with the CA.
In a Decision[23] dated May 11, 2011, the CA dismissed the Petition for Certiorari and affirmed
the afore-mentioned NLRC Resolutions. It agreed with the findings of the labor tribunals that:
(1) Sanchez was dismissed without valid grounds; (2) he is not guilty of abandonment of
work as he immediately filed a case after his efforts to return to work proved futile; (3) the
memorandum-letters were mere afterthought as to give semblance of validity to the
dismissal, they having been sent after the complaint was filed; (4) there was already
antagonism between the parties that warranted the award of separation pay; (5) Sanchez
was under the employ of Ong-Sitco‘s several companies for the past 15 years; (6) the
alleged accountabilities of Sanchez were not fully substantiated and cannot be offset against
his monetary awards since they sprung from a different contractual relation; (7) Sanchez is
entitled to attorney‘s fees since he was constrained to litigate and incur expenses to protect
his interests; and, (8) the award of backwages should be computed from the date of
dismissal on December 23, 2008 until finality of the judgment and not only until March 20,
2009 because Sanchez‘s refusal to return to work was justified, it being predicated on the
reasonable belief that compliance with petitioners‘ memorandum-letters would only serve the
latter‘s apparent purpose of evading their responsibility in illegally terminating him.
Petitioners filed a Motion for Reconsideration which was likewise denied in the CA
Resolution[24] of August 31, 2011.
Hence, this Petition.
Issues
WHETHER X X X IT IS MISLEADING ON THE PART OF THE PRIVATE RESPONDENT TO

PRAY FOR REINSTATEMENT WHEN IN FACT IT IS HIS POSITION THAT HE WILL NOT
REPORT FOR WORK ANYMORE.
WHETHER XXX THE AWARD OF SEPARATION PAY MAY BE SUSTAINED DESPITE THE
FACT THAT THE SAME IS NEITHER PRAYED FOR BY THE PRIVATE RESPONDENT [NOR]
SUPPORTED BY ALLEGATIONS OF STRAINED RELATIONSHIP IN THE PLEADINGS
SUBMITTED BY THE PARTIES NOR WAS THERE ANY ALLEGATION THERETO IN THE
QUESTIONED DECISION ITSELF.
WHETHER XXX MERE SELF-SERVING ALLEGATIONS OF THE PRIVATE RESPONDENT

[ARE] SUFFICIENT TO PROVE THE ALLEGED DISMISSAL.
WHETHER XXX PRIVATE RESPONDENT IS ENTITLED TO THE PAYMENT OF HIS MONEY

CLAIMS.[25]
Petitioners maintain that Sanchez is not entitled to the monetary awards as no dismissal, in
fact, took place. In particular, they question the award of separation pay since it was not
prayed for in the complaint, never discussed or raised in the proceedings before the Labor
Arbiter, and no strained relations exists between them and Sanchez. Besides, even
assuming that Sanchez is entitled to separation pay, petitioners contend that the
computation thereof should only be from 2002 when Sanchez commenced working for them
and not in 1994. Moreover, the award of attorney‘s fees is improper since there is no bad
faith on their part.
Our Ruling
The Petition is partly meritorious.
Sanchez did riot abandon his work

but was illegally dismissed.
Seeking to absolve themselves from the charge of illegal dismissal by denying the fact of
dismissal, petitioners contend that Sanchez abandoned his job. To support this, they
highlighted the fact that they sent him ―show-cause‖ letters which were made in good faith, in
order to give him an opportunity to answer the infractions imputed against him and to
likewise give notice for him to return to work. They insist that the two memorandum-letters
were mailed on January 8 and 23, 2009, respectively, or before the filing of the complaint,
and that said letters were presumed to have been received by Sanchez in the regular course
of mail absent any proof to the contrary.
Suffice it to say, however, that the issue of whether Sanchez was dismissed from
employment is essentially a question of fact[26] which cannot be raised in this petition for
review on certiorari. Besides, we see no compelling reason to deviate from the finding of fact
of the CA, which is in absolute agreement with those of the NLRC and the Labor Arbiter, that
Sanchez was dismissed from employment. ―[FJactual findings of agencies exercising quasi-
judicial functions are accorded not only respect but even finality‖ [27] by this Court when
supported by substantial evidence and especially when affirmed by the CA.[28] Here, the
Labor Arbiter, the NLRC and the CA were unanimous in finding Sanchez‘s narration of the
circumstances surrounding his illegal dismissal credible.
Moreover, this Court is not inclined to disturb findings which conform to evidentiary facts.
Aside from the fact that Ong-Sitco did not dispute Sanchez‘s claim that the two of them had
an altercation on December 23, 2008, the former also admitted that the latter subsequently
went back to his office to clear his employment status but was ignored by him. After two
similar attempts from Sanchez, Ong-Sitco still refused to entertain Sanchez‘s requests and
queries regarding his employment status. It was only in the two memorandum-letters dated
January 7 and January 22, 2009, which were likewise unanimously found by the labor
tribunals and the CA to have been sent to Sanchez after the filing of the complaint, that
petitioners warned Sanchez of his continued absence and directed him to report for work to
explain said absences and answer the infractions he allegedly committed.
From the above factual scenario, the Court is not convinced that Sanchez abandoned his
work. To constitute abandonment, it is essential that an employee failed to report for work
without any valid and justifiable reason and that he had a clear intention to sever the
employment relationship by some overt act.[29] Mere failure to report for work after notice to
return does not constitute abandonment.[30] As mentioned, Sanchez reported back to Ong-
Sitco several times to ask about his employment status but was not entertained. Oddly, while
Ong-Sitco did not deny this, he never bothered to explain why during these instances, he did
not warn Sanchez about his continued absence or ask him to return to work, if only to bolster
the claim that he was not dismissed. Instead, Ong-Sitco just ignored him and this, under the
circumstances, only shows his intention not to retain him. This is further bolstered by the
fact, as shown by the records, that the two memorandum-letters were sent to Sanchez after
he filed a complaint against petitioners. Clearly, Sanchez cannot be said to have unjustifiably
refused to return to work. He cannot be faulted from reasonably concluding that the
memorandum-letters were merely made in order to give semblance of validity to his
termination. In addition and as aptly observed by the CA, Sanchez‘s immediate filing of the
complaint is proof of his desire to return to work. It has been held that the filing of a
complaint negates any intention of abandoning foregoing employment.[31]
Anent Sanchez‘ dismissal, the Court finds that there is no valid ground for the same. No
substantial evidence but only mere allegations were proffered in support of the claim that
Sanchez committed infractions, to wit: 1) going home early without presenting any
justification on December 3, 2008; 2) exhibiting erratic behavior and threatening to file a
case against petitioners after being summoned to explain his unjustifiable leave from work
on December 9, 2008; and 3) unauthorized use of company vehicle for personal benefit on
December 20, 2008.
In view of the above discussion, the Court affirms the CA‘s finding that Sanchez was illegally
dismissed. As such, he is entitled to reinstatement without loss of seniority rights, full
backwages inclusive of allowances, and other benefits or their monetary equivalent,
computed from the time compensation was withheld up to the time of actual reinstatement
pursuant to Article 279[32] of the Labor Code, as amended by Republic Act No. 6715.
The award of separation pay is proper.

However, the computation of the same
should be reckoned from April 2002.
As stated, ―an illegally dismissed employee is entitled to reinstatement as a matter of

right.‖[33] But when an atmosphere of antipathy and antagonism has already strained the
relations between the employer and employee, separation pay is to be awarded as
reinstatement can no longer be equitably effected.[34]
We agree with the CA when it held that the Labor Arbiter‘s award of separation pay is an
equitable disposition. Although petitioners correctly pointed out that separation pay was not
prayed for in the complaint, Sanchez is deemed to have accepted the separation pay
awarded by the Labor Arbiter since he never questioned the same. The Court has ruled that
separation pay may be awarded if the employee decides not to be reinstated.[35] Besides, the
altercation that transpired between Sanchez and Ong-Sitco is enough basis to conclude that
there exists an apparent strained relationship between them. This strained relationship is
also very evident from petitioners‘ refusal to retain Sanchez under their employ. [36] While
petitioners contend that their act of sending Sanchez memorandum-letters directing him to
report for work exhibits their willingness to retain him, the same hardly convinces. We have
already concluded earlier that the said memorandum-letters were mere afterthought made
only to cover-up petitioners‘ act of illegally dismissing Sanchez. For obvious reasons, they
cannot be viewed as a sign of petitioners‘ sincere willingness to reinstate Sanchez. Further,
even if the issue of strained relations was not raised in the proceedings before the Labor
Arbiter, it was nonetheless discussed and argued by the parties in their respective pleadings
submitted to the NLRC when the case was brought on appeal. Clearly, there is sufficient
basis for the grant of separation pay in lieu of reinstatement in this case.
We, however, hold that the labor tribunals and the CA erred in reckoning the employment of
Sanchez from 1994 for the purpose of computing his separation pay. In affirming the
decision of the NLRC and the Labor Arbiter, the CA relied on the SSS Certification [37] and
gave weight to Sanchez‘s claim that Ong-Sitco has been remitting his SSS contributions
since 1996.
In L.C. Ordoñez Construction v. Nicdao,[38] the Court reiterated the basic rule on evidence
that the burden of proof lies on the party who makes the allegation and must prove his claim
by competent evidence. There, respondent Nicdao was claiming entitlement to separation
pay and other employee benefits computed from 1985, the date of her alleged employment.
The Court, however, denied her claim as she made inconsistent statements in her pleadings
concerning her date of employment.
In this case, it is incumbent upon Sanchez to prove that he was in the employ of petitioners
since 1994. Unfortunately, he failed to discharge this onus. The SSS Certification submitted
merely states that his coverage under the SSS started in 1996 and that his latest employer
as of the date of the issuance of the certification is Ong-Sitco. As correctly argued by
petitioners, there is nothing in the said certification which shows that Sanchez was in the
employ of petitioners since 1994 or even since 1996. Neither is there any other competent
evidence presented to substantiate the claim that he worked in several companies owned
and managed by Ong-Sitco since 1994.
Since the only persuasive evidence on record regarding Sanchez‘s date of employment with
petitioners is the latter‘s admission that they employed him in April 2002, the date Litex was
registered with the Department of Trade and Industry, Sanchez is deemed employed by
petitioners beginning on such date. Hence, the reckoning point for the computation of the
separation pay in lieu of reinstatement awarded to Sanchez shall be the year 2002 and not
1994.
Attorney’s fees was correctly awarded.
We affirm the CA‘s award as well as its basis in granting attorney‘s fees in favor of Sanchez.
―An award of attorney‘s fees is proper if one was forced to litigate and incur expenses to
protect one‘s rights and interest by reason of an unjustified act or omission on the part of the
party from whom the award is sought.‖[39] This is clearly obtaining in this case.
WHEREFORE, the Petition is PARTLY GRANTED. The assailed May 11, 2011 Decision
and August 31, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 113840,
are AFFIRMED with the modification that petitioners Litex Glass and Aluminum Supply
and/or Ronald Ong-Sitco are ordered to pay respondent Dominador B. Sanchez‘s separation
pay computed at one-month pay for every year of service, with years of service reckoned
from April 2002 until the finality of this Decision.
SO ORDERED.
20 APR 2015 | JURISPRUDENCE | PONENTE | JUSTICE

SUPREME COURT
The Heirs of the Late Delfin Dela Cruz,

represented by his Spouses Carmelita Dela
Cruz Vs. Philippine Transmarine Carriers, Inc.
represented by Mr Carlos C. Salinas, et al.;
G.R. No. 196357; April 20, 2015
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari[1] assails the June 18, 2010 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 105930 dismissing the petition for certiorari filed therewith
and affirming the January 23, 2007 Decision[3] of the National Labor Relations Commission
(NLRC) in OFW (M) 03-12-3155-00 (CA No. 046453-05). Said NLRC Decision reversed and
set aside the Labor Arbiter‘s May 30, 2005 Decision[4] which, in turn, granted the late Delfin
Dela Cruz‘s (Delfin) claims for sickness allowance and disability benefits filed against
respondents Philippine Transmarine Carriers, Inc. and/or Tecto Belgium N.V. (respondents).
Also assailed in this petition is the CA‘s March 29, 2011 Resolution[5] denying the Motion for
Reconsideration[6] filed by the heirs of Delfin (petitioners).
Factual Antecedents
The facts, as summarized by the CA in its assailed Decision, are as follows:
The late Delfin Dela Cruz was contracted for the position of [Oiler] by x xx Philippine Transmarine
Carriers[,] Inc., a local manning agent for and in behalf of the latter‘s principal, Tecto Belgium
N.V.[,] under the following terms and conditions as provided for in the Contract of Employment:
Duration of contract – 9 months
Position – OILER
Basic Monthly Salary – $535.00 per month
Hours of Work – 44 hours per week
Overtime – $298/month fixed overtime –
US$3.50/hour after 85 hours
Vacation Leave w/ – 8 days/month with Seniority Bonus

Pay US$7.50/month
Point of Hire – Manila, Philippines

As required by law and by the employment contract, [Delfin] underwent a Pre-Employment Medical
Examination (PEME) and was declared Fit for Sea Service. [His] work includes observing routine
watch, taking records of pressure of temperature of all working apparatus, obeying all orders and
commands of the engineers, and maintaining cleanliness of machinery and engine room.
[Delfin] left the Philippines on 16 August 2000 and immediately embarked the vessel ―Lady Hilde‖
on 17 August 2000. While on board, he felt gradual chest pains and pain [in] his upper abdominal
region. On 26 [June] 2001, while performing his regular duties, he was hit by a metal board on his
back. He, thereafter, requested medical attention and was given medications and advised to be given
light duties for the rest of the week. Upon the vessel‘s arrival at a convenient port on 16 August 2001,
his contract expired and [he] was signed off from the vessel. He xxx reported to xxx [respondents] as
required. He also sought medical assistance but was not [extended] such.
On 13 November 2003, [Delfin] went to De Los Santos Medical Center for proper medical attention[.]
[There,] he underwent X-Ray and MRI of the [Thoracic] Spine. Afterwards, he was not employed by
xxx [respondents] because he was already incapacitated to engage in his customary work. He filed his
claim for sickness allowance from the same manning agency but the same was not [granted].
His [condition] deteriorated[.] [Thereafter, he was] admitted at St. Luke‘s Medical Center, where he
was diagnosed to be suffering from [malignant] peripheral nerve sheath tumor [MPNST]. He
shouldered his medical expenses x x x.
On 4 December 2003, he filed a complaint before the NLRC to, claim payment for sickness allowance
and disability compensation. x x x
[Respondents] filed [a] Motion to Dismiss on the ground of prescription, the claim having [been] filed
beyond one year from the date of the termination of the contract. [Delfin] countered x x x that the
applicable prescription period is 3 years, according to the POEA Standard Employment Contract. The
parties, thereafter, submitted their position papers. [Delfin] claimed [for] medical reimbursement and
sickness allowance, permanent disability compensation, and damages and attorney‘s fees.
[Delfin], on one hand, asseverated in his complaint that he is entitled to sickness allowance because of
the incident when he was hit by a metal board on his back, which required medical attention.
Furthermore, [Delfin] averred that he is entitled [to] sickness allowance because his inability to work
and perform his usual occupation after he acquired the sickness while on board, lasted for more than
120 days. This is also the basis of his claim for permanent disability compensation. [Delfin] also
claimed that attorney‘s fees should be paid for the expenses he incurred due to the filing of the suit
and that moral damages may be paid as well for injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation.
[Respondents], on the other hand, averred that the medical condition of [Delfin] was not acquired or
suffered during the term of his employment, that said medical condition is not work-related, and[,]
therefore, the said illness is not compensable under the POEA Standard Employment Contract.
Furthermore, [respondents] asseverated that more than two years had elapsed from the time of the
tennination of [Delfin‘s] employment in August 2001 up to the time the claim was filed in November
2003, and thus the illness was not acquired during the period of employment. [Respondents] also
argued that the company[-]designated physician neither issued any certification as regards the medical
condition of [Delfin] nor conducted a post[-] employment medical examination, after he was
discharged from the vessel in August 2001.
On 6 May 2005, Pelfin] passed away, x x x[7]
Ruling of the Labor Arbiter (LA)
Ultimately, the LA rendered a Decision[8] dated May 30, 2005 in favor of Delfin. The LA
opined that Delfin contracted his illness during the period of his employment with
respondents and that such illness is a compensable occupational disease. Hence, Delfin is
entitled to his claims. The dispositive portion of the Decision reads:
WHEREFORE, judgment is hereby rendered ordering respondents, jointly and severally, to pay
complainant DELFIN C. DELA CRUZ, SIXTY THOUSAND US DOLLARS (US$60,000.00)
representing total permanent disability compensation, sickness allowance of US$2,140.00 or its
equivalent in local currency at the time of actual payment plus ten percent (10%) of the total monetary
award by way of attorney‘s fees.
SO ORDERED.[9]
On appeal, the NLRC, in a Decision[10] handed down on January 23, 2007, reversed the
Decision of the LA. It found Delfrn‘s claims to be barred by prescription for having been filed
beyond the reglementary period of one year from the termination of the employment
contract. The NLRC also found no evidence that would establish a causal connection
between Delfrn‘s ailment and his working conditions.
Petitioners moved for reconsideration but the same was denied in the NLRC‘s March
30,2007 Resolution.[11]
Aggrieved yet undeterred, petitioners filed a Petition for Certiorari[12] with theCA.
In its June 18, 2010 Decision,[13] the CA held that Delfrn‘s Complaint was filed well within the
reglementary period of three years from the date the cause of action arose, as provided for
in Section 30 of the Philippine Overseas Employment Administration Standard Terms and
Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessels
(POEA SEC). Nonetheless, the CA sustained the NLRC‘s pronouncement that petitioners
are not entitled to disability compensation as they failed to establish that Delfrn‘s illness was
work-related. According to the CA, Delfrn‘s illness, which is known as Malignant Peripheral
Nerve Sheath Tumor (MPNST), is a type of soft tissue sarcoma that develops in cells that
form a protective sheath (covering) around peripheral nerves. Peripheral nerves are those
that radiate from the brain and spinal cord and stimulate the muscles. However, aside from
the June 26, 2001 incident where Delfin was hit by a metal board on his back, there was no
other reported incident that would reasonably connect Delfrn‘s ailment to his working
condition. Petitioners could only offer their allegations that Delfin experienced chest pains
without, however, presenting proofs in support thereof. The CA also found notable that it was
only on November 13, 2003 or two years after the termination of his contract and repatriation
when Delfin went to Delos Santos Medical Center for medical check-up and underwent chest
x-ray and MRI of the thoracic spine. The findings of said hospital conformed to the diagnosis
of St. Luke‘s Medical Center that Delfrn has MPNST.
With regard to petitioners‘ claim for sickness allowance, the CA denied the same considering
that Delfin‘s contract with respondents had long expired. It likewise denied petitioners‘ claim
for attorney‘s fees, moral damages and exemplary damages as there is no proof that
respondents committed bad faith in denying Delfin‘s claims.
The CA‘s assailed Decision bears the following dispositive portion:
WHEREFORE, the petition is DISMISSED. The Decision dated 23 January 2007 by the NLRC is
AFFIRMED.
SO ORDERED.[14]
Petitioners filed a Motion for Reconsideration.[15] This was denied by the CA in its March
29,2011 Resolution.[16]
Thus, the present Petition for Review on Certiorari.
Issues
1. Whether xxx [petitioners are] entitled to permanent disability benefits and sickness
allowance;
2. Whether xxx [petitioners are] entitled to attorney‘s fees and damages.[17]
Our Ruling

A Petition filed under Rule 45 shall
raise only questions of law. But when
the findings of the labor tribunals and
the CA are in conflict with each other,
the Court may make its own
examination of the evidence on record
The issues petitioners brought before this Court pertain to questions of fact since they
basically seek to determine if the illness responsible for Delfrn‘s disability was acquired by
him during the course of his employment as to entitle petitioners to permanent disability
benefits, sickness allowance, attorney‘s fees and damages.
As a general rule, this Court does not review questions of facts in a petition filed under Rule
45 of the Rules of Court as only questions of law can be raised in such petition. However,
this rule is not absolute and without exceptions. In case the factual findings of the tribunals
or courts below are in conflict with each oilier, this Court may make its own examination and
evaluation of the evidence on record.[19] Here, the LA found that petitioners ought to be
awarded permanent disability benefits, sickness allowance, attorney‘s fees and damages;
the NLRC and the CA, on the other hand, ruled otherwise. Hence, the Court is constrained
to examine the evidence on record.
The 1996 POEA SEC concerning

permanent disability claims and
sickness allowance applies to this
case.
The Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-
Board Ocean-Going Vessels as contained in Department Order No. 04 and Memorandum
Circular No. 09, both Series of 2000,[20] initially took effect on June 25, 2000. This, at first
blush, must be strictly and faithfully observed in this case. However, the POEA had likewise
issued Memorandum Circular No. 11, series of 2000 (Memorandum Circular 11-00),
concerning, among others, compensation and benefits for injury and illness, viz:
In view of the Temporary Restraining Order [TRO] issued by the Supreme Court in a
Resolution dated 11 September 2000 on the implementation of certain amendments of the
Revised Terms and Conditions Governing the Employment of Filipino Seafarers on board
Ocean-Going Vessels as contained in DOLE Department Order No. 04 and POEA
Memorandum Circular No. 09, both Series of 2000, please be advised of the following:
1. Section 20, Paragraphs (A), (B) and (D) of the former Standard Terms and Conditions Governing
the Employment of Filipino Seafarers on board Ocean-Going Vessels, as provided in DOLE
Department Order No. 33, and POEA Memorandum Circular No. 55, both Series of 1996 shall
apply in lieu of Section 20 (A), (B) and (D) of the Revised Version; (Emphasis supplied)
It must be noted that: 1) the above TRO was lifted only on June 5, 2002; 2) Delfin‘s contract
with respondents was entered into on August 8, 2000; 3) he embarked on Lady Hilde on
August 17, 2000; and 4) was repatriated on August 16, 2001. Thus, as the TRO was in effect
at the time of Delfin‘s employment with respondents, it follows that it is the 1996 POEA SEC
provisions concerning permanent disability claims and sickness allowance which should
apply, and not those of the 2000 POEA SEC.[21]
Petitioners are not entitled to

permanent disability benefits and
sickness allowance.
Section 20 (B) of the 1996 POEA SEC reads as follows:
xxxx
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS:
The liabilities of the employer when the seafarer suffers injury or illness during the term of his
contract are as follows:
1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel;
2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall
be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as
board and lodging until the seafarer is declared fit to work or to be repatriated.
However, if after repatriation, the seafarer still requires medical attention arising from said injury or
illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree
of his disability has been established by the company-designated physician.
been assessed by the company-designated physician, but in no case shall this period exceed one
4. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full
cost of repatriation in the event that the seafarer is declared (1) fit for repatriation; or (2) fit to work
but the employer is unable to find employment for the seafarer on board his former vessel or another
vessel of the employer despite earnest efforts.
5. In case of permanent total or partial disability of the seafarer during the term of employment
caused by either injury or illness, the seafarer shall be compensated in accordance with the schedule
of benefits enumerated in Section 30 of his Contract. Computation of his benefits arising from an
illness or disease shall be governed by the rates and the rules of compensation applicable at the time
the illness or disease was contracted. (Emphasis supplied)
The above provision demonstrates that the 1996 POEA SEC covers all injuries or
illnesses occurring in the lifetime of the employment contract.[22] The seafarer only has to
prove that his injury or illness was acquired during the term of employment to support his
claim for disability benefits and sickness allowance.[23] Verily, his injury or illness need not be
shown to be work-related to be compensable under said employment contract.[24]
However, the Court also reiterates the rule that ―whoever claims entitlement to the benefits
provided by law should establish his right to the benefits by substantial evidence‖[25] or ―such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other equally reasonable minds might conceivably opine otherwise.‖ [26] Absent a
showing thereof, any decision set forth will only be based on unsubstantiated allegations.
Accordingly, the Court cannot grant a claim for disability benefits without adequate
substantiation for to do so will offend due process.[27] The foregoing jurisprudential principle
effectively shows that the burden of proving entitlement to disability benefits lies on
petitioners.[28] Thus, they must establish that Delfin suffered or contracted his injury or illness
which resulted in his disability during the term of the employment contract. An examination of
the records, however, shows that petitioners failed to discharge such burden.
The 1996 POEA SEC clearly provides that a seafarer must submit himself to a post-
employment medical examination within three days from his arrival in the Philippines
(mandatory reporting requirement) so that his claim for disability and sickness allowance can
prosper.[29] The only exception to this rule is when the seafarer is physically incapacitated to
do so, but there must be a written notice to the agency within the same period of three days
for the seaman to be considered to have complied with the requirement.[30] Otherwise, he
forfeits his right to claim his disability benefits and sickness allowance. [31] In Manota v.
Avantgarde Shipping Corporation.[32] the Court explained the rationale behind the three-day
period requirement, thus:
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 identity whether the disease x xx was
contracted during the term of his employment or that his working conditions increased the risk of
contracting the ailment.
xxxx
x x x Moreover, the post-employment medical examination within 3 days from x xx arrival is required
in order to ascertain [the seafarer‘s] physical condition, since to ignore the rule would set a precedent
with negative repercussions because it would open the floodgates to a limitless number of seafarers
claiming disability benefits. It would certainly be unfair to the employer who would have difficulty
determining the cause of a claimant‘s illness considering the passage of time. In such a case, the
employers would have no protection against unrelated disability claims.
Here, petitioners claim that Delfin went to respondents to comply with the mandatory
reporting requirement and to seek medical assistance but his request for medical evaluation
was unheeded. Petitioners, however, failed to support this.[33] In Career Philippines
Shipmanagement, Inc. v. Serna,[34] the Court upheld the seafarer‘s claim that he complied
with the mandatory reporting requirement and sought medical assistance from his agency,
thus:
We see no reason to disturb the lower tribunals‘ finding. While Serna‟s verified claim with respect
to his July 14, 1999 visit to the petitioner‟s office may be seen by some as a bare allegation, we
note that the petitioners‟ corresponding denial is itself also a bare allegation that, worse, is
unsupported by other evidence on record. In contrast, the events that transpired after the July
14, 1999 visit, as extensively discussed by the CA above, effectively served to corroborate
Serna‟s claim on the visit‟s purpose, i.e., to seek medical assistance. Under these circumstances,
we find no grave abuse of discretion on the part of the NLRC when it affirmed the labor arbiter ruling
and gave credence to Serna on this point. Under the evidentiary rules, a positive assertion is generally
entitled to more weight than a plain denial. (Emphasis supplied)
There, Serna (the seafarer) claimed that he reported to his employer‘s office on July 14,
1999, or two days after his repatriation, to submit himself to the mandatory reporting
requirement. The Court found his allegation credible in light of the fact that despite the
nonchalant instruction given to him by his agency to wait for a referral to the company-
designated physicians, Serna took it upon himself to seek medical assistance and submit to
a check-up with his personal physician to find out what was wrong with him. Indeed, about
two weeks from the time he reported for the mandatory reporting requirement and was told
to wait for a referral, Serna‘s check-up with his private physician revealed that he was
suffering from toxic goiter. Several days later, he submitted to a medical examination
conducted by the company-designated physician who diagnosed him with atrial fibrillation
and declared him unfit to work. Still, Serna did not stop there. He continued with his medical
treatment with his personal physician and even asked for a second opinion from another
doctor who concurred with the toxic goiter diagnosis of his first personal physician. Further,
he was examined by a third doctor who found that he had a history of goiter with throtoxicos
since 1999. He was also diagnosed with thyrotoxic heart disease, chronic atrial fibrillation
and hypertensive cardiovascular disease. Ultimately, Serna was given a disability rating of
Grade 3 classified as permanent medical unfitness which entitled him to 100%
compensation as provided for under the collective bargaining agreement. Verily, the above
steps taken by Serna helped establish his claim that he complied with the mandatory
reporting requirement and that he sought medical assistance from his employer, and further,
that he did so within the period required by law. His having been vigilant in asserting his
rights to medical assistance tended to show the same.
Unfortunately in this case, petitioners failed to show the steps supposedly undertaken by
Delfin to comply with the mandatory reporting requirement. To the Court‘s mind, this lapse
on petitioners‘ part only demonstrates that Delfin did not comply with what was incumbent
upon him. The reasonable conclusion, therefore, is that at the time of his repatriation, Delfin
was not suffering from any physical disability requiring immediate medical attendance.
Otherwise, and even if his request for medical assistance went unheeded, he would have
submitted himself for check-up with his personal physician. After all, the injury complained of
by Delfin was a serious one and it would seem illogical for him to just suffer in silence and
bear the pain for a considerable length of time. Moreover, while the rule on mandatory
reporting requirement is not absolute as a seafarer may show that he was physically
incapable to comply with the same by submitting a written notice to the agency within the
same three-day period, nowhere in the records does it show that Delfin submitted any such
notice. Clearly, petitioners failed to show that Delfin complied with the mandatory reporting
requirement. Thus, he is deemed to have forfeited his right to claim disability benefits and
sickness allowance.
Even assuming that there was compliance with the mandatory reporting requirement, other
factors that strongly militate against the granting of petitioners‘ claims exist in this case.
First, while petitioners did present a medical certificate dated June 26, 2001 which was
issued while Delfin was still employed with respondents, nothing therein shows that the
incident subject thereof has something to do or is related to MPNST – the injury or illness
which caused Delfin‘s disability. Specifically, said certificate pertains to a blow on
Delfin‘s back caused by a metal board and for which he complained of ―persistent pain in the
chest and upper abdominal region.‖ For this, Delfin was advised to undertake only ―light
duties for [the] rest of [the] week‖ and that ―if not settled[,] will need reassessment].‖ On the
other hand, the injury that showed up in his chest x-ray and MRI for which he claimed
compensation pertains to a different portion of his body, i.e., a fracture in one of his
ribs.[35]Besides, if indeed there is truth to petitioners‘ assertion that Delfin continued to
experience pain after he was hit by a metal board on his back, then why did he not request
for reassessment as advised or submit himself to the mandatory reporting requirement after
he was repatriated? What is glaring instead is that against all these, petitioners only offered
their bare allegation that Delfin‘s medical condition did not improve thereafter.
Second, while Delfin averred that he experienced on-and-off pain even prior to the June 26,
2001 incident, there exists no record thereof. On the contrary, Delfin himself claimed that
despite the pain, he ―remained calm and unbothered by the same.‖[36]
Third, it is also interesting to note that although petitioners did submit Delfin‘s chest x-ray
and MRI results[37]revealing a fracture in one of his ribs, it must be emphasized that these
findings were issued more than two years after his repatriation. Worse still, the Clinical
Abstract submitted by petitioner was undated[38] such that it cannot be determined when the
said document was released. Be that as it may, it can be safely concluded that the said
clinical abstract was issued in or after 2004 since it contained a detailed history of Delfin‘s
illness starting from his having been diagnosed with MPNST in 2003, and an enumeration of
his documented episodes of pathologic fractures occurring in May 2002, December 2003
and April 2004. These only highlight the fact that a considerable period of time had passed
from Delfin‘s repatriation in August 2001 up to the time that he started to suffer pathologic
fractures in May 2002. Thus, it cannot be said that Delfin‘s rib fracture subject of the above-
mentioned chest x-ray and MRI was caused by the blow on his back of the metal sheet that
fell on him as petitioners would want to impress upon this Court. On the other hand, what is
more likely under the circumstances is that the fracture came about after his repatriation. For
one, the report contained in Delfin‘s clinical abstract is telling, viz:
Patient is a diagnosed case of Malignant Peripheral Nerve Sheath Tumor. (2003 SLMC)[.] He
also had several episodes of pathologic fractures: x x x
Sixteen hours prior to admission, while in bed, trying to change position, patient suddenly heard a
cracking [sound], which was followed by shooting pain on the left thigh, intermittent, localized,
aggravated by movement, with no alleviating factors, x x x (Emphases supplied)[39]
Notably, MPNST, of which Delfin was diagnosed with more than two years after his
repatriation, causes pathologic fractures.[40] And since Delfin is prone to pathologic fractures
because of MPNST, it is quite possible that any wrong movement of his body may cause
fracture similar to what happened to him as narrated in the clinical report. As to the cause of
MPNST, again, it bears stating at this point that petitioners failed to show that the same has
any connection with the accident figured in by Delfin while he was on board the vessel.
Fourth, the Court notes that Delfm‘s Position Paper filed with the Labor Arbiter contained
vague and ambiguous allegations of two purported compensable illnesses, viz:
The record of the case will reveal that complainant is suffering from two (2) compensable sicknesses,
one (1) affecting his abdomen and two (2) affecting his back down to his legs.[41]
However, in the Rejoinder later filed by him with the same tribunal, he drastically changed
such theory by claiming that he instead suffers from MPNST.[42] ―It has been held that a party
will not be allowed to make a mockery of justice by taking inconsistent positions which, if
allowed, would result in brazen deception.‖[43]
Lastly, this Court deems it proper to reiterate its ruling in Quizora v. Denholm Crew
Management (Philippines), Inc.[44]on the relevance of the seafarer‘s passing his PEME vis-a-
vis the probability of his having acquired his injury or illness during the period of
employment, thus:
The fact that respondent passed the company‘s PEME is of no moment. We have ruled that in the past
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. Thus we held in NYK-FIL Ship
Management, Inc. v. NLRC:
While a PEME may reveal enough for the petitioner (vessel) to decide whether a seafarer is fit
for overseas employment, it may not be relied upon to inform petitioners of a seafarer‟s true
state of health. The PEME could not have divulged respondent‟s illness considering that the
examinations were not exploratory. (Emphases supplied)
Hence, the fact that Delfin passed his PEME is of no moment in this case.
Based on the foregoing, the Court holds that the NLRC and the CA correctly disallowed
petitioners‘ claim for permanent disability benefits and sickness allowance.
Petitioner is neither entitled to

attorney ‘s fees and damages.
The claim for attorney‘s fees cannot, likewise, be allowed. The Court has consistently held
that attorney‘s fees cannot be recovered as part of damages based on the policy that no
premium should be placed on the right to litigate. Suffice it to say that the authority of the
court to award attorney‘s fees under Article 2208 of the Civil Code requires factual, legal,
and equitable grounds. They cannot be awarded absent a showing of bad faith in a party‘s
tenacity in pursuing his case even if his belief in his stance is specious. Verily, being
compelled to litigate with third persons or to incur expenses to protect one‘s rights is not a
sufficient reason for granting attorney‘s fees.[45] As can be seen from our discussions above,
petitioners were not able to prove that respondents acted in bad faith in refusing to
acknowledge their claims. This Court, thus, deems it inappropriate to award attorney‘s fees.
As a final note, it must be mentioned that the Court respects and upholds the principle of
liberality in construing the POEA-SEC in favor of the seafarer. Nonetheless, it cannot grant
claims for compensation based on mere conjectures. Indeed, liberal construction neither
warrants the blithe disregard of the evidence on record nor the misapplication of our laws.[46]
WHEREFORE, the Petition is hereby DENIED. The June 18, 2010 Decision and March 29,
2011 Resolution of the Court of Appeals in CA-G.R. SP No. 105930 are AFFIRMED.
SO ORDERED.
16 JUL 2012 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C.

DEL CASTILLO
Heirs Of Ramon B. Gayares, et. al. Vs. Pacific

Asia Overseas Shipping Corporation, And
Kuwa; G.R. No. 178477; 16 July 2012
DECISION
DEL CASTILLO, J.:
Heavy workload, standing alone, is not considered a compelling reason to justify a request
for extension of time to file a petition for certiorari under Rule 65 of the Rules of Court.
Assailed in this Petition for Review on Certiorari[1] is the March 13, 2007 Resolution[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 98133 which denied petitioners‘ Motion for
Extension of Time. Also assailed is the June 1, 2007 Resolution[3] denying petitioners‘
motion for reconsideration for lack of merit.
Factual Antecedents
In February 1998, Ramon B. Gayares (Gayares) was hired by Pacific Asia Overseas
Shipping Corporation on behalf of its principal, Kuwait Oil Tanker Co., S.A.K., as an Able
Seaman aboard its vessel M/T A1 Awdah. The contract was for a period of nine months with
a monthly salary of US$ 499.00.[4] Prior to his embarkation on March 12, 1998,[5] Gayares
underwent medical examination and was found ―fit to work‖ by the examining
physician.[6] However, on April 22, 1998, he was repatriated to the Philippines for medical
reasons.[7]
On December 18, 1998, Gayares filed a complaint for disability/medical benefits, illness
allowance, damages and attorney‘s fees against herein respondents.
On February 24, 2000, the Labor Arbiter rendered a Decision8 ordering respondents to pay
Gayares disability benefits, sickness allowance, and attorney‘s fees. According to the Labor
Arbiter, Gayares‘ disability of ―blephasrospasm with oramandibular dystonia‖ was contracted
during his employment[9] and not preexisting as contended by the respondents considering
that he was diagnosed ―fit to work‖ by the company-physician.[10]
Aggrieved, respondents filed an appeal with the National Labor Relations Commission
(NLRC).[11]
On June 12, 2004, or during the pendency of the appeal, Gayares died[12] and was
substituted by his heirs, herein petitioners.

On February 10, 2006, the NLRC rendered its Decision[13] deleting the award of disability
benefits but affirming the award of sickness allowance and 10% thereof as attorney‘s
fees.[14] The NLRC held that Gayares is not entitled to disability benefits because he
miserably failed to show that: ―(a) the cause of his illness was reasonably connected with his
work; or (b) the sickness for which he claimed disability benefit is an accepted occupational
disease; or (c) his working conditions increased the risk of contracting the disease.‖[15] The
NLRC also opined that Gayares could not have contracted the illness during the term of his
employment contract, it having manifested a mere 22 days after embarkation and
considering that the said disease is hereditary.[16] Neither was there any proof that Gayares‘
employment contributed or even aggravated his illness.[17]
On the other hand, the NLRC opined that Gayares is entitled to receive sickness allowance
benefits. The NLRC noted that the company-designated physician failed to assess his
degree of disability after his repatriation or to declare him fit to work after subjecting him to
medical examinations.[18] Besides, sickness allowance benefit is separate and distinct from
disability benefit and is not dependent on whether it is work-connected or not.
Petitioners‘ motion for reconsideration was denied in a Resolution[19] dated November 30,
2006.
Petitioners received on January 3, 2007[20] a copy of the November 30, 2006 NLRC
Resolution denying their motion for reconsideration. However, instead of filing a Petition for
Certiorari, petitioners opted to file a Motion for Extension of Time[21] which was received by
the CA on March 5, 2007.[22]
On March 13, 2007, the CA issued a Resolution[23] which denied petitioners‘ Motion for
Extension of Time and dismissed the case. According to the CA, requests for extension of
time under Section 4, Rule 65 of the Rules of Court may only be allowed for ―compelling
reason.‖[24] The CA observed that mere pressure and volume of work cannot be considered
―compelling reason‖ to justify a request for extension. Consequently, when petitioners filed
their Petition for Certiorari, the CA merely noted the same in the Resolution[25] dated March
27, 2007.
Petitioners moved for reconsideration.[26] Finding no justifiable ground to warrant the reversal
of its earlier ruling, the CA denied the motion for lack of merit in a Resolution27 dated June
1, 2007.
Hence, this petition.
Issues
In their Petition for Review on Certiorari,[28] petitioners submitted the sole issue of whether:
THE COURT OF APPEALS GRAVELY ERRED IN DENYING PETITIONERS‘ MOTION FOR

EXTENSION OF TIME TO FILE PETITION FOR CERTIORARI DATED MARCH 5, 2007
NOTWITHSTANDING THAT THERE ARE COMPELLING REASONS STATED IN THE SAID
MOTION IN ACCORDANCE WITH SECTION 4, RULE 65 OF THE RULES OF COURT, AS
AMENDED.[29]
In their Memorandum,[30] however, petitioners presented the following issues of whether:
1. THE COURT OF APPEALS GRAVELY ERRED IN DENYING PETITIONERS‘ MOTION

FOR EXTENSION OF TIME TO FILE PETITION FOR CERTIORARI DATED MARCH
5, 2007 NOTWITHSTANDING THAT THERE ARE COMPELLING REASONS
STATED IN THE SAID MOTION IN ACCORDANCE WITH SECTION 4, RULE 65 OF
THE RULES OF COURT, AS AMENDED.
2.
3. THE APPEAL OF PETITIONER IS CLEARLY MERITORIOUS [IN] THAT

TECHNICALITIES, IF ANY, SHALL GIVE WAY TO SUBSTANTIAL JUSTICE.[31]
Petitioners‘ Arguments
Petitioners argue that the CA gravely erred in denying their motion for extension of time and,
consequently, in dismissing outright their petition for certiorari for having been filed late.
They insist that their counsel‘s heavy workload is compelling reason to grant their request for
additional time to file their petition.[32] They also claim that since this is a labor case,[33] the
worker‘s welfare should be given preference in ―carrying out and interpreting the Labor
Code‘s provisions and its implementing regulations.‖[34]
Notably, petitioners absolutely failed to discuss in their petition the substantial merits of their
case. It is only in their Memorandum that petitioners assert that their appeal is meritorious.
They allege that Gayares‘ illness was acquired during his employment and aggravated by
the nature of his work.[35]
Respondents‘ Arguments
Respondents, on the other hand, maintain that petitioners have no inherent right to expect
that their motion for additional time will be granted as the same rests on the discretion of the
court. Respondents also stress that no compelling reason was presented by petitioners as
basis for such request. Respondents maintain that Gayares is not entitled to disability
benefits as he was repatriated just 22 days into his contract and his illness was neither
acquired during the period of his employment with respondents nor aggravated by his work.
Our Ruling
The general rule is to file the petition for certiorari

within the 60-day reglementary period. A 15-day
extension is the exception to the rule and the
request may only be granted for
compelling reason.
Section 4,[36] Rule 65 of the Rules of Court provides:
Section 4. When and where petition filed. – The petition shall be filed not later than sixty (60) days
from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from
notice of the denial of said motion.
xxxx
No extension of time to file the petition shall be granted except for compelling reason and in no case
exceeding fifteen (15) days.
It is thus explicit from the foregoing that as a general rule, the petition shall be filed within the
60-day reglementary period. As an exception, an extension of time may be granted but only
for a compelling reason and only for 15 days. More important, the discretion to grant or deny
said request lies solely in the court.
Hence, the party requesting such extension must not expect that his request will be granted
as he has no inherent right to the same.
Petitioners did not cite any compelling reason

to justify their request for extension.
In the instant case, petitioners sought a 15-day extension from the CA since they failed to file
their petition within the 60-day reglementary period. In their Motion for Extension of
Time,[37] they averred thus:
xxxx
4. Petitioners intend to elevate the matter to this Honorable Court through a Petition for Certiorari
under Rule 65 of the 1997 Rules of Civil Procedure, thus they have until today, March 5, 2007 within
which to file a Petition for Certiorari with this Honorable Court.
5. However, due to heavy pressure of work on the part of the undersigned counsel, consisting in the
preparation of various pleadings, briefs and memoranda in other equally important cases, aggravated
by almost daily court appearances and the fact that he is one of the counsels in the case entitled
―People of the Philippines vs. Jose Antonio Leviste‖, docketed as Crim. Case No. 07-179, pending
before the Regional Trial Court of Makati City, Branch 150, wherein he has to prepare various urgent
pleadings, he would need an additional period of fifteen (15) days from today, March 5, 2007 or until
March 20, 2007 within which to file the said petition with this Honorable Court.[38]
In short, petitioners cite ―heavy pressure of work‖ as the sole reason for their failure to file
their petition on time. Unfortunately for them, the CA found the same ―not a compelling
reason‖ and thus pronounced in its assailed March 13, 2007 Resolution39 thus:
Considering that the 15-day extension allowable under Section 4 of the Rule 65 of the 1997 Revised
Rules of Civil Procedure is strictly conditioned on ―compelling reason‖ advance[d] by the movant and
mere pressure and volume of work has already been held by the Supreme Court as not a compelling
reason to justify an extension, the petitioners‘ Motion for Extension of Time dated March 5, 2007 is
hereby DENIED.
Accordingly, this case is ordered OUTRIGHTLY DISMISISED for failure to file the petition for
certiorari within the 60-day reglementary period which expired on March 3, 2007.
SO ORDERED.
We agree with the CA.
It is settled jurisprudence that heavy pressure of work is not considered compelling reason to
justify a request for an extension of time to file a petition for certiorari. ―Heavy workload is
relative and often self-serving. Standing alone, it is not a sufficient reason to deviate from the
60-day rule.‖[40] In Yutingco v. Court of Appeals,[41] therein petitioners‘ counsel cited heavy
workload in seeking the court‘s leniency. However, the same was rebuffed by the Court
ratiocinating that such ―circumstance alone does not provide the court sufficient reason to
merit allowance of an extension of the 60-day period to file the petition for certiorari. Heavy
workload x x x ought to be coupled with more compelling reasons such as illness of counsel
or other emergencies that could be substantiated by affidavits of merit.‖[42]
In the instant case, petitioners‘ counsel merely referred to ―heavy pressure of work‖, nothing
more, in asking for additional time. Incidentally, he also mentioned that he is one of the
counsels of the accused in People v. Jose Antonio Leviste then pending before the Makati
Regional Trial Court. However, we note that he is merely ―one of the counsels‖ in the said
criminal case. As such, any task must have been distributed among the counsels. Besides,
counsel should bear in mind that in accepting new cases, he should not deprive his ―older‖
cases of the same competence and efficiency he devotes on these new cases, or cause
prejudice to them in one way or another. In Miwa v. Atty. Medina,[43] we had occasion to
―remind lawyers to handle only as many cases as they can efficiently handle. For it is not
enough that a practitioner is qualified to handle a legal matter, he is also required to prepare
adequately and give the appropriate attention to his legal work.‖[44] ―[M]embers of the bar
must take utmost care of the cases they handle for they owe fidelity to the cause of their
clients.‖[45] Petitioners must also do well to remember that ―motions for extension are not
granted as a matter of right but in the sound discretion of the court, and lawyers should
never presume that their motions for extension or postponement will be granted or that they
will be granted for the length of time they pray for.‖[46]
Petitioners belatedly raised the issue on

the substantial merits of their case.
It is worthy of note that in their Petition for Review on Certiorari filed before this Court, the
only issue raised by the petitioners was the alleged error of the CA in denying their motion
for extension of time. They focused and limited their discussion on the fact that their
counsel‘s heavy workload should have compelled the CA to be lenient towards their cause.
Thus, when respondents were required by this Court to file their comment, they aptly
observed that ―[t]he sole issue raised by the petitioners in their present petition concerns the
denial by the Honorable Court of Appeals of their Motion for Extension of Time to file their
Petition for Certiorari x x x.‖[47] As a necessary consequence, respondents likewise limited
their discussion on debunking the claim of petitioners that ‗heavy workload‘ constitutes
compelling reason to grant a request for extension.
We likewise reviewed petitioners‘ Reply[48] and we note that the discussion therein referred
only to the denial of the motion for extension. No discussion whatsoever was made as
regards the substantial merits of the case. In fact, as we have mentioned before, it was only
in petitioners‘ Memorandum where they raised for the first time the issue that their appeal is
meritorious.
This is not only unfair to the respondents who were deprived of the opportunity to propound
their arguments on the issue. It is likewise not allowed by the rules. In the June 23, 2008
Resolution,[49] the Court reminded the parties that ―[n]o new issues may be raised by a party
in the memorandum.‖[50] The rationale for this was explained by the Court in Heirs of Cesar
Marasigan v. Marasigan,[51] thus:
This Court significantly notes that the first three issues, alleging lack of jurisdiction and cause of
action, are raised by petitioners for the first time in their Memorandum. No amount of interpretation
or argumentation can place them within the scope of the assignment of errors they raised in their
Petition.
The parties were duly informed by the Court in its Resolution dated September 17, 2003 that no new
issues may be raised by a party in his/its Memorandum and the issues raised in his/its pleadings but
not included in the Memorandum shall be deemed waived or abandoned. The raising of additional
issues in a memorandum before the Supreme Court is irregular, because said memorandum is
supposed to be in support merely of the position taken by the party concerned in his petition, and the
raising of new issues amounts to the filing of a petition beyond the reglementary period. The purpose
of this rule is to provide all parties to a case a fair opportunity to be heard. No new points of law,
theories, issues or arguments may be raised by a party in the Memorandum for the reason that to
permit these would be offensive to the basic rules of fair play, justice and due process.
Petitioners failed to heed the Court‘s prohibition on the raising of new issues in the Memorandum.[52]
Based on the foregoing, we find no necessity to discuss the second issue which was raised
by the petitioners for the first time only in their Memorandum.
WHEREFORE, based on the foregoing, the Petition for Review on Certiorari is DENIED. The
Resolution of the Court of Appeals in CA-G.R. SP No. 98133 March 13, 2007 denying
petitioners‘ Motion for Extension of Time and the Resolution dated June 1, 2007 denying
reconsideration thereof are AFFIRMED.
SO ORDERED.
11 JUL 2012 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C.

DEL CASTILLO
FLORDELIZA MARIA REYES RAYEL vs.

PHILIPPINE LUEN THAI HOLDINGS, ET.
AL.; G. R. No. 174893 AND G. R. NO.
174893; 11 JULY 2012
DECISION
DEL CASTILLO, J.:
The law is fair and just to both labor and management. Thus, while the Constitution accords
an employee security or tenure, it abhors oppression to an employer who cannot be
compelled to retain an employee whose continued employment would he patently inimical to
its interest.
This Petition for Review on Certiorari[1] assails the July 18, 2006 Decision[2] or the Court of
Appeals (CA) in CA-G.R. SP No. 86937, which (1) reversed the National Labor Relations
Commission (NL RC) March 23, 2004 Resolution[3] and in effect, its July 21,
2004[4] Resolution as well, (2) declared petitioner Flordeliza Maria Reyes-Rayel‘s (petitioner)
dismissal from employment valid, and (3) ordered respondents Philippine Luen Thai
Holdings, Corp. (PLTHC)/L&T International Group Phils., Inc. (L&T) (respondents) to pay
petitioner an amount equivalent to three months salary pursuant to the termination provision
of the employment contract.
Factual Antecedents
In February 2000, PLTHC hired petitioner as Corporate Human Resources (CHR) Director
for Manufacturing for its subsidiary/affiliate company, L&T. In the employment
contract,[5] petitioner was tasked to perform functions in relation to administration,
recruitment, benefits, audit/compliance, policy development/ structure, project plan, and such
other works as may be assigned by her immediate superior, Frank Sauceda (Sauceda),
PLTHC‘s Corporate Director for Human Resources.
On September 6, 2001, petitioner received a Prerequisite Notice[6] from Sauceda and the
Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles (Edles), which reads:
This has reference to your failure to perform in accordance with management directives in various
instances, which collectively have resulted in loss of confidence in your capability to promote the
interests of the Company.
The most deleterious to the Company has been your pronouncements against the Human Resource
Information System (HRIS) or HR2 Program, a corporate initiative that is at the core and is crucial to
the enhancement of personnel management for the global operations of the Company. On numerous
occasions, in the presence of colleagues and subordinates, you made statements that serve to
undermine the Company‘s efforts at pursuing the HR2 Program. You ought to have realized that when
leveled by an officer of your rank, no less than a Director of the Corporate Human Resources
Division, such remarks are highly inflammatory and their negative impact is magnified.
Just as flagrant is your inability to incite collaboration and harmony within the Corporate Human
Resources Division. Instead, colleagues and subordinates complain of your negative attitude towards
the Company, its officers and people. You have established notoriety for your temper and have
alienated most members of your division. You ought to have realized that when exhibited by an
officer of your rank, no less than a Director of the Corporate Human Resources Division, poor
interpersonal skills and the lack of moral suasion are extremely damaging.
The foregoing have, in fact, manifested in your own unsatisfactory performance rating, and in the
departure of promising employees who could not work with you.
In view of the above, we afford you the opportunity to submit your written reply to this memorandum
within forty-eight (48) hours from its receipt. Failure to so submit shall be construed as waiver of your
right to be heard. Consequently, the Company shall immediately decide on this matter.
x x x x[7]
In petitioner‘s written response[8] dated September 10, 2001, she explained that her alleged
failure to perform management directives could be attributed to the lack of effective
communication with her superiors due to malfunctioning email system. This caused her to
miss certain directives coming from her superiors and likewise, for her superiors to overlook
the reports she was submitting. She denied uttering negative comments about the HR2
Program and instead claimed to have intimated her support for it. She further denied causing
disharmony in her division. Petitioner emphasized that in June 2001, she received a
relatively good rating of 80.2% in her overall performance appraisal[9] which meant that she
displayed dependable work level performance as well as good corporate relationship with
her superiors and subordinates.
In a Termination Notice[10] dated September 12, 2001, respondents, through Sauceda and
Edles, dismissed petitioner from the service for loss of confidence on her ability to promote
the interests of the company. This led petitioner to file a Complaint [11] for illegal dismissal,
payment of separation pay, 13th month pay, moral and exemplary damages, attorney‘s fees,
and other unpaid company benefits against respondents and its officers, namely, Sauceda,
Edles and Willie Tan (Tan), the Executive Vice-President of PLTHC.
In her Position Paper,[12] petitioner argued that her dismissal was without valid or just cause
and was effected without due process. According to her, the causes for her dismissal as
stated in the Prerequisite Notice and Notice of Termination are not proper grounds for
termination under the Labor Code and the same do not even pertain to any willful violation of
the company‘s code of discipline or any other company policy. Even the alleged loss of
confidence was not supported by any evidence of wrongdoing on her part. She likewise
claimed that due process was not observed since she was not afforded a hearing,
investigation and right to appeal as per company procedure for disciplining employees.
Furthermore, respondents were guilty of violating the termination provision under the
employment contract which stipulated that employment after probationary period shall be
terminated by giving the employee a three-month notice in writing or by paying three months
salary in lieu of notice. Petitioner also accused respondents of having acted in bad faith by
subjecting her to public humiliation and embarrassment when she was ordered to
immediately turn over the company car, vacate her office and remove all her belongings on
the same day she received the termination notice, in full view of all the other employees.
Respondents, on the other hand, claimed that they have a wide discretion in dismissing
petitioner as she was occupying a managerial position. They claimed in their Position
Paper[13] that petitioner‘s inefficiency and lackadaisical attitude in performing her work were
just and valid grounds for termination. In the same token, her gross and habitual neglect of
duties were enough bases for respondents to lose all their confidence in petitioner‘s ability to
perform her job satisfactorily. Also, petitioner was accorded due process as she was
furnished with two notices – the first requiring her to explain why she should not be
terminated, and the second apprising her of the management‘s decision to terminate her
from employment.
Further in their Reply[14] to petitioner‘s position paper, respondents enumerated the various
instances which manifested petitioner‘s poor work attitude and dismal performance, to wit: 1)
her failure to perform in accordance with management directives such as when she
unreasonably delayed the hiring of a Human Rights and Compliance Manager; failed to
establish communication with superiors and co-workers; failed to regularly update Sauceda
of the progress of her work; requested for reimbursement of unauthorized expenditures; and,
gave orders contrary to policy on the computation of legal and holiday pay; 2) her negative
pronouncements against the company‘s program in the presence of colleagues and
subordinates; 3) her inability to incite collaboration and harmony within her department; 4)
her negative attitude towards the company, its officers and employees; and 5) her low
performance appraisal rating which is unacceptable for a top level personnel like herself.
Exchange of emails, affidavits and other documents were presented to provide proof of
incidents which gave rise to these allegations. Respondents also asserted that the
procedure laid down in the company‘s code of discipline, which provided for the mandatory
requirements of notice, hearing/investigation and right to appeal, only applies to rank and
file, supervisory, junior managerial and department managerial employees and not to
petitioner, a CHR Director, who plays a key role in these termination proceedings. Further,
the three-month notice for termination, as written in the employment contract, is only
necessary when there is no just cause for the employee‘s dismissal and, therefore, not
applicable to petitioner. Respondents then disputed petitioner‘s money claims and also
sought the dropping of Sauceda, Edles and Tan from the complaint for not being real parties
in interest.
In her rejoinder,[15] petitioner stood firm on her conviction that she was dismissed without
valid cause by presenting documentary evidence of her good performance. Further, she
insisted that she was dismissed for reasons different from those mentioned in the
Prerequisite Notice and Notice of Termination, both of which did not state gross and habitual
neglect of duties as a ground. She also construed respondents‘ act of offering her a
settlement or compensation right after her termination as their acknowledgement of the
illegal act they committed against her. Moreover, petitioner argued that the company policies
on procedural due process apply to all its employees, whether rank and file or managerial.
In a Decision[16] dated October 21, 2002, the Labor Arbiter declared petitioner to have been
illegally dismissed. It was held that petitioner cannot be charged with undermining the HR2
Program of the company since evidence was presented to show that she was already
divested of duties relative to this program. Also, respondents‘ accusation that petitioner
caused disharmony among colleagues and subordinates has no merit as there was ample
proof that petitioner was in constant communication with her co-workers through official
channels and email. Further, the Labor Arbiter theorized that petitioner‘s performance rating
demonstrated a passing or satisfactory grade and therefore could not be a sufficient and
legitimate basis to terminate her for loss of trust and confidence. Moreover, petitioner cannot
be dismissed based merely on these vague offenses but only for specific offenses which,
under the company‘s code of conduct, merit the penalty of outright dismissal. The dispositive
portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring that complainant was
illegally dismissed by respondent corporation, and the latter is hereby directed to reinstate
complainant to her former position and pay her full backwages and benefits computed below, as
follows:
A. Backwages September 12, 2001 to October 21, 2002
1. Salaries and Wages
P80,000 x 13.30 months = P1,064,000.00
2. 13th month pay
P1,064,000.00 / 12 = 88,666.67
3. VL P80,000 / 26 x 10 days = 34,102.56

P1,186,769.23
B. Attorney‘s Fees (10%) 118,676.92

P1,305,446.15
SO ORDERED.[17]
Respondents appealed to the NLRC.[18] For her part, petitioner filed before the Labor Arbiter
a Motion for Recomputation[19] of the awards. This motion was, however, denied in an
Order[20] dated March 17, 2003 on the ground that petitioner could challenge any disposition
made only by way of an appeal within the reglementary period and not through a motion.
In a Decision[21] dated August 20, 2003, the NLRC found merit in respondents‘ appeal. To the
NLRC, respondents have sufficiently established the validity of petitioner‘s dismissal on the
ground of loss of trust and confidence through the various emails, affidavits and other
documents attached to the records. Specifically, respondents have proven that petitioner
failed to recruit a Human Rights and Compliance Manager, ignored company policies, failed
to effectively communicate with her superiors and subordinates, and displayed ineptitude in
her work as a director and in her relationship with her co-workers. These showed that there
exist enough bases for respondents to lose the trust they had reposed on petitioner, who, as
a managerial employee, was expected to possess exemplary work attitude. The NLRC,
however, noted that the employment contract specifically provided for payment of three
months salary in lieu of the stipulated three-month notice in case of termination, thus:
IN LIGHT OF THE FOREGOING PREMISES, the decision appealed from is hereby MODIFIED, to
declare the dismissal of complainant legal but to order respondent[s] to pay complainant the sum of
P240,000.00 representing three months salary as expressed in complainant‘s contract of employment.

All other claims are DISMISSED for lack of merit.
SO ORDERED.[22]
Petitioner filed a Motion for Reconsideration[23] which was granted by the NLRC. In a
Resolution[24] dated March 23, 2004, the NLRC concluded that petitioner was not afforded
due process as she was not given the opportunity to refute the charges against her through
an investigation and an appeal at the company level. Thus, respondents failed to establish
the truthfulness of the allegations against her as to support the validity of the dismissal. The
NLRC also agreed with petitioner‘s claim that she was subjected to humiliation on the day of
her termination. Consequently, the NLRC declared petitioner‘s dismissal as illegal and thus
reinstated the Labor Arbiter‘s Decision with modification that respondents be ordered to pay
petitioner separation pay in lieu of reinstatement due to the strained relation between the
parties.
In a Resolution[25] dated July 21, 2004, the NLRC resolved to dismiss respondents‘ motion for
reconsideration.
Respondents thus filed with the CA a Petition for Certiorari with Urgent Motion for Issuance
of Temporary Restraining Order (TRO) or Writ of Preliminary Injunction. [26] Petitioner then
filed her Comment[27] thereto. Subsequently, the CA denied respondents‘ prayer for TRO in a
Resolution[28] dated February 15, 2005.
On July 18, 2006, the CA rendered a Decision[29] finding merit in the petition. The CA found
sufficient evidence to support the dismissal of petitioner on the ground of loss of trust and
confidence. It regarded petitioner‘s 80.2% performance rating as below par and hence,
declared that she cannot merely rely on the same in holding on to her position as CHR
Director, a highly sensitive and demanding post. Also, despite the opportunity to improve,
petitioner continued to display poor work attitude, dismal performance and rancorous and
abusive behavior towards co-workers as gleaned from the various emails and affidavits of
her superiors and other employees. These circumstances, taken together, constitute
sufficient cause for respondents to lose confidence in petitioner‘s ability to continue in her job
and to promote the interest of the company.
Moreover, the CA did not subscribe to petitioner‘s allegation that she was denied due
process. On the contrary, said court found that she was adequately notified of the charges
against her through the show cause notice which clearly stated the instances that served as
sufficient bases for the loss of trust and confidence, to wit: her failure to perform in
accordance with management directives and her actions of undermining company goals and
causing disharmony among her co-workers. After finding her written response to be
unsatisfactory, petitioner was likewise properly notified of the company‘s decision to
terminate her services. Clearly, respondents observed the requirements of procedural due
process. Nevertheless, respondents, in effecting the dismissal, should have paid petitioner
her salary for three months as provided for in the employment contract. For its failure to do
so, the CA ordered respondents to pay petitioner three months salary in accordance with
their contractual undertaking. The dispositive portion of the CA Decision states:
WHEREFORE, the Resolution of the National Labor Relations Commission dated March 23, 2004
is REVERSED. [Respondents] are hereby ordered to pay [petitioner] the amount corresponding to
three [months] salary pursuant to the termination provision of the employment contract.
SO ORDERED.[30]
Petitioner‘s Motion for Reconsideration[31] was denied in the CA Resolution[32]dated October 4,

2006.
Issues
Hence, the present petition raising the following issues:
I. WHETHER X X X THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT

REVERSED THE DECISION OF THE NLRC ON CERTIORARIDESPITE THE FACT THAT THE
NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE
FACTUAL FINDINGS OF THE LABOR ARBITER . THAT PETITIONER WAS ILLEGALLY
DISMISSED FROM HER EMPLOYMENT BY RESPONDENTS.
II. WHETHER X X X THE ALLEGED VALID OR JUST CAUSE FOR TERMINATION OF

PETITIONER FROM HER EMPLOYMENT WAS PROVEN AND ESTABLISHED BY
SUBSTANTIAL EVIDENCE ON RECORD.
III. WHETHER X X X RESPONDENTS DEPRIVED PETITIONER OF HER RIGHT TO DUE

PROCESS WHEN RESPONDENTS DISMISSED PETITIONER WITHOUT CONDUCTING ANY
INVESTIGATION TO DETERMINE THE VERACITY AND TRUTHFULNESS OF THE
ALLEGATIONS AGAINST PETITIONER IN VIOLATION OF RESPONDENTS‘ OWN
COMPANY POLICIES.[33]
Petitioner posits that there is no substantial evidence to establish valid grounds for her
dismissal since various emails from her superiors illustrating her accomplishments and
commendations, as well as her ―good‖ overall performance rating negate loss of trust and
confidence. She also insists that she was not afforded due process at the company level.
She claims that she was not properly informed of the offenses charged against her due to
the vagueness of the terms written in the termination notices and that no investigation and
hearing was conducted as required by company policy.
Our Ruling
The petition is devoid of merit. The Court finds no cogent reason to depart from the ruling of
the CA that petitioner was validly dismissed.
There exists a valid ground for petitioner’s

termination from employment.
Jurisprudence provides that an employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their
nature require the employer‘s full trust and confidence.[34] As distinguished from a rank and
file personnel, mere existence of a basis for believing that a managerial employee has
breached the trust of the employer justifies dismissal.[35] ―[L]oss of confidence as a ground for
dismissal does not require proof beyond reasonable doubt as the law requires only that there
be at least some basis to justify it.‖[36]
Petitioner, in the present case, was L&T‘s CHR Director for Manufacturing. As such, she was
directly responsible for managing her own departmental staff. It is therefore without question
that the CHR Director for Manufacturing is a managerial position saddled with great
responsibility. Because of this, petitioner must enjoy the full trust and confidence of her
superiors. Not only that, she ought to know that she is ―bound by more exacting work
ethics‖[37] and should live up to this high standard of responsibility. However, petitioner
delivered dismal performance and displayed poor work attitude which constitute sufficient
reasons for an employer to terminate an employee on the ground of loss of trust and
confidence. Respondents also impute upon petitioner gross negligence and incompetence
which are likewise justifiable grounds for dismissal.[38] The burden of proving that the
termination was for a valid cause lies on the employer.[39] Here, respondents were able to
overcome this burden as the evidence presented clearly support the validity of petitioner‘s
dismissal.
First, records show that petitioner indeed unreasonably failed to effectively communicate
with her immediate superior. There was an apparent neglect in her obligation to maintain
constant communication with Sauceda in order to ensure that her work is up to par. This is
evident from the various emails[40] showing that she failed to update Sauceda on the progress
of her important assignments on several occasions. While petitioner explained in her written
reply to the Prerequisite Notice that such failure to communicate was due to the company‘s
computer system breakdown, respondents however were able to negate this as they have
shown that the computer virus which affected the company‘s system only damaged some
email addresses of certain employees which did not include that of Sauceda‘s. On the other
hand, petitioner failed to present any concrete proof that the said computer virus also
damaged Sauceda‘s email account as to effectively disrupt their regular communication.
Moreover, we agree with respondents‘ stance that petitioner could still reach Sauceda
through other means of communication and should not completely rely on the web.
Second, the affidavits of petitioner‘s co-workers revealed her negative attitude and
unprofessional behavior towards them and the company. In her affidavit,[41]Agnes Suzette
Pasustento, L&T‘s Manager for the Corporate Communications Department, attested to
petitioner‘s ―badmouthing‖ of Sauceda in one of their meetings abroad and of discussing with
her about filing a labor case against the company. Also, in the affidavits of Rizza S.
Esplana[42] (Sauceda‘s Executive Assistant), Cynthia Yñiguez[43] (Corporate Human
Resources Manager of an affiliate of L&T), and Ana Wilma Arreza[44] (Human Resources and
Administration Division Manager of an affiliate of L&T), they narrated several instances
which demonstrated petitioner‘s notoriously bad temper. They all described her to have an
―irrational‖ behavior and ―superior and condescending‖ attitude in the workplace.
Unfortunately for petitioner, these sworn statements which notably remain uncontroverted
and unrefuted, militate against her innocence and strengthen the adverse averments against
her.[45] It is well to state that as a CHR Director tasked to efficiently manage the company‘s
human resource team and practically being considered the ―face‖ of the Human Resource,
petitioner should exhibit utmost concern for her employer‘s interest. She should likewise
establish not only credibility but also respect from co-workers which can only be attained if
she demonstrates maturity and professionalism in the discharge of her duties. She is also
expected to act as a role model who displays uprightness both in her own behavior and in
her dealings with others.
The third and most important is petitioner‘s display of inefficiency and ineptitude in her job as
a CHR Director. In the affidavit[46] of Ornida B. Calma, Chief Accountant of L&T‘s affiliate
company, petitioner, on two occasions, gave wrong information regarding issues on leave
and holiday pay which generated confusion among employees in the computation of salaries
and wages. Due to the nature of her functions, petitioner is expected to have strong working
knowledge of labor laws and regulations to help shed light on issues and questions
regarding the same instead of complicating them. Petitioner obviously failed in this respect.
No wonder she received a less than par performance in her performance evaluation
conducted in June 2001, contrary to her assertion that an 80.2% rating illustrates good and
dependable work performance. As can be gleaned in the performance appraisal form,
petitioner received deficient marks and low ratings on areas of problem solving and decision
making, interpersonal relationships, planning and organization, project management and
integrity notwithstanding an overall passing grade. As aptly remarked by the CA, these low
marks revealed the ―degree of [petitioner‘s] work handicap‖ and should have served as a
notice for her to improve on her job. However, she appeared complacent and remained lax
in her duties and this naturally resulted to respondents‘ loss of confidence in her managerial
abilities.
Taking all these circumstances collectively, the Court is convinced that respondents have
sufficient and valid reasons in terminating the services of petitioner as her continued
employment would be patently inimical to respondents‘ interest. 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.‖[47] ―[S]o 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,‖[48] the exercise of this
management prerogative must be upheld.
Anent petitioner‘s imputation of bad faith upon respondents, the same deserves no
credence. That she was publicly embarrassed when she was coerced by Sauceda and
Edles to vacate her office, return the company car and take all her personal belongings on
the day she was dismissed, are all mere allegations not substantiated by proof. And since it
is hornbook rule that he who alleges must prove, we could not therefore conclude that her
termination was tainted with any malice or bad faith without any sufficient basis to
substantiate this bare allegation. Moreover, we are more inclined to believe that
respondents‘ offer of settlement immediately after petitioner‘s termination was more of a
generous offer of financial assistance rather than an indication of ill-motive on respondents‘
part.
Petitioner was accorded due process.
Petitioner insists that she was not properly apprised of the specific grounds for her
termination as to give her a reasonable opportunity to explain. This is because the
Prerequisite Notice and Notice of Termination did not mention any valid or authorized cause
for dismissal but rather merely contained general allegations and vague terms.
We have examined the Prerequisite Notice and contrary to petitioner‘s assertion, find the
same to be free from any ambiguity. The said notice properly advised petitioner to explain
through a written response her failure to perform in accordance with management directives,
which deficiency resulted in the company‘s loss of confidence in her capability to promote its
interest. As correctly explained by the CA, the notice cited specific incidents from various
instances which showed petitioner‘s ―repeated failure to comply with work directives, her
inclination to make negative remarks about company goals and her difficult personality,‖ that
have collectively contributed to the company‘s loss of trust and confidence in her. Indeed,
these specified acts, in addition to her low performance rating, demonstrated petitioner‘s
neglect of duty and incompetence which support the termination for loss of trust and
confidence.
Neither can there be any denial of due process due to the absence of a hearing or
investigation at the company level. It has been held in a plethora of cases that due process
requirement is met when there is simply an opportunity to be heard and to explain one‘s side
even if no hearing is conducted.[49] In the case of Perez v. Philippine Telegraph and
Telephone Company,[50] this Court pronounced that an employee may be afforded ample
opportunity to be heard by means of any method, verbal or written, whether in a hearing,
conference or some other fair, just and reasonable way, in that:
xxxx
After receiving the first notice apprising him of the charges against him, the employee may submit a
written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records (such as his 201 file and daily
time records) and the sworn statements of his witnesses. For this purpose, he may prepare his
explanation personally or with the assistance of a representative or counsel. He may also ask the
employer to provide him copy of records material to his defense. His written explanation may also
include a request that a formal hearing or conference be held. In such a case, the conduct of a formal
hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary
disputes or where company rules or practice requires an actual hearing as part of employment
pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point
of law.
xxxx
In sum, the following are the 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.
(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.[51]
In this case, petitioner‘s written response to the Prerequisite Notice provided her with an
avenue to explain and defend her side and thus served the purpose of due process. That
there was no hearing, investigation or right to appeal, which petitioner opined to be a
violation of company policies, is of no moment since the records is bereft of any showing that
there is an existing company policy that requires these procedures with respect to the
termination of a CHR Director like petitioner or that company practice calls for the
same. There was also no request for formal hearing on the part of petitioner.
As she was served with a notice apprising her of the charges against her, and also a
subsequent notice informing her of the management‘s decision to terminate her services
alter respondents found her written response to the first notice unsatisfactory, petitioner was
clearly afforded her right to due process.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 1 2006 of the
Court of Appeals in CA-G.R. SP No. 86937 is AFFIRMED.
SO ORDERED.

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Labor Cases Penned By Justice Del Castillo

18 OCT 2017 | SUBJECT | LABOR AND

Meatworld International, Inc. Vs. Dominique

DEL CASTILLO, J.:

On September 6, 2006, petitioner Meatworld International, Inc., a corporation engaged in the

Ruling of the Labor Arbiter

Ruling of the National Labor Relations Commission

Petitioner appealed the case to the NLRC.

Ruling of the Court of Appeals

1. THE FINDING OF 1HE [CA] THAT THERE WAS NO COMPETENT EVIDENCE

2. THE [CA] ERRED IN DECLARING THAT A COPY OF 1HE BOARD

2. UPHOLDING THE FINDING OF THE NLRC IN AWARDING BACKWAGES AND

The Petition must fail.

Respondent was illegally dismissed.

Constructive dismissal is defined as a ―cessation of work because continued employment is

The Court finds petitioner‘s justification unacceptable.

WHEREFORE, the Petition is hereby DENIED.

02 OCT 2017 | JURISPRUDENCE | PONENTE | JUSTICE

Career Philippines Shipmanagement, Inc. and

DEL CASTILLO, J.:

Godinez was 20 years old at the time.

Prior to his employment, Godinez underwent a pre-employment medical examination

As Deck Cadet, Godinez‘s duties were as follows:

2. Perform gangway watch from 6:00 a.m. to 4:00 p.m. in port;

3. Assist in deck preventive maintenance;

4. Assist in arrival and departures, mooring, and unmooring;

5. Assist officers in the conduct of their work; and

6. Perform other tasks that may be assigned by his superiors.[7]

Subj: Update for Deck Cadet Eduard SJ. Godinez x x x x

Capt. Vicente A. Capero

Subject: UPDATE OF DCD1 GODINEZ – CONDITION

On January 22 and 23, 2004, Godinez underwent psychological tests.

(jurat and notarization)

Ruling of the Labor Arbiter

2. To pay 120 days sickness allowance equivalent to US$1,000.00[;]

3. To pay medical and hospital expenses in the total amount of Php70,475.90[;]

5. To pay attorney‘s fees equivalent to 10% of the total award[;]

WHEREFORE, premises considered, respondents Career Phils. Shipmanagement, Inc.; Columbia

1. Permanent and total disability compensation in the amount of US$60,000.00;

2. Sickness allowance amounting to US$475.00;

3. Reimbursement of medical expenses in the amount of Php70,475.90;

4. Moral damages in the amount of US$10,000.00; and Exemplary damages in the

In US DOLLARS or its equivalent in PHILIPPINE PESO at the time of payment.

Ruling of the National Labor Relations Commission

On April 30, 2008, the NLRC issued a Decision[33] declaring as follows:

2. In awarding disability benefits to appellee;

3. In ruling that appellee is entitled to sickness allowance amounting to US$475.00;

5. In awarding moral and exemplary damages; and,

6. In holding individual appellant personally liable.

Anent the issue of complainant-appellee‘s entitlement to sickness allowance in the amount of

WHEREFORE, premises considered, the appealed Decision is hereby, AFFIRMED with

Ruling of the Court of Appeals

‗SECTION 31. APPLICABLE LAW

as ‗any sickness resulting to disability or death as a result of an occupational disease listed

1. Reimbursement of medical expenses is REDUCED to Sixteen Thousand Six Hundred

2. Moral damages is REDUCED to One Thousand US Dollars (US$1,000.00); and

3. Exemplary damages is REDUCED to One Thousand US Dollars (US$1,000.00).

SO ORDERED. [36] (Citations omitted; emphasis and underscoring in the original)

A. THE HONORABLE COURT OF APPEALS COMMITTED CLEAR ERROR OF LAW AND IN

B. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN

By Godinez as petitioner in G.R. No. 206828

The Parties’ Respective Arguments

We find for Godinez.