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G.R. No.

209201 November 19, 2014

NEW FILIPINO MARITIME AGENCIES INC., ST. PAUL MARITIME CORP., and
ANGELINA T. RIVERA, Petitioners,
vs.
MICHAEL D. DESPABELADERAS, Respondent.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
assailing the May 30, 2013 Decision1 and the September 19, 2013 Resolution2 of the Court of
Appeals (CA), in CA G.R. SP. No. 120693, entitled "Michael D. Despabeladeras v. National
Labor Relations Commission (2nd Division), New Filipino Maritime Agencies inc .. St. Paul
Maritime Corp., and Ms. Angelina T. Rivera," a case for disability compensation and other
claims.

The Facts

Respondent Michael D. Despabeladeras (Michael)was hired by petitioner New Filipino Maritime


Agencies Inc., for and in behalf of its principal, St. Paul Maritime Corp. (petitioners), as Wiper
to work on board the vessel M/V "ATHENS HIGHWAY" for a period of nine (9) months, with a
basic monthly salary of US$415.00.3

Prior to embarkation, Michael underwent the required Pre- Employment Medical Examination
(PEME) and was declared "Fit for Sea Service" by the company doctor.

On April 26, 2009, Michael joined the assigned vessel.

On August 20, 2009, while going down the stairs of the vessel to get some tools to be used for
dismantling the engine’s piston, Michael slipped and fractured his left hand.

A few days after the incident, Michael experienced severe pain and swelling in his left wrist. He
was brought to the nearest hospital in Brunswick, Georgia, where he was diagnosed with "Ulna
Styloid Fracture, Left Wrist."4

On August 28, 2009,5 Michael was repatriated to the Philippines for better medical treatment
and management. Upon arrival in Manila on August 31, 2009,6 he was referred to the company-
designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz). Later on, Dr. Cruz endorsed Michael
to an orthopedic surgeon. Michael’s medical treatment was supervised by Dr. Cruz from August
2009 until February10, 2010. Despite continuous treatment under the care of Dr. Cruz, Michael
alleged that his medical condition did not improve. This prompted him to consult another
physician, Dr. Rogelio C. Catapang, Jr. (Dr. Catapang), who declared him unfit to resume his
duties as a seaman on January 16, 2010.7
Michael’s check-up with the orthopedic surgeon on February 3, 2010 showed minimal pain on
the left hand, but he was advised to continue with his medical therapy. Michael went back for his
check-up on February 10, 2010, and he was asked to return for a follow-up check up on February
17, 2010. He failed to return on the said date.8 Instead, he demanded that he be paid disability
benefits.

After his demand for payment of disability benefits was refused, Michael filed a complaint for
disability compensation and other monetary claims before the National Labor Relations
Commission (NLRC).

On September 9, 2010, the Labor Arbiter (LA) ruled in favor of Michael and awarded his claim
for permanent total disability benefits under the CBA. The LA found Michael entitled to the
award as he was unable to perform his customary job for more than 120 days due to the injury
sustained while performing his duty on board petitioners’ vessel. The LA concluded that Michael
did not abandon medical treatment and could not be faulted for not returning to the company-
designated physician who failed to assess him of rightful disability grading after treatment of
more than five months. The fallo of the LA decision, docketed as NLRC Case No. (M) 01-
00595-10, reads: WHEREFORE, premises considered, judgment is hereby rendered ordering
Respondents topay complainant the amount of US$89,100.00 representing his permanent total
disability benefit, plus 10% of the said amount as and by way of attorney’s fees.

SO ORDERED.9

On appeal, the NLRC reversed the LA decision, reasoning out that there was no positive proof
warranting the award of disability benefits because there was no assessment of any disability
grading by Dr. Cruz. It did not give credence to the medical report of Dr. Catapang because it
was issued after a single medical consultation and did not indicate the kind of examination
conducted to accurately assess his medical condition. Moreover, the NLRC found that Michael
did not complete his medical treatment in violation of the post-medical treatment provision in the
Philippine Overseas Employment Administration Standard Employment Contract (POEA-SEC).
The NLRC disposed:

WHEREFORE, the appeal is hereby GRANTED. The assailed Decision dated September 9,
2010, is hereby REVERSED and SET ASIDE and a new one is being entered dismissing the
complaint for lack of merit.

SO ORDERED.10

Michael filed a motion for reconsideration but it was denied by the NLRC. Thereafter, Michael
filed a petition with the CA.

In its May 30, 2013 Decision, the CA reversed the NLRC and sustained the LA award of
permanent total disability benefits. The CA applied the 120-day Presumptive Disability Rule. It
took note of the fact that Michael had exceeded the period within which he was initially
considered on temporary total disability. The CA brushed aside the conclusion of the NLRC that
the award of disability benefits was unjustified in the absence of disability grading. Itstated that
the absence of any grading at the onset of Michael’s disability orabsence of any assessment by
Dr. Cruz that he was still unfit to work was of no moment, as disability should be understood
more on the loss of earning capacity rather than on the medical significance of the disability. The
CA cited the case of Palisoc v. Easways Marine, Inc.,11 where even in the absence of an official
finding by the company-designated physician that the seafarer suffered a disability and was unfit
for sea duty, the seafarer may still be declared to be suffering from a permanent disability if he
was unable to work for more than 120 days. It added that what clearly determined the seafarer’s
entitlement to permanent disability benefits was his inability to work for more than 120 days. It
emphasized that in Valenzona v. Fair Shipping Corporation (Valenzona),12 the seafarer’s
disability was still considered permanent and total despite declaration by the company-
designated physician of the seafarer’s fitness to work as such declaration was made belatedly,
that is, more than 120 days after repatriation. The decretal portion of the CA decision reads:

WHEREFORE, in the light of the foregoing, the instant petition is GRANTED. The Decision
dated 31 March 2011 of the National Labor Relations Commission (NLRC) and its Resolution
dated 31 May 2011 are hereby REVERSED and SET ASIDE. Private respondents are held
jointly and severally liable to pay petitioner: a) permanent total disability benefits of US$
89,100.00 or its peso equivalent at the time of actual payment; and b) attorney’s fees of ten
percent (10%) of the total monetary award or its peso equivalent at the time of actual payment.

SO ORDERED.13

Petitioners moved for a reconsideration of the said decision, but their motion was denied by the
CA in its Resolution, dated September 19, 2013.

Hence, petitioners filed this petition anchored on the following

ERRORS:

I.

WHETHER THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE


ERROR OF LAW IN APPLYING THE 120 DAYS RULE DESPITE JURISPRUDENCE
ABANDONING THE SAME.

II.

WHETHER THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE


ERROR OF LAW IN DISREGARDING THE UNDISPUTED FACT THAT THE COMPANY-
DESIGNATED PHYSICIAN WAS RESTRAINED FROM ISSUING ASSESSMENT DUE TO
RESPONDENT’S MEDICAL ABANDONMENT.

III.
WHETHER THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE
ERROR OF LAW IN DEVIATING FROM THE RULING OF THIS HONORABLE COURT
IN C.F. SHARP CREW MANAGEMENT, INC. VS. TAOK.14

The sole issue to be resolved iswhether Michael was entitled to disability benefits for failure to
perform his pre-injury duties as seaman for more than 120 days.

Petitioners contend that the 120-day rule applied by the CA as basis for granting Michael’s
permanent total disability benefits was already abandoned and no longer controlling. In support
of their position, petitioners cited the cases of PHILASIA Shipping Agency Corporation, Inc. v.
Toma cruz,15 citing Vergara v. Hammonia Maritime Services, Inc.(Vergara),16 and Santiago v.
Pacbasin Ship management, Inc.(Pacbasin),17 where it was clarified that the temporary total
disability period of 120 days may be extended up to a maximum of 240 days. Thus, petitioners
claim that the seafarer’s cause of action arises only after the lapse of a maximum 240-day period.

Petitioners add that Michael’s failure to complete his medical treatment with Dr. Cruz prevented
the latter from issuing a final assessment of his disability, and thus, caused him to lose his right
to be entitled to disability compensation. Petitioners relied on the case of Magsaysay Maritime
Corporation v. National Labor Relations Commission,18 where it was held that abandonment by
a seafarerof his medical treatment with the company-designated physician resulted in the denial
of his disability claim.

There being no medical evidence to prove that he was suffering from disability, petitioners
argued that Michael had no cause of action at the time he filed his complaint.

Petitioners assert that the award of attorney’s fees was without basis. According to them, even ifa
claimant was compelled to litigate or to incur expenses to protect his rights, attorney’s fees may
still not be awarded in the absence of a clear showing of bad faith.

Respondent’s Position

In his Comment,19 Michael counters that the 120-day period in Valenzona20 applies to him. He
asserts what determines a seafarer’s permanent disability is his inability toresume his customary
work for a period of 120 days, notwithstanding any fit-to-work declaration or impediment rating
issued by the company-designated physician, as has been fortified in the recent cases of Wallem
Maritime Services, Inc. v. Tanawan (Wallem Maritime Services),21 and Kestrel Shipping Co.,
Inc. v. Munar (Kestrel Shipping).22 Michael adds that petitioners’ reliance on the Vergara
andPacbasincases, among others, was misplaced.

Michael claims that his failure to return for treatment could not be considered an abandonment
that would warrant the forfeiture of his right to disability claims. According to him, the failure of
Dr. Cruz to render an assessment of his fitness to work or permanent disability within the period
of 120 days with his medical condition remained unresolved, made him totally and permanently
disabled. In his case, the 120th day fell on December 26, 2009, which he counted from the time
he was repatriated on August 28, 2009. He explains that his failure to report to the company
doctor on February 17, 2010, was already beyond the 120-day period. There is, therefore, no
abandonment as he was already deemed permanently and totally disabled. He contends that it is
the failure to observe the mandatory 3-day reporting requirement under Section 20-B of the
POEA-SEC that can result to a forfeiture of the right to claim the said benefits.

Michael further argues that he is entitled to attorney’s fees because petitioners refused in bad
faith to acknowledge their accountability both under their contract and the law,compelling him to
litigate.

Reply of Petitioners

Petitioners, in their Reply,23 reiterate that the 120-day rule was already modified pursuant to the
Court’s pronouncement in Vergara that the rule should be applied depending on the
circumstances of the case. In Michael’s case, the 120-day rule lost its significance when he
refused to undergo further treatment under Dr. Cruz, thereby violating the procedure under the
POEA-SEC. Michael’s claim for disability benefits must, therefore, fail.

The Court’s Ruling

The Court finds merit in the petition.

The CA’s conclusion that Michael was entitled to permanent total disability benefits on the basis
of his inability to perform his sea duties for more than 120 days cannot be justified under the
prevailing circumstances. The 120-day rule, as aptly posited by petitioners, has already been
clarified in Vergarawhere it was declared that the 120-day rule could not simply be applied as a
general rule for all cases and in all contexts. In other words, it cannot be used as a cure-all
formula for all maritime compensation cases. Vergara’s application depends on the
circumstances of the case, especially the parties’ compliance with their contractual duties and
obligations as laid down in the POEA-SEC and/or their CBA, if one exists.24

In this regard, the Court quotes with approval the ruling of the NLRC, thus:

Anent the period of medical treatment, We are not oblivious of the 120 days principle cited by
the Labor Arbiter in the Decision; however, the particular circumstances of this case merit
different approach.

The records firmly established that complainant was diagnosed of "Ulna Styloid Fracture,"
commonly known as wrist fracture and as a definitive medical treatment, he underwent physical
therapy sessions. We are convincingly swayed that such injury requires medical treatment for a
period more than 120 days. Thus, to our mind, the ruling in Vergara vs. Hammonia Maritime
Services, Inc. and Atlantic Marine Ltd.,G.R. No. 172933, October 6, 2008, extending the period
of treatment to 240 days is more prudent and apropos in this case. Short-changing complainant’s
medical treatment to mere 120 days will be depriving him of realistic cure, which the POEA
SEC envisioned in requiring mandatory post-employment medical examinations.25
[Underscoring supplied]
In the recent case of Magsaysay Maritime Corporation v. National Labor Relations
Commission,26 the Court also referred to, and applied, the ruling in Vergara, viz:

xxx. The law in this jurisdiction must be determined in the context of the disagreement on
[seafarer’s] claim between the foreign employer, represented by the manning agency, and [the
seafarer] whose employment relationship isgoverned by the POEA-SEC and supplemented by
the parties’ CBA. As explained in Vergara, under Section 31 of the POEA-SEC, in case of any
unresolved dispute, claim or grievance arising out of orin connection with the contract, the
matter shall be governed by Philippine laws, as well as international conventions, treaties and
covenants where the Philippines is a signatory.

This signifies that the terms agreedupon by the parties pursuant to the POEA-SEC are to be read
and understood in accordance with Philippine laws, particularly, Articles 191 to 193 of the Labor
Code and the applicable implementing rules and regulations in case of any dispute, claim or
grievance. Article 192(3) of the Labor Code which deals with the period of disability states that:

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 adverted to is Section 2, Rule X of the Rules and Regulations implementing Book IV of
the Labor Code which provides:

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 mentalfunctions as determined by the System.

The above provisions must be read together with Section 20(B)(3) of the POEA-SEC which
states as follows:

Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent
disability has been assessed by the company-designated physician but in no case shall this period
exceed one hundred twenty (120) days.

The Vergara ruling, heretofore mentioned, gives us a clear picture of how the provisions of the
law, the rules and the POEA-SEC operate, thus –

The seafarer, upon sign-off from his vessel, must report to the company-designated physician
withinthree (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 alsobe declared fit to work at any time such declaration is justified by his medical
condition. (Underscoring supplied)

As recited earlier, upon Michael’s return to the country, he underwent medical treatment in
accordance with the terms of the POEASEC. Upon his repatriation on August 28, 2009, he was
given medical attention supervised by Dr. Cruz, the company-designated physician. He was later
on endorsed to an orthopedic surgeon. The company-designated specialist recommended that he
continue with his physical therapy sessions. During his visit on February 10, 2010, he was
required to return for a follow-up checkup on February 17, 2010. For unknown reasons, he failed
to return on the said date.

It should be noted that on February 10, 2010 when Michael last visited the company-designated
orthopedic surgeon, it had been 166 days since he was referred to the company-designated
physician upon his repatriation on August 28, 2009. During this time, Michael was under
temporary total disability inasmuch as the 240-day period provided under the aforecited Rules
had not yet lapsed. The CA, therefore, erred when it ruled that Michael’s disability was
permanent and total.

The CA even cited one of the instances enumerated in the case of C.F. Sharp Crew Management,
Inc. v. Taok (C.F. Sharp Crew Management)27 when a seafarer may be allowed to pursue an
action for permanent disability benefits. In the said case, the failureof the company-designated
physician to issue a declaration as to a seafarer’s fitness to engage in sea duty or disability even
after the lapse of the 120-day period with no indication that further medical treatment would
address his temporary total disability justified an extension of the period to 240 days. The
citation, however, finds no application in this case, where the company-designated physician
cannot be faulted for not issuing disability assessment or fit-to-work declaration. At that time,
which was within the 240-day period, Michael was still undergoing treatment by the company
doctors. The orthopedic surgeon noted that Michael’s fracture was healing and there was greater
probability of a fit for work declaration. After the lapse of 120 days, the treatment period was
considered extended as Michael was advised to continue medical therapy to improve his
condition to which he agreed. There was, thus, an indication that further therapy sessions would
address his temporary disability. He was expected to return for his therapy session, but he failed
to do so. Clearly, under the circumstances, the 240-day extension period was justified.

There being no assessment, Michael’s condition cannot be considered a permanent total


disability. Temporary total disability only becomes permanent when declared by the company
physician within the period he is allowed to do so, or upon the expiration of the maximum 240-
day medical treatment period without a declaration of either fitness to work or permanent
disability.28
Michael cannot validly invoke the cases of Valenzona, Wallem Maritime Services and Kestrel
Shipping to support his claim for permanent total disability claims. A perusal of the said cases
reveals that they relied on, and applied, Crystal Shipping, Inc. v. Natividad (Crystal Shipping).29
The Court had already resolved the seeming conflict between Crystal Shipping and Vergarain
this wise:

x x x This declaration of permanent total disability after the initial 120 days of temporary total
disability cannot, however, be simply lifted and applied as a general rule for all cases in all
contexts. The specific context of the application should be considered, as we must do in the
application of all rulings and even of the law and of the implementing regulations.

Crystal Shippingwas a case where the seafarer was completely unable to work for three years
and was indisputably unfit for sea duty "due to respondent’s need for regular medical check-up
and treatment which would not be available if he were at sea." While the case was not clear on
how the initial 120-day and the subsequent temporary total disability period operated, what
appears clear is that the disability went beyond 240 days without any declaration that the seafarer
was fit to resume work. Under the circumstances, a ruling of permanent and total disability was
called for, fully in accordance with the operation of the period for entitlement that we described
above.30

Furthermore, in the case of Kestrel Shipping, when the seafarer filed his claim for total and
permanent disability benefits, more than 120 days had gone by and the prevailing rule then was
that enunciated by this Court in Crystal Shipping, that total and permanent disability referred to
the seafarer’s incapacity to perform his customary sea duties for more than 120 days. In Kestrel
Shipping, the Court explained, thus:

This Court’s pronouncements in Vergara presented a restraint against the indiscriminate reliance
on Crystal Shipping such 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 unfitness to work despite the
lapse of 120 days will not automatically bring about a shift in the seafarer’s state from total and
temporary to total and permanent, considering that the condition of total and temporary disability
may be extended up to a maximum of 240 days.

Nonetheless, Vergarawas 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.31

On the issue of abandonment, the Court agrees with petitioners’ stance that Michael was indeed
guiltyof medical abandonment for his failure to complete his treatment even before the lapse of
the 240 days period. Due to his willful discontinuance of medical treatment with Dr. Cruz, the
latter could not declare him fit to work or assess his disability.
Michael’s claim that requiring him toawait the medical assessment of Dr. Cruz would mean
thathis fate would unduly rest in the hands of the company doctor does not persuade. Worthy of
note is that the company designated physician is mandated under the law to issue a medical
assessment within 240 days from the seafarer’s repatriation. It is, therefore, incorrect to conclude
that a seafarer isat the mercy of the company doctor.

Thus, without any disability assessment from Dr. Cruz, Michael’s claim for disability
compensation cannot prosper.1âwphi1 Section 20(D) of the POEA-SEC instructs that no
compensation and benefits shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act or intentional breach of his duties.
Michael was duty-bound to complete his medical treatment until declared fit to work or assessed
with a permanent disability grading. It is undisputed that Michael did not undergo further
treatment. As held in Splash Philippines, Inc. v. Ruizo,32 under the POEA-SEC, such a refusal
negated the payment of disability benefits.

Michael’s breach of his duties under the POEA-SEC was aggravated by the fact he filed his
complaint for permanent total disability benefits while he was under the care of the company-
designated specialist and without waiting for the latter’s assessment of his condition. Also, he
consulted with Dr. Catapang, who was not a designated company physician, and who declared
him permanently disabled to resume his sea duty. The facts of this case, however, show that
while he was under the medical treatment of the company orthopedic surgeon, his condition had
been gradually improving. In fact, as per medical report, dated February 3, 2010, his range of
motion was full and his left hand had good hand grip.33 Furthermore, based on the company-
designated physician’s medical opinion that had Michael appeared at the scheduled medical
consultation, he would have been declared fit towork as a seafarer.

The following facts must be noted: that Michael filed his complaint while Dr. Cruz had not yet
determined the nature and extent of his disability; that he was still undergoing therapy and his
injury had not yet been fully addressed; and that the 240-day period had not yet lapsed.
Considering these circumstances, petitioners correctly argued that the filing of Michael’s
complaint was premature. No cause of action for total and permanent disability benefits had yet
accrued.

Michael filed his complaint on January 12, 2010 and that he was able to secure a medical
certificate from Dr. Catapang on January 16, 2010.34 Such medical certificate was useless and
did not provide Michael with a cause of action to go after petitioners. Indeed, a seafarer has the
right to seek the opinion of other doctors under Section 20-B(3) of the POEA-SEC but this is on
the presumption that there is already a certification by the company-designated physician as to
his fitness or disability which he finds disagreeable. Under the same provision, it is the company-
designated physician who is entrusted with the task of assessing a seafarer’s disability and there
is a procedure to contest his findings.35 In this case, to repeat, Michael deprived the company-
designated physician to determine his fitness for sea duty when he chose not to appear for his
scheduled check-up.

The failure of Michael to observe the procedure under the POEA SEC provided a sufficient
ground for the denial of his claim for permanent total disability benefits. Considering, however,
that he was still under treatment by the company doctors even after the lapse of 120 days but
within the 240-day extended period allowed by the rules, he remained to be under temporary
total disability and entitled to temporary total disability benefits under the same rules.36 Stated
differently, as Michael still needed medical treatment beyond the initial 120 days from his
repatriation which lasted for 166 days, he is entitled under the rules37 to the income benefit for
temporary total disability during the extended period or for one hundred sixty-six ( 166) days.
This is computed from Michael's repatriation on August 28, 2009 until February 10, 2010 when
he last visited the company-designated orthopedic surgeon.

WHEREFORE, the petition is GRANTED. The assailed May 30, 2013 Decision and the
September 19, 2013 Resolution of the Court of Appeals, in CA-G.R. SP No. 120693, awarding
permanent total disability benefits to Michael D. Despabeladeras are REVERSED and SET
ASIDE. Petitioners New Filipino Maritime Agencies Inc. and St. Paul Maritime Corporation are
ORDERED, jointly and severally, to pay Michael D. Despabeladeras income benefit for one
hundred sixty-six (166) days.

G.R. No. 204142 November 19, 2014

HONDA CARS PHILIPPINES, INC., Petitioner,


vs.
HONDA CARS TECHNICAL SPECIALIST AND SUPERVISORS UNION, Respondent.

DECISION

BRION, J.:

We resolve the present petition for review on certiorari1 seeking to nullify the March 30, 2012
decision2 and October 25, 2012 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No.
109297. These rulings were penned by Associate Justice Noel G. Tijam and concurred in by
Associate Justices Romeo F. Barza and Edwin D. Sorongon.

The Factual Antecedents

On December 8, 2006, petitioner Honda Cars Philippines, Inc., (company) and respondent
Honda Cars Technical Specialists and Supervisory Union (union), the exclusive collective
bargaining representative of the company’s supervisors and technical specialists, entered into a
collective bargaining agreement (CBA) effective April 1, 2006 to March 31, 2011.4

Prior to April 1, 2005, the union members were receiving a transportation allowance of 3,300.00
a month. On September 3, 2005, the company and the union entered into a Memorandum of
Agreement5 (MOA) converting the transportation allowance into a monthly gasoline allowance
starting at 125 liters effective April 1,2005. The allowance answers for the gasoline consumed by
the union members for official business purposes and for home to office travel and vice-versa.
The company claimed that the grant of the gasoline allowance is tied up to a similar company
policy for managers and assistant vice-presidents (AVPs), which provides that in the event the
amount of gasoline is not fully consumed, the gasoline not used may be converted into cash,
subject to whatever tax may be applicable. Since the cash conversion is paid in the monthly
payroll as an excess gas allowance, the company considers the amount as part of the managers’
and AVPs’ compensation that is subject to income tax on compensation.

Accordingly, the company deducted from the union members’ salaries the withholding tax
corresponding to the conversion to cash of their unused gasoline allowance.

The union, on the other hand, argued that the gasoline allowance for its members is a "negotiated
item" under Article XV, Section 15 of the new CBA on fringe benefits. It thus opposed the
company’s practice of treating the gasoline allowance that, when converted into cash, is
considered as compensation income that is subject to withholding tax.

The disagreement between the company and the union on the matter resulted in a grievance
which they referred to the CBA grievance procedure for resolution. As it remained unsettled
there, they submitted the issue to a panel of voluntary arbitrators as required by the CBA.

The Voluntary Arbitration Decision

On February 6, 2009, the Panel of Voluntary Arbitrators6 rendered a decision/award7 declaring


that the cash conversion of the unused gasoline allowance enjoyed by the members of the union
is a fringe benefit subject to the fringe benefit tax, not to income tax. The panel held that the
deductions made by the company shall be considered as advances subject to refund in future
remittances of withholding taxes.

The company moved for partial reconsideration of the decision, but the panel denied the motion
in its June 3, 2009 order,8 prompting the company to appeal to the CA through a Rule 43 petition
for review. The core issue in this appeal was whether the cash conversion of the unused gasoline
allowance is a fringe benefit subject to the fringe benefit tax, and not to a compensation income
subject to withholding tax.

The CA Ruling

The CA Eight Division denied the petition and upheld with modification the voluntary
arbitration decision. It agreed with the panel’s ruling that the cash conversion of the unused
gasoline allowance is a fringe benefit granted under Section 15, Article XV of the CBA on
"Fringe Benefits." Accordingly, the CA held that the benefit is not compensation income subject
to withholding tax.

This conclusion notwithstanding, the CA clarified that while the gasoline allowance or the cash
conversion of its unused portion is a fringe benefit, it is "not necessarily subject to fringe benefit
tax."9 It explained that Section 33 (A) of the National Internal Revenue Code (NIRC) of 1997
imposed a fringe benefit tax, effective January 1, 2000 and thereafter, on the grossed-up
monetary value of fringe benefit furnished or granted to the employee (except rank-and-file
employees) by the employer (unless the fringe benefit is required by the nature of, or necessary
to the trade, business or profession of the employer, or when the fringe benefit is for the
convenience or advantage of the employer).
According to the CA, "it is undisputed that the reason behind the grant of the gasoline allowance
to the union members is primarily for the convenience and advantage of Honda, their
employer."10 It thus declared that the gasoline allowance or the cash conversion of the unused
portion thereof is not subject to fringe benefit tax.11

The Petition

Its motion for reconsideration denied, the company appeals to this Court to set aside the CA’s
dispositions, raising the very same issue it brought to the appellate court — whether the cash
conversion of the gasoline allowance of the union members is a fringe benefit or compensation
income, for taxation purposes.

The company reiterates its position that the cash conversion of the union members’ gasoline
allowance is compensation income subject to income tax, and not to a fringe benefit tax. It
argues that the tax treatment of a benefit extended by the employer to the employees is governed
by law and the applicable tax regulations, and notby the nomenclature or definition provided by
the parties. The fact that the CBA erroneously classified the gasoline allowance as a fringe
benefit is immaterial as it is the law – Section 33 of the NIRC – that provides for the legal
classification of the benefit.

It adds that there is no basis for the CA conclusion that the cash conversion of the unused
gasoline allowance redounds to the benefit of management. Common sense dictates that it is the
individual union members who solely benefit from the cash conversion of the gasoline allowance
as it goes into their compensation income.

In any event, the company submits that even assuming that the cash conversion of the unused
gasoline allowance is a tax-exempt fringe benefit and that it erred in withholding the income
taxes due, still the union members would have no cause of action against it for the refund of the
amounts withheld from them and remitted to the Bureau of Internal Revenue (BIR).

Citing Section 204 of the NIRC, the company contends that an action for the refund of an
erroneous withholding and payment of taxes should be in the nature of a tax refund claim with
the BIR. It further contends that when it withheld the income tax due from the cash conversion of
the unused gasoline allowance of the union members, it was simply acting as an agent of the
government for the collection and payment of taxes due from the members.

The Union’s Position

In its Comment12 dated April 19, 2013, the union argues for the denial of the petition for lack of
merit. Itposits that its members’ gasoline allowance and its unused gas equivalent are fringe
benefits under the CBA and the law [Section 33 (A) of NIRC] and is therefore not subject to
withholding tax on compensation income. Moreover, under that law and BIR Revenue
Regulations 2-98, the same benefit is not subject to the fringe benefit tax because it is required
by the nature of, or necessary to the trade or business of the company.
The union further submits that in 2007, the BIR ruled that fixed and/or pre-computed
transportation allowance given to supervisory employees in pursuit of the business of the
company, shall not be taxable as compensation or fringe benefits of the employees.13 It
maintains that the gasoline allowance is already pre-computed by the company as sufficient to
cover the gasoline consumption of the supervisors whenever they perform work for the company.
The fact that the company allowed its members to convert it to cash when not fully consumed is
no longer their problem because the benefit was already given.

Our Ruling

We partly grant the petition.

The Voluntary Arbitrator has no

jurisdiction to settle tax matters

The Labor Code vests the Voluntary Arbitrator original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies.14 Upon agreement of the parties, the Voluntary Arbitrator shall
also hear and decide allother labor disputes, including unfair labor practices and bargaining
deadlocks.15

In short, the Voluntary Arbitrator’s jurisdiction is limited to labor disputes. Labor dispute means
"any controversy or matter concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms
and conditions of employment, regardless of whether the disputants stand in the proximate
relation of employer and employee."16

The issues raised before the Panel of Voluntary Arbitrators are: (1) whether the cash conversion
of the gasoline allowance shall be subject to fringe benefit tax or the graduated income tax rate
on compensation; and (2) whether the company wrongfully withheld income tax on the
converted gas allowance.

The Voluntary Arbitrator has no competence to rule on the taxability of the gas allowance and on
the propriety of the withholding of tax. These issues are clearly tax matters, and do not involve
labor disputes. To be exact, they involve tax issues within a labor relations setting as they pertain
to questions of law on the application of Section 33 (A) of the NIRC. They do not require the
application of the Labor Code or the interpretation of the MOA and/or company personnel
policies. Furthermore, the company and the union cannot agree or compromise on the taxability
of the gas allowance. Taxation is the State’s inherent power; its imposition cannot be subject to
the will of the parties.

Under paragraph 1, Section 4 of the NIRC, the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the NIRC and other tax laws, subject to review by the
Secretary of Finance. Consequently, if the company and/or the union desire/s to seek
clarification of these issues, it/they should have requested for a tax ruling17 from the Bureau of
Internal Revenue (BIR). Any revocation, modification or reversal of the CIR’s ruling shall not be
given retroactive application if the revocation, modification or reversal will be prejudicial to the
taxpayers, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return or
any document required of him by the BIR;

(b) Where the facts subsequently gathered by the BIR are materially different from the
facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith.18

On the other hand, if the union disputes the withholding of tax and desires a refund of the
withheld tax, it should have filed an administrative claim for refund with the CIR. Paragraph 2,
Section 4 of the NIRC expressly vests the CIR original jurisdiction over refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other tax matters.
The union has no cause of action against the company

Under the withholding tax system, the employer as the withholding agent acts as both the
government and the taxpayer’s agent. Except in the case of a minimum wage earner, every
employer has the duty to deduct and withhold upon the employee’s wages a tax determined in
accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon the
CIR’s recommendation.19 As the Government’s agent, the employer collects tax and serves as
the payee by fiction of law.20 As the employee’s agent, the employer files the necessary income
tax return and remits the tax to the Government.21

Based on these considerations, we hold that the union has no cause of action against the
company.1âwphi1 The company merely performed its statutory duty to withhold tax based on its
interpretation of the NIRC, albeit that interpretation may later be found to be erroneous. The
employer did not violate the employee's right by the mere act of withholding the tax that may be
due the government.22

Moreover, the NIRC only holds the withholding agent personally liable for the tax arising from
the breach of his legal duty to withhold, as distinguished from his duty to pay tax.23 Under
Section 79 (B) of the NIRC, if the tax required to be deducted and withheld is not collected from
the employer, the employer shall not be relieved from liability for any penalty or addition to the
unwithheld tax.

Thus, if the BIR illegally or erroneously collected tax, the recourse of the taxpayer, and in proper
cases, the withholding agent, is against the BIR, and not against the withholding agent.24 The
union's cause of action for the refund or non-withholding of tax is against the taxing authority,
and not against the employer. Section 229 of the NIRC provides:

Sec. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, or of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty,
or sum has been paid under protest or duress.

WHEREFORE, premises considered, we PARTLY GRANT the petition for review on certiorari
filed by Honda Cars Philippines, Inc. We REVERSE AND SET ASIDE the March 30, 2012
decision and the October 25, 2012 resolution of the Court of Appeals in CA-G.R. SP No.
109297. We declare NULL AND VOID the February 6, 2009 decision and June 3, 2009
resolution of the Panel of Voluntary Arbitrators. No costs.

G.R. No. 195792 November 24, 2014

ABOSTA SHIP MANAGEMENT and/or ARTEMIO CORBILLA, Petitioners,


vs.
WILHILM M. HILARIO, Respondent.

DECISION

SERENO, CJ:

Abosta Ship Management Corporation (petitioner) filed a Petition for Review on Certiorari1
under Rule 45 of the 1997 Rules of Civil Procedure assailing the Court of Appeals (CA)
Decision2 dated 3 December 2010 and Resolution3 dated 11 February 2011 in CA-G.R. SP No.
110745.

The antecedents of this case are as follows:

On 24 October 2002, an employment contract was executed by petitioner, on behalf of its foreign
principal Panstar Shipping Co., Ltd., and respondent. In this contract, the latter was hired as a
bosun (boatswain) of the foreign vessel Grand Mark for a period of nine months, with a monthly
salary of USD566.4 The contract was duly approved by the Philippine Overseas Employment
Agency (POEA) on 25 October 2002.5

On 27 November 2002, upon reporting to the office of petitioner, respondent was informed that
the latter’s deployment had been postponed due to shifting demands of the foreign principal. It
appears, though, that the foreign principal decided to promote an able seaman on board the
vessel instead of hiring respondent. Petitioner thus requested respondent to wait for another two
to three months for a vacancy to occur.6 In the meantime, respondent was allowed tomake cash
advances7 as financial assistance.

Eventually, on 28 January 2003, respondent filed a Complaint with the POEA against petitioner
for violation of Section 2(r), Rule I, Part VI of the 2002 POEA Rules by failing to deploy
respondent within the prescribed period without any valid reason. Respondent likewise filed a
Complaint with the Labor Arbiter on 6 February 2003 based on the same ground and sought
actual, moral and exemplary damages and attorney’s fees.

Petitioner moved for the dismissal of the Complaint, alleging that the Labor Arbiter had no
jurisdiction over the matter, as jurisdiction was supposedly lodged with the POEA. However, the
Labor Arbiter denied the motion, stating that the action for damages arising from employment
relations was clearly within its jurisdiction.

On 13 February 2004, the National Labor Relations Commission (NLRC) granted petitioner’s
appeal and reversed the Labor Arbiter’s Order. The NLRC held that considering no employer-
employee relationship existed between the parties, the POEA had jurisdiction over the case. The
claim for non-deployment was administrative in character, and sanctions may be imposed by the
POEA.8

Respondent consequently filed a Petition for Certiorari with the CA questioning the ruling of the
NLRC.

On 17 March 2006, the CA granted the Petition. It pointed out that Section 10 of the Labor Code
provides that the jurisdiction of the Labor Arbiter includes claims arising by virtue of any law or
contract involving Filipino workers for overseas deployment, including claims for actual, moral,
exemplary and other forms of damages. Meanwhile, the POEA has jurisdiction over pre-
employment cases that are administrative in character. Thus, respondent’s Complaint was
reinstated.9

After the parties submitted their respective Position Papers, the Labor Arbiter ordered petitioner
to pay respondent his salary for nine months in the amount of USD 10,071. The Labor Arbiter
found that the contract executed between the parties and the non-fulfillment thereof entitled
respondent to his salary for the whole duration of the contract. However, the arbiter did not find
bad faith, which would have merited the award of moral damages.10

This Decision prompted petitioner to appeal to the NLRC. On 11 March 2009, it held that
respondent’s non-deployment was due to a valid exercise of the foreign principal’s management
prerogative, which should be given due respect. Thus, the NLRC dismissed the Complaint, but
ordered petitioner "to comply with our directive to deploy respondent as soon as possible or face
the inevitable consequences."11

Dissatisfied with the NLRC’s ruling,respondent filed a Petition for Certiorari with the CA. On 3
December 2010, it granted the Petition and held that the NLRC committed grave abuse of
discretion by holding that the able seaman’s promotion was a valid management prerogative. The
CA further ruled that since respondent had already been hired for the same position, then there
was no longer any vacant position to which to promote the able seaman. Moreover, under the
POEA Rules, petitioner assumed joint and solidary liability with its foreign principal, and was
thus liable to respondent. It thus found the NLRC’s Decision to be contrary to law and prevailing
jurisprudence. Finally, the CA ruled that NLRC’s Order for petitioner "to deploy respondent as
soon as possible or face inevitable consequences" was "nonsensical" considering that the
controversy arose from way back in 2002, and that the assailed Order was issued in 2009.12 The
CA likewise denied the Motion for Reconsideration filed by petitioner. Hence, this Petition.
ASSIGNMENT OF ERRORS

Petitioner raises the following errors allegedly committed by the CA:

The Honorable Court of Appeals committed grave reversible error when it ruled that
complainant is entitled to actual damages in the light of Paul v. Santiago case, the doctrine of
stare decis [sic] being inapplicable in the instant case as to the issue of award of actual damages.

The Honorable NLRC did not commit grave abuse of discretion when it ruled differently from
Santiago case [on] the issue of actual damages contrary to erroneous decision of the Court of
Appeals that NLRC committed grave abuse of discretion in disregarding Santiago case on the
issue of actual damages.

The Honorable Court of Appeals committed reversible error when it disregarded the factual
findings of the NLRC, that, if properly considered, would justify petitioner’s use of management
prerogative.

The Honorable Court of Appeals committed reversible error in reinstating the award of actual
damages despite the want of any factual and legal basis and again in missapplying [sic]
Datumancase in the instant case.13

THE COURT’S RULING

The issue boils down to whether the CA committed serious errors of law.

We rule in the negative.

There is no dispute that the parties entered into a contract of employment on 24 October 2002,
and that petitioner failed to deploy respondent. The controversy arose from the act of the foreign
principal in promoting another person, an act that effectively disregarded the contract dated 24
October 2002 entered into between petitioner, on behalf of its foreign principal, and respondent.
There was a clear breach of contract when petitioner failed to deploy respondent in accordance
with the POEA approved contract.

The Court is left with the issue of whether such breach would entitle respondent to the payment
of actual damages for the failureof petitioner to comply with the latter’s obligations in
accordance with the employment contract.

It is the contention of petitioner that respondent’s non-deployment was due to the foreign
principal’s management prerogative to promote an able seaman. Supposedly, this exercise of
management prerogative is a valid and justifiable reason that would negate any liabilityfor
damages.

We do not agree.
Based on a communication sent by a certain M.K. Jin dated 10 October 2002,14 the foreign
principal had already chosen respondent from among the other candidates as BSN (bosun or
boatswain). Pursuant to this communication, petitioner entered into an employment contract and
hired respondent on 24 October 2002. Subsequent communications, though, show that the
foreign principal approved a different candidate for the position of BSN.15

Thus, petitioner did notdeploy respondent.

There was an apparent violation of the contract at the time that the foreign principal decided to
promote another person as expressed in its communications dated 10 November 2002 and 14
November 2002. The vacancy for the position of boatswain ceased to exist upon the execution of
the contract between petitioner and respondent on 24 October 2002, a contract subsequently
approved by the POEA on 25 October 2002. Clearly, there was no vacancy when the foreign
principal changed its mind, since the position of boatswain had already been filled up by
respondent.

The contract was already perfected on the date of its execution, which occurred when petitioner
and respondent agreed on the object and the cause, as well as on the rest of the terms and
conditions therein. Naturally, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, a breach of which may give rise to a cause of
action against the erring party.16 Also, the POEA Standard Contract must be recognized and
respected. Thus, neither the manning agent nor the employer can simply prevent a seafarer from
being deployed without a valid reason.17

True, the promotion and choice of personnel is an exercise of management prerogative.1âwphi1


In fact, this Court has upheld management prerogatives, so long as they are exercised in good
faith for the advancement of the employer’s interest, and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements.18
However, there are limitations on the exercise of management prerogatives, such as existing laws
and the principle of equity and substantial justice.19

Under the principle of equity and substantial justice, change of mind was not a valid reason for
the non-deployment of respondent. He lost the opportunity to apply for other positions in other
agencies when he signed the contract of employment with petitioner. Simply put, that contract
was binding on the parties and may not later be disowned simply because of a change of mind of
either one of them.

The unilateral and unreasonable failure to deploy respondent constitutes breach of contract,
which gives rise to a liability to pay actual damages. The sanctions provided for non-deployment
do not end with the suspension or cancellation of license or the imposition of a fine and the
return of all documents at no cost to the worker. They do not forfend a seafarer from instituting
an action for damages against the employer or agency that has failed to deploy him.20

Considering that it was petitioner who entered into the contract of employment with respondent
for and on behalf of the foreign principal, it has the primary obligation to ensure the
implementation of that contract. Furthermore, in line with the policy of the state to protect and
alleviate the plight of the working class, Section 1, paragraph f (3) of Rule II of the POEA Rules
and Regulations,21 clearly provides that the private employment agency shall assume joint and
solidary liability with the employer. Indeed, this Court has consistently held that private
employment agencies are held jointly and severally liable with the foreign-based employer for
any violation of the recruitment agreement or contract of employment.22 This joint and solidary
liability imposed by law on recruitment agencies and foreign employers is meant to assure the
aggrieved worker of immediate and sufficient payment of what is due him.23

In sum, the failure to deploy respondent was an exercise of a management prerogative that went
beyond its limits and resulted in a breach of contract. In tum, petitioner's breach gave rise to
respondent's cause of action to claim actual damages for the pecuniary loss suffered by the latter
in the form of the loss of nine months' worth of salary as provided in the POEA-approved
contract of employment.

WHEREFORE, premises considered, the instant Petition is DENIED.

G.R. No. 196102 November 26, 2014

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,


vs.
AURELIA Y. CALUMPIANO, Respondent.

DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are 1) the October 30, 2009 Decision2 of the
Court of Appeals (CA) in CA-G.R. SP No. 85908 which set aside the June 24, 2004 Decision3 of
the Employees' Compensation Commission (ECC) in ECC Case No. GM-16174-0209-04 and
ordered the payment of disability benefits to the herein respondent Aurelia Y. Calumpiano; and
2) the CA's February 23, 2011 Resolution4 denying reconsideration of the assailed CA Decision.

Factual Antecedents

As determined by the CA, the facts are as follows:

x x x Aurelia Y. Calumpiano5 was employed as Court Stenographer at the then Court of First
Instance ofSamar from January 5, 1972 until her retirement on March 30, 2002.

On March 7, 2002, shortly before her retirement, [respondent] filed before the Supreme Court, an
application for disability retirement on account of her ailment[s], Hypertensive Cardiovascular
Disease [and] Acute Angle Closure Glaucoma. To bolster her claim, [respondent] submitted the
medical certificates issued by her attending physicians, Dr. Alfred I. Lim and Dr. Elmer Montes,
both of whom are Op[h]thalmologists [at] Eastern Samar Provincial Hospital. She submitted
them together with the results of her perimetry test, [a certificate of] which x x x was issued by
Dr. Lim. On September 30, 2002, the Supreme Court approved [respondent’s] application for
disability retirement, under Republic Act No. 8291 (New GSIS Act of 1997).

[Respondent’s] disability claim was forwarded to GSIS,6 but the latter denied her claim for the
reason that hypertension and glaucoma, which were her illnesses, were not work[-]related. Her
motion for reconsideration was likewise denied by the GSIS.

Petitioner filed an appeal [with] the ECC, which rendered the assailed Decision,7 the dispositive
portion of which stated:

WHEREFORE, in view of the foregoing, the decision appealed from is hereby AFFIRMED and
the instant appeal dismissed for want of merit.

SO ORDERED.8

In dismissing respondent’s appeal, the ECC held:

"Glaucoma is characterized by an intraocular pressure sufficiently elevated to produce


intraocular damage. The three major categories of glaucoma are: (1) angle-closure glaucoma, (2)
open-angle glaucoma, and (3) congenital and juvenile glaucoma. Eyes that develop primary
angle glaucoma are anatomically predisposed to the condition. In primary open-angle glaucoma,
[the] angle appears open [and] does notseem to function properly. The exact nature of
obstruction has not yet been elucidated. Congenital glaucoma and juvenile glaucoma are thought
to be hereditary inmost cases, although infectious causes are possible (rubella).["] (Pathologic
Basis of Disease by Cotran, 6th edition, pages 1374-1375)

"Hypertension is an increase in the blood pressure within the normal of less than 120/80 mm Hg
as defined by the Joint National Committee VII. Primary risk factor for developing hypertension
is smoking. Other important risk factors are excess body weight, high salt intake, nutritional
factors, high alcohol consumption, physical inactivity and psychological factors, including
stress." (Principles of Internal Medicine)

To warrant compensability of ailment and its resulting sickness, disability or death under P.D.
626, as amended, Rule III, Section 1(b) thereof, specifically provides that the ailment must be
listed by the Commission as an occupational disease with the conditions set forth therein
satisfied, otherwise, the conditions imposed under the Increased Risk Theory must be complied
with.

Appellant9 worked as a Court Stenographer III of the Supreme Court for thirty (30) years. Her
duties were no doubt stressful and the same may have caused her to develop her ailment,
hypertension. However, to make the same compensable, it is necessary that there must be
impairment of function of her body organs like kidneys, heart, eyes and brain resulting in her
permanent disability. An examination of the appellant’s records would show that she was not
suffering from end[-]organ damage. This was shown in the x x x report [of the ECG] that was
taken on the appellant on January 21, 2002. Thus, the same cannot be considered compensable
and work-connected.
Likewise, her other ailment, Glaucoma[,] cannot also be considered work-connected. Medical
science has explained that it is characterized by an intraocular pressure sufficiently elevatedto
produce intraocular glaucoma. Here, there was nothing in her duties that would cause or increase
her risk of contracting the said ailment.10

Ruling of the Court of Appeals

In a Petition for Review11 filed with the CA and docketed therein as CAG.R. SP No. 85908,
respondent sought to set aside the aboveECC Decision, arguing that her illness is work-
connected which thus entitles her to disability compensation.

On October 30, 2009, the CA issued the herein assailed Decision containing the following
decretal portion:

WHEREFORE, the petition is GRANTED. Accordingly, the assailed Decision is SET ASIDE.
Let this case be REMANDED to the Employees’ Compensation Commission for the payment of
the disability benefits due the Petitioner.

SO ORDERED.12

The CA held that while respondent’s hypertension and glaucoma are not listed as occupational
diseases under the implementing rules of the Employee Compensation Program under
Presidential Decree No. 62613 (PD 626), they were nonetheless contracted and became
aggravated during her employment as court stenographer; that under the "increased risk theory,"
a "non-occupational disease" is compensable as long as proof of a causal connection between the
work and the ailment is established;14 that respondent’s illnesses are connected to her work,
given the nature of and pressure involved in her functions and duties as a court stenographer; that
the certifications issued by the attending physicians certifying to respondent’s illnesses should
begiven credence; that the ECC itself conceded that respondent’s duties were "no doubt stressful
and the same may have caused her to develop her ailment, hypertension;" and that while the
presumption of compensability has been abrogated with the issuance of PD 626, employees’
compensation laws nevertheless constitute social legislation which allows for liberality in
interpretation to the benefit of the employee, and the policy has always been to extend the
applicability of said laws to as many employees who can avail of the benefits thereunder.15

Petitioner filed a Motion for Reconsideration, but the CA denied the same in its February 23,
2011 Resolution. Hence, the instant Petition.

Issues

Petitioner submits the following issues for resolution:

1. WHETHER THE COURT OF APPEALS ERRED IN FINDING THAT


RESPONDENT’S DISEASES (HYPERTENSION AND GLAUCOMA) ARE
COMPENSABLE UNDER THE INCREASED RISK THEORY; AND
2. WHETHER THE COURT OF APPEALS ERRED IN REVERSING THE FINDINGS
OF FACTS OF THE ECC.16

Petitioner’s Arguments

Praying that the assailed CA pronouncements be set aside and that the June 24, 2004 Decision of
the ECC be reinstated, petitioner argues in its Petition and Reply17 that respondent’s
hypertension and glaucoma are not compensable under the principle of increased risk; that
although essential hypertension is listed as an occupational disease, it is not compensable per
seas the conditions under Section 1, Rule III of the Amended Rules on Employees’
Compensation18 should be satisfied; that hypertension is compensable only "if it causes
impairment of function of body organs like kidneys, heart,eyes and brain, resulting in permanent
disability;"19 that since respondent did not suffer "end-organ damage" to or impairment of her
kidneys, heart, eyes and brain which resulted in permanent disability, her illness is not
compensable; that respondent’s other illness – glaucoma – is not compensable;20 and that the
findings of the ECC should be accorded respect and finality, as it has the expertise and
knowledge on account of its specialized jurisdiction overemployee compensation cases.
Respondent’s Arguments

In her Comment,21 respondent seeks the denial of the Petition, arguing relevantly that the
"increased risk theory," which applies to her, has been upheld in several decided cases;22 that in
disability compensation cases, it is not the injury which is compensated for but rather the
incapacity to work resulting in the impairment of the employee’s earning capacity;23 and that
while the ECC has the expertise and knowledge relative to compensation cases, the CA isnot
precluded from making its own assessment of the case which goes against that of the ECC’s. Our
Ruling

The Court denies the Petition.

In resolving this case, the case of Government Service Insurance System v. Baul24 comes into
mind and lays the groundwork for a similar ruling. In said case, the Court held:

Cerebro-vascular accident and essential hypertension are considered as occupational diseases


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

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

The degree of proof required to validate the concurrence of the above-mentioned conditions
under P.D. No. 626 is merely substantial evidence, that is, such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion. What the law requires is a reasonable
work connection and not direct causal relation. It is enough that the hypothesis on which the
workmen’s claim isbased is probable. As correctly pointed out by the CA, probability, not the
ultimate degree of certainty, is the test of proof in compensation proceedings. For, in interpreting
and carrying out the provisions of the Labor Code and its Implementing Rules and Regulations,
the primordial and paramount consideration is the employee’s welfare. To safeguard the
worker’s rights, any doubt as to the proper interpretation and application must be resolved in
[his] favor.

In the instant case, medical reports and drug prescriptions of respondent’s attending physicians
sufficiently support her claim for disability benefits. Neither the GSIS nor the ECC convincingly
deny their genuineness and due execution. The reports are made part of the record and there is no
showing that they are false or erroneous, or resorted to [for the purpose] of deceiving the Court,
hence, are entitled to due probative weight. The failure of respondent to submit to a full medical
examination, as required by the rules, to substantiate her essential hypertension, is of no moment.
The law is that laboratory reports such as X-ray and ECG are not indispensable prerequisites to
compensability, the reason being that the strict rules of evidence need not be observed in claims
for compensation. Medical findings of the attending physician may be received in evidence and
used as proof[s] of the fact in dispute. The doctor’s certification as to the nature of claimant’s
disability may begiven credence as he orshe normally would not make untruthful certification.
Indeed, no physician inhis right mind and who is aware of the far[-]reaching and serious effect
that his or her statements would cause on a money claim against a government agency would
vouch indiscriminately without regarding his own interests and protection.

Significantly, evenmedical authorities have established that the exact etiology of essential
hypertension cannot be accurately traced:

The term essential hypertension has been employed to indicate those cases of hypertension for
which a specific endocrine or renal basis cannot befound, and in which the neural element may
be only a mediator ofother influences. Since even this latter relationship is not entirely clear, it is
more properly listed for the moment in the category of unknown etiology. The term essential
hypertension defines simply by failing to define; hence, it is of limited use except as an
expression of our inability to understand adequately the forces at work.25

It bears stressing, however, that medical experiments tracing the etiology of essential
hypertension show that there is a relationship between the sickness and the nature and conditions
of work. In this jurisdiction, we have already ruled in a number of cases the strenuous office of a
public school teacher. The case of Makabali v. Employees’ Compensation Commission, which
we have re-affirmed in the subsequent cases of De Vera v. Employees’ Compensation
Commission, Antiporda v. Workmen’s Compensation Commission, and De la Torre v.
Employees’ Compensation Commission, amply summarized, thus:

xxxx

The fact that the essential hypertension of respondent worsened and resulted in a CVA at the
time she was already out of service is inconsequential. The main consideration for its
compensability is that her illness was contracted during and by reason ofher employment, and
any non-work related factor that contributed to its aggravation is immaterial.

Indeed, an employee’s disability may not manifest fully at one precise moment in time but rather
over a period of time. It is possible that an injury which at first was considered to be temporary
may later on become permanent or one who suffers a partial disability becomes totally and
permanently disabled from the same cause. The right to compensation extends to disability due
to disease supervening upon and proximately and naturally resulting from a compensable injury.
Where the primary injury is shown to have arisen in the course of employment, every natural
consequence that flows from the injury likewise arises out of the employment, unless it is the
result of an independent intervening cause attributable to claimant’s own negligence or
misconduct. Simply stated, all medical consequences that flow fromthe primary injury are
compensable.

P.D. No. 626, as amended, is said to have abandoned the presumption of compensability and the
theory of aggravation prevalent under the Workmen’s Compensation Act. Nonetheless, we ruled
in Employees’ Compensation Commission v. Court of Appeals, that:

Despite the abandonment of the presumption of compensability established by the old law, the
present law has not ceased to be an employees’ compensation law or a social legislation; hence,
the liberality of the law in favor of the working man and woman still prevails, and the official
agency charged by law to implement the constitutional guarantee of social justice should adopt a
liberal attitude in favor of the employee in deciding claims for compensability, especially in light
of the compassionate policy towards labor which the 1987 Constitution vivifies and enhances.
Elsewise stated, a humanitarian impulse, dictated by no less than the Constitution itself under the
social justice policy, calls for a liberal and sympathetic approach to legitimate appeals of
disabled public servants; or that all doubts to the right to compensation must be resolved in favor
of the employee or laborer. Verily, the policy is to extend the applicability of the law on
employees’ compensation to as many employees who can avail of the benefits thereunder.26
(Emphasis supplied)

Also, in Government Service Insurance System v. De Castro,27 this Court made the following
pronouncement:

Other than the given facts, another undisputed aspect of the case is the status of the ailments that
precipitated De Castro’s separation from the military service – CAD and hypertensive
cardiovascular disease. These are occupational diseases. No less than the ECC itself confirmed
the status of these ailments when it declared that "Contrary to the ruling of the System, CAD is a
form of cardiovascular disease which is included in the list of Occupational Diseases." Essential
hypertension is also listed under Item 29 in Annex "A" of the Amended ECC Rules as an
occupational disease.

Despite the compensable character of his ailments, both the GSIS and the ECC found De
Castro’s CAD to be non-work related and, therefore, noncompensable. To use the wording of the
ECC decision, it denied De Castro’s claim "due to the presence of factors which are not work-
related, such as smoking and alcohol consumption." De Castro’s own military records triggered
this conclusion ashis Admitting Notes, made when he entered the V. Luna General Hospital due
to chest pains and hypertension, were that he was a smoker and a drinker.

As the CA did, we cannot accept the validity of this conclusion at face value because it considers
only one side – the purely medical side – of De Castro’s case and even then may not be
completely correct. The ECC itself, in its decision, recites that CAD is caused, among others, by
atherosclerosis of the coronary arteries that in turn, and lists the following major causes:
increasing age; male gender; cigarette smoking; lipid disorder due to accumulation of too much
fats in the body; hypertension or high blood pressure; insulin resistance due to diabetes; family
history ofCAD. The minor factors are: obesity; physical inactivity; stress; menopausal estrogen
deficiency; high carbohydrate intake; and alcohol.

We find it strange that both the ECC and the GSIS singled out the presence of smoking and
drinking as the factors that rendered De Castro’s ailments, otherwise listed as occupational, to be
non-compensable. To be sure, the causes of CAD and hypertension that the ECC listed and
explained in its decision cannot be denied; smoking and drinking are undeniably among these
causes. However, they are not the sole causes of CAD and hypertension and, at least, not under
the circumstances of the present case. For this reason, we fear for the implication of the ECC
ruling if it will prevail and be read as definitive on the effects of smoking and drinkingon
compensability issues, even on diseases that are listed as occupational in character. The ruling
raises the possible reading that smoking and drinking, by themselves, are factors that can bar
compensability.

We ask the question of whether these factors can be sole determinants of compensability as the
ECC has apparently failed to consider other factors such as age and gender from among those
that the ECC itself listed as major and minor causes of atherosclerosis and, ultimately, of CAD.
While age and gender are characteristics inherent in the person (and thereby may be considered
nonwork related factors), they also do affect a worker’s job performance and may in this sense,
together with stresses of the job, significantly contribute to illnesses such as CAD and
hypertension. To cite an example, some workplace activities are appropriate only for the young
(such as the lifting of heavy objects although these may simply be office files), and when
repeatedly undertaken by older workers, may lead to ailments and disability. Thus, age coupled
with an age-affected work activity may lead to compensability. From this perspective, none of
the ECC’s listed factors should be disregarded to the exclusion of others in determining
compensability.

In any determination of compensability, the nature and characteristics of the job are as important
as raw medical findings and a claimant’s personal and social history. This is a basic legal reality
in workers’ compensation law. We are therefore surprised that the ECC and the GSIS simply
brushed aside the disability certification that the military issued with respect to De Castro’s
disability, based mainly on their primacy as the agencies with expertise on workers’
compensation and disability issues.28 (Emphasis supplied)

This case should not have been difficult for the petitioner to resolve on its own, given that so
many cases have been decided in the past which should have provided it the guiding hand to
decide disability cases on its own rightly – instead of putting claimants in the unfortunate
position of having to chase the benefits they are clearly entitled to, and waste years prosecuting
their claims in spite of their adverse circumstances in life. This Court should not have to parrot
over and over again what clearly has been the settled rule; in many ways, this is a waste of time,
and it only indicates that petitioner has eithernot learned its lesson, or it refuses to realize it.

Applying Bauland De Castro to the instant case and looking at the factual milieu, the Court
agrees with the CA’s conclusion and so declares that respondent’s illness is compensable.
Respondent served the government for 30 long years; veritably, as the ECC itself said, "[h]er
duties were no doubt stressful and the same may have caused her to develop her ailment,
hypertension"29 – which is a listed occupational disease, contrary to the CA’s pronouncement
that itis not. And because it is a listed occupational disease, the "increased risk theory" does not
apply – again, contrary to the CA’s declaration; no proof of causation is required.

It can also be said that given respondent’s age at the time, and taking into account the nature,
working conditions, and pressures of her work as court stenographer – which requires her to
faithfully record each and every day virtually all of the court’s proceedings; transcribe these
notes immediately in order to make them available to the court or the parties who require them;
take down dictations by the judge, and transcribe them; and type in final form the judge’s
decisions, which activities extend beyond office hours and without additional compensation or
overtime pay30 – all these contributed to the development of her hypertension – or hypertensive
cardiovascular disease, as petitioner would call it.31 Consequently, her age, work, and
hypertension caused the impairment of vision in both eyes due to "advanced to late stage
glaucoma",which rendered her "legally blind."32

Contrary to petitioner’s submissions, there appears to be a link between blood pressure and the
development of glaucoma, which leads the Court to conclude that respondent’s glaucoma
developed as a result of her hypertension.

Although intra ocular pressure (IOP) remains an important risk factor for glaucoma, it is clear
that other factors can also influence disease development and progression. More recently, the
role that blood pressure (BP) has in the genesis of glaucoma has attracted attention, as it
represents a clinically modifiable risk factor and thus provides the potential for new treatment
strategies beyond IOP reduction. The interplay between blood pressure and IOP determines the
ocular perfusion pressure (OPP), which regulates blood flow to the optic nerve. If OPP is a more
important determinant of ganglion cell injury than IOP, then hypotension should exacerbate the
detrimental effects of IOP elevation, whereas hypertension should provide protection against IOP
elevation. Epidemiological evidence provides some conflicting outcomes of the role of systemic
hypertension in the development and progression of glaucoma. The most recent study showed
that patients at both extremes of the blood pressure spectrum show an increased prevalence of
glaucoma. Those with low blood pressure would have low OPP and thus reduced blood flow;
however, that people with hypertension also show increased risk is more difficult to reconcile.
This finding may reflect an inherent blood flow dysregulation secondary to chronic hypertension
that would render retinal blood flow less able to resist changes in ocular perfusion pressure.33 x
x x (Emphasis and underscoring supplied)

In recent years, we’ve learned a lot about ocular perfusion pressure (OPP), i.e., the pressure
difference between blood entering the eye and IOP. It’s clear that three forces — OPP, IOP and
blood pressure — are interconnected in the glaucoma disease process. The mechanics of that
relationship, however, remain ambiguous.

xxxx

The ties between hypertension and glaucoma are less well established but the data, in addition to
my involvement in a new study (discussed below), have convinced me they probably do exist.
Therefore, I believe potential hypertension, along with potential low blood pressure, should be
investigated in patients whose glaucoma continues to progress despite what appears to be well
controlled IOP.

xxxx

We suspect there is a close relationship among IOP, OPP, blood pressure and glaucoma, but the
exact nature of these associations remains elusive. Complicating matters is the physiological
phenomenon known as autoregulation.34

Abstract

Aims: To determine whether systemic hypertension and glaucoma might coexist more often than
expected, with possible implications for treatment.

Methods: Case-control study using general practitioner database of patients with glaucoma
matched with controls for age and sex.

Results: Hypertension was significantly more common in the 27[,]080 patients with glaucoma
(odds ratio 1.29, 95% confidence intervals 1.23 to 1.36, p<0.001) than in controls. x x x35

While some of the above conclusions are not definitive, it must be stressed that probability, not
certainty, is the test of proof in compensation cases."36 It does not preclude the Court from
concluding that respondent’s hypertension – apart from her age, work, and working conditions –
impaired her vision as a result.

The Court likewise disregards the ECC’s finding, which petitioner relies upon, that the primary
and important risk factors for developing hypertension are smoking, excess body weight, high
salt intake, nutritional factors, high alcohol consumption, physical inactivity and psychological
factors, including stress. As the Court held in De Castro, these are not the sole causes of
hypertension; age, gender, and work stress significantly contribute to its development, and the
nature and characteristics of the employment are as important as raw medical findings and a
claimant’s personal and social history.

Finally, while the ECC possesses the requisite expertise and knowledge in compensation cases,
its decision in respondent’s caseis nonetheless erroneous and contrary to law. The Court cannot
uphold its findings; its specialized training, experience and expertise did not serve justice well in
this case.1âwphi1 The medical certificates and relevant reports issued by respondent’s attending
physicians – Drs. Alfred I. Lim, Elmer Montes, and Salvador R. Salceda – as well as hospital
records,37 deserve credence. The identical findings of these three eye specialists simply cannot
be ignored.

In arriving at the above conclusions, the Court is well guided by the principles, declared in
Bauland De Castro, that probability, not certainty, is the test of proof in compensation cases;that
the primordial and paramount consideration is the employee’s welfare; that the strict rules of
evidence need not be observed in claims for compensation; that medical findings of the attending
physician may be received in evidence and used as proof of the facts in dispute; that in any
determination of compensability, the nature and characteristics of the job are as important as raw
medical findings and a claimant’s personal and social history; that where the primary injury is
shown to have arisen in the course of employment, every natural consequence that flows from
the injury likewise arises out of the employment, unless it is the result of an independent
intervening cause attributable to claimant’s own negligenceor misconduct; and that the policy is
to extend the application of the law on employees’ compensation to as many employees who can
avail of the benefits thereunder.

WHEREFORE, the Petition is DENIED. The assailed October 30, 2009 Decision and February
23, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 85908 are AFFIRMED.

SO ORDERED.

G.R. No. 208567 November 26, 2014

JEANETTE V. MANALO, VILMA P. BARRIOS, LOURDES LYNN MICHELLE


FERNANDEZ and LEILA B. TAINO, Petitioners,
vs.
TNS PHILIPPINES INC., and GARY OCAMPO, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the January 29,
2013 Decision1 and the August 7, 2013 Resolution2 of the Court of Appeals (CA), in CA-G.R.
SP No. 117637, which set aside the July 23, 2010 Decision3 of the National Labor Relations
Commission (NLRC) and its October 28, 2010 Resolution4 and reinstated the May 29, 2009
Decision5 of the Labor Arbiter's finding that petitioners were project employees.
Respondent TNS Philippines Inc. (TNS), with Gary Ocampo as its president and general
manager, was engaged primarily in the business of marketing research and information, as well
as research consultancy and other value-added services to a widebase of clients, both local and
international.6 As a market research facility, TNS conducted public surveys about consumer
goods, products, merchandise and/or services of its clients.7 TNS hired several field personnel
on a project-to-project basis whose functions were the following: a) to gather data on consumer
goods, commodities, merchandise, and such other products as requested by clients, through
personal interviews, telephone interviews and/or such other modes akin to the foregoing; and b)
to submit the gathered data to the company for evaluation and/or analysis.8

Petitioners Jeanette V. Manalo, Vilma P. Barrios, Lourdes Lynn Michelle Fernandez, and Leila
B. Taiño (petitioners) were hired by TNS as field personnel on various dates starting 1996 for
several projects. They were made to sign a project-to-project employment contract. Thereafter,
TNS would file the corresponding termination report with the Department of Labor and
Employment Regional Office (DOLE-RO).9

Petitioners were likewise assigned office-based tasks for which they were required to be in the
office from 9:00 o’clock in the morning to 6:00 o’clock in the evening, but most of the time, they
worked beyond 6:00 o’clock without receiving the corresponding overtime pay. These office
based tasks were not on a per project basis and petitioners did not sign any contract for these
jobs. These assignments were not reported to the DOLE either.10

Later in August 2008, a meeting among the Field Interviewers (FIs) was called by TNS’ field
manager. They were told that all old FIs assigned in the "tracking" projects would be pulled out
eventually and replaced by new FIs contracted from an agency. Old FIs would be assigned only
to "ad hoc" projects which were seasonal. This prompted petitioners to file a consolidated
complaint for regularization before the LA.11

On October 20, 2008, petitioners and TNS were required to file their respective position papers.
On October 21, 2008, petitioners were advised by TNS not to report for work anymore because
they were being pulled out from their current assignments and that they were not being lined up
for any continuing or incoming projects becauseit no longer needed their services. They were
also asked to surrender their company IDs.12 Petitioners, thereafter, filed a complaint for illegal
dismissal, overtime pay, damages, and attorney’s fees against TNS. Later, the labor cases for
regularization and illegal dismissal were consolidated.

On May 29, 2009, the LA rendered a decision,13 dismissing the complaint on the ground that
petitioners were found to be project employees who knew the nature of their positions as such at
the time of their employment and who agreed with full understanding that the contracts would
lapse upon completion of the project stated in their respective contracts.14 The LA further ruled
that even if petitioners were continuously rehired for several and different projects, the
determining factor was whether, at the time of hiring, the employment was fixed for a specific
project or undertaking and its completion was predetermined.15

The LA was also of the view that petitioners were not illegally dismissed because as project
employees, the employer-employee relationship was terminated upon completion of the project
or phase for which they were hired. The term of their employment was coterminus with the
duration and until the accomplishment of the project.16

As to the claim for overtime pay and damages, the LA held that petitioners were not entitled to
them. Field personnel were excluded from the coverage of the minimum requirements on hours
of work and overtime pay.

Aggrieved, petitioners filed anappeal before the NLRC. Consequently, the NLRC rendered its
judgment17 in favor of petitioners and reversed the LA ruling. Thus:

We note that, initially, complainants used to be project employees as shown by the samples of
project-to-project employment contracts, project clearance slips, and the establishment
termination reports adduced in evidence. Case records, however, show that the last time
respondent company filed an establishment termination report was in November 2007 indicating
project completion on November 30, 2007. What is clear though is that complainants were
allowed to continue working after November 30, 2007. Respondent company did not adduce in
evidence employment contracts relating to the latest employment of the complainants. In the
absence of proof that the subsequent employment of the complainants continued to be on a
project-to-project basis under a contract of employment, complainants are considered to have
become regular employees after November 30, 2007. The failure to present contract of project
employment means that the employees are regular.18

[Emphases supplied]

The NLRC further ruled that, being regular employees, petitioners were illegally dismissed
because TNS, who had the burden of proving legality in dismissal cases, failed to show how and
why the employment of petitioners was terminated on October 21, 2008.19 Thus, the NLRC set
aside the LA decision and held TNS liable for illegal dismissal, ordering the latter to pay
petitioners their respective backwages and separation pay.20

TNS moved for reconsideration, butits motion was denied. Thus, it filed a petition for
certiorariwith prayer for preliminary injunction and/or temporary restraining order before the
CA. On January 29, 2013, the CA ruled in favor of TNS and opined that the projects assigned to
petitioners were distinct and separate from the other undertakings of TNS; that they wererequired
to sign project-to-project employment contracts; and that a corresponding termination report was
made to DOLE for every accomplished project. Further, it stated that the repeated re-hiring of
petitioners for at least one (1) year did not ipso facto convert their status to regular employees.
According to the CA, the mere fact that a project employee had worked on a specific project for
more than one (1) year did not necessarily change his status from project employee to regular or
permanent employee.21

As to the issue of grave abuse of discretion, the CA held that the NLRC committed such abuse
when it refused to consider the pieces of evidence submitted by TNS during its determination of
the merits of the latter’s motion for reconsideration. It stressed that the technical rules of
evidence were not binding in labor cases,22 that even if the evidence was not submitted to the
LA, the fact that it was duly introduced on appeal before the NLRC was enough basis for it to
admit them.23

Not in conformity, petitioners filed a motion for reconsideration but it was eventually denied.

Hence, this petition presenting the following

ARGUMENTS:

I. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN


HOLDING THAT THE PETITIONERS ARE NOT REGULAR EMPLOYEES OF THE
RESPONDENT COMPANY.

II. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN


RULING THAT THE HONORABLE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION.24

Petitioners assert that the factual circumstances of the case undoubtedly show their regular
employment status and that the NLRC correctly exercised its discretion. The respondents argue
otherwise insisting that the decision of the CA was correct.

The Court’s Ruling

At the outset, it must be stressed that the Court is not a trier of facts. In petitions for review under
Rule 45, the Court only resolves pure questions of law and is precluded from reviewing factual
findings of the lower tribunals, subject to certain exceptions. This case is an exception as "this
Court may review factual conclusions of the CA when they are contrary to those of the NLRC or
of the Labor Arbiter."25

Upon review of the records, the evidence failed to clearly, accurately, consistently, and
convincingly show that petitioners were still project employees of TNS.

Article 280 of the Labor Code, as amended, clearly defined a project employee as one whose
employment has been fixed for a specific 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. Additionally, a project employee is one whose termination of his employment contract is
reported to the DOLE everytime the project for which he was engaged has been completed.

In their Comment,26 the respondents stressed that the NLRC decision was mainly anchored upon
the supposed lack of compliance with the termination report requirement under the applicable
DOLE Department Orders. The NLRC ruled that petitioners were regular employees for having
been allowed to continue working after the last submitted termination report. Thus, TNS
submitted, albeit belatedly, the termination reports from November 2007 up to the last
termination report filed on November 18, 2008, by attaching it to the motion for reconsideration
filed before the NLRC.27
Although TNS belatedly submitted the supposed lacking termination reports, it failed to show the
corresponding project employment contracts of petitioners covering the period indicated in the
said termination reports. TNS itself stated in its motion for reconsideration28 before the NLRC
that the project employee status of the employee could be proved by the employment contracts
signed voluntarily by the employees and by the termination report filed with the DOLE after the
completion of every project.29 Yet, no project employment contracts were shown. It is well-
settled that rules of evidence shall be liberally applied in labor cases, but this does not detract
from the principle that piecemeal presentation of evidence is simply not in accord with orderly
justice.30 The NLRC was correct in saying that in the absence of proof that the subsequent
employment of petitioners continued to be on a project-to-project basis under a contract of
employment, petitioners were considered to have become regular employees.31

TNS contended that the repeated and successive rehiring of project employees does not qualify
petitioners asregular employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has been fixed for a
specific project or undertaking and its completion has been determined at the time of the
engagement of the employee. The repeated rehiring was only a natural consequence of the
experience gained from past service rendered in other projects.32

In Maraguinot, Jr. v. NLRC,33 the Court held that once a project or work pool employee has
been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employee’s service is not a controlling
determinant of project employment, it is vital in determining whether he was hired for a specific
undertaking or in fact tasked to perform functions vital, necessary and indispensable to the usual
business or trade of the employer.34 Petitioners’ successive re-engagement in order to perform
the same kind of work firmly manifested the necessity and desirability of their work in the usual
business of TNS as a market research facility.35 Undisputed also is the fact that the petitioners
were assigned office-based tasks from 9:00 o’clock in the morning up to 6:00 o’clock in the
evening, at the earliest, without any corresponding remuneration.

The project employment scheme used by TNS easily circumvented the law and precluded its
employees from attaining regular employment status in the subtlest way possible. Petitioners
were rehired not intermittently, but continuously, contract after contract, month after month,
involving the very same tasks. They practically performed exactly the same functions over
several years. Ultimately, without a doubt, the functions they performed were indeed vital and
necessary to the very business or trade of TNS.

Granting arguendothat petitioners were rehired intermittently, a careful review of the project
employment contracts of petitioners reveals some other vague provisions. Oddly, one of the
terms and conditions in the said contract stated that:

1. The need for your services being determinable and for a specific project starting
____________ your employment will be for the duration of said project of the Company,
namely Project ___________ which is expected to be finished on _____________. The
Company shall have the option of renewing or extending the period ofthis agreement for
such time as it may be necessary to complete the project or because we need further time
to determine your competence on the job.

To the Court, the phrase "because we need further time to determine your competence on
the job" would refer to a probationary employment. Such phrase changes the tenor of the
contract and runs counter to the very nature of a project employment. TNS can, therefore,
extend the contract which was already fixed when it deemed it necessary to determine
whether or not the employee was qualified and fit for the job. Corollarily, TNS can
likewise pre-terminate the contract not because the specific project was completed ahead
of time, but because of failure to qualify for the job. Consistently, the terms and
conditions of the contract, reads:

4. It is expressly agreed and understood that the Company may terminate your
employment after compliance with procedural requirements of law, without benefit of
termination pay and without any obligation on the part of the Company, in the event of
any breach of any conditions hereof: a) If the project is completed or cancelled before the
expected date of completion as specified in paragraph 1 hereof;

b) If we should find that you are not qualified, competent or efficient in the above-stated
positions for which you are hired in accordance with the company standards made known to you
at the start of your employment;

xxx

For said reason, at the outset, the supposed project employment contract was highly doubtful. In
determining the true nature of an employment, the entirety of the contract, not merely its
designation or by which it was denominated, is controlling. Though there is a rule that
conflicting provisions in a contract should be harmonized to give effect to all,36 in this case,
however, harmonization is impossible because project employment and probationary
employment are distinct from one another and cannot co-exist with each other. Hence, should
there be ambiguity in the provisions of the contract, the ruleis that all doubts, uncertainties,
ambiguities and insufficiencies should be resolved in favor of labor.37 This is in consonance
with the constitutional policy of providing full protection to labor.

In sum, petitioners are deemed to have become regular employees. As such, the burden of
proving the legality of their dismissal rests upon TNS. Having failed to discharge such burden
ofproving a just or authorized cause, TNS is liable for illegal dismissal.

Accordingly, as correctly ruled by the NLRC, each petitioner is entitled to backwages from the
time of their dismissal up to the finality or this decision plus separation pay, following their
prayer for such relief in lieu of reinstatement, computed as follows as of May 29, 2009:

a) Back.wages:

October 21, 2008 to May 29, 2009 = 7.27 mos.


₱382.00 x 26 days x 7.27 mos. = ₱72, 205.64

b) Separation Pay:

December 1, 2008 to May 29, 2009 = 5.93 mos.


₱382.00 x 26 days x 5.03 mps./12 = ₱4,908.10
₱77,113.80

Finally, nowhere in the NLRC resolution denying TNS' motion for reconsideration can it be
found it outrightly denied the said motion for belatedly submitting the lacking termination
reports. In resolving the motion, the NLRC also took into consideration the records of the case,
meaning, including those belatedly submitted, and despite review of these records, it still found
the evidence insufficient to overturn its decision against TNS.

To reiterate, the technical rules of evidence are not binding on labor tribunals.1avvphi1 Such a
rule, however, is not a license for parties to a case to be remiss in their duty to present every and
all proofs, at the earliest opportunity, that will best support their claim and help the courts to
fully, exhaustively and speedily resolve the controversy.

WHEREFORE, the petition is GRANTED. The January 29, 2013 Decision and the August 7,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 117637 are SET ASIDE. The July
23, 2010 Decision of the National Labor Relations Commission is hereby RE INSTATED.

G.R. No. 209202 November 19, 2014

CATALINO B. BELMONTE, JR., Petitioner,


vs.
C.F. SHARP CREW MANAGEMENT, INC.,/JUAN JOSE P. ROCHA and JAMES
FISHER (GUERNSEY) LTD., Respondents.

DECISION

REYES, J.:

Before this Court is a Petition for Review on Certiorari1 assailing the Decision2 dated April 29,
2013 and Resolution3 dated September 18, 2013 of the Court of Appeals (CA) in CA-G.R. SP
No. 124335, which nullified and set aside the Decision4 dated January 24, 2012 and Resolution5
dated February 23, 2012 of the National Labor Relations Commission (NLRC) Third Division in
NLRC LAC No. 10-002672-11, and reinstated the Decision6 dated August 25, 2011 of the Labor
Arbiter (LA) dismissing the claim for disability benefits of petitioner Catalino B. Belmonte, Jr.
(Belmonte).

The Facts
The case arose from a complaint for payment of disability benefits, medical expenses, with
damages and attorney’s fees, filed by Belmonte against respondents C.F. Sharp Crew
Management, Inc., (CFSCMI), a Philippine manning agency, its President/General Manager,
Juan Jose P. Rocha, and its foreign principal,James Fisher (Guernsey) Ltd. (respondents).
Belmonte entered into a six (6) months contract of employment with CFSCMI as A/B Cook on
board the vessel M/T Summity, with a basic monthly salary of $698.00. After undergoing the
required preemployment medical examination and being declared fit for sea duty, he was
deployed on September 14, 2008.

Unfortunately, on December 12, 2008, Belmonte met an accident on board the vessel when he
was used as a human mannequin during an emergency fire drill exercise. A metal ladder
accidentally hit the right sternoclavicular part of his body from which he sustained an injury. On
December 13, 2008, he was brought to a clinic in France where his x-ray result showed that he
has a fracture at the right sternoclavicular bone.7 As a result, on December 22, 2008, Belmonte
was repatriated to the Philippines.

Upon his return, Belmonte was referred by the respondents to the company-designated physician,
Dr. Antonio A. Pobre (Dr. Pobre), an Orthopaedic Surgeon, who issued an Initial Medical
Report8 dated December 23, 2008 assessing Belmonte’s injury as "Fracture, Non-Displaced,
Sterno-Clavicular Junction, Right". In the Follow-Up Report9 released on January 27, 2009, Dr.
Pobre stated that Belmonte’s fracture has fully healed, but he still advised the latter to undergo
physical therapy at the right sternoclavicular for at least two weeks. By February 14, 2009,
Belmonte had completed three physical therapy sessions.10 Thus, in Dr. Pobre’s Final Medical
Report11 dated February 17,2009, Belmonte was declared "FIT TO WORK and [can] resume
normal sea duties, effective immediately."

After almost two years from the time Belmonte was declared fit to work or on January 26, 2011,
Belmonte instituted a complaint against the respondents before the LA for disability benefits,
moral and exemplary damages, and attorney’s fees. To support his claim, on March 14, 2011,
Belmonte consulted a private doctor, Dr. Manuel C. Jacinto, Jr. (Dr. Jacinto), to evaluate and
determine his health condition. On even date, Dr. Jacinto issued a medical certificate declaring
Belmonte physically unfit to go back to work.12

On August 25, 2011, the LA rendered judgment dismissing the complaint for lack of
merit.1âwphi1 The LA held that the findings of the company-designated physician are more
credible as compared to the findings of Belmonte’s private doctor. The company-designated
physician was the one who monitored the health condition of Belmonte for several months while
the private doctor had examined him only once. The LA also observed that the medical
certificate issued by the private doctor was lacking on the essential details, aswell as the
particular tests or examinations conducted to support his medical findings. Lastly, the LA held
that the decision not to re-employ Belmonte, without any showing of malice, was well within the
managementprerogative of the respondents.

Aggrieved by the LA’s decision, Belmonte filed his appeal13 before the NLRC.
Based on the medical certificate of Belmonte’s private doctor, the NLRC reversed and set aside
the LA’s ruling and granted Belmonte’s disability compensation inthe Decision dated January
24, 2012. According to the NLRC, the continued non-deployment of Belmonte despite the
declaration of fit to work to resume normal sea duty of the company-designated physician is an
implied admission of his permanent total disability from work, which was bolstered by the
declaration made by his private doctor that he is "physically unfit to go back to work." The
NLRC held that if CFSCMI found Belmonte fit to work, they would have reemployed him after
he was medically deemed fit. However, CFSCMI have failed to re-hire him. The NLRC also
awarded Belmonte, moral and exemplary damages, both in the amount of ₱50,000.00, and
attorney’s fees equivalent to 10% of the total judgment award.

The respondents filed a Motion for Reconsideration,14 but it was denied; hence, they filed a
petition for certiorari15 with the CA.

On April 29, 2013, the CA nullified and set aside the decision and resolution of the NLRC, and
reinstated the LA’s decision.1âwphi1 The CA disregarded the private doctor’s medical findings
and instead upheld the one made by the company-designated physician, to wit:

Considering the amount of time and effort the company-designated physician gave to monitor
and treat the condition of the private respondent for several months, his medical findings and
evaluation are more worthy of credence than that ofthe independent physician who merely
treated and examined private respondent once. The familiarity gained by the company-
designated physician about the health condition of the private respondent, to us, made him able
to arrive at a more accurate prognosis of the private respondent’s injury as compared to the
private physician who merely treated the private respondent once after the lapse of two (2) years
from the date of his injury. Moreover, the company-designated physician in this case is an
orthopedic surgeon. Therefore, he has the proper training and qualification to treat and
evaluatethe fracture sustained by the private respondent as compared to Dr. Manuel C. Jacinto,
the independent physician, who seems to be a general practitioner with no specific field of
specialization.16

The CA brushed aside Belmonte’s argument that his non-deployment by CFSCMI after he has
been declared fit to work is an indication that he has not been really cured of his injury. Whether
to renew the contract of a seafarer is exclusively within the prerogative of the employer. The
seafarer cannot force the employer to re-employ him as a matter of right just because he has
already been extended a contractbefore. The CA also observed that in filing the complaint,
Belmonte has nomedical documents to back up his claim since it was still after almost two
months from January 26, 2011 or on March 14, 2011 when Belmonte thought of consulting a
private doctor to corroborate his claim that he is permanently incapacitated to resume sea duties.
But while Belmonte claims that he continues to suffer from the symptoms of his injury, the
records are bereft ofany documentary evidence that would prove that such was his condition
before the filing of the complaint.

Upset by the foregoing disquisition, Belmonte moved for reconsideration but it was denied;
hence, the present petition for review on certiorari.
The Issue

The core issue for our resolution iswhether or not the CA erred in reinstating the findings of the
LA thatBelmonte is not entitled to receive permanent total disability benefits.

Ruling of the Court

The petition is bereft of merit.

The question of Belmonte’s entitlement to permanent total disability benefits, while basically a
question of law apposite for a Rule 45 review, nevertheless hinges for its resolution ona factual
issue, the question of whether the medical findings of the private doctor should be given more
weight than the findings of the company-designated physician. Moreover, the inconsistent
rulings of the LA and the CA, on the one hand, and of the NLRC, on the other, in the present
petition, makes this case fall within the ambit of the Court’s review.17

This Court notes that the issue posited in this case is not novel since a catena of cases involving
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 unfit-to-work certification of
the seafarer’s private doctors – has already come before the Court.

In the main, the crux of Belmonte’s argument focuses only on the assumption that just because
he has not been re-hired by CFSCMI, he is deemed to be permanently unfit for sea duty. He
asserted that the CA erred in failing to give evidentiary value to the medical report of his private
doctor, arguing that the provisions of the Philippine Overseas Employment Administration-
Standard Employment Contract (POEA-SEC) and the numerous rulings of the Court have
established that the determination of the disability of a seafarer is not limited to the findings of
the company-designated physician.

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


medical findings, by law and by the parties’ contract."18 Section 20-B19 of the POEA-SEC laid
out the procedure to be followed in assessing the seafarer’s disability in addition to specifying
the employer’s liabilities on account of such injury or illness. The same provision also provides
that the seafarer is not irrevocably bound by the findings of the company-designated physician as
he is allowed to seek a second opinion and consult a doctor of his choice. In case of
disagreement between the findings of the company-designated physician and the seafarer’s
private physician, the parties shall jointly agree to refer the matter to a third doctor whose
findings shall be final and binding on both.20

A review of the records of this case shows that the pertinent provisions of the parties’ Collective
Bargaining Agreement21 are similar to those found in the 2000 POEA-SEC, that it is the finding
of the company-designated physician which is controlling. If the doctor appointed by the seafarer
disagrees with the assessment of the company-designated physician, a third doctor may be
agreed jointly between the employer and the seafarer. The third doctor’s finding shall be final
and binding on both parties.22 Apparently, this procedure was not availed of by Belmonte.
As can be recalled, upon Belmonte’s repatriation on December 22, 2008, he was immediately
examined by the company-designated physician on December 23, 2008. From then on, Belmonte
was continuously checked up by the company-designated physician, and has also undergone
physical therapy sessions. Indeed, Belmonte had been under examination and treatment with the
necessary medical procedures by the company specialists. Clearly, the respondents attended to
his health condition and shouldered his medical expenses, professional fees and costs of his
therapy sessions. Thus, after two months of treatment from the date of repatriation, Belmonte
was declared fit to return to work on February 17, 2009 by the company-designated physician.

Equally significant is the fact that almost two years had lapsed before Belmonte decided to
challenge the assessment of the company-designated physician and filed a complaint before the
LA. Then, on March 14, 2011, he sought the opinion of a private doctor who issued the
following assessment: "He is physically unfit to go back to work". This Court notes, however,
that Belmonte did so only two months after he had already filed his complaint with the LA.
Thus, Belmonte, in fact, had no ground for a disability claim at the time he filed his complaint,
since he did not have any sufficient evidentiary basis to support his allegation.

Indeed, Belmonte filed a claim for disability benefit without any basis since he waited for
another two months from the filing of the complaint before he consulted a private doctor who
issued a certification that he is physically unfit to go back to work. His private doctor’s medical
certification was issued after two years and one month from the company-designated physician’s
declaration of fit to work. Unfortunately, apart from the reasons already stated, this certification
could not be given any credence as Belmonte’s health condition could have changed during the
interim period due to different factors. As such, the said medical certification cannot effectively
negate the fit to work assessment earlier made as there would be no basis for comparison at all.
More than this, the disagreement between the findings of the company-designated physician and
Belmonte’s private doctor was never referred to a third doctor chosen byboth CFSCMI and
Belmonte, following the procedure spelled out in Section 20(B), paragraph 3 of the POEA-SEC.
Had this been done, Belmonte’s medical condition could have been easily clarified and finally
determined.

Evidently, the medical certificate of the company-designated physician was issued after almost
three months of closely monitoring Belmonte’s medical condition and progress, and after careful
analysis of the results of the diagnostic tests and procedures administered to Belmonte while in
consultation witha physical therapist. The extensive medical attention that the company-
designated physician gave to Belmonte enabled him to acquire a more accurate diagnosis of
Belmonte’s medical condition and fitness for work resumption compared to Belmonte’s private
doctor who was not privy to his case from the beginning.

Belmonte cannot likewise insist that the favorable report of his private doctor be preferred over
the certification of the company-designated physician, especially if the Court were to consider
that the private doctor he consulted examined him for only a day or on March 14, 2011. Clearly,
Belmonte’s private doctor did not have the chance to closely monitor his injury. Furthermore, the
private doctor’s evaluation of Belmonte’s injury was uncorroborated by any proof or basis as
there was no justification for such assessment that was provided for in the medical certificate he
issued. Besides, the private doctor merely relied on the same medical history, diagnosis and
analysis provided by the company-designated physician.

Thus, in the absence of adequate diagnostic tests and procedures and reasonable findings to
support the assessments of Belmonte’s private doctor, his certification on Belmonte’s alleged
disability simply cannot be taken at face value, particularly in light ofthe overwhelming evidence
supporting the findings of the company-designated physician. The burden of proof rested on
Belmonte to establish, by substantial evidence, his entitlement to disability benefits.23 Sadly,
Belmonte failed to discharge this burden.

Considering the absence of findings coming from a third doctor, the Court upholds the findings
of the CA and holds that the certification of the company-designated physician should prevail.
The Court does so for the following reasons: first, the records show that Belmonte only consulted
the private physician after his complaint with the LA has been filed; second, the medical
certificate was issued after a one-day consultation; and third, the medical certification was not
supported by particular tests or medical procedures conducted on Belmonte that would
sufficiently controvert the positive results of those administered to him by the company-
designated physician.

Lastly, the Court finds Belmonte’s assertion, that his non-hiring by the CFSCMI was the most
convincing proof of his disability, without basis. It was not a matter of course for CFSCMI to re-
hire him after the expiration of his contract. There is also no evidence on record showing that
Belmonte sought reemployment with other manning agencies, but was turned down due to his
illness.

"A seafarer's inability to resume his work after the lapse of more than 120 days from the time he
suffered an injury and/or illness is not a magic wand that automatically warrants the grant of total
and permanent disability benefits in his favor."24 Verily, while the Court adheres to the principle
of liberality in favor of the seafarer in construing the POEA-SEC, awards for compensation
cannot be made to rest on mere speculations and presumptions.25

Guided by the foregoing considerations, the Court finds that the CA correctly granted the
respondents' petition for certiorari since the NLRC's findings and conclusions are tainted with
grave abuse of discretion considering that Belmonte's claim for disability benefits was
unsupported by substantial evidence. Thus, the Court rules that Belmonte is not entitled to
receive permanent total disability benefits.

WHEREFORE, the petition is DENIED. The Decision dated April 29, 2013 and Resolution
dated September 18, 2013 of the Court of Appeals in CA-G.R. SP No. 124335 are AFFIRMED.

G.R. No. 189861 November 19, 2014

MICHELIN ASIA PACIFIC APPLICATION SUPPORT CENTER, INC., Petitioner,


vs.
MARIO J. ORTIZ, Respondent.
RESOLUTION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated June 2, 2009 and the
Resolution3 dated September 29, 2009 of the Court of Appeals (CA) in CA-G.R. SP. No. 106570
which annulled and set aside the Resolutions dated March 24, 2008,4 June 24, 2008,5 and
September 22, 20086 of the National Labor Relations Commission (NLRC) in NLRC NCR LAC
No. 01-000455-08 dismissing respondent Mario J. Ortiz's (Ortiz) appeal due to several
procedural errors.

The Facts

On March 1, 2003, Ortiz was employed by petitioner Michelin Asia Pacific Application Support
Center, Inc. (Michelin ASC) as Personnel Manager and was thereby involved in the processes of
recruitment, probation and employee contract monitoring, medical claims, and payroll, among
others.7

In line with the Michelin Group’s "Tonus" initiative, which is a program for improving working
methods, increasing efficiency, and reducing fixed costs across all of its affiliates, functions, and
departments globally,8 a formal review of the Service Personnel processes at Michelin ASC was
conducted and results there from determined that the functions of the Personnel Manager could
be absorbed by the Service Center/Site Manager and/or Assistant Personnel Manager.9 Thus, on
November 30, 2006, Michelin ASC sent Ortiz a letter10 informing him of the termination of his
employment effective the close of business on December 31, 2006 on the ground of
redundancy.11 It also notified the Department of Labor and Employment - Regional Office about
Ortiz’s intended termination and submitted an Establishment Termination Report.12

On December 6, 2006, Ortiz accepted a separation package in the amount of ₱2,225,561.6613


and executed a Release, Waiver and Quitclaim14 (quitclaim) in favor of Michelin ASC.
Respondent also signed a Final Pay Computation evidencing payment of the said amount.15

This notwithstanding, Ortiz, on February 27, 2007, filed a complaint16 for illegal dismissal
against Michelin ASC,17 docketed as NLRC-NCR Case No. 00-02-01810-07, claiming, among
others, that: (a) he was not aware that Michelin ASC had an impending redundancy program; (b)
he was promised a separation package in the amount of 2.5 months’ salary for every year of
service; and (c) he, was, however, offered a lesser package upon his termination but was forced
to accept the same since he had a family to support and was then 53 years old.18

The LA Ruling

In a Decision19 dated November 27, 2007, the Labor Arbiter (LA) dismissed the illegal
dismissal complaint, holding that Michelin ASC complied with the statutory requirements of a
valid redundancy program and that the same was conducted in good faith.20 In this relation, the
LA pointed out that Ortiz executed a quitclaim in favor of Michelin ASC and had received the
total of 2,225,561.66, which amount was more than what the law provides as separation pay.21
Furthermore, the LA did not sustain Ortiz’s claim regarding the separation package amounting to
2.5 months’ salary for every year of service, considering the Affidavit22 executed by Michelin
ASC’s Senior Legal Counsel, Angeline Khoo, denying the same.23 Unconvinced, Ortiz appealed
before the NLRC.24

The Proceedings Before the NLRC

In a Resolution25 dated March 24, 2008, the NLRC dismissed Ortiz’s appeal for not having been
duly perfected, observing that his Memorandum of Appeal was not accompanied by a certificate
of non-forum shopping in violation of Section 4,26 Rule VI of the New Rules of Procedure of
the NLRC27 (NLRC Rules).

Ortiz moved for reconsideration28 but was denied by the NLRC in a Resolution29 dated June
24, 2008, considering that his motion was filed out of time. In particular, the NLRC observed
that Ortiz himself admitted that he received a copy of the resolution sought to be reconsidered on
April 14, 2008. However, his motion for reconsideration was only filed on May 7, 2008, hence,
beyond the 10-day reglementary period to perfect the same, in violation of the mandatory
requirement under Section 15,30 Rule VII of the NLRC Rules.

Dissatisfied, Ortiz filed a second motion for reconsideration31 on July 14, 2008, to which
Michelin ASC was required to comment.32

In a Resolution33 dated September 22, 2008, the NLRC did not give due course to the second
motion for reconsideration for being in violation also of Section 15,34 Rule VII of the NLRC
Rules, or the prohibition against second motions for reconsideration.

The Proceedings Before the CA

Undeterred, Ortiz, on December 12, 2008, filed a petition for Certiorari35 before the CA
assailing the LA Decision and the NLRC’s March 24, 2008, June 24, 2008, and September 22,
2008 Resolutions.

In a Resolution36 dated December 19, 2008, the CA dismissed Ortiz’s petition for having been
filed out of time, remarking that a second motion for reconsideration before the NLRC was not
allowed. The CA also dismissed the petition on the ground that a relevant pleading was not
attached to it, i.e., Ortiz’s reply.

Ortiz filed a Motion for Reconsideration dated January 9, 2009,37 to which Michelin ASC was
required to comment.38

In a Decision39 dated June 2, 2009, the CA reversed its earlier December 19, 2008 Resolution,
and annulled the NLRC’s March 24, 2008, June 24, 2008, and September 22, 2008 Resolutions,
thus directing the NLRC to give due course to Ortiz’s appeal. Mainly, the CAruled that there was
prima faciemerit in Ortiz’s contention and found it fitting to relax the procedural rules.40

Aggrieved, Michelin ASC moved for reconsideration41 but was denied in a Resolution42
dated September 29, 2008, hence, the instant petition.

The Issue Before the Court

The essential issue before the Court is whether or not the CA properly granted Ortiz’s petition
for certiorariand annulled the NLRC Resolutions.

The Court's Ruling

The petition is meritorious.

To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily show
that the court or quasi-judicial authority gravely abused the discretion conferred upon them.
Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner
that is tantamount to lack of jurisdiction. To be considered "grave," the discretionary authority
must be exercised in a despotic manner by reason of passion or personal hostility, and must be so
patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined by or to act at all in contemplation of law.43

After evaluating the relevant antecedents of this case, the Court comes to the conclusion that no
grave abuse of discretion, in the sense above described, was committed by the NLRCin
dismissing Ortiz’s appeal. As seen from the preceding factual narration, it is clear that the NLRC
– in due observance of its own procedural rules – had amply justified its dismissal of Ortiz’s
appeal in view of his numerous procedural infractions, namely: (a) his failure to attach to his
Memorandum of Appeal a certificate of non-forum shopping in violation of Section 4, Rule VI
of the NLRC Rules;44 (b) his filing of a motion for reconsideration of the NLRC’s March 24,
2008 Resolution beyond the 10 day reglementary period in violation of Section 15, Rule VII of
the NLRC Rules;45 and (c) his filing of a second motion for reconsideration in violation of
Section 15, Rule VII of the NLRC Rules.46

Of significant consideration is Ortiz’s violation of the mandatory requirement on the timely


filing of a motion for reconsideration, which thus rendered the NLRC’s initial March 24, 2008
Resolution final and executory. Silva v. NLRC47 instructs:

Time and again, this Court has been emphatic in ruling that the seasonable filing of a motion for
reconsideration within the l0-day reglementary period following the receipt by a party of any
order, resolution or decision of the NLRC, is a mandatory requirementto forestall the finality of
such order, resolution or decision.The statutory base for this is found in Article 22348 of the
Labor Codeand Section 14, Rule VII49 of the New Rules of Procedure of the National Labor
Relations Commission.50 (Emphases supplied)

"A definitive final judgment [– such as the NLRC’s March 24, 2008 Resolution –] however
erroneous, is no longer subject to change or revision."51 Settled is the rule that "[a] decision that
has acquired finality becomes immutable and unalterable. This quality of immutability precludes
the modification of a final judgment, even if the modification is meant to correct erroneous
conclusions of fact and law."52
Hence, by the foregoing consideration alone, the CA should have dismissed Ortiz’s certiorari
petition.1âwphi1 But this is not all.

To compound his mistakes, Ortiz even filed a second motion for reconsideration, which is a
prohibited pleading under the NLRC Rules. As a prohibited pleading, the filing of said motion
could not have tolled the running of the 60-day reglementary period for the filing of a petition for
certiorari under Rule 65 of the Rules of Court before the CA. Thus, since the NLRC’s June 24,
2008 Resolution assailed by Ortiz’s second motion for reconsideration was received by him on
July 8, 2008,53 while his petition for certiorari before the CA was filed more than 60 days
thereafter, or on December 12, 2008,54 his certioraripetition should have been dismissed outright
for having been filed out of time.

Therefore, for all these reasons, the Court reverses the CA Decision and reinstates the NLRC
Resolutions dismissing Ortiz's appeal. Accordingly, it is now unnecessary to delve on the other
ancillary issues raised in the petition of Michelin ASC.

WHEREFORE, the petition is GRANTED. The Decision dated June 2, 2009 and the Resolution
dated September 29, 2009 of the Court of Appeals in CA-G.R. SP. No. 106570 are hereby
REVERSED and SET ASIDE. Accordingly, the Resolutions dated March 24, 2008, June 24,
2008, and September 22, 2008 of the National Labor Relations Commission in NLRC NCR LAC
No. 01-000455-08 are REINSTATED.

G.R. No. 208567 November 26, 2014

JEANETTE V. MANALO, VILMA P. BARRIOS, LOURDES LYNN MICHELLE


FERNANDEZ and LEILA B. TAINO, Petitioners,
vs.
TNS PHILIPPINES INC., and GARY OCAMPO, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the January 29,
2013 Decision1 and the August 7, 2013 Resolution2 of the Court of Appeals (CA), in CA-G.R.
SP No. 117637, which set aside the July 23, 2010 Decision3 of the National Labor Relations
Commission (NLRC) and its October 28, 2010 Resolution4 and reinstated the May 29, 2009
Decision5 of the Labor Arbiter's finding that petitioners were project employees.

Respondent TNS Philippines Inc. (TNS), with Gary Ocampo as its president and general
manager, was engaged primarily in the business of marketing research and information, as well
as research consultancy and other value-added services to a widebase of clients, both local and
international.6 As a market research facility, TNS conducted public surveys about consumer
goods, products, merchandise and/or services of its clients.7 TNS hired several field personnel
on a project-to-project basis whose functions were the following: a) to gather data on consumer
goods, commodities, merchandise, and such other products as requested by clients, through
personal interviews, telephone interviews and/or such other modes akin to the foregoing; and b)
to submit the gathered data to the company for evaluation and/or analysis.8

Petitioners Jeanette V. Manalo, Vilma P. Barrios, Lourdes Lynn Michelle Fernandez, and Leila
B. Taiño (petitioners) were hired by TNS as field personnel on various dates starting 1996 for
several projects. They were made to sign a project-to-project employment contract. Thereafter,
TNS would file the corresponding termination report with the Department of Labor and
Employment Regional Office (DOLE-RO).9

Petitioners were likewise assigned office-based tasks for which they were required to be in the
office from 9:00 o’clock in the morning to 6:00 o’clock in the evening, but most of the time, they
worked beyond 6:00 o’clock without receiving the corresponding overtime pay. These office
based tasks were not on a per project basis and petitioners did not sign any contract for these
jobs. These assignments were not reported to the DOLE either.10

Later in August 2008, a meeting among the Field Interviewers (FIs) was called by TNS’ field
manager. They were told that all old FIs assigned in the "tracking" projects would be pulled out
eventually and replaced by new FIs contracted from an agency. Old FIs would be assigned only
to "ad hoc" projects which were seasonal. This prompted petitioners to file a consolidated
complaint for regularization before the LA.11

On October 20, 2008, petitioners and TNS were required to file their respective position papers.
On October 21, 2008, petitioners were advised by TNS not to report for work anymore because
they were being pulled out from their current assignments and that they were not being lined up
for any continuing or incoming projects becauseit no longer needed their services. They were
also asked to surrender their company IDs.12 Petitioners, thereafter, filed a complaint for illegal
dismissal, overtime pay, damages, and attorney’s fees against TNS. Later, the labor cases for
regularization and illegal dismissal were consolidated.

On May 29, 2009, the LA rendered a decision,13 dismissing the complaint on the ground that
petitioners were found to be project employees who knew the nature of their positions as such at
the time of their employment and who agreed with full understanding that the contracts would
lapse upon completion of the project stated in their respective contracts.14 The LA further ruled
that even if petitioners were continuously rehired for several and different projects, the
determining factor was whether, at the time of hiring, the employment was fixed for a specific
project or undertaking and its completion was predetermined.15

The LA was also of the view that petitioners were not illegally dismissed because as project
employees, the employer-employee relationship was terminated upon completion of the project
or phase for which they were hired. The term of their employment was coterminus with the
duration and until the accomplishment of the project.16

As to the claim for overtime pay and damages, the LA held that petitioners were not entitled to
them. Field personnel were excluded from the coverage of the minimum requirements on hours
of work and overtime pay.
Aggrieved, petitioners filed anappeal before the NLRC. Consequently, the NLRC rendered its
judgment17 in favor of petitioners and reversed the LA ruling. Thus:

We note that, initially, complainants used to be project employees as shown by the samples of
project-to-project employment contracts, project clearance slips, and the establishment
termination reports adduced in evidence. Case records, however, show that the last time
respondent company filed an establishment termination report was in November 2007 indicating
project completion on November 30, 2007. What is clear though is that complainants were
allowed to continue working after November 30, 2007. Respondent company did not adduce in
evidence employment contracts relating to the latest employment of the complainants. In the
absence of proof that the subsequent employment of the complainants continued to be on a
project-to-project basis under a contract of employment, complainants are considered to have
become regular employees after November 30, 2007. The failure to present contract of project
employment means that the employees are regular.18

[Emphases supplied]

The NLRC further ruled that, being regular employees, petitioners were illegally dismissed
because TNS, who had the burden of proving legality in dismissal cases, failed to show how and
why the employment of petitioners was terminated on October 21, 2008.19 Thus, the NLRC set
aside the LA decision and held TNS liable for illegal dismissal, ordering the latter to pay
petitioners their respective backwages and separation pay.20

TNS moved for reconsideration, butits motion was denied. Thus, it filed a petition for
certiorariwith prayer for preliminary injunction and/or temporary restraining order before the
CA. On January 29, 2013, the CA ruled in favor of TNS and opined that the projects assigned to
petitioners were distinct and separate from the other undertakings of TNS; that they wererequired
to sign project-to-project employment contracts; and that a corresponding termination report was
made to DOLE for every accomplished project. Further, it stated that the repeated re-hiring of
petitioners for at least one (1) year did not ipso facto convert their status to regular employees.
According to the CA, the mere fact that a project employee had worked on a specific project for
more than one (1) year did not necessarily change his status from project employee to regular or
permanent employee.21

As to the issue of grave abuse of discretion, the CA held that the NLRC committed such abuse
when it refused to consider the pieces of evidence submitted by TNS during its determination of
the merits of the latter’s motion for reconsideration. It stressed that the technical rules of
evidence were not binding in labor cases,22 that even if the evidence was not submitted to the
LA, the fact that it was duly introduced on appeal before the NLRC was enough basis for it to
admit them.23

Not in conformity, petitioners filed a motion for reconsideration but it was eventually denied.

Hence, this petition presenting the following

ARGUMENTS:
I. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT THE PETITIONERS ARE NOT REGULAR EMPLOYEES OF THE
RESPONDENT COMPANY.

II. WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN


RULING THAT THE HONORABLE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION.24

Petitioners assert that the factual circumstances of the case undoubtedly show their regular
employment status and that the NLRC correctly exercised its discretion. The respondents argue
otherwise insisting that the decision of the CA was correct.

The Court’s Ruling

At the outset, it must be stressed that the Court is not a trier of facts. In petitions for review under
Rule 45, the Court only resolves pure questions of law and is precluded from reviewing factual
findings of the lower tribunals, subject to certain exceptions. This case is an exception as "this
Court may review factual conclusions of the CA when they are contrary to those of the NLRC or
of the Labor Arbiter."25

Upon review of the records, the evidence failed to clearly, accurately, consistently, and
convincingly show that petitioners were still project employees of TNS.

Article 280 of the Labor Code, as amended, clearly defined a project employee as one whose
employment has been fixed for a specific 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. Additionally, a project employee is one whose termination of his employment contract is
reported to the DOLE everytime the project for which he was engaged has been completed.

In their Comment,26 the respondents stressed that the NLRC decision was mainly anchored upon
the supposed lack of compliance with the termination report requirement under the applicable
DOLE Department Orders. The NLRC ruled that petitioners were regular employees for having
been allowed to continue working after the last submitted termination report. Thus, TNS
submitted, albeit belatedly, the termination reports from November 2007 up to the last
termination report filed on November 18, 2008, by attaching it to the motion for reconsideration
filed before the NLRC.27

Although TNS belatedly submitted the supposed lacking termination reports, it failed to show the
corresponding project employment contracts of petitioners covering the period indicated in the
said termination reports. TNS itself stated in its motion for reconsideration28 before the NLRC
that the project employee status of the employee could be proved by the employment contracts
signed voluntarily by the employees and by the termination report filed with the DOLE after the
completion of every project.29 Yet, no project employment contracts were shown. It is well-
settled that rules of evidence shall be liberally applied in labor cases, but this does not detract
from the principle that piecemeal presentation of evidence is simply not in accord with orderly
justice.30 The NLRC was correct in saying that in the absence of proof that the subsequent
employment of petitioners continued to be on a project-to-project basis under a contract of
employment, petitioners were considered to have become regular employees.31

TNS contended that the repeated and successive rehiring of project employees does not qualify
petitioners asregular employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has been fixed for a
specific project or undertaking and its completion has been determined at the time of the
engagement of the employee. The repeated rehiring was only a natural consequence of the
experience gained from past service rendered in other projects.32

In Maraguinot, Jr. v. NLRC,33 the Court held that once a project or work pool employee has
been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employee’s service is not a controlling
determinant of project employment, it is vital in determining whether he was hired for a specific
undertaking or in fact tasked to perform functions vital, necessary and indispensable to the usual
business or trade of the employer.34 Petitioners’ successive re-engagement in order to perform
the same kind of work firmly manifested the necessity and desirability of their work in the usual
business of TNS as a market research facility.35 Undisputed also is the fact that the petitioners
were assigned office-based tasks from 9:00 o’clock in the morning up to 6:00 o’clock in the
evening, at the earliest, without any corresponding remuneration.

The project employment scheme used by TNS easily circumvented the law and precluded its
employees from attaining regular employment status in the subtlest way possible. Petitioners
were rehired not intermittently, but continuously, contract after contract, month after month,
involving the very same tasks. They practically performed exactly the same functions over
several years. Ultimately, without a doubt, the functions they performed were indeed vital and
necessary to the very business or trade of TNS.

Granting arguendothat petitioners were rehired intermittently, a careful review of the project
employment contracts of petitioners reveals some other vague provisions. Oddly, one of the
terms and conditions in the said contract stated that:

1. The need for your services being determinable and for a specific project starting
____________ your employment will be for the duration of said project of the Company,
namely Project ___________ which is expected to be finished on _____________. The
Company shall have the option of renewing or extending the period ofthis agreement for
such time as it may be necessary to complete the project or because we need further time
to determine your competence on the job.

To the Court, the phrase "because we need further time to determine your competence on
the job" would refer to a probationary employment. Such phrase changes the tenor of the
contract and runs counter to the very nature of a project employment. TNS can, therefore,
extend the contract which was already fixed when it deemed it necessary to determine
whether or not the employee was qualified and fit for the job. Corollarily, TNS can
likewise pre-terminate the contract not because the specific project was completed ahead
of time, but because of failure to qualify for the job. Consistently, the terms and
conditions of the contract, reads:

4. It is expressly agreed and understood that the Company may terminate your
employment after compliance with procedural requirements of law, without benefit of
termination pay and without any obligation on the part of the Company, in the event of
any breach of any conditions hereof: a) If the project is completed or cancelled before the
expected date of completion as specified in paragraph 1 hereof;

b) If we should find that you are not qualified, competent or efficient in the above-stated
positions for which you are hired in accordance with the company standards made known to you
at the start of your employment;

xxx

For said reason, at the outset, the supposed project employment contract was highly doubtful. In
determining the true nature of an employment, the entirety of the contract, not merely its
designation or by which it was denominated, is controlling. Though there is a rule that
conflicting provisions in a contract should be harmonized to give effect to all,36 in this case,
however, harmonization is impossible because project employment and probationary
employment are distinct from one another and cannot co-exist with each other. Hence, should
there be ambiguity in the provisions of the contract, the ruleis that all doubts, uncertainties,
ambiguities and insufficiencies should be resolved in favor of labor.37 This is in consonance
with the constitutional policy of providing full protection to labor.

In sum, petitioners are deemed to have become regular employees. As such, the burden of
proving the legality of their dismissal rests upon TNS. Having failed to discharge such burden
ofproving a just or authorized cause, TNS is liable for illegal dismissal.

Accordingly, as correctly ruled by the NLRC, each petitioner is entitled to backwages from the
time of their dismissal up to the finality or this decision plus separation pay, following their
prayer for such relief in lieu of reinstatement, computed as follows as of May 29, 2009:

a) Back.wages:

October 21, 2008 to May 29, 2009 = 7.27 mos.


₱382.00 x 26 days x 7.27 mos. = ₱72, 205.64

b) Separation Pay:

December 1, 2008 to May 29, 2009 = 5.93 mos.


₱382.00 x 26 days x 5.03 mps./12 = ₱4,908.10
₱77,113.80

Finally, nowhere in the NLRC resolution denying TNS' motion for reconsideration can it be
found it outrightly denied the said motion for belatedly submitting the lacking termination
reports. In resolving the motion, the NLRC also took into consideration the records of the case,
meaning, including those belatedly submitted, and despite review of these records, it still found
the evidence insufficient to overturn its decision against TNS.

To reiterate, the technical rules of evidence are not binding on labor tribunals.1avvphi1 Such a
rule, however, is not a license for parties to a case to be remiss in their duty to present every and
all proofs, at the earliest opportunity, that will best support their claim and help the courts to
fully, exhaustively and speedily resolve the controversy.

WHEREFORE, the petition is GRANTED. The January 29, 2013 Decision and the August 7,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 117637 are SET ASIDE. The July
23, 2010 Decision of the National Labor Relations Commission is hereby RE INSTATED.

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