Compilation of SC Decisions For Labor Law (2014-2015)

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COMPILATION OF SUPREME COURT DECISIONS

(MARCH 2014-MARCH 2015)
LABOR LAW AND

SOCIAL LEGISLATION
G.R. No. 193047. March 3, 2014Fil-Pride
Shipping Company, Inc., et al. Vs. Edgar
A. Balasta
Compensability
Regarding the issue of compensability, it
has been the Courts consistent ruling that
in disability compensation, it is not the
injury which is compensated, but rather it
is the incapacity to work resulting in the
impairment of ones earning capacity.
Moreover, the list of illnesses/diseases in
Section 32-A does not preclude other
illnesses/diseases not so listed from being
compensable. The POEA-SEC cannot be
presumed to contain all the possible
injuries that render a seafarer unfit for
further sea duties.
Just the same, in several cases,
cardiovascular disease, coronary artery
disease, as well as other heart ailments
were held to be compensable. Likewise,
petitioners failed to refute respondents
allegations in his Position Paper that in the
performance of his duties as Able
Seaman, he inhaled, was exposed to, and
came into direct contact with various
injurious and harmful chemicals, dust,
fumes/ emissions, and other irritant
agents; that he performed strenuous
tasks such as lifting, pulling, pushing
and/or moving equipment and materials
on board the ship; that he was constantly
exposed to varying temperatures of
extreme hot and cold as the ship crossed
ocean boundaries; that he was exposed as
well to harsh weather conditions; that in
most instances, he was required to
perform overtime work; and that the work
of an Able Seaman is both physically and
mentally stressful. It does not require
much imagination to realize or conclude
that these tasks could very well cause the
illness that respondent, then already 47
years old, suffered from six months into
his employment contract with petitioners.
Notably, it is a matter of judicial notice
that an overseas worker, having to ward
off homesickness by reason of being
physically separated from his family for
the entire duration of his contract, bears a

great degree of emotional strain while
making an effort to perform his work well.
The strain is even greater in the case of a
seaman who is constantly subjected to the
perils of the sea while at work abroad and
away from his family.
Assessment
physician
by
company-designated
The company-designated physician must

arrive at a definite assessment of the
seafarer's fitness to work or permanent
disability within the period of 120 or 240
days pursuant to Article 192 (c)(l) ofthe
Labor Code and Rule X, Section 2 ofthe
Amended
Rules
on
Employees
Compensation (AREC). Ifhe fails to do so
and the seafarer's medical condition
remains unresolved, the latter shall be
deemed totally and permanently disabled.
On the other hand, an employee's
disability becomes permanent and total
even before the lapse ofthe statutory 240day treatment period, when it becomes
evident that the employee's disability
continues and he is unable to engage in
gainful employment during such period
because, for instance, he underwent
surgery and it evidently appears that he
could not recover therefrom within the
statutory period.
Respondent was repatriated on September 18,

2005. He was further examined by the companydesignated physician Dr. Cruz on September 21,
23 and 30, 2005; October 6, 2005; February 2,
13 and 17, 2006; March 6 and 20, 2006; and on
April 19, 2006. And beginning from the February
2, 2006 medical report, respondent was
diagnosed by Dr. Cruz with severe 3-vessel
coronary artery disease, and was scheduled for
coronary artery bypass surgery on February 24,
2006. After surgery, respondent continued his
treatment with Dr. Cruz, who on the other hand
continued to diagnose respondent with severe
coronary artery disease even on respondents last
consultation on April 19, 2006.
Concededly, the period September 18, 2005 to
Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

Ateneo de Davao University
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April 19, 2006 is less than the statutory 240-day

or 8-month period. Nonetheless, it is
impossible to expect that by May 19, 2006, or on
the last day of the statutory 240-day period,
respondent would be declared fit to work when
just recently or on February 24, 2006 he
underwent coronary artery bypass graft surgery;
by then, respondent would not have sufficiently
recovered. In other words, it became evident as
early as April 19, 2006 that respondent was
permanently and totally disabled, unfit to return
to work as seafarer and earn therefrom, given his
delicate post-operative condition; a definitive
assessment by Dr. Cruz before May 19, 2006 was
unnecessary. Respondent would to all intents and
purposes still be unfit for sea- duty. Even then,
with Dr. Cruzs failure to issue a definite
assessment of respondents condition on May 19,
2006, or the last day of the statutory 240-day
period, respondent was thus deemed totally and
permanently disabled pursuant to Article 192
(c)(1) of the Labor Code and Rule X, Section 2 of
the AREC.
Premature labor complaint
Neither may it be argued by the petitioners that
respondents filing of the labor complaint on
February 10, 2006 should affect the outcome of
the case. It is difficult to blame respondent for
deciding to sue, considering that he has been
diagnosed by no less than three separate
physicians Drs. Dizon, Vicaldo, and Cruz with
severe three-vessel coronary artery disease
which required bypass procedure. Respondent
may have been acting under a sense of extreme
urgency given the life-threatening nature of his
illness. The filing of the labor complaint may have
been designed to pressure petitioners into taking
action to address his condition, or to recover
expenses should he decide to proceed with the
bypass procedure on his own. Either way, the
Court cannot subscribe to the view that there was
a premature resort to litigation since respondent
was still undergoing treatment for his illness and
the company-designated physician has not
completed treatment and made a definite
assessment of his condition.
G.R. No. 188828. March 5, 2014 Co Say
Products Phils., et al. Vs. Benjamin
Baltasar, et al.
The crucial issue in the resolution
of the instant petition concerns the

timely posting of the appeal
bond. The pertinent rule on the
matter is Article 223 of the Labor
Code, as amended, which sets
forth the rules on appeal from the
Labor Arbiters monetary award
These statutory and regulatory provisions
explicitly provide that an appeal from the
Labor Arbiter to the NLRC must be
perfected within ten calendar days
from receipt of such decisions,
awards or orders of the Labor Arbiter.
In a judgment involving a monetary
award, the appeal shall be perfected only
upon; (1) proof of payment of the
required appeal fee; (2) posting of a
cash or surety bond issued by a
reputable bonding company; and (3)
filing of a memorandum of appeal.
No appeal was perfected by the petitioners
within the 10-day period under Article 223
of the Labor Code.
The petitioners received the 7 August
2003 Decision of the Labor Arbiter on 15
September 2003, hence, they had until 25
September 2003 to perfect their appeal. A
perusal of the records reveals an apparent
contrariety on the date of the posting of
the appeal bond, a material fact decisive
of the instant controversy. While the First
Certification indicated that no appeal bond
has been posted as of 2 October 2003, the
Second Certification and the Transmittal
Letter stated that a surety bond was
posted on 24 September 2003.
The conclusion that the First Certification
necessarily leads to is the lateness of the
perfection of the appeal to the NLRC.
Ostensibly, the Second Certification puts
the appeal within the required perfection
period of ten days from receipt of the
decision of the Labor Arbiter. However,
the fact behind what seems to be is that
both certifications state, directly by the
first while distortedly by the second, that
the appeal by petitioners to the NLRC was
perfected beyond the provided period. In

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a seeming attempt to avoid the direct fact
of untimeliness in the First Certificate, the
Second Certificate mentions two dates,
one which is within the 10-day period and
the other, the late date of 28 October
2003 which is even beyond the 2 October
2003 issuance of the First Certificate. The
first date, 24 September 2003 was
depicted in the Second Certificate as the
date of posting while the date 28 October
2003 was described as the date of receipt
by the DOLE-RAB. Apart from saying that
the appeal bond was timely posted on
24
September
2003,
the
Second
Certification would also justify why on the
date of the First Certification, 2 October
2003, there was yet no posted appeal
bond on record, the reason, although
unstated being that the posted bond was
received only on 28 October 2003.
The Second Certificate is not a document
of timeliness of petitioners appeal bond.
It is even confirmatory of the fact of
tardiness that the First Certification stated
doubtlessly. The NLRC gravely abused its
discretion when it considered as correct
the statement in the Second Certificate
that x x x respondent in re: RAB-V Case
No. 10-004860-02 x x x posted Surety
Bond x x x dated on September 24,
2003.
That the posting of the surety bond
requires as necessary addition the seven
enumerated documents is underscored by
the provision that the appellant shall
furnish the appellee with a certified true
copy of the said surety bond with all the
above-mentioned supporting documents.
The appellee shall verify the regularity and
genuineness thereof and immediately
report any irregularity to the Commission.
The rule gives the appellee the authority
and opportunity, even the duty, to verify
the regularity and genuineness not only of
the surety bond but also of the seven
attachments. To reiterate, even if the
issuance of the surety bond on 24
September 2003 is considered as the
posting of the bond, the certification
cannot furthermore be considered as the

posting of the other seven required
documents.
Without a straight statement, the Second
Certification seems to consider posting as
mailing such that the date 24 September
2003 should be the reckoning date that
determines timeliness and not the date 28
October 2003 which was the date of
receipt of the surety bond. Even such
insinuation,
strained
and
all,
is
unacceptable considering the absence of
proof of mailing, it being the fact that
there was no mention at all in any of the
pleadings below that the surety bond was
mailed.
The Court of Appeals therefore, correctly
ruled that petitioners failed to perfect their
appeal on time. In holding so, the
appellate court only applied the appeal
bond
requirement
as
already
well
explained in our previous pronouncements
that there is legislative and administrative
intent to strictly apply the appeal bond
requirement, and the Court should give
utmost regard to this intention. The clear
intent of both statutory and procedural
law is to require the employer to post a
cash or surety bond securing the full
amount of the monetary award within the
ten 10-day reglementary period. Rules on
perfection of an appeal, particularly in
labor cases, must be strictly construed
because to extend the period of the
appeal
is
to delay
the case,
a
circumstance which would give the
employer a chance to wear out the efforts
and meager resources of the worker to
the point that the latter is constrained to
give up for less than what is due him. This
is to assure the workers that if they finally
prevail in the case the monetary award
will be given to them both upon dismissal
of the employers appeal. It is further
meant to discourage employers from using
the appeal to delay or evade payment of
their obligations to the employees. The
appeal bond requirement precisely aims to
prevent empty or inconsequential victories
secured by laborers in consonance with
the protection of labor clause ensconced

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and
zealously
Constitution.
guarded
by
our
It is entrenched in our jurisprudence that

perfection of an appeal in a manner and
within the period prescribed by law is not
only mandatory but jurisdictional, and
failure to perfect an appeal has the
effect of making judgment final and
executory. While dismissal of an appeal
on technical grounds is frowned upon,
Article 223 of the Labor Code which
prescribes the appeal bond requirement,
however, is a rule of jurisdiction and not
of procedure.
All considered then, the finding of the
Labor Arbiter holding the petitioners liable
for illegal dismissal is binding on them.
Not having been timely appealed, this
issue is already beyond our jurisdiction to
resolve, and the finding of the Labor
Arbiter can no longer be disturbed without
violating the fundamental principle that
final
judgment
is
immutable
and
unalterable and may no longer be
modified in any respect, even if the
modification is meant to correct erroneous
conclusion of fact and law.
G.R. No. 199344. March 5, 2014Vetyard
Terminals & Shipping Services, Inc./Miguel
S. Perez, Seafix, Inc. Vs. Bernardino D.
Suarez
The sole issue in this case is
whether or not the CA erred in
failing to hold that the NLRC
gravely abused its discretion when
it found that Suarezs eye
ailment is compensable.
employment contract. Section 32(A) of

the 2000 POEA Amended Standard Terms
and Condition further provides that for an
occupational disease and the resulting
disability to be compensable, the following
need to be satisfied: (1) the seafarer's
work must involve the risks described; (2)
the disease was contracted as a result of
the seafarer's exposure to the described
risks; (3) the disease was contracted
within a period of exposure and under
such other factors necessary to contract
it; and (4) there was no notorious
negligence on the part of the seafarer.
Suarez had been diagnosed to suffer from
posterior subscapsular cataract on his
right eye and pseudophakia, and posterior
capsule opacification on his left eye. For
these to be regarded as occupational
diseases, Suarez had to prove that the
risk of contracting the disease was
increased by the conditions under which
he worked. The evidence must be real and
substantial, and not merely apparent. It
must constitute a reasonable basis for
arriving at a conclusion that the conditions
of his employment caused the disease or
that such conditions aggravated the risk of
contracting the illness.
The contractual liability of an employer to

pay disability benefits to a seafarer who
suffers illness or injury during the term of
his contract is governed by Section
20(B)(6) of the Philippine Overseas
Employment
Administration-Standard
Employment Contract (POEA-SEC).
Here, Suarez did not present substantial

proof that his eye ailment was workrelated. Other than his bare claim that
paint droppings accidentally splashed on
an eye causing blurred vision, he adduced
no note or recording of the supposed
accident. Nor did he present any record of
some medical check-up, consultation, or
treatment that he had undergone.
Besides, while paint droppings can cause
eye irritation, such fact alone does not
ipso
facto
establish
compensable
disability. Awards of compensation cannot
rest on speculations or presumptions;
Suarez must prove that the paint
droppings caused his blindness.
Based on the above, an injury or illness is

compensable when, first, it is work-related
and, second, the injury or illness existed
during the term of the seafarers
The Court is inclined to accept the findings

of Dr. Caparas, the company-designated
physician, that it was cataract extraction,
not paint droppings that caused Suarezs

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ailment. The definitions of the imputed
medical conditions plainly do not indicate
work-relatedness.
Besides, even if the Court were to assume
that Suarezs eye ailment was workrelated, he still cannot claim disability
benefits since he concealed his true
medical condition. The records show that
when Suarez underwent pre-employment
medical
examination
(PEME),
he
represented that he was merely wearing
corrective lens. He concealed the fact that
he had a cataract operation in 2005. He
told the truth only when he was being
examined at the Medical City on May 18,
2007. This willful concealment of a vital
information in his PEME disqualifies him
from claiming disability benefits pursuant
to Section 20(E) of the POEA-SEC which
provides that a seafarer who knowingly
conceals and does not disclose past
medical condition, disability and history in
the pre-employment medical examination
constitutes fraudulent misrepresentation
and shall disqualify him from any
compensation and benefits.
The CA has no basis in holding that

Suarez's PEME is sufficiently exhaustive as
to excuse his non-disclosure of a previous
cataract operation. The fact that he was
physically and psychologically ascertained
to be fit for sea duties does not rule out
misrepresentation. A PEME is generally
not exploratory in nature, nor is it a totally
in-depth and thorough examination of an
applicant's medical condition. It does not
reveal the real state of health of an
applicant. Since it is not exploratory, its
failure to reveal or uncover Suarez's eye
disability cannot shield him from the
consequences of his willful concealment.
G.R. No. 181806. March 12, 2014Wesleyan
University-Philippines
Vs.
Wesleyan
University-Philippines Faculty and Staff
Association
A Collective Bargaining Agreement

(CBA) is a contract entered into by
an employer and a legitimate labor
organization concerning the terms
and conditions of employment. Like
any other contract, it has the force

of law between the parties and,
thus, should be complied with in
good faith. Unilateral changes or
suspensions in the implementation
ofthe
provisions
ofthe
CBA,
therefore,
cannot
be
allowed
without the consent o f both
parties.
The Non-Diminution Rule found in Article
100 of the Labor Code explicitly prohibits
employers from eliminating or reducing
the benefits received by their employees.
This rule, however, applies only if the
benefit is based on an express policy, a
written contract, or has ripened into a
practice. o be considered a practice, it
must be consistently and deliberately
made by the employer over a long period
of time.
An exception to the rule is when the
practice is due to error in the construction
or application of a doubtful or difficult
question of law. The error, however,
must be corrected immediately after its
discovery; otherwise, the rule on NonDiminution of Benefits would still apply.
The practice of giving two retirement
benefits to petitioners employees is
supported by substantial evidence.
In this case, respondent was able to
present substantial evidence in the form
of affidavits to support its claim that there
are two retirement plans. Based on the
affidavits, petitioner has been giving two
retirement benefits as early as 1997.
Petitioner, on the other hand, failed to
present any evidence to refute the
veracity of these affidavits. Petitioners
contention that these affidavits are selfserving holds no water. The retired
employees of petitioner have nothing to
lose or gain in this case as they have
already received their retirement benefits.
Thus, they have no reason to perjure
themselves. Obviously, the only reason
they executed those affidavits is to bring
out the truth. As we see it then, their

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affidavits, corroborated by the affidavits of

incumbent employees, are more than
sufficient to show that the granting of two
retirement benefits to retiring employees
had already ripened into a consistent and
deliberate practice.
G.R. No. 190724. March 12, 2014Diamond
Taxi and/or Bryan Ong Vs. Felipe Llamas,
Jr.
The NLRC committed grave
abuse
of
discretion
in
dismissing Llamas appeal on
mere technicality
Article 223 (now Article 229) of the Labor
Code states that decisions (or awards or
orders) of the LA shall become final and
executory unless appealed to the NLRC
within ten (10) calendar days from receipt
of the decision. Consistent with Article
223, Section 1, Rule VI of the 2005 NLRC
Rules also provides for a ten (10)-day
period for appealing the LAs decision.
Under Section 4(a), Rule VI of the 2005
NLRC Rules, the appeal shall be in the
form of a verified memorandum of appeal
and accompanied by proof of payment of
the appeal fee, posting of cash or surety
bond (when necessary), certificate of
non-forum shopping, and proof of
service upon the other parties. Failure of
the appealing party to comply with any or
all of these requisites within the
reglementary period will render the LAs
decision final and executory.
Indisputably, Llamas did not file a
memorandum of appeal from the LAs
decision. Instead, he filed, within the ten
(10)-day appeal period, a motion for
reconsideration. Under Section 15, Rule V
of the 2005 NLRC Rules, motions for
reconsideration from the LAs decision are
not allowed; they may, however, be
treated as an appeal provided they comply
with the requirements for perfecting an
appeal. The NLRC dismissed Llamas
motion for reconsideration treated as an
appeal for failure to attach the required
certificate of non-forum shopping per
Section 4(a), Rule VI of the 2005 NLRC
Rules.
Ordinarily, the infirmity in Llamas appeal
would have been fatal and would have
justified an end to the case. A careful
consideration of the circumstances of the
case, however, convinces us that the
NLRC should, indeed, have given due
course to Llamas appeal despite the initial
absence of the required certificate. We
note that in his motion for reconsideration
of the NLRCs May 30, 2006 resolution,
Llamas attached the required certificate of
non-forum shopping.
Moreover, Llamas adequately explained, in
his motion for reconsideration, the
inadvertence and presented a clear
justifiable
ground
to
warrant
the
relaxation of the rules. To recall, Llamas
was able to file his position paper, through
his new counsel, only on December 20,
2005. He hired the new counsel on
December
19,
2005
after
several
repeated, albeit failed, pleas to his former
counsel to submit, on or before October
25, 2005 per the LAs order, the required
position paper. On November 29, 2005,
however, the LA rendered a decision that
Llamas and his new counsel learned and
received a copy of only on January 5,
2006. Evidently, the LAs findings and
conclusions were premised solely on the
petitioners pleadings and evidence. And,
while not the fault of the LA, Llamas,
nevertheless, did not have a meaningful
opportunity to present his case, refute the
contents and allegations in the petitioners
position paper and submit controverting
evidence.
Faced with these circumstances, i.e.,
Llamas subsequent compliance with the
certification-against-forum-shopping
requirement; the utter negligence and
inattention of Llamas former counsel to
his pleas and cause, and his vigilance in
immediately securing the services of a
new counsel; Llamas filing of his position
paper before he learned and received a
copy of the LAs decision; the absence of a
meaningful opportunity for Llamas to

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present his case before the LA; and the
clear merits of his case (that our
subsequent discussion will show), the
NLRC should have relaxed the application
of procedural rules in the broader
interests of substantial justice. Indeed,
while the requirement as to the certificate
of non-forum shopping is mandatory, this
requirement should not, however, be
interpreted too literally and thus defeat
the
objective
of
preventing
the
undesirable practice of forum- shopping.
Under Article 221 (now Article 227) of the
Labor Code, the Commission and its
members and the Labor Arbiters shall use
every and all reasonable means to
ascertain the facts in each case speedily
and objectively and without regard to
technicalities of law or procedure, all in
the interest of due process.
Then, too, we should remember that the
dismissal of an employees appeal on
purely technical ground is inconsistent
with the constitutional mandate on
protection
to
labor.
Under
the
Constitution
and the Labor Code, the State is bound to
protect labor and assure the rights of
workers to security of tenure tenurial
security being a preferred constitutional
right that, under these fundamental
guidelines, technical infirmities in labor
pleadings cannot defeat.
In this case, Llamas action against the
petitioners concerned his job, his security
of tenure. This is a property right of which
he could not and should not be deprived
of without due process. But, more
importantly, it is a right that assumes a
preferred position in our legal hierarchy.
Under these considerations, we agree that
the NLRC committed grave abuse of
discretion when, in dismissing Llamas
appeal, it allowed purely technical
infirmities to defeat Llamas tenurial
security without full opportunity to
establish his cases merits.

Llamas did not abandon his work; he
was constructively dismissed
abandonment is the deliberate and
unjustified refusal of an employee to
resume his employment. It is a form of
neglect of duty that constitutes just cause
for the employer to dismiss the employee.
To constitute abandonment of work, two
elements must concur: (1)
x x x the employee must have failed to
report for work or must have been absent
without valid or justifiable reason; and (2)
x x x there must have been a clear
intention [on the part of the employee] to
sever the employer- employee relationship
manifested by some overt act. The
employees absence must be accompanied
by overt acts that unerringly point to the
employees clear intention to sever the
employment relationship.
And, to successfully invoke abandonment,
whether as a ground for dismissing an
employee or as a defense, the employer
bears the burden of proving the
employees unjustified refusal to resume
his employment. Mere absence of the
employee is not enough.
Guided by these parameters, we agree
that the petitioners unerringly failed to
prove the alleged abandonment. They did
not present proof of some overt act of
Llamas that clearly and unequivocally
shows his intention to abandon his job.
We note that, aside from their bare
allegation, the only evidence that the
petitioners
submitted
to
prove
abandonment were the photocopy of their
attendance logbook and the July 15, 2005
memorandum that they served on Llamas
regarding the July 13, 2005 incident.
These pieces of evidence, even when
considered collectively, indeed failed to
prove the clear and unequivocal intention,
on Llamas part, that the law requires to
deem as abandonment Llamas absence

77

from work. Quite the contrary, the
petitioners July 15, 2005 memorandum,
in fact, supports, if not strengthens,
Llamas' version of the events that led to
his filing of the complaint, i.e., that as a
result of the July 13, 2005 incident, the
petitioners refused to give him the key to
his assigned taxi cab unless he would sign
the resignation letter.
Moreover, and as the CA pointed out,
Llamas lost no time in filing the
illegal dismissal case against them. To
recall, he filed the complaint on July
18, 2005 or only two days from the third
time he was refused access to his
assigned taxi cab on July 16, 2005.
Clearly, Llamas could not be deemed to
have abandoned his work for, as we have
previously held, the immediate
filing by the employee of an illegal
dismissal complaint is proof enough of
his intention to return to work
negates the employer's charge of
and
abandonment.
To reiterate and emphasize, abandonment
is a matter of
intention that cannot lightly be presumed
from certain equivocal acts of the
employee.
The CA, therefore, correctly
Llamas as constructively
regarded
dismissed for the petitioners' failure to

prove the alleged just cause abandonment
for
his
dismissal.
Constructive dismissal exists when there
is cessation of work because continued
employment is rendered impossible,

unreasonable or unlikely. Constructive
dismissal is a dismissal in disguise or
an act amounting to dismissal but made to
appear as if it were not. In
constructive dismissal cases, the employer
is, concededly, charged with the
burden of proving that its conduct and
action were for valid and legitimate
grounds.
The
petitioners'
persistent
refusal to give Llamas the key to his
assigned taxi cab, on the condition that he
should first sign the resignation letter,
rendered, without doubt, his continued
employment impossible, unreasonable and
unlikely; it, thus, constituted constructive
dismissal.
G.R. No. 186621. March 12, 2014 South
East International Rattan, Inc. and/or
Estanislao Agbay Vs. Jesus Coming
Resolution of the first issue is
paramount in view of petitioners
denial
of
the
existence
of
employer-employee relationship.
To ascertain the existence of an employeremployee relationship jurisprudence has
invariably adhered to the four-fold test, to
wit: (1) the selection and engagement of
the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the
power to control the employees conduct,
or the so-called control test.
In Tan v. Lagrama, the Court held that the
fact that a worker was not reported as an
employee to the SSS is not conclusive
proof of the absence of employeremployee relationship. Otherwise, an
employer would be rewarded for his
failure or even neglect to perform his
obligation.
Nor does the fact that respondents name
does not appear in the payrolls and pay
envelope records submitted by petitioners
negate the existence of employeremployee relationship. For a payroll to be

88

utilized to disprove the employment of a
person, it must contain a true and
complete list of the employee. In this
case, the exhibits offered by petitioners
before the NLRC consisting of copies of
payrolls and pay earnings records are only
for the years 1999 and 2000; they do not
cover the entire 18-year period during
which respondent supposedly worked for
SEIRI.
In their comment to the petition filed by
respondent
in
the
CA,
petitioners
emphasized that in the certifications
issued by Mayol and Apondar, it was
shown that respondent was employed and
working for them in those years he
claimed to be working for SEIRI. However,
a reading of the certification by Mayol
would show that while the latter claims to
have respondent under his employ in
1997, 1998 and 1999, respondents
services were not regular and that he
works only if he wants to. Apondars
certification
likewise
stated
that
respondent worked for him since 1999
through his brother Vicente as sideline
but only after regular working hours and
off and on basis. Even assuming the
truth of the foregoing statements, these
do not foreclose respondents regular or
full-time employment with SEIRI. In
effect, petitioners suggest that respondent
was employed by SEIRIs suppliers, Mayol
and Apondar but no competent proof was
presented as to the latters status as
independent contractors.
Petitioners admission that the five affiants
were their former employees is binding
upon them. While they claim that
respondent was the employee of their
suppliers Mayol and Apondar, they did not
submit proof that the latter were indeed
independent
contractors;
clearly,
petitioners failed to discharge their burden
of proving their own affirmative allegation.
There is thus no showing that the five
former
employees
of
SEIRI
were
motivated by malice, bad faith or any illmotive
in
executing
their
affidavit
supporting the claims of respondent.

In any controversy between a laborer and
his master, doubts reasonably arising
from the evidence are resolved in favor of
the laborer.
As a regular employee, respondent enjoys
the right to security of tenure under
Article 279 of the Labor Code and may
only be dismissed for a just or authorized
cause, otherwise the dismissal becomes
illegal.
Respondent, whose employment was
terminated without valid cause by
petitioners, is entitled to reinstatement
without loss of seniority rights and other
privileges and to his full back wages,
inclusive o f allowances and other benefits
or their monetary equivalent, computed
from the time his compensation was
withheld from him up to the time of his
actual
reinstatement.
Where
reinstatement is no longer viable as an
option, back wages shall be computed
from the time of the illegal termination up
to the finality of the decision. Separation
pay equivalent to one month salary for
every year of service should likewise be
awarded as an alternative in case
reinstatement is not possible.
G.R. No. 191455. March 12, 2014
Dreamland Hotel Resort and Westley J.
Prentice Vs. Stephen B. Johnson
At its inception, the Court takes
note of the Resolutions dated
December 14, 2009 and February
11, 2010 of the CA dismissing the
Petition for Certiorari due to the
following infirmities:
1. The affiant has no proof of
authority to file the petition in
behalf of petitioner Dreamland.
2. The petition has no appended affidavit
of service to show proof of service of filing
as required by Sec. 13 of the 1997 Rules
of Civil Procedure.
While it is desirable that the Rules of
Court be faithfully observed, courts should

99
10

not be so strict about procedural lapses
that do not really impair the proper
administration of justice. If the rules are
intended to ensure the proper and orderly
conduct of litigation, it is because of the
higher objective they seek which are the
attainment of justice and the protection of
substantive rights of the parties. Thus, the
relaxation of procedural rules, or saving a
particular case from the operation of
technicalities when substantial justice
requires it, as in the instant case, should
no longer be subject to cavil.
Brushing aside technicalities, in the
utmost interest of substantial justice and
taking into consideration the varying and
conflicting factual deliberations by the LA
and the NLRC, the Court shall now delve
into the merits of the case.
The
petitioners
contend
that
the
employment of Johnson as operations
manager commenced only on October 8,
2007 and not on August 1, 2007.
However,
the
employment
contract
categorically stated that the term of
employment shall commence on [August
1, 2007]. Furthermore, the factual
allegations of Johnson that he actually
worked from August 1, 2007 were neither
sufficiently rebutted nor denied by the
petitioners.
Notably, it was only in their Motion for
Reconsideration of the NLRC decision
where the petitioners belatedly disagreed
that
Johnson
performed
the
abovementioned tasks and argued that
had
Johnson
done
the
tasks
he
enumerated, those were tasks foreign and
alien to his position as operations
manager and [were done] without their
knowledge and consent. Nevertheless,
Prentice did not deny that he ordered
Johnson to speak with potential guests of
the hotel. In fact, the petitioners admitted
and submitted documents which showed
that Johnson has already taken his
residence in the hotel as early as July
2007a part of Johnsons remuneration
as the hotel operations manager. In
presenting
such
documents,
the
petitioners would want to impress upon
the Court that their act of accommodating
Johnson was merely due to his being a
fellow Australian national.
As it could not be determined with
absolute certainty whether or not Johnson
rendered the services he mentioned
during the material time, doubt must be
construed in his favor for the reason that
the consistent rule is that if doubt exists
between the evidence presented by the
employer and that by the employee, the
scales of justice must be tilted in favor of
the latter.
What is clear upon the records is that
Johnson had already taken his place in the
hotel since July 2007.
For the petitioners failure to disprove that
Johnson started working on August 1,
2007, as stated on the employment
contract, payment of his salaries on said
date, even prior to the opening of the
hotel is warranted.
Another
argument
posited
by
the
petitioners is that the employment
contract executed by the parties is
inefficacious because the employment
contract is subject to the presentation of
Johnson of his Alien Employment Permit
(AEP) and Tax Identification Number
(TIN).
Again, this statement is wanting of merit.
Johnson has adduced proof that as a
permanent resident, he is exempted from
the requirement of securing an AEP as
expressed under Department Order No.
75-06, Series of 2006 of the Department
of Labor and Employment (DOLE),
Furthermore,
Johnson
submitted
a
Certification from DOLE Regional Office
III, stating that he is exempted from
securing an AEP as a holder of Permanent
Resident Visa. Consequently, the condition
imposed upon Johnsons employment, if

1010
11

there is any, is in truth without effect to
its validity.
Anent the requirement of securing a TIN
to make the contract of employment
efficacious, records show that Johnson
secured his TIN only on December 2007
after his resignation as operations
manager. Nevertheless, this does not
negate the fact that the contract of
employment had already become effective
even prior to such date.
In addition to the foregoing, there is no
stipulation in the employment contract
itself that the same shall only be effective
upon the submission of AEP and TIN. The
petitioners did not present any proof to
support this agreement prior to the
execution of the employment contract.
As regards the NLRC findings that Johnson
was constructively dismissed and did not
abandon his work, the Court is in
consonance with this conclusion with the
following basis:
Even the most reasonable employee would
consider quitting his job after working for
three months and receiving only an
insignificant fraction of his salaries. There
was, therefore, not an abandonment of
employment nor a resignation in the real
sense, but a constructive dismissal, which
is defined as an involuntary resignation
resorted to when continued employment is
rendered impossible, unreasonable or
unlikely x x x.
The petitioners aver that considering that
Johnson tendered his resignation and
abandoned his work, it is his burden to
prove that his resignation was not
voluntary on his part. It is impossible,
unreasonable
or
unlikely
that
any
employee, such as Johnson would
continue working for an employer who
does not pay him his salaries.
Since
Johnson
was
constructively
dismissed, he was illegally dismissed. In
the present case, the NLRC found that due
to the strained relations between the

parties, separation pay is to be awarded
to Johnson in lieu of his reinstatement.
G.R. No. 171482. March 12, 2014Ashmor
M. Tesoro, Pedro Ang and Gregorio Sharp
Vs.
Metro
Manila
Retreaders,
Inc.
(BANDAG)
and/or
Northern
Luzon
Retreaders, Inc (BANDAG) and/or Power
Tire
and
Rubber
Corp.
(BANDAG)
Dissenting OpinionJ. Leonen
This case concerns the effect on
the status of employment of
employees who entered into a
Service Franchise Agreement with
their employer.
Franchising is a business method of
expansion that allows an individual or
group of individuals to market a product
or a service and to use of the patent,
trademark, trade name and the systems
prescribed by the owner. In this case,
Bandags SFAs created on their faces an
arrangement that gave petitioners the
privilege to operate and maintain Bandag
branches in the way of franchises,
providing tire repair and retreading
services, with petitioners earning profits
based on the performance of their
branches.
The question is: did petitioners remain to
be Bandags employees after they began
operating those branches? The tests for
determining
employeremployee
relationship are: (a) the selection and
engagement of the employee; (b) the
payment of wages; (c) the power of
dismissal; and (d) the employers power
to control the employee with respect to
the means and methods by which the
work is to be accomplished. The last is
called the control test, the most
important element.
When petitioners agreed to operate
Bandags franchise branches in different
parts of the country, they knew that this
substantially
changed
their
former
relationships. They were to cease working
as Bandags salesmen, the positions they
occupied before they ventured into

1111
12

running separate Bandag branches. They
were to cease receiving salaries or
commissions. Their incomes were to
depend on the profits they made. Yet,
petitioners did not then complain of
constructive dismissal. They took their
chances, ran their branches, Gregorio
Sharp in La Union for several months and
Ashmor Tesoro in Baguio and Pedro Ang in
Pangasinan for over a year. Clearly, their
belated claim of constructive dismissal is
quite hollow.
It is pointed out that Bandag continued,
like an employer, to exercise control over
petitioners work. It points out that
Bandag: (a) retained the right to adjust
the price rates of products and services;
(b) imposed minimum processed tire
requirement (MPR); (c) reviewed and
regulated credit applications; and (d)
retained the power to suspend petitioners
services for failure to meet service
standards.
But uniformity in prices, quality of
services, and good business practices are
the essence of all franchises. A franchisee
will damage the franchisors business if he
sells at different prices, renders different
or inferior services, or engages in bad
business
practices.
These
business
constraints are needed to maintain
collective responsibility for faultless and
reliable service to the same class of
customers for the same prices.
This is not the control contemplated in
employer-employee relationships. Control
in such relationships addresses the details
of day to day work like assigning the
particular task that has to be done,
monitoring the way tasks are done and
their results, and determining the time
during which the employee must report
for work or accomplish his assigned task.
Franchising involves the use of an
established business expertise, trademark,
knowledge, and training. As such, the
franchisee is required to follow a certain
established system. Accordingly, the
franchisors may impose guidelines that

somehow restrict the petitioners conduct
which
do
not
necessarily
indicate
control. The important factor to consider
is still the element of control over how the
work itself is done, not just its end result.
Petitioners cannot use the revolving funds
feature of the SFAs as evidence of their
employer-employee
relationship
with
Bandag. These funds do not represent
wages. They are more in the nature of
capital advances for operations that
Bandag
conceptualized
to
attract
prospective
franchisees.
Petitioners
incomes depended on the profits they
make, controlled by their individual
abilities to increase sales and reduce
operating costs.
G.R. No. 150326. March 12, 2014 The
National
Wages
and
Productivity
Commission (NWPC), et al. Vs. The
Alliance of Progessive Labor (APL), et al.
This case concerns the authority of

the
National
Wages
and
Productivity Commission (NWPC)
and the Regional Tripartite Wages
and Productivity Board (RTWPB)
created under Republic Act No.
6727 otherwise known as the Wage
Rationalization Act, to issue wage
orders, and to receive, process and
act on applications for exemption
from the prescribed wage rates
Restated, the issues are: (a) whether or

not the RTWPB-NCR had the authority to
provide additional exemptions from the
minimum wage adjustments embodied in
Wage Order No. NCR-07; and (b) whether
or not Wage Order No. NCR-07 complied
with the requirements set by NWPC
Guidelines No. 01, Series of 1996.
Under the guidelines, the RTWPBs could
issue exemptions from the application of
the wage orders as long as the
exemptions complied with the rules of the
NWPC. In its rules, the NWPC enumerated
four exemptible establishments, but the
list was not exclusive. The RTWPBs had

1212
13

the authority to include in the wage orders
establishments that belonged to, or to
exclude from the four enumerated
exemptible categories. If the exempted
category was one of the listed ones, the
RTWPB issuing the wage order must see
to it that the requisites stated in Section 3
and Section 4 of the NWPC Guidelines No.
01, Series of 1996 were complied with
before granting fully or partially the
application of an establishment seeking to
avail of the exemption,
On the other hand, if the exemption was
outside of the four exemptible categories,
like here, the exemptible category should
be: (1) in accord with the rationale for
exemption; (2) reviewed/approved by the
NWPC; and (3) upon review, the RTWPB
issuing the wage order must submit a
strong and justifiable reason or reasons
for the inclusion of such category. It is the
compliance with the second requisite that
is at issue here.
The CA reversed the decisions of the
NWPC dated February 28, 2000 and July
17, 2000 mainly on the ground that Wage
Order No. NCR-07, specifically its Section
2(A) and Section 9(2), had not been
reviewed or approved by the NWPC.
However, the NWPC stated that it had
reviewed and approved the challenged
sections when it upheld the validity of
Wage Order No. NCR-07 in its decisions of
February 28, 2000 and July 17, 2000.
We rule in favor of petitioners.
The wage orders issued by the RTWPBs
could be reviewed by the NWPC motu
proprio or upon appeal. Any party
aggrieved by the wage order issued by the
RTWPBs could appeal. Here, APL and
TNMR appealed on October 26, 1999,
submitting to the NWPC precisely the
issue of the validity of the Section 2(A)
and Section 9(2) of Wage Order No. NCR07. The NWPC, in arriving at its decision,
weighed the arguments of the parties and
ruled that the RTWPB-NCR had substantial
and justifiable reasons in exempting the
sectors and establishments enumerated in

Section 2(A) and Section 9(2) based on
the public hearings and consultations,
meetings,
social-economic
data
and
informations gathered prior to the
issuance of Wage Order No. NCR-07. The
very fact that the validity of the assailed
sections of Wage Order No. NCR-07 had
been already passed upon and upheld by
the NWPC meant that the NWPC had
already given the wage order its
necessary legal imprimatur. Accordingly,
the requisite approval or review was
complied with.
In creating the RTWPBs, Congress
intended to rationalize wages, firstly, by
establishing full time boards to police
wages round-the-clock, and secondly, by
giving the boards enough powers to
achieve this objective. In Employers
Confederation o f the Phils. v. National
Wages and Productivity Commission, this
Court all too clearly pronounced that
Congress meant the RTWPBs to be
creative in resolving the annual question
of wages without Labor and Management
knocking on the doors of Congress at
every turn. The RTWPBs are the thinking
group of men and women guided by
statutory standards and bound by the
rules and guidelines prescribed by the
NWPC. In the nature of their functions,
the RTWPBs investigate and study all the
pertinent facts to ascertain the conditions
in their respective regions. Hence,
they are logically vested with the
competence to determine the applicable
minimum wages to be imposed as well as
the industries and sectors to exempt from
the coverage of their wage orders.
Lastly, Wage Order No. NCR-07 is
presumed to be regularly issued in the
absence of any strong showing of grave
abuse of discretion on the part of RTWPBNCR. The presumption of validity is made
stronger by the fact that its validity was
upheld by the NWPC upon review.
G.R. No. 177493. March 19, 2014 Eric
Godfrey Stanley Livesey Vs. Binswanger

1313
14

Philippines, Inc. and Keith Elliot
The NLRC committed no grave
abuse of discretion in reversing LA
Laderas
ruling
as
there
is
substantial evidence in the records
that Livesey was prevented from
fully
receiving
his
monetary
entitlements under the compromise
agreement between him and CBB,
with Elliot signing for CBB as its
President and CEO. Substantial
evidence is more than a scintilla; it
means such relevant evidence as a
reasonable mind might accept as
adequate to support a conclusion.
Shortly after Elliot forged the compromise
agreement with Livesey, CBB ceased
operations, a corporate event that was not
disputed by the respondents. Then
Binswanger suddenly appeared. It was
established almost simultaneously with
CBBs closure, with no less than Elliot as
its President and CEO. Through the
confluence of events surrounding CBBs
closure
and
Binswangers
sudden
emergence, a reasonable mind would
arrive at the conclusion that Binswanger is
CBBs alter ego or that CBB and
Binswanger are one and the same
corporation. There are also indications of
badges
of
fraud
in
Binswangers
incorporation. It was a business strategy
to evade CBBs financial liabilities,
including its outstanding obligation to
Livesey.
The respondents impugned the probative
value of Liveseys documentary evidence
and insist that the NLRC erred in applying
the doctrine of piercing the veil of
corporate fiction in the case to avoid
liability.
They
consider
the
NLRC
conclusions as mere assumptions.
We disagree.
It has long been settled that the law vests
a corporation with a personality distinct
and separate from its stockholders or
members.
In
the
same
vein,
a
corporation,
by
legal
fiction
and
convenience, is an entity shielded by a

protective mantle and imbued by law with
a character alien to the persons
comprising it. Nonetheless, the shield is
not at all times impenetrable and cannot
be extended to a point beyond its reason
and policy. Circumstances might deny a
claim for corporate personality, under the
doctrine of piercing the veil of
corporate fiction.
Piercing the veil of corporate fiction is an
equitable doctrine developed to address
situations where the separate corporate
personality of a corporation is abused or
used for wrongful purposes. Under the
doctrine, the corporate existence may be
disregarded where the entity is formed or
used for non-legitimate purposes, such as
to evade a just and due obligation, or to
justify a wrong, to shield or perpetrate
fraud or to carry out similar or inequitable
considerations, other unjustifiable aims or
intentions, in which case, the fiction will
be disregarded and the individuals
composing it and the two corporations will
be treated as identical.
In the present case, we see an
indubitable
link
between
CBBs
closure
and
Binswangers
incorporation. CBB ceased to exist
only in name; it re-emerged in the
person of Binswanger for an urgent
purpose to avoid payment by CBB
of the last two installments of its
monetary obligation to Livesey, as
well as its other financial liabilities.
Freed of CBBs liabilities, especially
that owing to Livesey, Binswanger
can continue, as it did continue, CBBs
real estate brokerage business.
Liveseys evidence, whose existence the
respondents never denied, converged to
show
this
continuity
of
business
operations from CBB to Binswanger. It
was not just coincidence that Binswanger
is engaged in the same line of business
CBB embarked on: (1) it even holds office
in the very same building and on the very
same floor where CBB once stood; (2)

1414
15

CBBs key officers, Elliot, no less, and
Catral moved over to Binswanger,
performing the tasks they were doing at
CBB; (3) notwithstanding CBBs closure,
Binswangers Web Editor (Young), in an email
correspondence,
supplied
the
information that Binswanger is now
known as either CBB (Chesterton
Blumenauer Binswanger or as Chesterton
Petty, Ltd., in the Philippines; (4) the use
of Binswanger of CBBs paraphernalia
(receiving stamp) in connection with a
labor
case
where
Binswanger
was
summoned by the authorities, although
Elliot claimed that he bought the item with
his own money; and (5) Binswangers
takeover of CBBs project with the PNB.
While
the
ostensible
reason
for
Binswangers establishment is to continue
CBBs
business
operations
in
the
Philippines, which by itself is not illegal,
the close proximity between CBBs
disestablishment and Binswangers coming
into existence points to an unstated but
urgent consideration which, as we earlier
noted, was to evade CBBs unfulfilled
financial obligation to Livesey under the
compromise agreement.
With CBBs closure, Livesey asked why
people would buy into a corporation and
simply
close
it
down
immediately
thereafter? The answer to pave the way
for CBBs reappearance as Binswanger.
Elliots guiding hand, as Livesey puts it,
is very much evident in CBBs demise and
Binswangers creation. Elliot knew that
CBB had not fully complied with its
financial obligation under the compromise
agreement. He made sure that it would
not be fulfilled when he allowed CBB's
closure, despite the condition in the
agreement that "unless and until the
Compromise Amount has been fully
settled and paid by the Company in favor
of Mr. Livesey, the Company shall not x x
x suspend, discontinue, or cease its entire
or a substantial portion of its operations.
What happened to CBB, we believe,
supports Livesey's assertion that De
Guzman, CBB's former Associate Director,

informed him that at one time Elliot told
her of CBB's plan to close the corporation
and organize another for the purpose of
evading CBB's liabilities to Livesey and its
other financial liabilities. This wrongful
intent we cannot and must not condone,
for it will give a premium to an iniquitous
business strategy where a corporation is
formed or used for a non-legitimate
purpose, such as to evade a just and due
obligation. We, therefore, find Elliot as
liable as Binswanger for CBB's unfulfilled
obligation to Livesey.
G.R. No. 193628. March 19, 2014Splash
Philippines, Inc., et al. Vs. Ronulfo G.
Ruizo
A. The 120-day rule
As in many other maritime
compensation cases which reached
the Court, the CAs award of
permanent total disability benefits
to Ruizo is anchored on the 120day rule often invoked through the
Courts pronouncement in Crystal
Shipping. The CA declared: The
true
test
of
whether
respondent suffered from a
permanent disability is whether
there is evidence that he was
unable
to
perform
his
customary work as chief cook
for more than 120 days.
Under the above Court pronouncement, it
is clear that the degree of a seafarers
disability cannot be determined on the
basis solely of the 120-day rule or in total
disregard of the seafarers employment
contract (executed in accordance with the
POEA-SEC), the parties CBA if there is
one, and Philippine law and rules in case
of any unresolved dispute, claim or
grievance arising out of or in connection
with the POEA-SEC, as the Court
explained in Vergara. Thus, in every
maritime
disability
compensation
claim, it is important to bear in mind
that under Section 20(B)3 of the
POEA-SEC, in the event a seafarer
suffers a work-related injury or
illness, the employer is liable only for
the resulting disability that has been

1515
16

assessed
or
evaluated
by
the
company-designated physician. If a
doctor appointed by the seafarer
disagrees with the assessment, a
third doctor may be agreed jointly
between the employer and the
seafarer whose decision shall be final
and binding on both parties. Further,
the parties supposed CBA (the
complete copy belatedly submitted by
Ruizo to the CA ) contains an almost
identical provision (as the POEA-SEC)
in its Article 20.1.4.2.
Relatedly, there is one other POEA-SEC
provision that is often overlooked or
ignored, but which should be given due
consideration in the determination of the
seafarers disability compensation, and
this is found in Section 20(B)6 which
states:
6. In case of permanent total or
partial disability of the seafarer
caused by either injury or illness[,]
the seafarer shall be compensated in
accordance with the schedule of
benefits arising from an illness or
disease shall be governed by the rates
and the rules of compensation
applicable at the time the illness or
disease was contracted.
In light of the above-cited provisions of
the POEA-SEC which is the law
between the parties, we cannot find a
basis for the award of permanent total
disability benefits to Ruizo, except the
much belabored 120-day rule. The rule, as
earlier emphasized, had already been
modified
pursuant
to
the
Courts
pronouncement in Vergara. It cannot
simply be xxx applied as a general rule
for all cases and in all contexts.
In short, it cannot be used as a cureall
formula
for
all
maritime
compensation cases. Its application
must depend on the circumstances of
the
case,
including
especially
compliance
with
the
parties
contractual duties and obligations as
laid down in the POEA-SEC and/or

their CBA, if one exists. Thus, the CA
ruled outside of legal contemplation
and thus committed grave abuse of
discretion.
Significantly, Ruizo himself recognized the
relevance of the POEA- SEC in his case
when he acknowledged that under the
contract, a medically repatriated seafarer
is subject for examination and treatment
by the company designated physician for
a period not exceeding 120 days. After
which the company designated physician
will make [an] assessment whether the
seafarer had already become fit for work
or not. Ruizo, however, was not
medically repatriated; he went home for
a finished contract. In any event, as we
said in Vergara: a temporary total
disability only becomes permanent
when so declared by the company
physician within the periods he is
allowed to do so, or upon the
expiration of the maximum 240-day
medical treatment period without a
declaration of either fitness to work
or the existence of a permanent
disability.
Although
the
240-day
maximum
treatment period under the rules had
already
expired,
counted
from
his
repatriation on December 21, 2005, it can
be said that Ruizo and the petitioners
agreed to have the treatment period
extended as it was obvious that he still
needed treatment. In fact, he agreed,
after some trepidation, to be subjected to
an ultrasound procedure (ESWL) in the
effort of the petitioners to improve his
condition; he was expected to return after
February 5, 2007 to Dr. Cruz for a repeat
ESWL, but he failed to do so. Clearly,
under the circumstances, the 120-day rule
had lost its relevance.
B. Compliance with the POEA-SEC
As earlier emphasized, under the POEASEC, the employer is liable for a seafarers
disability, resulting from a work-connected

1616
17

injury or illness, only after the degree of
disability has been established by the
company- designated physician and, if
the
seafarer
consulted
with
a
physician
of
his
choice
whose
assessment disagrees with that of the
company- designated physician, the
disagreement must be referred to a
third doctor for a final assessment.
In the present dispute, no showing exists
that the relevant POEA-SEC provisions had
been observed or complied with. While
Ruizo reported to Dr. Cruz upon his
repatriation
for
examination
and
treatment, he cut short his sessions with
the doctor and missed an important
medical procedure (ESWL) which could
have improved his health condition and
his capability to work. Ruizos explanation
that he did not return for further ESWL
because Dr. Cruz told him that he would
already be forwarding his assessment to
the petitioners is belied by the doctors
report to the agency dated March 19,
2007, stating that he did not return for
further ESWL. The reason for Ruizos
failure to return and continue his
treatment with Dr. Cruz was, as the LA
aptly saw it, his awareness of the
possibility that he could be declared fit to
work after treatment.
Thus, the facts of the case show that the

absence of a disability assessment by Dr.
Cruz was not of the doctors making, but
was due to Ruizos refusal to undergo
further treatment. In the absence of any
disability assessment from Dr. Cruz,
Ruizos claim for disability benefits must
fail for his obvious failure to comply with
the procedure under the POEA-SEC which
he was duty bound to follow
G.R. No. 190053. March 24, 2014Navotas
Shipyard Corporation and Jesus Villaflor
Vs. Innocencio Montallana, et al.
ISSUE: AWARD OF separation pay and
backwages
notwithstanding
the
closure of the companys business
operations.
It appears from the records that the
company was compelled to shut down its

operations due to serious business
reverses during the period material to the
case. It also appears that the petitioners
initially intended the shutdown to be
temporary as it expected to resume
operations before the expiration of six
months or on April 22, 2004,
As we earlier stated, the petitioners
undertook a temporary shutdown. In fact,
the company notified the DOLE of the
shutdown and filed an Establishment
Termination Report containing the names
of the affected employees. The petitioners
expected the company to recover before
the end of the six-month shutdown period,
but unfortunately, no recovery took place.
Thus, the shutdown became permanent.
According to the petitioners, they gave the
companys employees their separation
pay.
We disagree with the companys position
that it resorted to a retrenchment under
Article 283 of the Labor Code; it was a
temporary shutdown under Article 286
where the employees are considered on
floating status or whose employment is
temporarily suspended.
Were
the
respondents
dismissed and entitled to
award?
illegally
the CA
1. The illegal dismissal ruling

Under the circumstances, we cannot
say that the companys employees
were illegally dismissed; rather, they
lost their employment because the
company ceased operations after
failing to recover from their financial
reverses. The CA itself recognized what
happened to the company when it
observed: The temporary shutdown has
ripened into a closure or cessation of
operations. In this situation[,] private
respondents are definitely entitled to the
corresponding benefits of separation.
In these lights, the CA was not only

1717
18

incorrect from the point of law; it likewise
disregarded, or at the very least, grossly
misappreciated the evidence on record
that the petitioner was in distress and had
temporarily suspended its operations,
and duly reflected these circumstances to
the DOLE.
2. The award of backwages/nominal
damages
Since there was no illegal dismissal,
the respondents are not entitled to
backwages.
The term backwages
presupposes
illegal
termination
of
employment. It is restitution of earnings
unduly withheld from the employee
because of illegal termination. Hence,
where there is no illegal termination, there
is no basis for claim or award of
backwages.
Pursuant to existing jurisprudence, if
the dismissal is by virtue of a just or
authorized cause, but without due
process, the dismissed workers are
entitled to an indemnity in the form of
nominal damages.
In the present case, the evidence on hand
substantially shows that the company
closed down due to serious business
reverses,
an
authorized
cause
for
termination of employment. The failure to
notify the respondents in writing of the
closure of the company will not invalidate
the termination of their employment, but
the company has to pay them nominal
damages for the violation of their right to
procedural due process.
In Jaka Food Processing Corp. v. Pacot,
the Court made a distinction between
just and authorized cause in relation to
the award of nominal damages. Thus, the
Court said: if the dismissal is based on a
just cause under Article 282 but the
employer failed to comply with the notice
requirement, the sanction to be imposed
upon him should be tempered because the
dismissal process was, in effect, initiated
by an act imputable to the employee; and
(2) if the dismissal is based on an

authorized cause under Article 283 but the
employer failed to comply with the notice
requirement, the sanction should be stiffer
because the dismissal process was
initiated by the employers exercise of his
management prerogative. The Court
awarded P50,000.00 nominal damages in
Jaka.
Further, in Industrial Timber Corp. v.
Ababon, the Court emphasized that in the
determination of the amount of nominal
damages, several factors are taken into
account: (1) the authorized cause invoked
whether it was a retrenchment or a
closure or cessation of operation of the
establishment due to serious business
losses or financial reverses or otherwise;
(2) the number of employees to be
awarded; (3) the capacity of the
employers to satisfy the awards, taking
into account their prevailing financial
status as borne by the records; (4) the
employers grant of other termination
benefits in favor of the employees; and
(5) whether there was a bona fide attempt
to comply with the notice requirements as
opposed to giving no notice at all. In this
cited case, the Court, in considering the
circumstances obtaining in the case,
deemed it wise and just to reduce the
amount of nominal damages to be
awarded to each employee, to P10,000.00
instead of P50,000.00 each.
In the present case, there is no question
that the company failed to resume
operations anymore as it had been
saddled with serious financial obligations
due to unpaid debts for diesel fuel and ice
and other indebtedness, and because of
this it had to dispose of its fishing vessels.
The respondents themselves were aware
of the companys heavy financial burden
since Villaflor told them about it at the
meeting on October 20, 2003. Then there
was Villaflors undertaking to give them
separation pay of which he also told them.
Although the respondents were not
individually served written notice of the
termination of their employment, the
company,
nonetheless,
filed
an

1818
19

Establishment Termination Report which
included the names of the respondents.
The filing of the report indicates that the
company made the bona fide effort to
comply with the notice requirement under
the law and the rules. Given the
circumstances
surrounding
the
companys closure and guided by the
ruling in Industrial Timber, we find it
reasonable to award the respondents
P10,000.00 in nominal damages.
3. The award of separation pay,
service incentive leave pay and 13th
month pay
Under Article 283 of the Labor Code
quoted
earlier,
the
employer
may
terminate
the
employment
of
any
employee due to, among other causes,
the closure or cessation of operations of
the establishment or undertaking. In such
an eventuality, the employee may or may
not be entitled to separation pay. On this
point, Article 283 provides: in cases of
closures or cessation of operations of
establishment or undertaking not due
to serious business losses or financial
reverses, the separation pay shall be
equivalent to one (1) month pay or to
at least one-half (1/2) month pay for
every year of service, whichever is
higher. A fraction of least six months
shall be considered one (1) whole
year.
Considering
that
the
companys
closure was due to serious financial
reverses, it is not legally bound to
give
the
separated
employees
separation pay.
G.R. No. 193107. March 24, 2014
Sutherland Global Serives (Philippines),
Inc. and Janette G. Lagazo Vs. Larry S.
Labrador
Sutherland insists that the failure
to state the material dates is fatal
to
Salvadors appeal to the NLRC and
to his present position in this case.
We do not find Sutherlands
argument meritorious as technical
rules are not necessarily fatal in

labor cases; they can be liberally
applied if all things being equal
any doubt or ambiguity would be
resolved in favor of labor.
The same reasoning applies to the failure
to attach a certificate of non- forum
shopping. We can likewise relax our
treatment of the defect. Additionally,
while
the
2005
NLRC
Rules
specifically stated that a certificate of
non-forum
shopping
should
be
attached, the 2011 NLRC Rules of
Procedure no longer requires it.
Jurisprudence, too, is replete with
instances when the Court relaxed the
rules involving the attachment of the
certificate of non-forum shopping.
We, however, do not agree with the
findings of the NLRC, as affirmed by
the CA, that Labrador was illegally
dismissed.
The failure to faithfully comply with the
company
rules
and
regulations
is
considered to be a just cause in
terminating ones employment, depending
on the nature, severity and circumstances
of non-compliance. An employer has the
right to regulate, according to its
discretion and best judgment, all aspects
of
employment,
including
work
assignment, working methods, processes
to be followed, working regulations,
transfer of employees, work supervision,
lay-off of workers and the discipline,
dismissal and recall of workers.
Thus,
it
was
within
Sutherlands
prerogative
to
terminate
Labradors
employment when he committed a serious
infraction and, despite a previous warning,
repeated it. To reiterate, he opened
another client account without the latters
consent, with far-reaching and costly
effects on the company. For one, the
repeated past infractions would have
resulted
in
negative
feedbacks
on
Sutherlands performance and reputation.
It
would
likewise
entail
additional

1919
20

administrative expense since Sutherland
would have to address the complaints
an effort that would entail investigation
costs and the return of the doublydelivered merchandise. As a rule, an
employer cannot be compelled to continue
with the employment of workers when
continued employment will prove inimical
to the employer's interests.
To Sutherlands credit, it duly complied
with the procedural requirement in
dismissing an employee; it clearly
observed both substantive and procedural
due process. Its action was based on a
just and authorized cause, and the
dismissal was effected after due notice
and hearing.
G.R. No. 196142. March 26, 2014Venus B.

Castillo, et al. Vs. Prudentiallife Plans, Inc.
et al.
In a labor case, the written
statements
of
co-employees
admitting their
participation in a scheme to
defraud
the
employer
are
admissible in evidence. The
argument by an employee that the
said statements constitute hearsay
because the
authors thereof were not presented
for their cross-examination does
not persuade,
because the rules of eviden~e are
not strictly observed in proceedings
before the
National
Labor
Relations
Co)Illnission (NLRC), which are
summary in nature and
decisions may be made on the
basis ofposition papers.
For their dishonesty, the penalty of
dismissal is justified pursuant to Section
2.6 (i) of the Prudentialife Personnel
Manual which prescribes the penalty of
dismissal for acts of padding receipts for
reimbursement or liquidation of advances
or expenses. Dishonesty is a serious
offense, and no employer will take to its
bosom a dishonest employee. Acts of
dishonesty have been held to be sufficient

grounds for dismissal as a measure of
self-protection on the part of the
employer.
G.R. No. 201663. March 31, 2014Emmanuel
M. Olores Vs. Manila Doctors College and/or
Teresita O. Turla
Essentially, the issues are: (1) whether
respondents appeal with the NLRC was perfected
despite its failure to post a bond;
At the outset, it must be emphasized that Article
223 of the Labor Code states that an appeal by
the employer to the NLRC from a judgment of a
Labor Arbiter, which involves a monetary award,
may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding
company duly accredited by the NLRC, in an
amount equivalent to the monetary award in the
judgment appealed from.
The posting of a bond is indispensable to the
perfection of an appeal in cases involving
monetary awards from the decisions of the Labor
Arbiter. The lawmakers clearly intended to make
the bond a mandatory requisite for the perfection
of an appeal by the employer as inferred from the
provision that an appeal by the employer may be
perfected only upon the posting of a cash or
surety bond. The word only makes it clear that
the posting of a cash or surety bond by the
employer is the essential and exclusive means by
which an employers appeal may be perfected.
Moreover, the filing of the bond is not only
mandatory, but a jurisdictional requirement as
well, that must be complied with in order to
confer jurisdiction upon the NLRC. Noncompliance therewith renders the decision of the
Labor
Arbiter
final
and
executory.
This
requirement is intended to assure the workers
that if they prevail in the case, they will receive
the money judgment in their favor upon the
dismissal of the employers appeal. It is intended
to discourage employers from using an appeal to
delay or evade their obligation to satisfy their
employees just and lawful claims.
Here, it is undisputed that respondents appeal
was not accompanied by any appeal bond despite
the clear monetary obligation to pay petitioner
his separation pay in the amount of P100,000.00.
Since the posting of a bond for the perfection of

2020
21

an appeal is both mandatory and jurisdictional,

the decision of the Labor Arbiter sought to be
appealed before the NLRC had already become
final and executory. Therefore, the NLRC had no
authority to entertain the appeal, much less to
reverse the decision of the Labor Arbiter.
G.R. No. 204761. April 2, 2014 Emeritus
Security and Maintenance Systems, Inc.
Vs. Janrie C. Dailig
The issues are (1) whether respondent
was illegally dismissed by respondent and
(2) if he was, whether respondent is
entitled to separation pay, instead of
reinstatement.
The Court agrees with the ruling of the
Labor Arbiter, NLRC and Court of Appeals
that a floating status of a security guard,
such as respondent, for more than six
months constitutes constructive dismissal.
Petitioner admits relieving respondent
from his post as security guard on 10
December 2005. There is also no dispute
that respondent remained on floating
status at the time he filed his complaint
for illegal dismissal on 16 June 2006. In
other words, respondent was on floating
status from 10 December 2005 to 16 June
2006 or more than six months.
x x x the temporary inactivity or floating
status of security guards should continue
only for six months. Otherwise, the
security agency concerned could be liable
for constructive dismissal. The failure of
petitioner to give respondent a work
assignment beyond the reasonable sixmonth period makes it liable for
constructive dismissal.
On whether respondent is entitled to
separation pay
Article 279 of the Labor Code of the
Philippines mandates the reinstatement of
an illegally dismissed employee,
Respondent
admits
receiving
a
reinstatement notice from petitioner.
Thereafter, respondent was assigned to
one of petitioner's clients. However,

respondent points out that he was not
reinstated by petitioner Emeritus Security
and Maintenance Systems, Inc. but was
employed by another company, Emme
Security and Maintenance Systems, Inc.
(Emme). Thus, according to respondent,
he was not reinstated at all.
Petitioner counters that Emeritus and
Emme are sister companies with the same
Board of Directors and officers, arguing
that Emeritus and Emme are in effect one
and the same corporation.
Considering petitioner's undisputed claim
that Emeritus and Emme are one and the
same, there is no basis in respondent's
allegation that he was not reinstated to
his
previous
employment.
Besides,
respondent
assails
the
corporate
personalities of Emeritus and Emme only
in his Comment filed before this Court.
Further, respondent did not appeal the
Labor Arbiter's reinstatement order.
Contrary to the Court of Appeals' ruling,
there is nothing in the records showing
any strained relations between the parties
to warrant the award of s~paration pay.
There is neither allegation nor proof that
such animosity existed between petitioner
and respondent. In fact, petitioner
complied
with
the
Labor
Arbiter's
reinstatement order.
Considering that (1) petitioner reinstated
respondent in compliance with the Labor
Arbiter's decision, and (2) there is no
ground, particularly strained relations
between the parties, to justify the grant of
separation pay, the Court of Appeals erred
in ordering the payment thereof, in lieu of
reinstatement.
G.R. No. 201072. April 2, 2014 United
Philippine Lines, Inc. and Holland America
Line Vs. Generoso E. Sibug
Essentially, the issues for our
resolution are as follows: (1)
whether Sibug is entitled to
permanent and total disability
benefits for his Volendam and

2121
22

Ryndam injuries and (2) whether
he is entitled to attorneys fees.
2.
After our own review of the case, we find
the petition partly meritorious. We rule
that Sibug is not entitled to permanent
and total disability benefit for his
Volendam injury. But he is entitled to
permanent and total disability benefit for
his Ryndam injury and to attorneys fees.
Sibug is not entitled to permanent and
total disability benefit for his Volendam
injury since he became already fit to work
again as a seaman. He even admitted in
his position paper that he was declared fit
to work. He was also declared fit for sea
service after his pre-employment medical
examination
when
he
sought
reemployment
with
petitioners.
The
medical certificate declaring Sibug fit for
sea service even bears his signature. And
he was able to work again in the same
capacity as waste handler in Ryndam. On
this point, the Labor Arbiters ruling is
amply supported by substantial evidence.
On the other hand, the CA erred in ruling
that Sibug is entitled to permanent and
total disability benefit for the injury he
suffered at the Volendam. The facts
clearly show that he is not.
As regards his Ryndam injury, we agree
with the CA that Sibug is entitled to
permanent and total disability benefit
amounting to US$60,000.
In Millan v. Wallem Maritime Services,
Inc., we listed the following circumstances
when a seaman may be allowed to pursue
an action for permanent and total
disability benefits:
1. (a) The company-designated
physician failed to issue a
declaration as to his fitness to
engage in sea duty or disability
even after the lapse of the 120day period and there is no
indication that further medical
treatment would address his
temporary
total
disability,
3.
4.
5.
6.
hence, justify an extension of

the period to 240 days;
(b)
240 days had lapsed
without any certification issued
by
the
company-designated
physician;
(c)
The
company-designated
physician declared that he is fit for
sea duty within the 120-day or
240-day period, as the case may
be, but his physician of choice and
the doctor chosen under Section
20-B(3) of the POEA-SEC are of a
contrary opinion;
(d)
The
company-designated
physician acknowledged that he is
partially permanently disabled but
other doctors who he consulted, on
his own and jointly with his
employer,
believed
that
his
disability is not only permanent but
total as well;
(e)
The
company-designated
physician recognized that he is
totally and permanently disabled
but there is a dispute on the
disability grading;
(f)
Thecompanydesignatedphysiciandeterminedthat
hismedicalcondition
is
not
compensable or work-related under
the POEA-SEC but his doctor- ofchoice and the third doctor
selected under Section 20-B(3) of
the POEA-SEC found otherwise and
declared him unfit to work;
(g)The
company-designated
physician
declared him totally and permanently
disabled but the employer refuses to pay
him the corresponding benefits; and
(h)The
company-designated
physician
declared him partially and permanently
disabled within the 120-day or 240-day
period but he remains incapacitated to
perform his usual sea duties after the
lapse of said periods.
Paragraph (b) applies to Sibugs case. The
company-designated doctor failed to issue
a certification with a definite assessment

2222
23

of the degree of Sibugs disability for his
Ryndam injury within 240 days.
was validly terminated by petitioner.

Our Ruling
In this case, Sibug was repatriated and

arrived in the country on January 15,
2007 after his Ryndam injury. He had
surgery on his injured hand. On
September 7, 2007, the companydesignated doctor issued a medical report
that Sibug has a permanent but
incomplete disability. But this medical
report failed to state the degree of Sibugs
disability. Only in an email dated
September 28, 2007, copy of which was
attached as Annex 3 of petitioners
position paper, was Sibugs disability from
his Ryndam injury classified as a grade 10
disability by the company-designated
doctor. By that time, however, the 240day extended period when the companydesignated doctor must give the definite
assessment of Sibugs disability had
lapsed. From January 15, 2007 to
September 28, 2007 is 256 days. Hence,
Sibugs disability is already deemed
permanent and total.
In addition, we grant Sibug attorneys fees
of US$6,000 since he was forced to
litigate to protect his valid claim. Where
an employee is forced to litigate and incur
expenses to protect his right and interest,
he is entitled to an award of attorneys
fees equivalent to 10% of the award.
G.R. Nos. 196280 & 196286. April 2, 2014
Universidad De Sta. Isabel Vs. MarvinJulian L. Sambajon, Jr.
ISSUE: DISMISSAL without just or
authorized cause at the time he had
already acquired permanent or regular
status since petitioner allowed him to
continue teaching despite the expiration of
the
first
contract
of
probationary
employment for the second semester of
SY 2002-2003.
In fine, petitioner asks this Court to rule
on the following issues: (1) whether the
NLRC correctly resolved an issue not
raised
in
petitioners
appeal
memorandum;
and
(2)
whether
respondents probationary employment
The petition is partly meritorious.

Issues on Appeal before the NLRC
Section 4(d), Rule VI of the 2005 Revised
Rules of Procedure of the NLRC, which
was in force at the time petitioner
appealed the Labor Arbiters decision,
expressly provided that, on appeal, the
NLRC shall limit itself only to the specific
issues that were elevated for review, to
wit:
Section 4. Requisites for perfection of
appeal. x x x. xxx x
(d) Subject to the provisions of Article 218
of the Labor Code, once the appeal is
perfected in accordance with these Rules,
the Commission shall limit itself to
reviewing and deciding only the specific
issues that were elevated on appeal.
We have clarified that the clear import of
the aforementioned procedural rule is that
the NLRC shall, in cases of perfected
appeals, limit itself to reviewing those
issues which are raised on appeal. As a
consequence thereof, any other issues
which were not included in the appeal
shall become final and executory.
In reviewing the Labor Arbiters finding of
illegal dismissal, the NLRC concluded that
respondent had already attained regular
status after the expiration of his first
appointment contract as probationary
employee. Such conclusion was but a
logical
result of
the NLRCs
own
interpretation of the law. Since petitioner
elevated the questions of the validity of
respondents dismissal and the applicable
probationary period under the aforesaid
regulations, the NLRC did not gravely
abuse its discretion in fully resolving the
said issues.

2323
24

Probationary Employment Period
permanent.
A probationary employee is one who is on

trial by the employer during which the
employer determines whether or not said
employee is qualified for permanent
employment. A probationary appointment
is made to afford the employer an
opportunity to observe the fitness of a
probationary employee while at work, and
to ascertain whether he will become a
proper and efficient employee. The word
probationary as used to describe the
period of employment implies the purpose
of the term or period, but not its length.
Since it was explicitly provided in the

above contract that unless renewed in
writing
respondents
appointment
automatically expires at the end of the
stipulated period of employment, the CA
erred in concluding that simply because
the word probationary no longer appears
below the designation (Full-Time Faculty
Member), respondent had already become
a permanent employee. Noteworthy is
respondents admission of being still under
probationary period in his January 12,
2005 letter to Sr. Evidente reiterating his
demand for salary differential, which letter
was sent almost one year after he signed
the February 26, 2004 appointment
contract,
It is well settled that the employer has the

right or is at liberty to choose who will be
hired and who will be denied employment.
In that sense, it is within the exercise of
the right to select his employees that the
employer may set or fix a probationary
period within which the latter may test
and observe the conduct of the former
before hiring him permanently. The law,
however, regulates the exercise of this
prerogative
to
fix
the
period
of
probationary employment. While there is
no statutory cap on the minimum term of
probation, the law sets a maximum trial
period during which the employer may
test the fitness and efficiency of the
employee.
The probationary employment of teachers
in private schools is not governed purely
by the Labor Code. The Labor Code is
supplemented with respect to the period
of probation by special rules found in the
Manual of Regulations for Private Schools.
Thus, it is the Manual of Regulations for
Private Schools, and not the Labor Code,
that determines whether or not a faculty
member in an educational institution has
attained regular or permanent status.
Section 93 of the 1992 Manual of
Regulations for Private Schools provides
that
full-time
teachers
who
have
satisfactorily completed their probationary
period shall be considered regular or
There can be no dispute that the period of

probation may be reduced if the employer,
convinced of the fitness and efficiency of a
probationary
employee,
voluntarily
extends a permanent appointment even
before the three-year period ends.
Conversely, if the purpose sought by the
employer is neither attained nor attainable
within the said period, the law does not
preclude the employer from terminating
the
probationary
employment
on
justifiable
ground;
or,
a
shorter
probationary period may be incorporated
in a collective bargaining agreement. But
absent
any
circumstances
which
unmistakably show that an abbreviated
probationary period has been agreed
upon, the three-year probationary term
governs.
As to the Certificate of Employment issued
by Sr. Real on January 31, 2005, it simply
stated that respondent was a full time
faculty member in the Religious Education
Department of this same institution and
that he holds the rank of Associate
Professor. There was no description or
qualification of respondents employment
as regular or permanent. Neither did the
similar Certification also issued by Sr. Real
on March 18, 2005 prove respondents
status as a permanent faculty member of

2424
25

petitioner.
It bears stressing that full-time teaching

primarily refers to the extent of services
rendered by the teacher to the employer
school and not to the nature of his
appointment. Its significance lies in the
rule that only full-time teaching personnel
can acquire regular or permanent status.
In this case, petitioner applied the
maximum three-year probationary period
equivalent to six consecutive semesters
provided in the Manual of Regulations.
The
circumstance
that
respondents
services were hired on semester basis did
not negate the applicable probationary
period, which is three school years or six
consecutive semesters.
In Magis Young Achievers Learning Center
the Court explained the three years
probationary period rule in this wise:
The common practice is for the employer
and the teacher to enter into a contract,
effective for one school year. At the end of
the school year, the employer has the
option not to renew the contract,
particularly considering the teachers
performance. If the contract is not
renewed, the employment relationship
terminates. If the contract is renewed,
usually for another school year, the
probationary
employment
continues.
Again, at the end of that period, the
parties may opt to renew or not to renew
the contract. If renewed, this second
renewal of the contract for another school
year would then be the last year since it
would be the third school year of
probationary employment. At the end of
this third year, the employer may now
decide whether to extend a permanent
appointment to the employee, primarily
on the basis of the employee having met
the reasonable standards of competence
and efficiency set by the employer. For
the entire duration of this three-year
period, the teacher remains under
probation. Upon the expiration of his

contract of employment, being simply on
probation, he cannot automatically claim
security of tenure and compel the
employer to renew his employment
contract. It is when the yearly contract is
renewed for the third time that Section 93
of the Manual becomes operative, and the
teacher then is entitled to regular or
permanent employment status.
As we made clear in the afore-cited case
of Magis Young Achievers Learning
Center, the teacher remains under
probation for the entire duration of the
three-year period. Subsequently, in the
case of Mercado v. AMA Computer
College-Paranaque City, Inc. the Court,
speaking through Justice Arturo D. Brion,
recognized the right of respondent school
to determine for itself that it shall use
fixed-term employment contracts as its
medium
for
hiring
its
teachers.
Nevertheless, the Court held that the
teachers probationary status should not
be disregarded simply because their
contracts were fixed-term.
Illegal Dismissal
Notwithstanding the limited engagement
of probationary employees, they are
entitled to constitutional protection of
security of tenure during and before the
end of the probationary period. The
services of an employee who has been
engaged on probationary basis may be
terminated for any of the following: (a) a
just or (b) an authorized cause; and (c)
when he fails to qualify as a regular
employee in accordance with reasonable
standards prescribed by the employer.
Thus, while no vested right to a
permanent appointment had as yet
accrued in favor of respondent since he
had not completed the prerequisite threeyear period (six consecutive semesters)
necessary for the acquisition of permanent
status as required by the Manual of
Regulations for Private Schools -- which
has the force of law -- he enjoys a limited

2525
26

tenure. During the said probationary
period, he cannot be terminated except
for just or authorized causes, or if he fails
to qualify in accordance with reasonable
standards prescribed by petitioner for the
acquisition of permanent status of its
teaching personnel.
In a letter dated February 26, 2005,
petitioner terminated the services of
respondent stating that his probationary
employment as teacher will no longer be
renewed upon its expiry on March 31,
2005, respondents fifth semester of
teaching. No just or authorized cause was
given by petitioner. Prior to this,
respondent had consistently achieved
above average rating based on evaluation
by petitioners officials and students. He
had also been promoted to the rank of
Associate Professor after finishing his
masters degree course on his third
semester
of
teaching.
Clearly,
respondents
termination
after
five
semesters of satisfactory service was
illegal.
Respondent therefore is entitled to

continue his three-year probationary
period, such that from March 31, 2005,
his probationary employment is deemed
renewed for the following semester (1st
semester of SY 2005-2006). However,
given the discordant relations that had
arisen from the parties dispute, it can be
inferred with certainty that petitioner had
opted not to retain respondent in its
employ beyond the three-year period.
G.R. No. 192998. April 2, 2014Bernard A.
Tenazas, Jaime M. Farncisco and Isidro G.
Endraca Vs. R. Villegas Taxi Transport and
Romualdo Villegas
Pivotal to the resolution of the
instant case is the determination of
the
existence
of
employeremployee relationship and whether
there was an illegal dismissal.
[I]n determining the presence or absence
of an employer-employee relationship, the
Court has consistently looked for the
following incidents, to wit: (a) the
selection
and
engagement
of
the
employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the
employers power to control the employee
on the means and methods by which the
work is accomplished. The last element,
the so-called control test, is the most
important element.
There is no hard and fast rule designed to
establish the aforesaid elements. Any
competent and relevant evidence to prove
the relationship may be admitted.
Identification cards, cash vouchers, social
security registration, appointment letters
or
employment
contracts,
payrolls,
organization charts, and personnel lists,
serve as evidence of employee status.
In this case, however, Francisco failed to
present any proof substantial enough to
establish
his
relationship
with
the
respondents.
He
failed
to
present
documentary evidence like attendance
logbook, payroll, SSS record or any
personnel file that could somehow depict
his status as an employee. Anent his claim
that he was not issued with employment
records, he could have, at least, produced
his social security records which state his
contributions, name and address of his
employer, as his co-petitioner Tenazas
did. He could have also presented
testimonial
evidence
showing
the
respondents exercise of control over the
means and methods by which he
undertakes his work. This is imperative in
light of the respondents denial of his
employment and the claim of another taxi
operator, Emmanuel Villegas (Emmanuel),
that he was his employer. Specifically, in
his Affidavit, Emmanuel alleged that
Francisco was employed as a spare driver
in his taxi garage from January 2006 to
December 2006, a fact that the latter
failed to deny or question in any of the
pleadings attached to the records of this
case. The utter lack of evidence is fatal to
Franciscos case especially in cases like his
present predicament when the law has
been very lenient in not requiring any
particular form of evidence or manner of
proving the presence of employer-

2626
27

employee relationship.
Here, Francisco simply relied on his
allegation that he was an employee of the
company without any other evidence
supporting his claim. Unfortunately for
him, a mere allegation in the position
paper is not tantamount to evidence.
Bereft of any evidence, the CA correctly
ruled that Francisco could not be
considered
an
employee
of
the
respondents.
The CAs order of reinstatement of
Tenazas and Endraca, instead of the
payment of separation pay, is also well in
accordance with prevailing jurisprudence.
In Macasero v. Southern Industrial Gases
Philippines, Clearly, it is only when
reinstatement is no longer feasible that
the payment of separation pay is ordered
in
lieu
thereof.
For
instance,
if
reinstatement would only exacerbate the
tension and strained relations between the
parties, or where the relationship between
the employer and the employee has been
unduly strained by reason of their
irreconcilable differences, it would be
more prudent to order payment of
separation pay instead of reinstatement.
This doctrine of strained relations,
however, should not be used recklessly or
applied loosely nor be based
on
impression alone. It bears to stress that
reinstatement is the rule and, for the
exception of strained relations to apply, it
should be proved that it is likely that if
reinstated, an atmosphere of antipathy
and antagonism would be generated as to
adversely affect the efficiency and
productivity of the employee concerned.
A bare claim of strained relations by
reason of termination is insufficient to
warrant the granting of separation pay.
Likewise, the filing of the complaint by the
petitioners does not necessarily translate
to strained relations between the parties.
As a rule, no strained relations should
arise from a valid and legal act asserting
ones right. Although litigation may also
engender a certain degree of hostility, the

understandable strain in the parties
relation would not necessarily rule out
reinstatement which would, otherwise,
become the rule rather the exception in
illegal dismissal cases.
Thus, it was a prudent call for the CA to
delete the award of separation pay and
order for reinstatement instead, in
accordance with the general rule stated in
Article 279 of the Labor Code.
G.R. No. 189456. April 2, 2014Chiang Kai
Shek College and Carmelita Espino Vs.
Rosalina M. Torres
Resignation is the voluntary act of
an employee who is in a situation
where one believes that personal
reasons cannot be sacrificed for the
favor of employment, and opts to
leave rather than stay employed. It
is a formal pronouncement or
relinquishment of an office, with
the intention of relinquishing the
office accompanied by the act of
relinquishment. As the intent to
relinquish must concur with the
overt act of relinquishment, the
acts of the employee before and
after the alleged resignation must
be considered in determining
whether, he or she, in fact,
intended to sever his or her
employment.
Respondent had admitted to leaking a
copy of the HEKASI 5 special quiz. She
reluctantly made the admission and
apologized to Mrs. Koo when the latter
confronted her. She admitted during the
28 August 2002 hearing of executing two
(2) contradictory statements. On 30
August 2002, the Investigating Committee
found respondent guilty of leaking a copy
of the special quiz. Based on this
infraction alone, Chiang Kai Shek College
would have been justified to validly
terminate respondent from service. As
Associate Justice Antonio T. Carpio
emphasized, academic dishonesty is the
worst offense a teacher can make because
teachers caught committing academic

2727
28

dishonesty lose their credibility as
educators and cease to be role models for
their students. More so that under Chiang
Kai Shek College Faculty Manual, leaking
and selling of test questions is classified
as a grave offense punishable by
dismissal/termination.
On 5 September 2002, respondent was
verbally informed by Mrs. Caneda, Mrs.
Carmelita Espino and Ms. Tibi that she
was being dismissed from service. Before
the
Investigating
Committee
could
formalize
respondents
dismissal,
respondent handwrote a letter requesting
that the penalty be lowered from dismissal
to
suspension
in
exchange
for
respondents resignation at the end of the
school year.
We do not find anything irregular with
respondents handwritten letter. The letter
came about because respondent was
faced with an imminent dismissal and
opted for an honorable severance from
employment. That respondent voluntarily
resigned is a logical conclusion. Justice
Arturo D. Brion correctly observed that
respondents infraction and the inevitable
and justifiable consequence of that
infraction,
i.e.,
termination
of
employment, induced her to resign or
promise to resign by the end of the school
year.
Given
the
indications
of
voluntary
resignation, we rule that there is no
constructive dismissal in this case. There
is constructive dismissal when there is
cessation of work, because continued
employment is rendered impossible,
unreasonable or unlikely, as an offer
involving a demotion in rank or a
diminution in pay and other benefits. Aptly
called a dismissal in disguise or an act
amounting to dismissal but made to
appear as if it were not, constructive
dismissal may, likewise, exist if an act of
clear
discrimination,
insensibility,
or
disdain by an employer becomes so
unbearable on the part of the employee
that it could foreclose any choice by him
except
to
employment.
forego
his
continued
There
was
here
no
discrimination
committed
by
petitioners.
While
respondent did not tender her resignation
wholeheartedly, circumstances of her own
making did not give her any other option.
With due process, she was found to have
committed the grave offense of leaking
test
questions.
Dismissal
from
employment was the justified equivalent
penalty. Having realized that, she asked
for, and was granted, not just a deferred
imposition of, but also an acceptable cover
for the penalty.
Respondents profession, the gravity of
her infraction, and the fact that she waited
until the close of the school year to
challenge her impending resignation
demonstrate
that
respondent
had
bargained for a graceful exit and is now
trying to renege on her obligation.
Associate Justice Antonio T. Carpio
accordingly noted that petitioners should
not be punished for being compassionate
and granting respondent's request for a
lower penalty. Put differently, respondent
should not be rewarded for reneging on
her promise to resign at the end of the
school year. Otherwise, employers placed
in similar situations would no longer
extend
compassion
to
employees.
Compromise agreements, like that in the
instant case, which lean towards desired
liberality that favor labor, would be
discouraged.
G.R. No. 195687. April 7, 2014Land Bank
of the Philippines Vs. David G. Naval, Jr.,
et al.
Despite the convoluted claims of
the parties, the basic question
before us is whether or not
respondents and intervenors are
entitled to the COLA and the BEP
on top of their basic salaries from
1989 up to the present.
The SSL Remained Valid Despite the
Nullification of DBM-CCC No. 10

2828
29

To recall, respondents demand for the
payment of their COLA and BEP on top of
their basic salaries came after this Courts
promulgation of De Jesus, which nullified
DBM-CCC No. 10 for non-publication. It is
their position that by the nullification of
DBM-CCC No. 10 which expressly named
the COLA and BEP as integrated into the
basic salary, LBPs integration of the COLA
and the BEP is likewise invalid. In other
words,
respondents
equate
the
nullification of the implementing rules with
the nullification of the very law which
orders the integration of these allowances
into the basic salary. This Court had
already refuted the soundness of this
claim.
The nullity of DBM-CCC No. 10, will
not affect the validity of R.A. No.
6758. It is a cardinal rule in statutory
construction that statutory provisions
control the rules and regulations which
may be issued pursuant thereto. Such
rules and regulations must be consistent
with and must not defeat the purpose of
the statute. The validity of R.A. No.
6758 should not be made to depend
on the validity of its implementing
rules.
From the foregoing provision,
immediately apparent that the SSL
mandates
the
integration
of
allowances except for the following:
it
is
all
1. Representation and transportation

allowances;
2. Clothing and laundry allowances;
3. Subsistence allowance of marine
officers and crew on board
government vessels;
4. Subsistence allowance of hospital
personnel;
5. Hazard pay;
6. Allowances
of
foreign
service
personnel stationed abroad;
7. And
such
other
additional
compensation
not
otherwise
specified
herein as may be determined by
the DBM.
Since the COLA and the BEP are among
those expressly excluded by the SSL from
integration, they should be considered as
deemed integrated in the standardized
salaries of LBP employees under the
general rule of integration.
Under the doctrine of stare decisis et non
quieta movere, a point of law already
established will be followed by the court in
subsequent cases where the same legal
issue is raised. Thus, we can come to no
other conclusion than to deny the
payment of the COLA on top of the LBP
employees basic salary from July 1, 1989
because (1) it has not been expressly
excluded from the general rule on
integration by the first sentence of Sec. 12
of the SSL and (2) as we have explained
in Gutierrez, the COLA is not granted in
order to reimburse employees for the
expenses incurred in the performance of
their official duties.
G.R. No. 170007. April 7, 2014Tabangao
Shell Refinery Employees Association Vs.
Pilipinas Shell Petroleum Corporation
ISSUE: unfair labor practice through bad
faith bargaining.
the nature of the duty to bargain, that is,
it does not compel any party to accept a
proposal or to make any concession. While
the purpose of collective bargaining is the
reaching of an agreement between the
employer and the employees union
resulting in a binding contract between
the parties, the failure to reach an
agreement after negotiations continued
for a reasonable period does not mean
lack of good faith. The laws invite and
contemplate
a
collective
bargaining
contract but do not compel one. For after
all, a CBA, like any contract is a product of
mutual consent and not of compulsion. As
such, the duty to bargain does not include
the obligation to reach an agreement.

2929
30

n this light, the corporations unswerving
position on the matter of annual lump sum
payment in lieu of wage increase did not,
by itself, constitute bad faith even if such
position caused a stalemate in the
negotiations, as correctly ruled by the
Secretary of Labor and Employment in the
decision dated June 8, 2005.
As there was no bad faith on the part of
the company in its bargaining with the
union, deadlock was possible and did
occur. The unions reliance on item 8 of
the ground rules governing the parties
negotiations
which
required
mutual
consent for a declaration of deadlock was
reduced to irrelevance by the actual facts.
Contra factum non valet argumentum.
There is no argument against facts. And
the fact is that the negotiations between
the union and the company were stalled
by the opposing offers of yearly wage
increase by the union, on the one hand,
and annual lump sum payment by the
company, on the other hand. Each party
found the others offer unacceptable and
neither party was willing to yield. The
company
suggested
seeking
the
assistance of a third party to settle the
issue but the union preferred the remedy
of filing a notice of strike. Each party was
adamant in its position. Thus, because of
the unresolved issue on wage increase,
there was actually a complete stoppage of
the ongoing negotiations between the
parties and the union filed a Notice of
Strike. A mutual declaration would neither
add to nor subtract from the reality of the
deadlock then existing between the
parties. Thus, the absence of the parties
mutual declaration of deadlock does not
mean that there was no deadlock. At
most, it would have been simply a
recognition of the prevailing status quo
between the parties.
More importantly, the union only caused
confusion in the proceedings before the
Secretary of Labor and Employment when
it questioned the latters assumption of
jurisdiction over the labor dispute between
the union and the company on the ground
that the Secretary erred in assuming
jurisdiction over the CBA case when it

[was] not the subject matter of the notice
of strike because the case was all about
ULP in the form of bad faith bargaining.
For the union, the Secretary of Labor and
Employment should not have touched the
issue of the CBA as there was no CBA
deadlock at that time, and should have
limited the assumption of jurisdiction to
the charge of unfair labor practice for
bargaining in bad faith.
The union is wrong.
As discussed above, there was already an
actual existing deadlock between the
parties. What was lacking was the formal
recognition of the existence of such a
deadlock because the union refused a
declaration of deadlock. Thus, the unions
view that, at the time the Secretary of
Labor and Employment exercised her
power of assumption of jurisdiction, the
issue of deadlock was neither an incidental
issue to the matter of unfair labor practice
nor an existing issue is incorrect.
More importantly, however, the unions
mistaken theory that the deadlock issue
was neither incidental nor existing is
based on its premise that the case is all
about the companys alleged unfair labor
practice of bargaining in bad faith, which
is the ground stated in its first Notice of
Strike.
While the first Notice of Strike is indeed
significant in the determination of the
existing labor dispute between the parties,
it is not the sole criterion. The totality of
the companys Petition for Assumption of
Jurisdiction, including every allegation
therein, also guided the Secretary of
Labor and Employment in the proper
determination of the labor dispute over
which he or she was being asked to
assume jurisdiction.
In this case, there was a dispute, an
unresolved issue on several matters,
between the union and the company in
the course of the negotiations for a new

3030
31

CBA. Among the unsettled issues was the
matter of compensation.
Thus, the labor dispute between the union
and
the
company
concerned
the
unresolved matters between the parties in
relation to their negotiations for a new
CBA. The power of the Secretary of Labor
and Employment to assume jurisdiction
over this dispute includes and extends to
all questions and controversies arising
from the said dispute, such as, but not
limited to the unions allegation of bad
faith bargaining. It also includes and
extends to the various unresolved
provisions of the new CBA such as
compensation, particularly the matter of
annual wage increase or yearly lump sum
payment in lieu of such wage increase,
whether or not there was deadlock in the
negotiations. Indeed, nowhere does the
Order dated September 20, 2004 of the
Secretary of Labor and Employment
mention a CBA deadlock. What the union
viewed as constituting the inclusion of a
CBA deadlock in the assumption of
jurisdiction was the inclusion of the
economic
issues,
particularly
the
companys stance of yearly lump sum
payment in lieu of annual wage increase,
in the directive for the parties to submit
their respective position papers.
The unions Motion for Reconsideration
(With Urgent Prayer to Compel the
Company to Justify Offer of Wage
[Increase]
Moratorium)
and
Second
Motion for Reconsideration questioning the
Order dated September 20, 2004 of the
actually confirm that the labor dispute
between the parties essentially and
necessarily
includes
the
conflicting
positions of the union, which advocates
annual wage increase, and of the
company, which offers yearly lump sum
payment in lieu of wage increase. In fact,
that is the reason behind the unions
prayer that the company be ordered to
justify its offer of wage increase
moratorium.
As there is already an existing controversy

on the matter of wage increase, the
Secretary of Labor and Employment need
not wait for a deadlock in the negotiations
to take cognizance of the matter. That is
the significance of the power of the
Secretary of Labor and Employment under
Article 263(g) of the Labor Code to
assume jurisdiction over a labor dispute
causing or likely to cause a strike or
lockout in an industry indispensable to the
national interest.
Everything considered, therefore, the
committed no abuse of discretion when
she assumed
jurisdiction over the labor dispute ofthe
union and the company.
G.R. No. 192582. April 7, 2014Bluer Than
Blue Joint Ventures Company/ Mary Ann
Dela Vega Vs. Glyza Esteban
"It is not the job title but the actual
work that the employee performs
that determines whether he or she
occupies a position of trust and
confidence." In this case, while
respondent's
position
was
denominated as Sales Clerk, the
nature of her work included
inventory
and
cashiering,
a
function that clearly falls within the
sphere ofrank-and-file positions
imbued with trust and confidence.
Loss of trust and confidence is premised
on the fact that the employee concerned
holds a position of responsibility, trust and
confidence. The employee must be
invested with confidence on delicate
matters, such as the custody, handling,
care and protection of the employers
property and funds. [W]ith respect to
rank-and-file personnel, loss of trust and
confidence as ground for valid dismissal
requires proof of involvement in the
alleged events in question, and that mere
uncorroborated assertions and accusations
by the employer will not be sufficient.
Esteban is, no doubt, a rank-and-file

3131
32

employee. The question now is whether
she occupies a position of trust and
confidence.
Among
the
fiduciary
rank-and-file
employees are cashiers, auditors, property
custodians, or those who, in the normal
exercise of their functions, regularly
handle significant amounts of money
or property. These employees, though
rank-and-file, are routinely charged with
the care and custody of the employers
money or property, and are thus classified
as occupying positions of trust and
confidence.
In this case, Esteban was a sales clerk.
Her duties, however, were more than that
of a sales clerk. Aside from attending to
customers and tending to the shop,
Esteban also assumed cashiering duties.
This, she does not deny; instead, she
insists that the competency clause
provided that her tasks were that of a
sales clerk and the cashiering function was
labelled to follow. A perusal of the
competency clause, however, shows that
it is merely an attestation on her part that
she is competent to meet the basic
requirements needed for the position
[she] is applying for x x x. It does not
define her actual duties. As consistently
ruled by the Court, it is not the job title
but the actual work that the employee
performs that determines whether he or
she occupies a position of trust and
confidence.
Proceeding from the above conclusion, the
pivotal question that must be answered is
whether Estebans acts constitute just
cause to terminate her employment.
Loss of trust and confidence to be a valid
cause for dismissal must be work related
such as would show the employee
concerned to be unfit to continue
working for the employer and it must
be based on a wilful breach of trust
and founded on clearly established
facts. Such breach is wilful if it is done
intentionally, knowingly, and purposely,
without justifiable excuse as distinguished

from
an
act
done
carelessly,
thoughtlessly, heedlessly or inadvertently.
The loss of trust and confidence must
spring from the voluntary or wilful act of
the employee, or by reason of some
blameworthy act or omission on the part
of the employee.
In this case, the Court finds that the acts
committed by Esteban do not amount to a
wilful breach of trust. She admitted that
she accessed the POS system with the use
of the unauthorized 123456 password.
She did so, however, out of curiosity and
without
any
obvious
intention
of
defrauding the petitioner. As professed by
Esteban, she was acting in good faith in
verifying what her co-staff told her about
the opening of the computer by the use of
the 123456 password, x x x. She even
told her co-staff not to open again said
computer, and that was the first and last
time
she
opened
said
computer.
Moreover, the petitioner even admitted
that Esteban has her own password to the
POS system. If it was her intention to
manipulate the stores inventory and
funds, she could have done so long before
she had knowledge of the unauthorized
password. But the facts on hand show that
she did not. The petitioner also failed to
establish a substantial connection between
Estebans use of the 123456 password
and any loss suffered by the petitioner.
Indeed, it may be true that, as posited by
the petitioner, it is the fact that she used
the password that gives cause to the loss
of trust and confidence on Esteban.
However, as ruled above, such breach
must have been done intentionally,
knowingly, and purposely, and without
any justifiable excuse, and not simply
something done carelessly, thoughtlessly,
heedlessly or inadvertently. To the Courts
mind, Estebans lapse is, at best, a
careless act that does not merit the
imposition of the penalty of dismissal.
The Court is not saying that Esteban is
innocent of any breach of company policy.
That she relayed the password to another
employee is likewise demonstrative of her

3232
33

mindless appreciation of her duties as a
sales clerk in the petitioners employ. But
absent any showing that her acts were
done with moral perverseness that
would justify the claimed loss of trust and
confidence attendant to her job, the Court
must sustain the conclusion that Esteban
was illegally dismissed. As stated by the
CA, [s]uspension would have sufficed as
punishment,
considering
that
the
petitioner had already been with the
company for more than 2 years, and the
petitioner apologized and readily admitted
her mistake in her written explanation,
and considering that no clear and
convincing evidence of loss or prejudice,
which was suffered by the [petitioner]
from [Estebans] supposed infraction.
Preventive
investigation
suspension
during
Preventive suspension is a measure

allowed by law and afforded to the
employer if an employees continued
employment
poses
a
serious
and
imminent threat to the employers life or
property or of his co-workers. It may be
legally imposed against an employee
whose alleged violation is the subject of
an investigation.
In this case, the petitioner was acting well
within its rights when it imposed a 10-day
preventive suspension on Esteban. While
it may be that the acts complained of
were committed by Esteban almost a year
before the investigation was conducted,
still, it should be pointed out that Esteban
was performing functions that involve
handling of the petitioners property and
funds, and the petitioner had every right
to protect its assets and operations
pending Estebans investigation.
Sales negative
deductions
variances
as
wage
The petitioner deducted the amount of

P8,304.93 from Estebans last salary.
According
to
the
petitioner,
this
represents the stores negative variance
for the year 2005 to 2006. The petitioner

justifies the deduction on the basis of
alleged trade practice and that it is
allowed by the Labor Code.
Article 113 of the Labor Code provides
that no employer, in his own behalf or in
behalf of any person, shall make any
deduction from the wages of his
employees, except in cases where the
employer is authorized by law or
regulations issued by the Secretary of
Labor and Employment, among others.
The Omnibus Rules Implementing the
Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or
damage. Where the employer is
engaged in a trade, occupation or
business where the practice of making
deductions or requiring deposits is
recognized
to
answer
for
the
reimbursement of loss or damage to tools,
materials, or equipment supplied by the
employer to the employee, the employer
may make wage deductions or require the
employees to make deposits from which
deductions shall be made, subject to the
following conditions:
(a) That the employee concerned is clearly
shown to be responsible for the loss or
damage;
(b) That the employee is given reasonable
opportunity to show cause why deduction
should not be made;
(c) That the amount of such deduction is
fair and reasonable and shall not exceed
the actual loss or damage; and
(d) That the deduction from the wages of
the employee does not exceed 20 percent
of the employees wages in a week.
In this case, the petitioner failed to
sufficiently establish that Esteban was
responsible for the negative variance it
had in its sales for the year 2005 to 2006
and that Esteban
was
given the
opportunity to show cause the deduction

3333
34

from her last salary should not be made.
The Court cannot accept the petitioners
statement that it is the practice in the
retail industry to deduct variances from an
employees salary, without more.
In Nina Jewelry Manufacturing of Metal
Arts, Inc. v. Montecillo, the Court ruled
that:
T]he petitioners should first establish that

the making of deductions from the salaries
is authorized by law, or regulations issued
by the Secretary of Labor. Further, the
posting of cash bonds should be proven as
a recognized practice in the jewelry
manufacturing business, or alternatively,
the petitioners should seek for the
determination by the Secretary of Labor
through the issuance of appropriate rules
and regulations that the policy the former
seeks to implement is necessary or
desirable in the conduct of business. The
petitioners failed in this respect. It bears
stressing
that
without
proofs
that
requiring
deposits
and
effecting
deductions are recognized practices, or
without securing the Secretary of Labor's
determination
of
the
necessity
or
desirability of the same, the imposition of
new policies relative to deductions and
deposits can be made subject to abuse by
the employers. This is not what the law
intends.
G.R. No. 199022. April 7, 2014Magsaysay
Maritime Corporation Vs. Oscar D. Chin,
Jr.
The key issue in this case is
whether or not the CA erred in
affirming the Labor Arbiters award
of loss of future earnings on top of
his disability benefits as well as
awards of moral and exemplary
damages and attorneys fees.
Definitely, the Labor Arbiters award of
loss of earning is unwarranted since Chin
had
already
been
given
disability
compensation for loss of earning capacity.
An additional award for loss of earnings
will result in double recovery. In a catena
of cases, the Court has consistently ruled
that disability should not be understood

more on its medical significance but on
the loss of earning capacity. Permanent
total disability means disablement of an
employee to earn wages in the same kind
of work, or work of similar nature that he
was trained for or accustomed to perform,
or any kind of work which a person of his
mentality and attainment could do.
Disability, therefore, is not synonymous
with sickness or illness. What is
compensated is ones incapacity to work
resulting in the impairment of his earning
capacity.
Moreover, the award for loss of earning
lacks basis since the Philippine Overseas
Employment Agency (POEA) Standard
Contract of Employment (POEA SCE), the
governing law between the parties, does
not provide for such a grant. What Section
20, paragraph (G) of the POEA SCE
provides is that payment for injury,
illness, incapacity, disability, or death of
the seafarer covers all claims arising from
or in relation with or in the course of the
seafarers employment, including but not
limited to damages arising from the
contract, tort, fault or negligence under
the laws of the Philippines or any other
country.
The
permanent
disability
compensation
of
US$60,000
clearly
amounts to reasonable compensation for
the injuries and loss of earning capacity of
the seafarer.
G.R. No. 207983. April 7, 2014 Wenphil
Corporation Vs. Almer R. Abing and
Anabelle M. Tuazon
An order of reinstatement is
immediately executory even
pending appeal. The employer
has the obligation to reinstate
and pay the wages of the
dismissed employee during the
period of appeal until reversal
by the higher court.
Under Article 223 of the Labor
Code, the decision of the Labor
Arbiter reinstating a dismissed
or separated employee, insofar
as the reinstatement aspect is
concerned, shall immediately
be executory, even pending

3434
35

appeal. The employee shall either
be admitted back to work under
the same terms and conditions
prevailing prior to his dismissal or
separation, or at the option of the
employer, merely reinstated in the
payroll. The posting of a bond by
the employer shall not stay the
execution for reinstatement.
Since
the
decision
is
immediately
executory, it is the duty of the employer
to comply with the order of reinstatement,
which can be done either actually or
through
payroll
reinstatement.
As
provided under Article 223 of the Labor
Code, this immediately executory nature
of an order of reinstatement is not
affected by the existence of an ongoing
appeal. The employer has the duty to
reinstate the employee in the interim
period until a reversal is decreed by a
higher court or tribunal.
In the case of payroll reinstatement, even
if the employers appeal turns the tide in
its favor, the reinstated employee has no
duty to return or reimburse the salary he
received during the period that the lower
court or tribunals governing decision was
for the employees illegal dismissal.
Otherwise, the situation would run counter
to the immediately executory nature of an
order of reinstatement.
We see the situation discussed above to
be present in the case before us as
Wenphil observed the mandate of Article
223 to immediately comply with the order
of reinstatement by the LA. On October
29, 2001, while Wenphils appeal with the
NLRC was pending, it entered into a
compromise
agreement
with
the
respondents. In this agreement, Wenphil
committed to reinstate the respondents in
its payroll. However, the commitment
came with a condition: Wenphil stipulated
that its obligation to pay the wages due to
the respondents would cease if the
decision of the LA would be modified,
amended or reversed by the NLRC.
Thus, when the NLRC rendered its

decision on the appeal affirming the LAs
finding that the respondents were illegally
dismissed, but modifying the award of
reinstatement to payment of separation
pay,
Wenphil
stopped
paying
the
respondents wages.
The reinstatement salaries due to the
respondents were, by their nature,
payment of unworked backwages. These
were salaries due to the respondents
because they had been prevented from
working despite the LA and the NLRC
findings that they had been illegally
dismissed.
We point out that reinstatement and
backwages are two separate reliefs
available
to
an
illegally
dismissed
employee. The normal consequences of a
finding that an employee has been illegally
dismissed are: first, that the employee
becomes entitled to reinstatement to his
former position without loss of seniority
rights; and second, the payment of
backwages covers the period running from
his illegal dismissal up to his actual
reinstatement. These two reliefs are not
inconsistent with one another and the
labor
arbiter
can
award
both
simultaneously.
Moreover, the relief of separation pay
may
be
granted
in
lieu
of
reinstatement but it cannot be a
substitute
for
the
payment
of
backwages.
In
instances
where
reinstatement is no longer feasible
because of strained relations between the
employee and the employer, separation
pay should be granted. In effect, an
illegally dismissed employee should be
entitled to either reinstatement if viable,
or separation pay if reinstatement is no
longer be viable, plus backwages in
either instance.
Apparently, when the NLRC changed the
LAs decision (specifically, the order to
award
separation
pay
in
lieu
of
reinstatement), Wenphil read this to mean

3535
36

to be the modification envisioned in the
compromise agreement, Wenphil likewise
effectively concluded that separation pay
and backwages are the same or are
interchangeable reliefs. This conclusion
can be deduced from Wenphils insistence
not to pay the respondents remaining
backwages under its erroneous reasoning
that this was the effect of the NLRCs
order to Wenphil to pay separation pay in
lieu of reinstatement.
We emphasize that the basis for the
payment of backwages is different from
that of the award of separation pay.
Separation pay is granted where
reinstatement is no longer advisable
employee and the employer. Backwages
represent compensation that should have
been earned but were not collected
because of the unjust dismissal. The basis
for computing separation pay is usually
the length of the employees past service,
while that for backwages is the actual
period when the employee was unlawfully
prevented from working.
Had Wenphil really wanted to put a stop
to the running of the period for the
payment of the respondents backwages,
then it should have immediately complied
with the NLRCs order to award the
employees their separation pay in lieu of
reinstatement. This action would have
immediately
severed
the
employeremployee relationship. However, the
records are bereft of any evidence that
Wenphil actually paid the respondents
separation pay. Thus, the employeremployee relationship between Wenphil
and the respondents never ceased and the
employment status remained pending and
uncertain until the CA actually rendered
its decision that the respondents had not
been illegally dismissed. In the context of
the parties agreement, it was only at this
point that the payment of backwages
should have stopped.
A compromise agreement should not
be contrary to law, morals, good
customs and public policy.

In the present case, the parties
compromise agreement simply provided
that Wenphils obligation to pay the
respondents backwages shall end the
moment the NLRC modifies, amends or
reverses the illegal dismissal decision of
LA Bartolabac. On its face, there is
nothing invalid with such stipulation.
Indeed, had the NLRC reversed the LA,
the obligation to pay backwages would
have stopped. The NLRC, however, did not
decree a reversal of the finding of illegal
dismissal. In fact, it affirmed the illegal
dismissal
conclusion,
confining itself
merely
to
a
modification
of
the
consequences of the illegal dismissal
from reinstatement to the payment of
separation pay.
This modification of course we cannot
accept; the option under the legal policy is
solely limited to a ruling that the
respondents had not been illegally
dismissed. Otherwise, we would be
violating the Labor Codes policy entitling
illegally dismissed employees to their right
to backwages even during the period of
appeal.
This ruling embodies a principle and policy
of the law that cannot be watered down
by any lesser agreement except perhaps
when backwages are already earned
entitlements that the employee chooses to
surrender for a valuable consideration
(and even then, the consideration must at
least be equitable). This legal policy
emphasizes, too, the rule that separation
pay cannot be a substitute for backwages
but only for reinstatement. The award of
separation pay is not inconsistent with the
payment of backwages. Thus, until a
higher courts or tribunals reversal of the
finding that an employee
had been illegally dismissed, the employee
would
be
entitled
to
receive
his
reinstatement salary or backwages during
the period of appeal until such reversal.
This is in line with the Labor Codes policy

3636
37

that an order of reinstatement, which can

either be actual or through the payroll, is
immediately executory and is not affected
by the period of appeal.
G.R. No. 191154. April 7, 2014 SPI
Technologies, Inc., et al. Vs. Victoria K.
Mapua
he Court remains steadfast on its
stand that the determination of the
continuing necessity of a particular
officer or position in a business
corporation is a management
prerogative, and the courts will not
interfere
unless arbitrary or malicious action
on the part of management is
shown.
Indeed, an employer has no legal
obligation to keep more employees than
are necessary for the operation of its
business.
we
find
our
intrusion
indispensable, to look into matters which
we would otherwise consider as an
exercise of management prerogative.
"Management prerogative" are not magic
words uttered by an employer to bring
him to a realm where our labor laws
cannot reach.
Mapua was dismissed from employment
supposedly due to redundancy. However,
she contended that her position as
Corporate Development Manager is not
redundant. She cited that SPI was in fact
actively looking for her replacement after
she was terminated. Furthermore, SPI
violated her right to procedural due
process when her termination was made
effective on the same day she was notified
of it.
for
a
valid
implementation
of
a
redundancy program, the employer must
comply with the following requisites: (1)
written notice served on both the
employee and the DOLE at least one
month prior to the intended date of
termination; (2) payment of separation
pay equivalent to at least one month pay
or at least one month pay for every year
of service, whichever is higher; (3) good
faith in abolishing the redundant position;

and (4) fair and reasonable criteria in
ascertaining what positions are to be
declared redundant.
Anent the first requirement which
is
employee and the DOLE at least one

month prior to the intended date of
termination, SPI had discharged the
burden of proving that it submitted a
notice to the DOLE on March 21, 2007,
stating therein that the effective date of
termination is on April 21, 2007. It is,
however, quite peculiar that two kinds of
notices were served to Mapua. One
termination letter stated that its date of
effectivity is on the same day, March 21,
2007. The other termination letter sent
through mail to Mapuas residence stated
that the effective date of her termination
is on April 21, 2007.
Moving on to the issue of the validity of
redundancy program, SPI
asserted that an employer has the
unbridled right to conduct its own
business in order to achieve the results it
desires. In AMA Computer College, Inc. v.
Garcia, et al., the Court held that the
presentation of the new table of the
organization and the certification of the
Human Resources Supervisor that the
positions occupied by the retrenched
employees are redundant are inadequate
as evidence to support the colleges
redundancy program.
Furthermore, on the assumption that the
functions of a Marketing Communications
Manager are different from that of a
Corporate Development Manager, it was
not even discussed why Mapua was not
considered for the position. While SPI had
no legal duty to hire Mapua as a Marketing
Communications Manager, it could have
clarified why she is not qualified for that
position. In fact, Mapua brought up the
subject of transfer to Villanueva and Raina

3737
38

several times prior to her termination but
to no avail. There was even no showing
that Mapua could not perform the duties
of a Marketing Communications Manager.
LA but with the regular courts, the remedy

being civil in nature arising from a
contractual
obligation, following this
Courts ruling in several cases.
Change in the job title is not synonymous

to a change in the functions. A position
cannot be abolished by a mere change of
job title. In cases of redundancy, the
management should adduce evidence and
prove that a position which was created in
place of a previous one should pertain to
functions which are dissimilar and
incongruous to the abolished office.
The Court sustains the CAs award of

moral and exemplary damages. Award of
moral and exemplary damages for an
illegally dismissed employee is proper
where the employee had been harassed
and
arbitrarily
terminated
by
the
employer. Moral damages may be
awarded to compensate one for diverse
injuries
such
as
mental
anguish,
besmirched reputation, wounded feelings,
and social humiliation occasioned by the
employers unreasonable dismissal of the
employee. The Court has consistently
accorded the working class a right to
recover damages for unjust dismissals
tainted with bad faith; where the motive
of the employer in dismissing the
employee is far from noble. The award of
such damages is based not on the Labor
Code but on Article 220 of the Civil Code.
G.R. No. 195227. April 21, 2014Froilan M.
Bergonio, Jr., et al. Vs. South East Asian
Arilines and Irene Cornier
Nature of the reinstatement
aspect of the LAs decision on a
finding of illegal dismissal
On the issue of the solidary obligation of

the corporate officers impleaded vis-a-vis
the corporation for Mapuas illegal
dismissal, [i]t is hornbook principle that
personal liability of corporate directors,
trustees or officers attaches only when:
(a) they assent to a patently unlawful act
of the corporation, or when they are guilty
of bad faith or gross negligence in
directing its affairs, or when there is a
conflict of interest resulting in damages to
the corporation, its stockholders or other
persons; (b) they consent to the issuance
of watered down stocks or when, having
knowledge of such issuance, do not
forthwith file with the corporate secretary
their written objection; (c) they agree to
hold themselves personally and solidarily
liable with the corporation; or (d) they are
made by specific provision of law
personally answerable for their corporate
action.
While the Court finds Mapuas averments
against Villanueva, Nolan, Maquera and
Raina as detailed and exhaustive, the
Court takes notice that these are mostly
suppositions on her part. Thus, the Court
cannot apply the above-enumerated
exceptions when a corporate officer
becomes
personally
liable
for
the
obligation of a corporation to this case.
With respect to the vehicle under the
company car plan which the LA awarded
to Mapua, the Court rules that the subject
matter is not within the jurisdiction of the
Under paragraph 3, Article 223 of the

Labor Code, the LAs order for the
reinstatement of an employee found
illegally
dismissed
is
immediately
executory even during pendency of the
employers appeal from the decision.
Under this provision, the employer must
reinstate the employee either by
physically admitting him under the
conditions prevailing prior to his dismissal,
and paying his wages; or, at the
employers option, merely reinstating the
employee in the payroll until the decision
is reversed by the higher court. Failure of
the employer to comply with the
reinstatement order, by exercising
the options in the alternative, renders
him liable to pay the employees
salaries.

3838
39

Otherwise stated, a dismissed employee
whose case was favorably decided by the
LA is entitled to receive wages
pending appeal upon reinstatement,
which reinstatement is immediately
executory. Unless the appellate tribunal
issues a restraining order, the LA is duty
bound to implement the order of
reinstatement and the employer has no
option but to comply with it.
Moreover, and equally worth emphasizing,
is that an order of reinstatement
issued by the LA is self-executory, i.e.,
the dismissed employee need not even
apply for and the LA need not even issue a
writ of execution to trigger the employers
duty to reinstate the dismissed employee.
The employer is obliged to pay the
dismissed employees salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar
an employee from receiving the
accrued wages
As we amply discussed above, an
employer is obliged to immediately
reinstate the employee upon the LAs
finding of illegal dismissal; if the employer
fails, it is liable to pay the salary of the
dismissed employee. Of course, it is not
always the case that the LAs finding of
illegal dismissal is, on appeal by the
employer, upheld by the appellate court.
After the LAs decision is reversed by a
higher tribunal, the employers duty to
reinstate the dismissed employee is
effectively terminated. This means that an
employer is no longer obliged to keep the
employee in the actual service or in the
payroll. The employee, in turn, is not
required to return the wages that he had
received prior to the reversal of the LAs
decision.
The reversal by a higher tribunal of the
LAs
finding
(of
illegal
dismissal),
notwithstanding,
an
employer,
who,
despite the LAs order of reinstatement,
did not reinstate the employee during the
pendency of the appeal up to the reversal

by a higher tribunal may still be held liable
for the accrued wages of the employee,
i.e., the unpaid salary accruing up to the
time the higher tribunal reverses the
decision.
The rule, therefore, is that an employee
may still recover the accrued wages up to
and despite the reversal by the higher
tribunal. This entitlement of the employee
to the accrued wages proceeds from the
immediate and self-executory nature of
the reinstatement aspect of the LAs
decision.
By way of exception to the above rule, an
employee may be barred from collecting
the accrued wages if shown that the delay
in enforcing the reinstatement pending
appeal was without fault on the part of the
employer. To determine whether an
employee is thus barred, two tests must
be satisfied: (1) actual delay or the fact
that the order of reinstatement pending
appeal was not executed prior to its
reversal; and (2) the delay must not be
due to the employers unjustified act
or omission. Note that under the second
test, the delay must be without the
employers fault. If the delay is due to
the employers unjustified refusal, the
employer may still be required to pay
the salaries notwithstanding the reversal
of the LAs decision.
G.R. No. 181719. April 21, 2014Eugene S.
Arabit, et al. Vs. Jerdine Pacific Finance,
Inc.
Redundancy in contrast with
retrenchment
We cannot accept Jardines shallow
understanding
of
the
concepts
of
redundancy
and
retrenchment
in
determining the validity of the severance
of an employer-employee relationship.
The fact that they are found together in
just one provision does not necessarily
give rise to the conclusion that the
difference between them is immaterial.
This Court has already ruled before that
retrenchment and redundancy are

3939
40

two different concepts; they are not
synonymous; thus, they should not be
used interchangeably.
Redundancy exists where the services
of an employee are in excess of what
is reasonably demanded by the actual
requirements of the enterprise. A
position is redundant where it is
superfluous, and superfluity of a position
or positions may be the outcome of a
number of factors, such as over hiring of
workers, decreased volume of business, or
dropping of a particular product line or
service activity previously manufactured
or undertaken by the enterprise.
Retrenchment, on the other hand, is
used interchangeably with the term
lay-off. It is the termination of
employment initiated by the employer
through no fault of the employees and
without prejudice to the latter, resorted
to by management during periods of
business
recession,
industrial
depression, or seasonal fluctuations,
or during lulls occasioned by lack of
orders,
shortage
of
materials,
conversion of the plant for a new
production
program
or
the
introduction of new methods or more
efficient machinery, or of automation.
Simply put, it is an act of the employer of
dismissing employees because of losses in
the operation of a business, lack of work,
and considerable reduction on the volume
of his business, a right consistently
recognized and affirmed by this Court.
These rulings appropriately clarify that
redundancy does not need to be always
triggered by a decline in the business.
Primarily, employers resort to redundancy
when the functions of an employee have
already become superfluous or in excess
of what the business requires. Thus, even
if a business is doing well, an employer
can still validly dismiss an employee from
the service due to redundancy if that
employees position has already become in
excess of what the employers enterprise
requires.
From this perspective, it is illogical for
Jardine to terminate the petitioners
employment and replace them with
contractual employees. The replacement
effectively belies Jardines claim that the
petitioners positions were abolished due
to superfluity. Redundancy could have
been justified if the functions of the
petitioners were transferred to other
existing employees of the company.
To dismiss the petitioners and hire new
contractual employees as replacements
necessarily give rise to the sound
conclusion that the petitioners services
have not really become in excess of what
Jardines business requires. To replace the
petitioners
who
were
all
regular
employees with contractual ones would
amount to a violation of their right to
security of tenure, and therefore illegal.
Guidelines
redundancy
We recognize
prerogative to
services as
sustainable,
terminable.
in
implementing
that management has the

characterize an employees
no longer necessary or
and
therefore
properly
Jardines decision to hire contractual

employees
as
replacements
is
a
management
prerogative
which
the
company has the right to undertake to
implement a more economic and efficient
operation of its business.
The
employers
exercise
of
its
management prerogative, however, is not
an unbridled right that cannot be
subjected to this Courts scrutiny. The
exercise of management prerogative is
subject to the caveat that it should not
performed in violation of any law and that
it is not tainted by any arbitrary or
malicious motive on the part of the
employer.
In Golden Thread Knitting Industries, Inc.

4040
41

v. NLRC, this Court laid down the principle
that the employer must use fair and
reasonable criteria in the selection of
employees who will be dismissed from
employment due to redundancy. Such fair
and reasonable criteria may include the
following, but are not limited to: (a) less
preferred
status
(e.g.
temporary
employee); (b) efficiency; and (c)
seniority. The presence of these criteria
used by the employer shows good faith on
its part and is evidence that the
implementation
of
redundancy
was
painstakingly done by the employer in
order to properly justify the termination
from the service of its employees.
As the petitioners pointed out, the records
are bereft of indications that Jardine
employed clear criteria when it decided
who among its employees, who held
similar positions as the petitioners, should
be removed from their posts because of
redundancy. Jardine never bothered to
explain how and why the petitioners were
the ones dismissed. Jardines acts became
more suspect given that the petitioners
were all union officers and some of them
were panel members in the scheduled CBA
negotiations between Jardine and the
Union.
Aside from the guidelines for the selection
of employees who will be terminated, the
Court, in Asian Alcohol Corp. v. NLRC, also
laid down guidelines for redundancy to be
characterized as validly undertaken by the
employer. The Court ruled:
For the implementation of a redundancy
program to be valid, the employer must
comply with the following requisites: (1)
employees and the Department of Labor
and Employment at least one month prior
to the intended date of retrenchment; (2)
payment of separation pay equivalent to
at least one month pay or at least one
month pay for every year of service,
whichever is higher; (3) good faith in
abolishing the redundant positions;
and (4) fair and reasonable criteria in
ascertaining what positions are to be

declared redundant and accordingly
abolished.
Under the circumstances of the case,
Jardines move was thus illegal. We affirm
the LAs ruling that fair play and good
faith require that where one employee will
be chosen over the others, the employer
must be able to clearly explain the merit
of the choice it has taken.
G.R. No. 188190. April 21, 2014 Barko
International, Inc., et al. Vs. Eberly S.
Alcayno
In the instant case, the respondent went
through the PEME. While there was a
notation of pulmonary fibrosis right lower
lung with calcified benign nodules cleared
by the pulmonary specialist in said
report, he was declared fit for sea duties.
The respondent was able to board the
vessel on December 1, 2005. On February
8, 2006, he was repatriated to Manila on
medical grounds. He was diagnosed to be
suffering mainly from tuberculous adenitis
and was treated thereof. The respondent
asserted that he contracted the illness
while
on
board
the
vessel.
Notwithstanding the medical treatment he
underwent, he was unable to go back to
his sea duties for a period of more than
one hundred twenty (120) days.
The Court finds merit in the respondents
contention
regarding
the
suspicious
gesture of the petitioners in having a
medical certification declaring him as fit
to work despite apparent clear knowledge
that he has been subjected to a long
period of medical treatment. Both the
company-designated physician and the
respondents private physician had similar
findings that the respondent is suffering
from tuberculous adenitis which is
occupational
in
character
and
compensable
under
the
attendant
circumstances.
Indeed, the fact that a certification
declaring the respondent as fit to work
contrary to a prior finding of tuberculosis
can be considered as a ploy to circumvent

4141
42

the
law
intended
to
defeat
the
respondents right to be compensated for
a disability which the law considers as
permanent and total.
Permanent
total
disability
means
disablement of an employee to earn
wages in the same kind of work or work of
a similar nature that he was trained for or
accustomed to perform, or any kind of
work which a person of his mentality and
attainment can do.
Again, what is important is that he
was unable to perform his customary
work for more than 120 days which
constitutes permanent total disability,
and not the actual injury itself.
Undoubtedly, the illness of the respondent
which incapacitated him to work more
than 120 days after repatriation is
considered as work-related which entitles
him to disability benefits.
This Court, moreover, agrees with the CA
regarding the applicability of the doctrine
in the case of Crystal Shipping that a
seafarer's continuous inability to work due
to a work-related illness for a period of
more than 120 days need not be qualified
by a declaration of fitness to work by a
company- designated physician for it to be
considered as a permanent total disability
which is compensable. It would, thus, be
illogical to apply the ruling laid down in
Vergara which was promulgated on
October 6, 2008, or more than two years
from the time the complaint was filed. The
observance
of
the
principle
of
prospectivity dictates that Vergara should
not operate to strip the respondent of his
cause of action for total and permanent
disability that accrued since the time ofhis
inability to perform his customary work.
G.R. No. 192571. April 22, 2014 Abbott
Laboratories, Phils., Cecille A. Terrible,
Edwin D. Feist, Maria Olivia T. Yabut-Misa,
Teresita C. Bernardo, and Allan G.
Alamazar Vs. Pearlie Ann F. Alcaraz
Dissenting OpinionJ. Brion
B. Standards for regularization;
conceptual underpinnings.
Alcaraz posits that, contrary to the

Courts
Decision,
ones
job
description cannot by and of itself
be treated as a standard for
regularization
as
a
standard
denotes a measure of quantity or
quality. By way of example, Alcaraz
cites the case of a probationary
salesperson and asks how does
such employee achieve regular
status if he does not know how
much he needs to sell to reach the
same.
The argument is untenable.
First off, the Court must correct
Alcarazs mistaken notion: it is not
the probationary employees job
description
but
the
adequate
performance of his duties and
responsibilities which constitutes
the inherent and implied standard
for regularization. To echo the
fundamental point of the Decision,
if the probationary employee had
been fully apprised by his employer
of these duties and responsibilities,
then basic knowledge and common
sense dictate that
he must
adequately perform the same, else
he fails to pass the probationary
trial and may therefore be subject
to termination.8
The determination of adequate
performance is not, in all cases,
measurable
by
quantitative
specification, such as that of a
sales quota in Alcarazs example. It
is also hinged on the qualitative
assessment of the employees
work; by its nature, this largely
rests on the reasonable exercise of
the
employers
management
prerogative.
While
in
some
instances the standards used in
measuring the quality of work may
be conveyed such as workers
who construct tangible products
which follow particular metrics, not
all
standards
of
quality

4242
43

measurement may be reducible to
hard
figures
or
are
readily
articulable
in
specific
pre
engagement descriptions. A good
example would be the case of
probationary
employees
whose
tasks involve the application of
discretion and intellect, such as
to name a few lawyers, artists,
and journalists. In these kinds of
occupation, the best that the
employer can do at the time of
engagement is to inform the
probationary employee of his
duties and responsibilities and to
orient him on how to properly
proceed with the same. The
employer cannot bear out in
exacting detail at the beginning of
the engagement what he deems as
quality work especially since the
probationary employee has yet to
submit the required output. In the
ultimate
analysis,
the
communication
of
performance
standards should be perceived
within the context of the nature of
the probationary employees duties
and responsibilities.
The same logic applies to a

probationary managerial employee
who is tasked to supervise a
particular department, as Alcaraz
in this case. It is hardly possible for
the employer, at the time of the
employees engagement, to map
into technical indicators, or convey
in precise detail the quality
standards by which the latter
should effectively manage the
department. Factors which gauge
the ability of the managerial
employee to either deal with his
subordinates (e.g., how to spur
their performance, or command
respect and obedience from them),
or to organize office policies, are
hardly conveyable at the outset of
the
engagement
since
the
employee has yet to be immersed
into the work itself. Given that a
managerial
role
essentially
connotes an exercise of discretion,

the
quality
of
effective
management
can
only
be
determined through subsequent
assessment. While at the time of
engagement, reason dictates that
the employer can only inform the
probationary managerial employee
of his duties and responsibilities as
such and provide the allowable
parameters for the same. Verily, as
stated
in
the
Decision,
the
adequate performance of such
duties and responsibilities is, by
and of itself, an implied standard of
regularization.
In this relation, it bears mentioning

that the performance standard
contemplated by law should not, in
all cases, be contained in a
specialized system of feedbacks or
evaluation. The Court takes judicial
notice of the fact that not all
employers,
such
as
simple
businesses
or
smallscale
enterprises, have a sophisticated
form
of
human
resource
management, so much so that the
adoption of technical indicators as
utilized through comment cards
or appraisal tools should not be
treated as a prerequisite for every
case of probationary engagement.
In fact, even if a system of such
kind
is
employed
and
the
procedures for its implementation
are not followed, once an employer
determines that the probationary
employee fails to meet the
standards
required
for
his
regularization, the former is not
precluded from dismissing the
latter. The rule is that when a valid
cause for termination exists, the
procedural infirmity attending the
termination only warrants the
payment of nominal damages. This
was the principle laid down in the
landmark cases of Agabon v.
NLRC9 (Agabon) and Jaka Food
Processing Corporation v. Pacot10
(Jaka). In the assailed Decision,

4343
44

the Court actually extended the

application of the Agabon and Jaka
rulings to breaches of company
procedure, notwithstanding the
employers compliance with the
statutory requirements under the
Labor Code.11 Hence, although
Abbott did not comply with its own
termination procedure, its non
compliance thereof would not
detract from the finding that there
subsists a valid cause to terminate
Alcarazs
employment.
Abbott,
however, was penalized for its
contractual breach and thereby
ordered to pay nominal damages.
G.R. No. 198640. April 23, 2014Carlo F.
Sunga Vs. Virjen Shipping Corporation,
Nissho Odyssey Ship Management Pte.,
Ltd. and/or Capt. Angel Zambrano
ISSUE: WHETHER THE INCIDENT IN MT
SUNWAY WAS AN ACCIDENT
Sungas injury was the result of the
accidental slippage in the handling of the
200kilogram globe valve which triggered
Sungas back pain;18 the weight of the
globe valve, coupled with the abruptness
of the fall, explain why the injury was so
severe
as
to
render
Sunga
immobile.19 While indeed Sunga had not
explained in the request for repatriation
the proximate cause of the injury, there
was enough circumstantial evidence to
substantiate the claim.
In the present case, Sunga did not incur
the injury while solely performing his
regular duties; an intervening event
transpired which brought upon the
injury. To repeat, the two other oilers
who were supposed to help carry the
weight of the 200kilogram globe valve
lost their grasp of the globe valve. As a
result, Sungas back snapped when the
entire weight of the item fell upon
him. The sheer weight of the item is
designed not to be carried by just one
person, but as was observed, meant to be
undertaken
by
several
men
and
expectedly greatly overwhelmed the
physical limits of an average person.
Notably,
this
incident
cannot
be
considered as foreseeable, nor can it be

reasonably anticipated. Sungas duty as a
fitter involved changing the valve, not to
routinely carry a 200kilogram globe
valve singlehandedly. The loss of his
fellow workers group was also unforeseen
in so far as Sunga was concerned.
In Jarco Marketing Corporation, et al.,
v. Court of Appeals, we ruled that an
accident pertains to an unforeseen event
in which no fault or negligence attaches to
the defendant.
It is a fortuitous
circumstance, event or happening; an
event happening without any human
agency, or if happening wholly or partly
through human agency, an event which
under the circumstances is unusual or
unexpected by the person to whom it
happens.
In other words, as the NLRC found,
Sungas disability benefits should fall
within the coverage of the parties CBA,
which
provides:chanRoblesvirtualLawlibrary
Article 28: Disability
28.1
A
seafarer
who
suffers
permanent disability as a result of an
accident whilst in the employment of the
Company regardless of fault, including
accidents occurring while traveling to or
from the ship, and whose ability to work
as a seafarer is reduced as a result
thereof,
but
excluding
permanent
disability due to willful acts, shall in
addition to sick pay, be entitled to
compensation according to the provisions
of this Agreement. (emphasis ours)30
G.R. No. 181490. April 23, 2014 Mirant
(Philippines) Corporation, et al. Vs.
Joselito A. Caro
We agree with the disposition of
the appellate court that there was
illegal dismissal in the case at bar.
While
the
adoption
and
enforcement
by
petitioner
corporation of its AntiDrugs Policy
is recognized as a valid exercise of
its management prerogative as an
employer, such exercise is not

4444
45

absolute
and
unbridled. Managerial prerogatives
are subject to limitations provided
by
law,
collective
bargaining
agreements, and the general
principles
of
fair
play
and
justice.46 In the exercise of its
management
prerogative,
an
employer must therefore ensure
that
the policies,
rules
and
regulations
on
workrelated
activities of the employees must
always be fair and reasonable and
the corresponding penalties, when
prescribed, commensurate to the
offense involved and to the degree
of the infraction.47 The AntiDrugs
Policy of Mirant fell short of these
requirements.
Petitioner
corporations
subject
AntiDrugs Policy fell short of being
fair and reasonable.
First. The policy was not clear on

what
constitutes
unjustified
refusal when the subject drug
policy
prescribed
that
an
employees unjustified refusal to
submit to a random drug test shall
be punishable by the penalty of
termination
for
the
first
offense. To be sure, the term
unjustified refusal could not
possibly cover all forms of refusal
as the employees resistance, to be
punishable by termination, must be
unjustified. To the mind of the
Court, it is on this area where
petitioner corporation had fallen
short of making it clear to its
employees as well as to
management as to what types of
acts would fall under the purview
of unjustified refusal.
It is not a mere jurisprudential principle,
but an enshrined provision of law, that all
doubts shall be resolved in favor of
labor. Thus, in Article 4 of the Labor
Code, as amended, [a]ll doubts in the
implementation and interpretation of the
provisions of [the Labor] Code, including
its implementing rules and regulations,
shall be resolved in favor of labor. In

Article 1702 of the New Civil Code, a
similar provision states that [i]n case of
doubt, all labor legislation and all labor
contracts shall be construed in favor of the
safety
and
decent
living
for
the
laborer. Applying these provisions of law
to the circumstances in the case at bar, it
is not fair for this Court to allow an
ambiguous policy to prejudice the rights of
an employee against illegal dismissal. To
hold otherwise and sustain the stance of
petitioner corporation would be to adopt
an interpretation that goes against the
very grain of labor protection in this
jurisdiction. As correctly stated by the
Labor Arbiter, when a conflicting interest
of labor and capital are weighed on the
scales of social justice, the heavier
influence of the latter must be counter
balanced
by
the
sympathy
and
compassion the law must accord the
underprivileged worker.49
Second.
The
penalty
of
termination imposed by petitioner
corporation upon respondent fell
short
of
being
reasonable. Company policies and
regulations are generally valid and
binding between the employer and
the employee unless shown to be
grossly oppressive or contrary to
law50 as in the case at bar.
To be sure, the unreasonableness
of the penalty of termination as
imposed in this case is further
highlighted by a fact admitted by
petitioner corporation itself: that
for the tenyear period that
respondent had been employed by
petitioner corporation, he did not
have any record of a violation of its
company policies.
Finally, the petition avers that petitioner
Bautista should not be held personally
liable for respondents dismissal as he
acted in good faith and within the scope of
his official functions as then president of
petitioner corporation.
A corporation has a personality separate
and distinct from its officers and board of

4545
46

directors who may only be held personally

liable for damages if it is proven that they
acted with malice or bad faith in the
dismissal of an employee.57 Absent any
evidence on record that petitioner Bautista
acted maliciously or in bad faith in
effecting the termination of respondent,
plus the apparent lack of allegation in the
pleadings of respondent that petitioner
Bautista acted in such manner, the
doctrine of corporate fiction dictates that
only petitioner corporation should be held
liable for the illegal
dismissal
of
respondent.
APQ Shipmanagement Co., Ltd., and APQ
Crew Management USA, Inc. Vs.
Angelito L. Caseas G.R. No. 197303.
June 4, 2014
The pivotal issue for resolution is
whether or not the employment
contract of Caseas was extended
with the consent of APQ/Crew
Management.
The Court rules in the affirmative.

APQs primary argument revolves around
the fact of expiration of Caseas
employment contract, which it claims was
not extended as it was without its
consent. While the contract stated that
any extension must be made by mutual
consent of the parties, it, however,
incorporated Department Order (DO) No.
4 and Memorandum Circular No. 09, both
series of 2000, which provided for the
Standard Terms and Conditions Governing
the Employment of Filipino Seafarers on
Board Ocean Going Vessels.
It is to be observed that both provisions
require the seafarer to arrive at the point
of hire as it signifies the completion of the
employment contract, and not merely its
expiration.
Similarly,
a
seafarers
employment contract is terminated even
before the contract expires as soon as he
arrives at the point of hire and signs off
for medical reasons, due to shipwreck,
voluntary resignation or for other just
causes. In a nutshell, there are three (3)
requirements necessary for the complete
termination of the employment contract:
1] termination due to expiration or other
reasons/causes; 2] signing off from the

vessel; and 3] arrival at the point of hire.
In this case, there was no clear showing
that Caseas signed off from the vessel
upon the expiration of his employment
contract, which was in February or April
2005. He did not arrive either in Manila,
his point of hire, because he was still on
board the vessel MV Haitien Pride on the
supposed date of expiration of his
contract. It was only on August 14, 2006
that he signed off21 from MV Haitien Pride
and arrived in Manila on August 30, 2006.
In Interorient Maritime Enterprises, Inc. v.
NLRC,22 the Court held that the obligations
and liabilities of the local agency and its
foreign principal do not end upon the
expiration of the contracted period as they
were duty bound to repatriate the
seaman to the point of hire to
effectively terminate the contract of
employment.23cralaw
Meanwhile, Caseas claimed that his
transfer was due to the fact that MV
Perseverance could not leave port because
of incomplete documents for its operation.
This was not disputed. To the mind of the
Court, having incomplete documents for
the
vessels
operation
renders
it
unseaworthy. While seaworthiness is
commonly equated with the physical
aspect and condition of the vessel for
voyage as its ability to withstand the
rigors of the sea, it must not be forgotten
that a vessel should be armed with the
necessary documents required by the
maritime rules and regulations, both local
and international. It has been written that
vessel seaworthiness further extends to
cover the documents required to ensure
that the vessel can enter and leave ports
without problems.24cralawred
Accordingly, Caseas contract should
have been terminated and he should have
been repatriated to the Philippines
because a seafarer cannot be forced to
sail with an unseaworthy vessel, pursuant
to Section 24 of the POEA-SEC.25 There
was, however, no showing that his

4646
47

contract was terminated by reason of such
transfer. It is necessary to reiterate that
MV Haitien Pride appears to be manned
by, and accredited with, the same
principal/ agency. His joining the said
vessel could only mean that it was for the
purpose of completing his contract as the
transfer was made well within the period
of his employment contract on board MV
Perseverance.
As to his claim for medical and other
benefits, there is no dispute that the
symptoms of Caseas illness began to
manifest during the term of his
employment contract. The fact that the
manifestations of the illness only came
about in August 2006 will not bar a
conclusion that he contracted the ailment
while the contract was subsisting. The
overall state and condition that he was
exposed to over time was the very cause
of his illness. Thus, the CA was correct in
reinstating the NLRC resolution awarding
sickness allowance as well as disability
benefits in favor of Caseas.
In this case, Casenas immediately
reported to APQ for the required postemployment medical examination upon his
return to the Philippines. He was referred
to the company-designated physician, who
diagnosed him to be suffering from
Ischemic Heart Disease, which was a
manifestation of organ damage.33 Caseas
likewise
consulted
two
(2)
other
physicians who certified him to be
suffering from Essential Hypertension
aside from Ischemic Heart Disease.34 From
the time of Caseas diagnosis by the
company-designated physician, he was
under the state of temporary total
disability, which lasted for at least 120
days as provided by law. Such period
could be extended up to 240 days, if
further medical attention was required.
There was, however, no showing of any
justification to extend said period. As the
law requires, within 120 days from the
time he was diagnosed of his illness, the
company-designated physician must make
a declaration as to the fitness or unfitness
of Caseas As correctly observed by the
CA, however, the 120 day period lapsed

without such a declaration being made.35
Caseas is now deemed to be in a state of
permanent total disability and, thus,
clearly entitled to the total disability
benefits provided by law.
Sara Lee Philippines, Inc. Vs. Emilinda D.
Macatlang, et al./Aris Philippines, Inc.
Vs. Emilinda D. Macatlang, et al./Sara
Lee Corporation Vs. Emilinda D.
Macatlang, et al./Cesar C. Cruz Vs.
Emilinda D. Macatlang, et al./Fashion
Accessories Phils. Inc. Vs. Emilinda D.
Macatlang,
et
al./Emilinda
D.
Macatlang, et al. Vs. NLRC, et al.G.R.
No. 180147/G.R. No. 180148/G.R. No.
180149/G.R
.No.
180150/G.R.
No.
180319/G.R. No. 180685. June 4, 2014
The dilemma of the appeal bond in labor
cases is epochal, present whenever the
amount of monetary award becomes
debatably impedimental to the completion
of remedies. Such instances exaggerate
the ambivalence between rigidity and
liberality in the application of the
requirement that the bond must be equal
to the arbiters award. The rule of
reasonableness in the determination of
the compliant amount of the bond has
been formulated to allow the review of the
arbiters award.
However, that rule
seemingly becomes inadequate when the
award staggers belief but is, nonetheless,
supported by the premises of the
controversy. The enormity of the award
cannot prevent the settlement of the
dispute. The amount of award may vary
case-to-case.
But the law remains
constant.
The requisites for perfection of appeal as
embodied in Article 223, as amended, are:
1) payment of appeal fees; 2) filing of the
memorandum of appeal; and 3) payment
of
the
required
cash
or
surety
bond.47 These requisites must be satisfied
within 10 days from receipt of the decision
or order appealed from.
In sum, the NLRC may dispense of the
posting of the bond when the judgment
award is: (1) not stated or (2) based on a
patently erroneous computation. Sans

4747
48

these two (2) instances, the appellant is
generally required to post a bond to
perfect his appeal.
The Court adhered to a strict application
of Article 223 when appellants do not post
an appeal bond at all. By explicit provision
of law, an appeal is perfected only upon
the posting of a cash or surety bond. The
posting of the appeal bond within the
period provided by law is not merely
mandatory
but
jurisdictional.57
The
reason behind the imposition of this
requirement is enunciated in Viron
Garments Mfg. Co., Inc. v. NLRC,58
thus:chanRoblesvirtualLawlibrary
The requirement that the employer post a
cash or surety bond to perfect its/his
appeal is apparently intended to assure
the workers that if they prevail in the
case, they will receive the money
judgment in their favor upon the dismissal
of the employer's appeal. It was intended
to discourage employers from using an
appeal to delay, or even evade, their
obligation to satisfy their employees' just
and lawful claims.59
Clearly therefore, the Rules only allow the
filing of a motion to reduce bond on two
(2)
conditions:
(1) that
there
is
meritorious ground and (2) a bond in a
reasonable amount is posted. Compliance
with the two conditions stops the running
of the period to perfect an appeal provided
that they are complied within the 10-day
reglementary period.
In the case at bar, the motion to reduce
bond filed by the Corporations was
resolved by the NLRC in the affirmative
when it found that there are meritorious
grounds in reducing the bond such as the
huge
amount
of
the
award
and
impossibility of proceeding against the
Corporations properties which correspond
to a lower valuation. Also, the NLRC took
into consideration the fact of partial
payment of P419 Million. The NLRC found
the P4.5 Million bond posted by the
Corporations
as
insufficient,
hence
ordering them to post an additional P4.5
Million. Thus, P9 Million was held as the

amount of the bond as reduced.
The Court of Appeals found the amount of
the appeal bond adjudged by the NLRC as
measly and insufficient and raised it to P1
Billion. Notably, the computation of the
judgment award in this case includes
damages.
The NLRC Interim Rules on Appeals under
Republic Act No. 6715 specifically provides
that damages shall be excluded in the
determination of the appeal bond,
Thus, under the applicable rules, damages
and attorneys fees are excluded from the
computation of the monetary award to
determine the amount of the appeal
bond. We shall refer to these exclusions
as discretionaries, as distinguished from
the mandatories or those amounts fixed
in the decision to which the employee is
entitled upon application of the law on
wages.
These
mandatories
include
awards for backwages, holiday pay,
overtime pay, separation pay and 13th
month pay.
The judgment award in the instant case
amounted
to
an
immense
P3.45
Billion. The award is broken down as
follows: backwages, separation pay, moral
and exemplary damages. For purposes of
determining the reasonable amount of the
appeal bond, we reduce the total amount
of awards as follows:
The mandatories comprise the backwages
and separation pay. The daily wage rate
of an employee of Aris ranges from P170P200. The average years of service
ranges from 5-35 years. The backwages
were computed at 108 months or
reckoned from the time the employees
were actually terminated until the finality
of
the
Labor
Arbiters
Decision.
Approximately, the amount to be received
by an employee, exclusive of damages
and
attorneys
fees,
is
about
P600,000.00. The Labor Arbiter granted
moral damages amounting to P10,000.00,
and another P10,000.00 as exemplary

4848
49

damages. The total number of employees
receiving P20,000.00 each for damages is
5,984, bringing the total amount of
damages
to
P119,680,000.00.
This
amount should be deducted as well as the
P419 Million unpaid commitment plus the
P 9 Million already paid-up cash appeal
bond from the actual amount to determine
the amount on which to base the appeal
bond. Thus, the total amount is P2.9
Billion.
We sustain the Court of Appeals in so far
as it increases the amount of the required
appeal bond. But we deem it reasonable
to reduce the amount of the appeal bond
to P725 Million. This directive already
considers that the award if not illegal, is
extraordinarily huge and that no insurance
company would be willing to issue a bond
for such big money. The amount of P725
Million is approximately 25% of the basis
above calculated. It is a balancing of the
constitutional obligation of the state to
afford protection to labor which, specific to
this case, is assurance that in case of
affirmance of the award, recovery is not
negated; and on the other end of the
spectrum, the opportunity of the employer
to appeal.
By reducing the amount of the appeal

bond in this case, the employees would
still be assured of at least substantial
compensation, in case a judgment award
is affirmed.
On the other hand,
management will not be effectively denied
of its statutory privilege of appeal.
Takata
(Philippines)
Corporation
Vs.
Bureau
of
Labor
Relations
and
Samahang Lakas Manggagawa ng
Takata (SALAMAT) G.R. No. 196276.
June 4, 2014
Anent the first issue, petitioner
contends that respondent had filed
two separate appeals with two
different representations at two
different venues, in violation of the
rule on multiplicity of suits and
forum shopping, and instead of
dismissing
both
appeals,
the
appeal erroneously filed before the
Labor Secretary was the one held
validly filed, entertained and even

granted; that it is not within the
discretion of BLR to choose which
between the two appeals should be
entertained, as it is the fact of the
filing of the two appeals that is
being prohibited and not who
among the representatives therein
possessed the authority.
We are not persuaded.

We find no error committed by the
CA in finding that respondent
committed no forum shopping. As
the CA correctly concluded, to
wit:ChanRoblesVirtualawlibrary
It is undisputed that BMP Paralegal
Officer Domingo P. Mole was no
longer authorized to file an appeal
on behalf of union SALAMAT and
that BMP was duly informed that its
services was already terminated.
SALAMAT even submitted before
the BLR its Resolusyon Blg. 012009 terminating the services of
BMP
and
revoking
the
representation of Mr. Domingo
Mole in any of the pending cases
being handled by him on behalf of
the union. So, considering that
BMP Paralegal Officer Domingo P.
Mole was no longer authorized to
file an appeal when it filed the
Notice and Memorandum of Appeal
to DOLE Regional Office No. IV-A,
the same can no longer be treated
as an appeal filed by union
SALAMAT. Hence, there is no forum
shopping to speak of in this case as
only the Appeal Memorandum with
Formal Entry of Appearance filed
by Atty. Napoleon C. Banzuela, Jr.
and Atty. Jehn Louie W. Velandrez
is sanctioned by SALAMAT.18
Since Mole's appeal filed with the
BLR was not specifically authorized
by respondent, such appeal is
considered to have not been filed
at all. It has been held that if a
complaint is filed for and in behalf

4949
50

of the plaintiff who is not
authorized to do so, the complaint
is
not
deemed
filed.
An
unauthorized complaint does not
produce
any
legal
effect.19cralawred
Respondent through its authorized

representative filed its Appeal
Memorandum with Formal Entry of
Appearance before
the Labor
Secretary, and not with the BLR.
As the appeal emanated from the
petition
for
cancellation
of
certificate of registration filed with
the Regional Office, the decision
canceling
the
registration
is
appealable to the BLR, and not
with the Labor Secretary. However,
since the Labor Secretary motu
propio referred the appeal with the
BLR, the latter can now act on it.
Considering that Mole's appeal with
the BLR was not deemed filed,
respondents
appeal,
through
Banzuela and Associates, which the
Labor Secretary referred to the BLR
was the only existing appeal with
the BLR for resolution. There is,
therefore, no merit to petitioner's
claim that BLR chose the appeal of
Banzuela and Associates over
Mole's appeal.
As to the second issue, petitioner seeks
the
cancellation
of
respondent's
registration on grounds of fraud and
misrepresentation
bearing
on
the
minimum requirement of the law as to its
membership, considering the big disparity
in numbers, between the organizational
meeting and the list of members, and so
misleading the BLR that it obtained the
minimum required number of employees
for
purposes
of
organization
and
registration.
We find no merit in the arguments.
Art.
234
of
the
Labor
Code
provides:ChanRoblesVirtualawlibrary
ART. 234. Requirements of Registration. A federation, national union or industry or
trade union center or an independent

union shall acquire legal personality and
shall be entitled to the rights and
privileges granted by law to legitimate
labor organizations upon issuance of the
certificate of registration based on the
following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their
addresses, the principal address of the
labor organization, the minutes of the
organizational meetings and the list of the
workers
who
participated
in
such
meetings;
(c) In case the applicant is an independent
union, the names of all its members
comprising at least twenty percent (20%)
of all the employees in the bargaining unit
where it seeks to operate;
(d) If the applicant union has been in
existence for one or more years, copies of
its annual financial reports; and
(e) Four copies of the constitution and bylaws of the applicant union, minutes of its
adoption or ratification, and the list of the
members who participated in it."
And after the issuance of the certificate of
registration, the labor organization's
registration could be assailed directly
through
cancellation
of
registration
proceedings in accordance with Articles
238 and 239 of the Labor Code. And the
cancellation
of
union
certificate
of
registration and the grounds thereof are
as follows:ChanRoblesVirtualawlibrary
ART. 238. Cancellation of Registration. The certificate of registration of any
legitimate labor organization, whether
national or local, may be cancelled by the
Bureau, after due hearing, only on the
grounds specified in Article 239 hereof.
ART. 239. Grounds for Cancellation of
Union Registration. - The following may
constitute grounds for cancellation of
union registration:
(a) Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification, and the list of members who

5050
51

took part in the ratification;
(b) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
and the list of voters;
(c) Voluntary dissolution by the members.
Petitioner's
charge
that
respondent
committed misrepresentation and fraud in
securing its certificate of registration is a
serious charge and must be carefully
evaluated. Allegations thereof should be
compounded
with
supporting
circumstances and evidence.21 We find no
evidence on record to support petitioner's
accusation.
Petitioner's allegation of misrepresentation
and fraud is based on its claim that during
the organizational meeting on May 1,
2009, only 68 employees attended, while
respondent claimed that it has 119
members as shown in the document
denominated as Pangalan ng mga Kasapi
ng
Unyon;
hence,
respondent
misrepresented on the 20% requirement
of the law as to its membership.
We do not agree.
It does not appear in Article 234 (b) of the
Labor Code that the attendees in the
organizational meeting must comprise
20% of the employees in the bargaining
unit. In fact, even the Implementing Rules
and Regulations of the Labor Code does
not so provide. It is only under Article 234
(c) that requires the names of all its
members comprising at least twenty
percent (20%) of all the employees in the
bargaining unit where it seeks to operate.
Clearly, the 20% minimum requirement
pertains to the employees membership in
the union and not to the list of workers
who participated in the organizational
meeting. Indeed, Article 234 (b) and (c)
provide for separate requirements, which
must be submitted for the union's
registration, and which respondent did
submit. Here, the total number of
employees in the bargaining unit was 396,
and 20% of which was about 79.
Respondent
submitted
a
document
entitled Pangalan ng Mga Kasapi ng

Unyon showing the names of 119
employees as union members, thus
respondent sufficiently complied even
beyond the 20% minimum membership
requirement. Respondent also submitted
the attendance sheet of the organizational
meeting which contained the names and
signatures of the 68 union members who
attended the meeting. Considering that
there are 119 union members which are
more than 20% of all the employees of
the bargaining unit, and since the law
does not provide for the required number
of members to attend the organizational
meeting,
the
68
attendees
which
comprised at least the majority of the 119
union members would already constitute a
quorum for the meeting to proceed and to
validly ratify the Constitution and By-laws
of the union. There is, therefore, no basis
for petitioner to contend that grounds
exist for the cancellation of respondent's
union
registration.
For
fraud
and
misrepresentation to be grounds for
cancellation of union registration under
Article 239 of the Labor Code, the nature
of the fraud and misrepresentation must
be grave and compelling enough to vitiate
the consent of a majority of union
members.22cralawred
As to petitioner's argument that the total
number of its employees as of May 1,
2009 was 470, and not 396 as respondent
claimed, still the 117 union members
comprised
more
than
the
20%
membership requirement for respondent's
registration.
In Mariwasa Siam Ceramics v. Secretary
of the Department of Labor and
Employment,24
we
said:ChanRoblesVirtualawlibrary
For the purpose of de-certifying a union
such as respondent, it must be shown that
there
was
misrepresentation,
false
statement or fraud in connection with the
adoption or ratification of the constitution
and by-laws or amendments thereto, the
minutes of ratification; or, in connection
with the election of officers, the minutes
of the election of officers, the list of

5151
52

voters, or failure to submit these
documents together with the list of the
newly elected-appointed officers and their
postal addresses to the BLR.
The bare fact that two signatures
appeared twice on the list of those who
participated in the organizational meeting
would not, to our mind, provide a valid
reason to cancel respondents certificate
of registration. The cancellation of a
unions registration doubtless has an
impairing dimension on the right of labor
to self-organization. For fraud and
misrepresentation to be grounds for
cancellation of union registration under
the Labor Code, the nature of the fraud
and misrepresentation must be grave and
compelling enough to vitiate the consent
of a majority of union members.
In this case, we agree with the BLR and

the CA that respondent could not have
possibly committed misrepresentation,
fraud, or false statements. The alleged
failure of respondent to indicate with
mathematical precision the total number
of employees in the bargaining unit is of
no moment, especially as it was able to
comply
with
the
20%
minimum
membership requirement. Even if the total
number of rank-and-file employees of
petitioner is 528, while respondent
declared that it should only be 455, it still
cannot be denied that the latter would
have more than complied with the
registration requirement. 25
Princess Joy Placement and General
Services, Inc. Vs. German A. Binalla
G.R. No. 197005. June 4, 2014
Is Princess Joy liable under the
complaint?
After an examination of the facts,

we find, contrary to the NLRC
ruling,
substantial
evidence
showing that Binalla was employed
by Al Adwani in Saudi Arabia
through a fraudulent scheme or
arrangement, called reprocessing
or otherwise, participated in by
Princess Joy and CBM, as well as
by Paguio and Lateo (who worked
on
the
processing
and
documentation
of
Binallas
deployment
papers
to
Al
Adwani). Although the scheme
enabled Binalla to be employed
overseas,
his
two-year
employment was marred from the
start by violations of the law on
overseas employment.
First. Binalla was a victim of

contract substitution. He worked
under an employment contract
whose terms were inferior to the
terms certified by the POEA. Under
the four-year contract he signed
and implemented by his employer,
Al Adwani, he was paid only
SR1500.00 or US$400 a month;
whereas, under the POEA- certified
two-year contract, he was to be
paid $550.00. The POEA-certified
contract for all intents and
purposes and despite his claim that
his signature on the certified
contract was forged was the
contract that governed Binallas
employment with Al Adwani as it
was the contract that the Philippine
government officially recognized
and which formed the basis of his
deployment
to
Saudi
Arabia.
Clearly, the four-year
contract
signed
by
Binalla
substituted for the POEA-certified
contract.
Under Article 34 (i) of the Labor
Code on prohibited practices, it
shall be unlawful for any individual,
entity, licensee, or holder of
authority to substitute or alter
employment contracts approved
and verified by the Department of
Labor and Employment from the
time of actual signing thereof by
the parties up to and including the
periods of expiration of the same
without the approval of the
Secretary of Labor.
Further,
contract substitution constitutes
illegal
recruitment
under
Article 38 (I) of the Code.

5252
53

Under the circumstances, Princess

Joy is as liable as CBM and Al
Adwani
for
the
contract
substitution, no matter how it tries
to avoid liability by disclaiming any
participation in the recruitment and
deployment of Binalla to Al
Adwani. Before the labor arbiter,
Princess Joy claimed that Paguio
and
Lateo
were
not
its
employees/representatives or that
the principal piece of evidence
relied upon by the labor arbiter,
the ticket/telegram/advise (sic)40
handed to Binalla by Paguio had no
probative value as it was merely an
unsigned
and
unauthenticated
printout or that the four-year
employment contract was signed
only by Binalla and there was no
showing that it was the contract
implemented by Al Adwani.
Princess Joys protestations fail to

convince us. We believe, as the
labor arbiter did, that the ticket
telegram/advice is proof enough
that Princess Joy recruited Binalla
Significantly, there is evidence on record
that belied Princess Joys submission that
it was not an agent of Al Adwani. We refer
to a nine-page Annex A43 to Binallas
motion for reconsideration with the
NLRC,44 showing that Princess Joy entered
into recruitment contracts, hired and
placed Filipino workers for Al Adwani,
through Glenda Chua, Princess Joys
President, Reginaldo Paguio and Cynthia
Lateo in 2003 to 2004 which covered the
period when Binalla was working for Al
Adwani.
We consider this evidence
relevanteven if it was submitted only on
motion for reconsideration with the NLRC- as it supports LA Aurellanos conclusion
that Princess Joy was involved in Binallas
recruitment
and
deployment
to
Al
Adwani. In Clarion Printing House,
Inc., et al. v. NLRC,45 we reiterated the
settled rule that the NLRC is not precluded
from receiving evidence on appeal as
technical rules of evidence are not binding
in labor cases. In an earlier case,46 we
allowed the submission of additional

evidence in support of the employees
appeal as it did not prejudice the
employer since it could submit counter
evidence.
In these lights, we find that the NLRC
gravely abused its discretion in
ignoring the presence of substantial
evidence in the records indicating
that Princess Joy is as responsible
and, therefore, as liable as CBM in
Binallas fraudulent deployment to
Saudi Arabia.
Second. The substitution of Binallas
contract imposed upon him terms and
conditions of employment inferior to those
provided in the POEA-certified contract,
especially in relation to his monthly salary
and the term of his contract. This should
be rectified. There were also Binallas
claims of non-payment or withholding of
contractual employee benefits by Al
Adwani and imposition of unreasonable
financial burden or obligations in the
course
of
his
two-year
employment.
These claims, it bears
stressing, had not been disproved by
Princess Joy, CBM or Al Adwani. The
claims should be satisfied. We thus
find that, except for the award of
damages, all the other items awarded by
LA Aurellano are in order. He, however,
omitted the reimbursement of Binallas
placement fee. This must also be
rectified.
McMer Corporation, Inc., Macario D.
Roque, Jr. and Cecilia R. Alvestis Vs.
National Labor Relations Commission
and Feliciano C. Libunao, Jr.G.R. No.
193421. June 4, 2014
we have defined constructive
dismissal as a cessation of work
because continued employment is
rendered impossible, unreasonable
or unlikely; when there is a
demotion in rank or diminution in
pay or both; or when a clear
discrimination,
insensibility,
or
disdain by an employer becomes
unbearable to the employee.27

5353
54

The test of constructive dismissal is

whether a reasonable person in the
employees position would have felt
compelled to give up his position
under the circumstances.28 It is an
act amounting to dismissal but
made to appear as if it were not. 29
Constructive
dismissal
is,
therefore,
a
dismissal
in
disguise.30As
such,
the
law
recognizes
and
resolves
this
situation in favor of employees in
order to protect their rights and
interests from the coercive acts of
the employer.31 In fact, the
employee who is constructively
dismissed may be allowed to keep
on coming to work.
As may gleaned from the records, what
transpired on July 20, 2007 was not
merely an isolated outburst on the part of
petitioner Roque. The latters behaviour
towards his employees shows a clear
insensibility
rendering
the
working
condition
of
private
respondent
unbearable.
Private
respondent
had
reason to dawdle and refuse to comply
with the summon of petitioner Roque out
of severe fear that he will be physically
harmed. In fact, the same was clearly
manifested by his immediate reaction to
the situation by going to the Valenzuela
Police to report the incident.
Moreover, after a judicious scrutiny of the
records, we find that private respondent
has exhibited a strong opposition to some
company practices resulting in a severe
marginal distance between him and
petitioners Roque and Alvestir at the
workplace. This, together with the
harassment and intimidation displayed by
petitioner Roque to his employees,
became
so
unbearable
for
private
respondent to continue his employment
with petitioner McMer. The fact that none
of the employees complained or brought
this to the attention of the appropriate
authority does not validate petitioners
actions. For private respondent, retaining
the employment despite his despair was a
matter of principle. Private respondent
reasoned that it was difficult for him to

look for another employment, considering
that at the time he filed his Position Paper,
he was already 58 years old. His eventual
decision to leave petitioners due to the
agonizing situation at the workplace
cannot, therefore, be discounted.
The NLRC and the CA, therefore, correctly
appreciated the foregoing events as
badges of constructive dismissal, since
private respondent could not have given
up a job he has engaged in for eight years
unless it has become so unbearable for
him to stay therein. Indeed, private
respondent felt compelled to give up his
employment.
As far as private respondent is concerned,
how the working place is being run has
caused
inordinate
strain
on
his
professional work and moral principles,
even stretching to desecration of dignity in
the workplace. The allegation that all of
private respondents staff were removed
one by one until finally only the latter was
left alone performing managerial and
clerical duties is merely part of the greater
scheme brought forth by the insensibility
of petitioners in dealing with the
employees.
Avelino S. Alilin, et al. Vs. Petron
Corporation G.R. No. 177592. June 9,
2014
A contractor is presumed to be a laboronly contractor, unless it proves that it
has the substantial capital, investment,
tools and the like. However, where the
principal is the one claiming that the
contractor is a legitimate contractor, the
burden of proving the supposed status of
the
contractor
rests
on
the
principal.1cralawred
Labor-only contracting, distinguished
from permissible job contracting.
The
prevailing
rule
on
labor-only
contracting at the time Petron and RDG
entered into the Contract for Services in
June 2000 is DOLE Department Order No.
10, series of 1997,43 the pertinent
provision
of
which
reads:ChanRoblesVirtualawlibrary

5454
55

introductory or promotional period;
Section 4. x x x
xxxx
(f) Labor-only contracting prohibited
under this Rule is an arrangement where
the contractor or subcontractor merely
recruits, supplies or places workers to
perform a job, work or service for a
principal and the following elements are
present:
(i) The contractor or subcontractor does
not have substantial capital or investment
to actually perform the job, work or
service under its own account and
responsibility; and
(ii) The employees recruited, supplied or
placed by such contractor or subcontractor
are performing activities which are directly
related to the main business of the
principal.
xxxx
Section 6. Permissible contracting or
subcontracting. - Subject to the conditions
set forth in Section 3 (d) and (e) and
Section 5 hereof, the principal may
engage the services of a contractor or
subcontractor for the performance of any
of the following:
(a) Works or services temporarily or
occasionally needed to meet abnormal
increase in the demand of products or
services, provided that the normal
production capacity or regular workforce
of the principal cannot reasonably cope
with such demands;
(b) Works or services temporarily or
occasionally needed by the principal for
undertakings requiring expert or highly
technical personnel to improve the
management
or
operations
of
an
enterprise;
(c) Services temporarily needed for the
introduction
or
promotion
of
new
products, only for the duration of the
(d) Works or services not directly related

or not integral to the main business or
operation of the principal, including casual
work, janitorial, security, landscaping, and
messengerial services, and work not
related to manufacturing processes in
manufacturing establishments;
(e) Services involving the public display of
manufacturers products which do not
involve the act of selling or issuance of
receipts or invoices;
(f) Specialized works involving the use of
some particular, unusual or peculiar skills,
expertise,
tools
or
equipment
the
performance of which is beyond the
competence of the regular workforce or
production capacity of the principal; and
(g) Unless a reliever system is in place
among the regular workforce, substitute
services for absent regular employees,
provided that the period of service shall be
coextensive with the period of absence
and the same is made clear to the
substitute employee at the time of
engagement. The phrase absent regular
employees includes those who are
serving suspensions or other disciplinary
measures not amounting to termination of
employment meted out by the principal,
but excludes those on strike where all the
formal requisites for the legality of the
strike have been prima facie complied
with based on the records filed with the
National Conciliation and Mediation Board.
Permissible
job
contracting
or
subcontracting refers to an arrangement
whereby a principal agrees to farm out
with a contractor or subcontractor the
performance of a specific job, work, or
service within a definite or predetermined
period, regardless of whether such job,
work or, service is to be performed or
completed within or outside the premises
of the principal. Under this arrangement,
the following conditions must be met: (a)
the contractor carries on a distinct and
independent business and undertakes the

5555
56

contract work on his account under his
own responsibility according to his own
manner and method, free from the control
and direction of his employer or principal
in all matters connected with the
performance of his work except as to the
results thereof; (b) the contractor has
substantial capital or investment; and (c)
the agreement between the principal and
contractor or subcontractor assures the
contractual employees entitlement to all
labor and occupational safety and health
standards, free exercise of the right to
self-organization, security of tenure, and
social welfare benefits.44
Labor-only
contracting, on the other hand, is a
prohibited act, defined as supplying
workers to an employer who does not
have substantial capital or investment in
the form of tools, equipment, machineries,
work premises, among others, and the
workers recruited and placed by such
person are performing activities which are
directly related to the principal business of
such employer.45 [I]n distinguishing
between prohibited labor-only contracting
and permissible job contracting, the
totality of the facts and the surrounding
circumstances of the case shall be
considered.46cralawred
Generally, the contractor is presumed to
be a labor-only contractor, unless such
contractor overcomes the burden of
proving that it has the substantial capital,
investment, tools and the like. However,
where the principal is the one claiming
that the contractor is a legitimate
contractor, as in the present case, said
principal has the burden of proving that
supposed status.47 It is thus incumbent
upon Petron, and not upon petitioners as
Petron insists, 48 to prove that RDG is an
independent contractor.
Petron failed to discharge the burden
of proving that RDG is a legitimate
contractor. Hence, the presumption
that RDG is a labor-only contractor
stands.
Here, the audited financial statements and
other financial documents of RDG for the
years 1999 to 2001 establish that it does
have sufficient working capital to meet the

requirements of its service contract. In
fact, the financial evaluation conducted by
Petron of RDGs financial statements for
years 1998-2000 showed RDG to have a
maximum financial capability of Php4.807
Million as of December 1998,49 and
Php1.611
Million
as
of
December
2000.50 Petron was able to establish
RDGs sufficient capitalization when it
entered into the service contract in
2000. The Court stresses though that this
determination of RDGs status as an
independent contractor is only with
respect to its financial capability for the
period covered by the financial and other
documents presented. In other words,
the evidence adduced merely proves that
RDG was financially qualified as a
legitimate contractor but only with respect
to its last service contract with Petron in
the year 2000.
Sections 8 and 9, Rule VIII, Book III51 of
the implementing rules of the Labor Code,
in force since 1976 and prior to DOLE
Department Order No. 10, series of
1997,52 provide that for job contracting to
be permissible, one of the conditions that
has to be met is that the contractor must
have
substantial
capital
or
investment. Petron having failed to show
that this condition was met by RDG, it can
be concluded, on this score alone, that
RDG is a mere labor-only contractor.
Otherwise stated, the presumption that
RDG is a labor-only contractor stands due
to the failure of Petron to discharge the
burden of proving the contrary.
The Court also finds, as will be discussed
below, that the works performed by
petitioners were directly related to
Petrons business, another factor which
negates Petrons claim that RDG is an
independent contractor.
Petrons power of control over
petitioners exists in this case.
[A] finding that a contractor is a laboronly contractor is equivalent to declaring
that there is an employer-employee
relationship between the principal and the

5656
57

employees of the supposed contractor. 53
In this case, the employer-employee
relationship
between
Petron
and
petitioners becomes all the more apparent
due to the presence of the power of
control on the part of the former over the
latter.
It was held in Orozco v. The Fifth Division
of
the
Hon.
Court
of
Appeals54
that:ChanRoblesVirtualawlibrary
This Court has constantly adhered to the
four-fold test to determine whether
there
exists
an
employer-employee
relationship between the parties. The four
elements of an employment relationship
are: (a) the selection and engagement of
the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the
power to control the employees conduct.
Of these four elements, it is the
power to control which is the most
crucial and most determinative factor,
so important, in fact, that, the other
elements may even be disregarded.
(Emphasis supplied)
Hence, the facts that petitioners were
hired by Romeo or his father and that
their salaries were paid by them do not
detract from the conclusion that there
exists an employer-employee relationship
between the parties due to Petrons power
of control over the petitioners.
One manifestation of the power of control
is the power to transfer employees from
one work assignment to another.55 Here,
Petron could order petitioners to do work
outside
of
their
regular
maintenance/utility
job.
Also,
petitioners were required to report for
work everyday at the bulk plant, observe
an 8:00 a.m. to 5:00 p.m. daily work
schedule, and wear proper uniform and
safety helmets as prescribed by the safety
and security measures being implemented
within the bulk plant. All these imply
control. In an industry where safety is of
paramount
concern,
control
and
supervision over sensitive operations,
such as those performed by the

petitioners, are inevitable if not at all
necessary. Indeed, Petron deals with
commodities that are highly volatile and
flammable which, if mishandled or not
properly attended to, may cause serious
injuries and damage to property and the
environment. Naturally, supervision by
Petron is essential in every aspect of its
product handling in order not to
compromise the integrity, quality and
safety of the products that it distributes to
the consuming public.
Petitioners already attained regular
status as employees of Petron.
Petitioners were given various work
assignments such as tanker receiving,
barge
loading,
sounding,
gauging,
warehousing, mixing, painting, carpentry,
driving, gasul filling and other utility
works. Petron refers to these work
assignments as menial works which could
be
performed
by
any
able-bodied
individual. The Court finds, however, that
while the jobs performed by petitioners
may be menial and mechanical, they are
nevertheless necessary and related to
Petrons business operations. If not for
these tasks, Petrons products will not
reach the consumers in their proper state.
Indeed, petitioners roles were vital
inasmuch as they involve the preparation
of the products that Petron will distribute
to its consumers.
Furthermore, while it may be true that
any able-bodied individual can perform
the tasks assigned to petitioners, the
Court notes the undisputed fact that for
many years, it was the same able-bodied
individuals (petitioners) who performed
the tasks for Petron. The engagement of
petitioners for the same works for a long
period of time is a strong indication that
such works were indeed necessary to
Petrons business. In view of these, and
considering further that petitioners length
of service entitles them to become regular
employees
under the Labor
Code,
petitioners are deemed by law to have
already attained the status as Petrons
regular employees. As such, Petron could

5757
58

not terminate their services on the pretext
that the service contract it entered with
RDG has already lapsed. For one, and as
previously discussed, such regular status
had already attached to them even before
the execution of the service contract in
2000. For another, the same does not
constitute a just or authorized cause for a
valid dismissal of regular employees.
In sum, the Court finds that RDG is a

labor-only contractor. As such, it is
considered merely as an agent of
Petron.
Consequently, the employeremployee relationship which the Court
finds to exist in this case is between
petitioners as employees and Petron as
their employer. Petron therefore, being
the principal employer and RDG, being the
labor-only contractor, are solidarily liable
for petitioners illegal dismissal and
monetary claims.56cralawred
Dionarto Q. Noblejas Vs. Italian Maritime
Academy Phils., Inc., Capt. Nicolo S.
Terrei, Raceli B. Ferrez and Ma.
Teresa R. Mendoza G.R. No. 207888.
June 9, 2014
Before the Court tackles the issue
of illegal dismissal, there should
first be a determination of the
status of his employment. In this
regard, the Court finds Noblejas to
be a regular employee of IMAPI.
Pursuant to Article 280 of the Labor

Code, there are two kinds of
regular employees, namely: (1)
those who are engaged to perform
activities
which
are
usually
necessary or desirable in the usual
business or trade of the employer;
and (2) those who have rendered
at least one year of service,
whether continuous or broken, with
respect to the activities in which
they are employed.13 Regular
employees are further classified
into (1) regular employees - by
nature of work and (2) regular
employees - by years of service.14
The
former
refers
to
those
employees
who
perform
a
particular
function
which
is

business or trade of the employer,
regardless of their length of
service; while the latter refers to
those employees who have been
performing the job, regardless of
its nature thereof, for at least a
year.15
In the case at bench, Noblejas was

employed by IMAPI as a training
instructor/assessor for a period of
three (3) months effective May 20,
2009. After the end of the 3-month
period, he was rehired by IMAPI for
the same position and continued to
work as such until March 16, 2010.
There is no dispute that the work
of Noblejas was necessary or
desirable in the business or trade
of
IMAPI,
a
training
and
assessment center for seamen and
officers of vessels. Moreover, such
continuing need for his services is
sufficient evidence of the necessity
and indispensability of his services
to IMAPIs business. Taken in this
light, Noblejas had indeed attained
the status of a regular employee at
the time he ceased to report for
work on March 17, 2010.
There was,
dismissal.
however,
no
illegal
Fair evidentiary rule dictates that

before employers are burdened to
prove that they did not commit
illegal dismissal, it is incumbent
upon
the
employee
to
first
establish by substantial evidence
the fact of his or her dismissal.16
The Court is not unmindful of the
rule in labor cases that the
employer has the burden of
proving that the termination was
for a valid or authorized cause. It is
likewise
incumbent
upon
the
employees, however, that they
should first establish by competent
evidence the fact of their dismissal
from employment.17 It is an ageold rule that the one who alleges a

5858
59

fact has the burden of proving it
and the proof should be clear,
positive and convincing.18 Mere
allegation is not evidence. 19
Aside from his mere assertion, no

corroborative
and
competent
evidence was adduced by Noblejas
to substantiate his claim that he
was dismissed from employment.
The record is bereft of any
indication that he was prevented
from
returning
to
work
or
otherwise deprived of any work
assignment. It is also noted that no
evidence was submitted to show
that
respondent
Ferrez,
the
secretary of Capt. Terrei, was
actually authorized by IMAPI to
terminate the employment of the
companys employees or that
Ferrez was indeed instructed by
Capt. Terrei to dismiss him from
employment.
The Court finds it odd that, instead
of clarifying from Capt. Terrei what
he heard from Ferrez, Noblejas
immediately instituted an illegal
dismissal
case
against
the
respondents the day following the
alleged incident and never reported
back for work since then.
Let it be underscored that the fact
of dismissal must be established by
positive and overt acts of an
employer indicating the intention to
dismiss.21 Indeed, a party alleging
a critical fact must support his
allegation
with
substantial
evidence, for any decision based on
unsubstantiated allegation cannot
stand
without
offending
due
process.22 Here, there is no
sufficient
proof
showing
that
Noblejas was actually laid off from
work. In any event, his filing of a
complaint for illegal dismissal,
irrespective
of
whether
reinstatement or separation pay
was prayed for, could not by itself
be the sole consideration in
determining whether he has been
illegally
dismissed.
All
circumstances
surrounding
the
alleged termination should also be
taken into account.
Philippine
Spring
Water
Resources,
Inc./Danilo Y. Lua Vs. Court of
Appeals and Juvenstein B. Mahilum
G.R. No. 205278. June 11, 2014
Mahilum was a regular employee
A probationary employee, like a regular
employee, enjoys security of tenure. In
cases
of
probationary
employment,
however, aside from just or authorized
causes of termination, an additional
ground is provided under Article 281 of
the Labor Code, that is, the probationary
employee may also be terminated for
failure to qualify as a regular employee in
accordance with reasonable standards
made known by the employer to the
employee at the time of the engagement.
Thus, the services of an employee who
has been engaged on probationary basis
may be terminated for any of the
following: (1) a just or (2) an authorized
cause and (3) when he fails to qualify as a
regular employee in accordance with
reasonable standards prescribed by the
employer.14
As applied to the petitioners arguments, it
would seem that PSWRI and Lua now
invoke the first and third ground for
Mahilums
termination.
The
Court,
however, cannot subscribe to the premise
that Mahilum failed to qualify as a regular
employee when he failed to perform at par
with the standards made known by the
company to him. In this case, it is clear
that the primary cause of Mahilums
dismissal from his employment was borne
out of his alleged lapses as chairman for
the inauguration of the Bulacan plant
companys Christmas party. In fact, the
termination letter to him cited loss of
trust and confidence as a ground for his
dismissal. Under the circumstances, the
petitioners may not be permitted to
belatedly harp on its choice not to extend
his alleged probationary status to regular
employment as a ground for his dismissal.
Besides, having been allowed to work

5959
60

after the lapse of the probationary period,
Mahilum became a regular employee. He
was hired in June 2004 and was dismissed
on February 5, 2005. Thus, he served the
company for eight (8) months.
Mahilum was illegally dismissed
According to the petitioners, Mahilums
behavior during the inauguration/party
was allegedly tantamount to: 1] serious
misconduct, as displayed by a drinking
binge with his own visitors causing the
shame and humiliation of Lua; and 2]
willful disobedience, as shown by his
refusal to carry out legitimate orders.
As previously explained, Mahilum was a

regular employee who was entitled to
security of tenure. Thus, he could only be
dismissed
from
service
for
causes
provided in Article 282 of the Labor
Code.16 At this point, it bears stressing
that the NLRC and the CA, in their
decisions, both found Mahilum to have
been illegally dismissed.
Mega Magazine Publications, Inc., et al.
Vs. Margaret A. Defensor G.R. No.
162021. June 16, 2014
In labor cases, the rules on the degree of
proof are enforced not as stringently as in
other cases in order to better serve the
higher ends of justice. This lenity is
intended to afford to the employee every
opportunity to level the playing field.
The grant of a bonus or special incentive,
being a management prerogative, is not a
demandable and enforceable obligation,
except when the bonus or special
incentive is made part of the wage, salary
or compensation of the employee,29 or is
promised by the employer and expressly
agreed upon by the parties.30 By its very
definition, bonus is a gratuity or act of
liberality of the giver,31 and cannot be
considered part of an employees wages if
it is paid only when profits are realized or
a certain amount of productivity is
achieved. If the desired goal of production
or actual work is not accomplished, the
bonus does not accrue.
Payment of the full amount of appellate
court docket and lawful fees is mandatory
and jurisdictional; Relaxation of the rule
on payment of appeal fee is unwarranted

in this case.
Section 4, Rule 41 of the Rules of Court
Sec. 4. Appellate court docket and other
lawful fees. Within the period for
taking an appeal, the appellant shall pay
to the clerk of court which rendered the
judgment or final order appealed from,
the full amount of the appellate court
docket and other lawful fees. Proof of
payment of said fees shall be transmitted
to the appellate court together with the
original record or the record on appeal.
Here, petitioners concede that payment of
the full amount of docket fees within the
prescribed
period
is
not
a
mere
technicality of law or procedure but a
jurisdictional requirement. Nevertheless,
they want this Court to relax the
application of the rule on the payment of
the appeal fee in the name of substantial
justice and equity.
The Court is not persuaded.
The liberality which petitioners pray for
has already been granted to them by the
CA at the outset. It may be recalled that
while petitioners paid a substantial part of
the docket fees, they still failed to pay the
full amount thereof since their payment
was short of P30.00. Based on the
premise that the questioned Decision of
the RTC has already become final and
executory due to non-perfection, the CA
could have dismissed the appeal outright.
But owing to the fact that only the meager
amount of P30.00 was lacking and
considering that the CA may opt not to
proceed with the case until the docket
fees are paid,40 it still required petitioners,
even if it was already beyond the
reglementary period, to complete their
payment of the appeal fee within 10 days
from notice. Clearly, the CA acted
conformably with the pronouncement
made in Camposagrado, a case cited by
petitioners, that [a] partys failure to pay
the appellate docket fee within the
reglementary period confers only a

6060
61

discretionary and not a mandatory power
to dismiss the proposed appeal. Such
discretionary power should be used in the
exercise of the courts sound judgment in
accordance with the tenets of justice and
fair play with great deal of circumspection,
considering all attendant circumstances
and must be exercised wisely and
prudently, never capriciously, with a view
to substantial justice.4
Ruben C. Jordan Vs. Grandeur Security

Services, Inc.G.R. No. 206716. June 18,
2014
A. The dispositive part must be
harmonized with the whole
body of the decision where
uncertainty
exists
in
the
dispositive part.
It does not escape this Courts

attention that the dispositive part
of the May 27, 2008 decision
contains
two
contradictory
judgments. The dispositive part
states that Jordans complaint for
illegal dismissal is dismissed for
lack of merit. In the same breath,
the LA ordered Grandeur Security
to
reinstate
Jordan
in
employment,
whether
physically
or
in
the
payroll.
These
conflicting
judgments are absurd because
an employee who has not been
dismissed, much less illegally
dismissed,
cannot
be
reinstated. In legal parlance,
reinstatement without loss of
seniority rights is merely a
consequence of the employers
illegal
dismissal;33
it
merely
restores the employee who is
unjustly dismissed to his former
position.34cralawred
As a rule, the courts resolution in a

given issue is embodied in the
decisions dispositive part. The
dispositive part is the controlling
factor on the settlement of parties
rights,
notwithstanding
the
confusing statement in the body of
the decision or order. However,

this rule only applies when the
decisions
dispositive
part
is
definite,
clear
and
unequivocal.35Where a doubt or
uncertainty exists between the
dispositive part and the body of
the decision, the Court must
harmonize the former with the
latter in order to give effect to
the
decisions
intention,
purpose
and
substantive
terms.36cralawred
B. The Court may correct clerical
errors in a final and executory
judgment
It seems to us that the word payroll in
the dispositive part of the May 27, 2008
decision is a mere surplusage a clerical
error
that
was
beyond
the LAs
contemplation
in
rendering
that
decision. The reason is simple: the
payroll reinstatement order manifestly and
patently contradicts the LAs unequivocal
statement in the body of the decision that
there were no strained relations
between
Grandeur
Security
and
Jordan. In fact, the LA categorically
declared that there was no justification
whatsoever for complainant Jordans
allegation of strained relations. The
rationales for payroll reinstatement under
Article 223 of the Labor Code are to avoid
the intolerable presence of the unwanted
employee as when there exist strained
relations
between
labor
and
management or due to the non-availability
of positions.38 Since these circumstances
are remarkably absent in the present
case, coupled with the fact that Jordan
was never separated from employment,
we delete the word payroll in the
dispositive part of the May 27, 2008
decision.
A.
The
NLRC
has
no
original
jurisdiction over termination disputes
It is a basic rule that the averments in the
body of the pleading and the character of
the relief sought determine the nature of
the action and which court has jurisdiction
over the case. It is not the title of the
pleading but its allegations that must

6161
62

control.40
A plain reading of the
memorandum of appeal shows that this
pleading was in fact another complaint
for illegal dismissal. Jordan alleged in
his memorandum of appeal that his
claims for backwages, separation pay, and
attorneys fees arose after Grandeur
Security refused to heed the LAs return to
work order in the May 27, 2008 decision;
he vehemently insisted that he did not
receive Grandeur Securitys letter ordering
him to return to work. Also, Jordan
specifically asked for backwages beginning
June 2008 or after the promulgation of
the May 27, 2008 decision.
This procedural recourse is a serious error
that the NLRC and the CA should have
immediately spotted. The NLRC and the
CA should have immediately dismissed the
memorandum of appeal for lack of
jurisdiction. Under Article 217 (a) (2), and
(b) of the Labor Code, the LA has original
and
exclusive
jurisdiction
over
termination disputes; the NLRC only has
exclusive appellate jurisdiction over
these
cases.
Furthermore,
Jordans
remedy
against
Grandeurs
Security
alleged disobedience to the return to work
order is not to file a complaint for illegal
dismissal, but to ask the NLRC to hold
Grandeur
Security
in
indirect
contempt.41crala
III. Jordan did not waive his right
to
return to work in Grandeur
Security
At the outset, we clarify that whether
Jordan received Grandeur Securitys letter
directing him to report to work is
irrelevant in determining his waiver of
employment in Grandeur Security. In
labor cases, rules of procedure should not
be applied in a very rigid and technical
sense because they are merely tools
designed to facilitate the attainment of
justice.46 That Jordan was actually
informed of the return to work order and
that Grandeur Security never prohibited
him from reporting for work are sufficient
compliance with the LAs return to work
order.
Nonetheless,
we
are
unprepared
to
declare NLRC-NCR Case No. 00-05-0500307 to be closed and terminated because

the mere absence or failure to report for
work, even after notice to return, does
not necessarily amount to abandonment.
Abandonment is a matter of intention and
cannot lightly be presumed from certain
equivocal
acts.
To
constitute
abandonment, there must be clear proof
of deliberate and unjustified intent to
sever the employer-employee relationship.
The operative act is still the employees
ultimate act of putting an end to his
employment.47cralawred
In the present case, Jordans filing of a
complaint for illegal dismissal in the
form of a memorandum of appeal before
the
NLRC
is
inconsistent
with
abandonment of employment. The filing of
this complaint is a proof of his desire to
return to work, effectively negating any
suggestion of abandonment.48 We also
cannot fault him for his continuous
absence because he faithfully relied on the
void NLRC rulings which ordered Grandeur
Security to pay backwages, separation
pay, and attorneys fees in lieu of the LAs
return to work order.
Marlo A. Deoferio Vs. Intel Technology
Philippines, Inc., et al. G.R. No.
202996. June 18, 2014
Intel had an authorized cause
to
dismiss
Deoferio
from
employment
Concomitant to the employers

right to freely select and engage an
employee is the employers right to
discharge the employee for just
and/or authorized causes. To
validly
effect
terminations
of
employment, the discharge must
be for a valid cause in the manner
required by law. The purpose of
these two-pronged qualifications is
to protect the working class from
the
employers
arbitrary
and
unreasonable exercise of its right
to dismiss. Thus, in termination
cases, the law places the burden of
proof upon the employer to show
by substantial evidence that the

6262
63

termination was for a lawful cause
and in the manner required by law.
(1)
(2)
(3)
whose continued employment is

prohibited by law or is prejudicial
to his health as well as to the
In
concrete
terms,
these
health of his co-employees:
qualifications embody the due
Provided,
That
he
is
paid
process requirement in labor cases
separation pay equivalent to at
- substantive and procedural
least one (1) month salary or to
due process. Substantive due
one-half (1/2) month salary for
process means that the termination
every year of service, whichever is
must be based on just and/or
greater, a fraction of at least six
authorized causes of dismissal. On
(6) months being considered as
the other hand, procedural due
one (1) whole year. [underscores,
process requires the employer to
italics and emphases ours]
effect the dismissal in a manner
Consistent with this construction,
specified in the Labor Code and its
we applied this provision in
IRR.32cralawred
resolving illegal dismissal cases
due to non-contagious diseases
The
present
case
involves
such as stroke, heart attack,
termination due to disease an
osteoarthritis, and eye cataract,
authorized cause for dismissal
among others.
under Article 284 of the Labor
The third element substantiates the
Code.
As
substantive
contention that the employee has indeed
requirements, the Labor Code
been suffering from a disease that: (1) is
and its IRR33 require the presence
prejudicial to his health as well as to the
of the following elements:
health of his co-employees; and (2)
cannot be cured within a period of six
An employer has been found to be suffering from any
months
disease.
even
with
proper
medical
treatment. Without the medical certificate,
His continued employment is prohibited by law orthere
prejudicial
can be
to no
his health,
authorized
as well
cause
as to for
the health
co-employees.
the employees dismissal. The absence of
this element thus renders the dismissal
A competent public health authority certifies thatvoid
the disease
and illegal.
is of such nature or at such a stage
cannot be cured within a period of six months even with proper medical treatment.
Simply stated, this requirement is not
With respect to the first and second
merely a procedural requirement, but
elements,
the
Court
liberally
a substantive one. The certification from a
construed the phrase prejudicial
competent public health authority is
to his health as well as to the
precisely the substantial evidence
health of his co-employees to
required by law to prove the existence of
mean prejudicial to his health or
the disease itself, its non-curability within
to the health of his co-employees.
a period of six months even with proper
We did not limit the scope of this
medical treatment, and the prejudice that
phrase to contagious diseases for
it would cause to the health of the sick
the reason that this phrase is
employee and to those of his copreceded by the phrase any
employees.
disease under Article 284 of the
Labor
Code,
to
In the current case, we agree with
the CA that Dr. Lees psychiatric
Art. 284. Disease as ground for
report substantially proves that
termination. An employer may
Deoferio
was
suffering
from
terminate the services of an
schizophrenia, that his disease was
employee who has been found to
not curable within a period of six
be suffering from any disease and
months even with proper medical
6363
64

treatment, and that his continued
employment would be prejudicial
to
his
mental
health.
This
conclusion is further substantiated
by the unusual and bizarre acts
that Deoferio committed while at
Intels employ.
The twin-notice requirement applies
to terminations under Article 284 of
the Labor Code
The Labor Code and its IRR are

silent on the procedural due
process required in terminations
due to disease. Despite the
seeming gap in the law, Section 2,
Rule 1, Book VI of the IRR
expressly states that the employee
should be afforded procedural due
process
in
all
cases
of
dismissals.38cralawred
Deoferio is entitled to nominal
damages for violation of his right to
statutory procedural due process
Intels violation of Deoferios right to
statutory procedural due process warrants
the payment of indemnity in the form of
nominal
damages.
In
Jaka
Food
Processing
Corp.
v.
Pacot,41
we
distinguished between terminations based
on Article 282 of the Labor Code42 and
dismissals under Article 283 of the Labor
Code.43 We then pegged the nominal
damages at P30,000.00 if the dismissal is
based on a just cause but the employer
failed to comply with the twin-notice
requirement. On the other hand, we fixed
the nominal damages at P50,000.00 if the
dismissal is due to an authorized cause
under Article 283 of the Labor Code but
the employer failed to comply with the
notice requirement. The reason is that
dismissals for just cause imply that the
employee has committed a violation
against the employer, while terminations
under Article 283 of the Labor Code are
initiated by the employer in the exercise
of his management prerogative.
With respect to Article 284 of the Labor
Code, terminations due to disease do not
entail any wrongdoing on the part of the
employee. It also does not purely involve

the employers willful and voluntary
exercise of management prerogative a
function associated with the employer's
inherent right to control and effectively
manage
its
enterprise.44
Rather,
terminations
due
to
disease
are
occasioned by matters generally beyond
the worker and the employer's control.
In fixing the amount of nominal damages
whose determination is addressed to our
sound discretion, the Court should take
into account several factors surrounding
the case, such as: (1) the employers
financial, medical, and/or moral assistance
to the sick employee; (2) the flexibility
and leeway that the employer allowed the
sick employee in performing his duties
while attending to his medical needs; (3)
the employers grant of other termination
benefits in favor of the employee; and (4)
whether there was a bona fide attempt on
the part of the employer to comply with
the twin-notice requirement as opposed to
giving no notice at all.
We award Deoferio the sum of P30,000.00
as nominal damages for violation of his
statutory right to procedural due process.
Wentling is not personally liable for
the satisfaction of nominal damages
in favor of Deoferio
Intel shall be solely liable to Deoferio for
the satisfaction of nominal damages.
Wentling, as a corporate officer, cannot be
held liable for acts done in his official
capacity because a corporation, by legal
fiction, has a personality separate and
distinct from its officers, stockholders, and
members. There is also no ground for
piercing the veil of corporate fiction
because Wentling acted in good faith and
merely relied on Dr. Lees psychiatric
report
in
carrying
out
the
dismissal.48cralawred
Deoferio is not entitled to salary
differential, backwages, separation
pay, moral and exemplary damages,
as well as attorneys fees

6464
65

Deoferios claim for salary differential is

already barred by prescription. Under
Article 291 of the Labor Code, all money
claims arising from employer-employee
relations shall be filed within three years
from the time the cause of action accrued.
In the current case, more than four years
have elapsed from the pre-termination of
his assignment to the United States until
the filing of his complaint against the
respondents. We thus see no point in
further discussing this matter. His claim
for backwages, separation pay, moral and
exemplary damages, as well as attorneys
fees must also necessarily fail as a
consequence of our finding that his
dismissal was for an authorized cause and
that the respondents acted in good faith
when they terminated his services.
Netlink Computer, Inc. Vs. Eric DelmoG.R.
No. 160827. June 18, 2014
In the absence of a written agreement
between the employer and the employee
that sales commissions shall be paid in a
foreign currency, the latter has the right
to be paid in such foreign currency once
the same has become an established
practice of the former. The rate of
exchange at the time of payment, not the
rate of exchange at the time of the sales,
controls.
There was no written contract between
Netlink and Delmo stipulating that the
latters commissions would be paid in US
dollars. The absence of the contractual
stipulation notwithstanding, Netlink was
still liable to pay Delmo in US dollars
because the practice of paying its sales
agents in US dollars for their US dollardenominated
sales
had
become
a
company policy. This was impliedly
admitted by Netlink when it did not refute
the allegation that the commissions
earned by Delmo and its other sales
agents had been paid in US dollars.
Instead of denying the allegation, Netlink
only sought a declaration that the US
dollar commissions be paid using the
exchange rate at the time of sale. The
principle of non-diminution of benefits,
which has been incorporated in Article
10013 of the Labor Code, forbade Netlink
from unilaterally reducing, diminishing,
discontinuing or eliminating the practice.

Verily, the phrase supplements, or other
employee benefits in Article 100 is
construed to mean the compensation and
privileges received by an employee aside
from regular salaries or wages.
With regard to the length of time the
company practice should have been
observed to constitute a voluntary
employer
practice
that
cannot
be
unilaterally
reduced,
diminished,
discontinued
or
eliminated
by
the
employer, we find that jurisprudence has
not laid down any rule requiring a specific
minimum number of years. In Davao
Fruits Corporation v. Associated Labor
Unions,14 the company practice lasted for
six years. In Davao Integrated Port
Stevedoring Services v. Abarquez,15 the
employer, for three years and nine
months, approved the commutation to
cash of the un- enjoyed portion of the sick
leave with pay benefits of its intermittent
workers. In Tiangco v. Leogardo, Jr.,16 the
employer carried on the practice of giving
a fixed monthly emergency allowance
from November 1976 to February 1980, or
three years and four months. In Sevilla
Trading Company v. Semana,17 the
employer kept the practice of including
non-basic benefits such as paid leaves for
unused sick leave and vacation in the
computation of their 13th-month pay for at
least two years.
With
the
payment
of
US
dollar
commissions having ripened into a
company practice, there is no way that
the commissions due to Delma were to be
paid in US dollars or their equivalent in
Philippine currency determined at the time
of the sales. To rule otherwise would be to
cause an unjust diminution of the
commissions due and owing to Delma.
Teekay Shipping Philippines, Inc., et al.
Vs. Exequiel O. JarinG.R. No. 195598.
June 25, 2014
Under the 2000 POEA-SEC,42 a
work-related
illness
is
any
sickness resulting to disability or
death as a result of an occupational
disease listed under Section 32-A

6565
66

with the conditions
satisfied.
set
therein
The Court has held, however, that

the enumeration in Section 32-A
does
not
preclude
other
illnesses/diseases not so listed
from being compensable. The
POEA-SEC cannot be presumed to
contain all the possible injuries that
render a seafarer unfit for further
sea duties.43 This is in view of
Section 20(B)(4)44 of the POEASEC which states that (t)hose
illnesses not listed in Section 32 of
this
Contract
are
disputably
presumed
as
work-related.
Concomitant
with
such
presumption is the burden placed
upon the claimant to present
substantial
evidence
that
his
working conditions caused or at
least
increased
the
risk
of
contracting the disease.45 [I]t is
not sufficient to establish that the
seafarers illness or injury has
rendered him permanently or
partially disabled; it must also be
shown that there is a causal
connection between the seafarers
illness or injury and the work for
which
he
had
been
contracted.46cralawred
In the case at bar, Jarin was able to prove
that
his
rheumatoid
arthritis
was
contracted out of his daily duties as Chief
Cook onboard M.T. Erik Spirit.
It is well to note that in resolving disputes
on disability benefits, the fundamental
consideration has been that the POEA-SEC
was designed primarily for the protection
and benefit of Filipino seamen in the
pursuit of their employment onboard
ocean-going
vessels.
As
such,
its
provisions must be construed and applied
fairly, reasonably and liberally in their
favor because only then can its beneficent
provisions
be
fully
carried
into
effect.54cralawred
Libcap Marketing Corporation, et al. Vs.
Lanny Jean B. BaquialG.R. No. 192011.
June 30, 2014
The law and jurisprudence allow the award

of nominal damages in favor of an
employee in a case where a valid cause
for dismissal exists but the employer fails
to observe due process in dismissing the
employee. On the other hand, financial
assistance is granted to a dismissed
employee as a measure of equity or social
justice, and is in the nature or takes the
place of severance compensation.
No. 177374. July 2, 2014
Amecos Innovations, Inc. and Antonio F.
Mateo Vs. Eliza R. Lopez G.R. No.
178055. July 2, 2014
The issues raised in this Petition
are:
WHETHER THE REGULAR CIVIL
COURT AND NOT THE LABOR
ARBITER OR X X X THE NATIONAL
LABOR RELATIONS COMMISSION
HAS
JURISDICTION
OVER
CLAIM[S] FOR REIMBURSEMENT
ARISING
FROM
EMPLOYEREMPLOYEE RELATIONS.
WHETHER THE REGULAR CIVIL

COURT AND NOT THE LABOR
ARBITER OR X X X THE NATIONAL
LABOR RELATIONS COMMISSION
HAS
JURISDICTION
OVER
CLAIM[S] FOR DAMAGES FOR
MISREPRESENTATION
ARISING
FROM
EMPLOYER-EMPLOYEE
RELATIONS.26
This Court holds that as between the

parties, Article 217(a)(4) of the Labor
Code is applicable. Said provision bestows
upon the Labor Arbiter original and
exclusive jurisdiction over claims for
damages arising from employer-employee
relations. The observation that the matter
of SSS contributions necessarily flowed
from the employer-employee relationship
between the parties shared by the lower
courts and the CA is correct; thus,
petitioners claims should have been
referred to the labor tribunals. In this
connection, it is noteworthy to state that
the Labor Arbiter has jurisdiction to
award not only the reliefs provided by
labor laws, but also damages governed by
the Civil Code.34cralawred

6666
67

At the same time, it cannot be assumed
that since the dispute concerns the
payment of SSS premiums, petitioners
claim should be referred to the Social
Security Commission (SSC) pursuant to
Republic Act No. 1161, as amended by
Republic Act No. 8282.35 As far as SSS is
concerned, there is no longer a dispute
with respect to petitioners accountability
to the System; petitioners already settled
their pecuniary obligations to it. Since
there is no longer any dispute regarding
coverage, benefits, contributions and
penalties to speak of, the SSC need not be
unnecessarily dragged into the picture.36
Besides, it cannot be made to act as a
collecting agency for petitioners claims
against the respondent; the Social
Security Law should not be so interpreted,
lest the SSC be swamped with cases of
this sort.
At any rate, it appears that petitioners do
not have a cause of action against
respondent.
while
respondent
was
employed, Amecos did not remit premium
contributions both employer and
employees shares to the SSS; the SSS
demand letter38 sent to it covers nonpayment of SSS premium contributions
from January 2001 up to April 2002,
amounting to P85,687.84.39 The Amecos
payroll40 covering the period from January
30 to November 29, 2001 likewise shows
that no deductions for SSS contributions
were being made from respondents
salaries. This can only mean that during
the period, Amecos was not remitting SSS
contributions whether the employer or
employees shares
pertaining to
respondent.
As
such,
during
her
employment with Amecos, respondent
was never covered under the System as
SSS did not know in the first instance that
petitioners employed her, since the
petitioners
were not remitting her
contributions. Petitioners were forced to
remit monthly SSS contributions only
when SSS filed I.S. No. 03-6068 with the
Quezon City Prosecutors Office. By that
time, however, respondent was no longer
with Amecos, as her employment was
terminated sometime in mid-February of

2002.
Given the above facts, it is thus clear that
petitioners have no cause of action against
the respondent in Civil Case No. 0427802. Since Amecos did not remit
respondents full SSS contributions, the
latter was never covered by and protected
under the System. If she was never
covered by the System, certainly there is
no sense in making her answerable for the
required contributions during the period of
her employment. And it follows as a
matter of consequence that claims for
other damages founded on the foregoing
non-existent cause of action should
likewise fail.
Immaculate Conception Academy, et al.
Vs. Evelyn E. CamilonG.R. No. 188035.
July 2, 2014
Now to the main issue of whether

the CA correctly granted an award
of separation pay to respondent as
a measure of social justice.
The issue of whether a validly

dismissed employee is entitled to
separation pay has been settled in
the 2007 case of Toyota Motor
Philippines Corporation Workers
Association (TMPCWA) v. NLRC,20
where it was further clarified that
in addition to serious misconduct,
in dismissals based on other
grounds under Art. 282 like willful
disobedience, gross and habitual
neglect of duty, fraud or willful
breach of trust, and commission of
a crime against the employer or his
family, separation pay should
not
be
conceded
to
the
dismissed employee.
Pursuant to the aforementioned rulings,
respondent is clearly not entitled to
separation pay. Respondent was holding a
position which involves a high degree of
responsibility
requiring
trust
and
confidence as it involves the financial
interests
of
the
school.
However,
respondent proved to be unfit for the
position when she failed to exercise the

6767
68

necessary diligence in the performance of
her duties and responsibilities as Chief
Accountant, thus justifying her dismissal
from service. Respondent was guilty of
gross and habitual negligence when she
failed to regularly pre-audit the report of
the school cashier, check the entries
therein and keep custody of the petty cash
fund. Had respondent been assiduously
doing her job, the unaccounted school
funds would have been discovered right
away. Respondents dereliction in her
duties spanned a period of 11 months
thus enabling the school cashier to
misappropriate tuition fee payments,
manipulate the school records and destroy
official receipts, in the total amount of
P1,167,181.45
to the prejudice of
petitioners. Hence, she should not be
granted separation pay. To rule otherwise
would be to reward respondent for her
negligent acts instead of punishing her for
her offense. As we held in Reno Foods,
Inc.
v.
Nagkakaisang
Lakas
ng
Manggagawa
(NLM)-Katipunan,23
[s]eparation pay is only warranted when
the cause for termination is
not
attributable to the employee's fault, such
as those provided in Articles 283 and 284
of the Labor Code, as well as in cases of
illegal dismissal in which reinstatement is
no longer feasible. It is not allowed when
an employee is dismissed for just cause.
As to whether respondents length of

service with petitioners justifies the award
of separation pay, we rule in the negative.
Respondents 12 years of service and
clean employment record cannot simply
erase her gross and habitual negligence in
her duties. Length of service is not a
bargaining chip that can simply be stacked
against the employer.
Monchito
R.
Ampeloquio
Vs.
Jaka
Distribution, Inc.G.R. No. 196936. July
2, 2014
The issue for our resolution is the
scope
viz-a-viz
wages
of
seniority
rights
and
other
privileges.
Seniority rights refer to the
creditable years of service in the

employment record of the illegally
dismissed employee as if he or she
never ceased working for the
employer. In other words, the
employees years of service is
deemed continuous and never
interrupted. Such is likewise the
rationale for reinstatements twin
relief of full backwages.13
Ampeloquio is correct in asserting

that he is a senior employee
compared
to
the
other
merchandisers whom he himself
designates as casual or contractual
merchandisers.
He is likewise
senior to other regular employees
subsequently
hired
by
JAKA,
specifically two regular messenger
employees
which
Ampeloquio
claims receive wages higher than
what he is receiving from JAKA.
Attached to the recognition of
seniority rights of a reinstated
employee who had been illegally
dismissed is the entitlement to
wages appurtenant thereto.
The case of Ampeloquio is outside
the ordinary. His reinstatement
was ordered when merchandisers
like him were no longer employed
by JAKA.
He is not entitled to the same
terms
and
conditions
of
employment as that which was
offered to the other regular
employees (not merchandisers)
subsequently hired by JAKA.
JAKAs decision to grant or
withhold certain benefits to other
employees
is
part
of
its
management prerogative as a
function
of
an
employers
constitutionally protected right to
reasonable
return
on
investments.14
Ampeloquio

cannot
likewise
6868
69

compare his wages to that received
by
casual
or
contractual
merchandisers or merchandisers
who are admittedly outsourced
from manpower agencies or those
who
are
considered
seasonal
employees hired only during peak
season when JAKA is in need of
extra merchandisers.
To
say
the
least,
these
merchandisers are not, strictly
speaking, employees of JAKA, but
of a service provider company
which has a service contract with
JAKA. The merchandisers in this
case simply perform the work at
JAKAs outlets, wearing uniforms
approved by JAKA but provided by
the service company who is
actually their employer. There is
no employer-employee relationship
between
JAKA
and
these
merchandisers.
Receipt by these merchandisers of
a benefit such as transportation or
meal allowance is part of the
monies they receive from their
employer and embedded in the
contract price of the service
agreement the employer has with
JAKA.
The existence of an independent
and
permissible
contractor
relationship is generally established
by
considering
the
following
determinants:
whether
the
contractor is carrying on an
independent business; the nature
and extent of the work; the skill
required; the term and duration of
the relationship; the right to assign
the performance of a specified
piece of work; the control and
supervision of the work to another;
the employer's power with respect
to the hiring, firing and payment of
the contractor's workers; the
control of the premises; the duty to
supply
the
premises,
tools,
appliances, materials and labor;
and the mode, manner and terms

of payment.15
On the other hand, existence of an

employer-employee relationship is
established by the presence of the
following determinants: (1) the
selection and engagement of the
workers; (2) power of dismissal;
(3) the payment of wages by
whatever means; and (4) the
power to control the worker's
conduct, with the latter assuming
primacy
in
the
overall
consideration.16
In the same vein, seasonal employees
hired only for the peak season do not
have the same status as regular
employees and do not receive amounts
considered as part of a compensation and
benefits
scheme
for
regular
employees. These seasonal employees
only receive payment for work rendered
during the period for which they were
hired, i.e., peak season. The wages and
other monies seasonal employees may
receive for the duration of their limited
employment period constitute bulk or
wholesale payment for services rendered.
Seasonal employment involves work or
service that is seasonal in nature or
lasting for the duration of the season.
Seasonal employees differ from those
classified as regular employees, in that:
(1) the employee must be performing
work or services that are seasonal in
nature; and (2) he had been employed for
the duration of the season.17
The phrase without loss of seniority rights
applies with practical and real effect to
Ampeloquio upon his retirement because
he will reach earlier than other regular
employees of JAKA the required number of
years of service to qualify for retirement.
In all, the labor tribunals were right in
using as guidepost the existing statutory
minimum wages and COLA during the
three (3) year prescriptive period within
which Ampeloquio can make his money
claims.

6969
70

We are not unaware that reinstatement is
the rule and such covers reinstatement to
the same or substantially equivalent
position without loss of seniority rights
and privileges.
In this case, JAKA did not claim exceptions
to the rule of reinstatement, i.e., (1)
strained relations, or (2) abolition of the
position;18 JAKA immediately complied
with the Labor Arbiters order of
reinstatement.
We note that, specifically, JAKA could
have claimed that the position of
merchandiser no longer exists and has
been abolished with the contracting of this
job function. However, it merely opted to
reinstate Ampeloquio to the same
position. There is no quarrel that with his
reinstatement, Ampeloquio is now the
lone regular merchandiser of JAKA.
The option of reinstatement to a
substantially equivalent position does not
apply herein as reinstatement to a
substantially equivalent position entails
the same or similar job functions and not
just same wages or salary. As applied to
this
case,
Ampeloquio
cannot
be
reinstated to a messengerial position
although such is a regular employment
enjoying the same employment benefits
and privileges. His employment cannot
likewise be converted into a contractual
employment as such is actually a
downgrade from his regular employment
enjoying security of tenure with JAKA.
As the sole regular merchandiser of

JAKA, Ampeloquios reinstatement
entitles him, at the minimum, to
the standard minimum wage at the
time of his employment and to the
wages he would have received
from JAKA had he not been illegally
dismissed, as if there was no
cessation
of
employment.
Ampeloquio is likewise entitled to
any increase which JAKA may have
given across the board to all its
regular employees.
To repeat,
Ampeloquio is not entitled to all

benefits or privileges received by
other
employees
subsequently
hired by JAKA just by the fact of
his seniority in the service with
JAKA.
Ariel L. David, doing business under the
name and style "Yiels Hog Dealer" Vs.
John G. MacasioG.R. No. 195466. July
2, 2014
Engagement on pakyaw or task basis
does not characterize the relationship that
may exist between the parties, i.e.,
whether
one
of
employment
or
independent contractorship. Article 97(6)
of the Labor Code defines wages as xxx
the remuneration or earnings, however
designated, capable of being expressed in
terms of money, whether fixed or
ascertained on a time, task, piece, or
commission basis, or other method of
calculating the same, which is payable
by an employer to an employee under
a written or unwritten contract of
employment for work done or to be done,
or for services rendered or to be
rendered[.]35 In relation to Article 97(6),
Article 10136 of the Labor Code speaks of
workers paid by results or those whose
pay is calculated in terms of the quantity
or quality of their work output which
includes pakyaw work and other nontime work.
Even a factual review shows that
Macasio is Davids employee
To determine the existence of an
employer-employee
relationship,
four
elements generally need to be considered,
namely: (1) the selection and engagement
of the employee; (2) the payment of
wages; (3) the power of dismissal; and
(4) the power to control the employees
conduct. These elements or indicators
comprise the so-called four-fold test of
employment
relationship.
Macasios
relationship with David satisfies this test.
First, David engaged the services of
Macasio, thus satisfying the element of
selection
and
engagement
of
the
employee. David categorically confirmed
this fact when, in his Sinumpaang

7070
71

Salaysay, he stated that nag apply po
siya sa akin at kinuha ko siya na
chopper[.]39 Also, Solano and Antonio
stated in their Pinagsamang Sinumpaang
Salaysay40
that
[k]ami
po
ay
nagtratrabaho sa Yiels xxx na pag-aari ni
Ariel David bilang butcher and kilala
namin si xxx Macasio na isa ring butcher
xxx ni xxx David at kasama namin siya sa
aming trabaho.
Second,
David
paid
Macasios
wages.
Both
David
and
Macasio
categorically stated in their respective
pleadings before the lower tribunals and
even before this Court that the former had
been paying the latter P700.00 each day
after the latter had finished the days
task. Solano and Antonio also confirmed
this fact of wage payment in their
Pinagsamang Sinumpaang Salaysay.41
This satisfies the element of payment of
wages.
Third, David had been setting the day and
time when Macasio should report for work.
This power to determine the work
schedule obviously implies power of
control. By having the power to control
Macasios work schedule, David could
regulate Macasios work and could even
refuse to give him any assignment,
thereby effectively dismissing him.
And fourth, David had the right and power
to control and supervise Macasios work as
to the means and methods of performing
it. In addition to setting the day and time
when Macasio should report for work, the
established facts show that David rents
the place where Macasio had been
performing his tasks. Moreover, Macasio
would leave the workplace only after he
had finished chopping all of the hog meats
given to him for the days task. Also,
David would still engage Macasios
services and have him report for work
even during the days when only few hogs
were delivered for butchering.
Under this overall setup, all those working
for David, including Macasio, could
naturally be expected to observe certain
rules and requirements and David would

necessarily exercise some degree of
control as the chopping of the hog meats
would
be
subject
to
his
specifications.
Also,
since
Macasio
performed his tasks at Davids workplace,
David could easily exercise control and
supervision over the former. Accordingly,
whether or not David actually exercised
this right or power to control is beside the
point as the law simply requires the
existence of this power to control 4243 or,
as in this case, the existence of the right
and opportunity to control and supervise
Macasio.44
In sum, the totality of the surrounding
circumstances of the present case
sufficiently points to an employeremployee relationship existing between
David and Macasio.
Macasio is engaged on pakyaw or
task basis
A distinguishing characteristic of pakyaw
or task basis engagement, as opposed to
straight-hour wage payment, is the nonconsideration of the time spent in
working. In a task-basis work, the
emphasis is on the task itself, in the sense
that payment is reckoned in terms of
completion of the work, not in terms of
the number of time spent in the
completion of work.45 Once the work or
task is completed, the worker receives a
fixed amount as wage, without regard to
the standard measurements of time
generally used in pay computation.
In Macasios case, the established facts
show that he would usually start his work
at 10:00 p.m. Thereafter, regardless of
the total hours that he spent at the
workplace or of the total number of the
hogs assigned to him for chopping,
Macasio would receive the fixed amount of
P700.00 once he had completed his
task. Clearly, these circumstances show a
pakyaw or task basis engagement that
all three tribunals uniformly found.
In sum, the existence of employment
relationship between the parties is

7171
72

determined by applying the four-fold
test; engagement on pakyaw or task
basis does not determine the parties
relationship as it is simply a method of
pay computation. Accordingly, Macasio is
Davids employee, albeit engaged on
pakyaw or task basis.
As an employee of David paid on pakyaw
or task basis, we now go to the core issue
of whether Macasio is entitled to holiday,
13th month, and SIL pay.
Provisions governing SIL and holiday
pay
Article 82 of the Labor Code provides the
exclusions from the coverage of Title I,
Book III of the Labor Code - provisions
governing working conditions and rest
periods.
Among the Title I provisions are the
provisions on holiday pay (under Article
94 of the Labor Code) and SIL pay (under
Article 95 of the Labor Code). Under
Article 82, field personnel on one hand
and workers who are paid by results on
the other hand, are not covered by the
Title I provisions. The wordings of Article
82 of the Labor Code additionally
categorize workers paid by results and
field personnel as separate and distinct
types of employees who are exempted
from the Title I provisions of the Labor
Code.
Under these provisions, the general rule
is that holiday and SIL pay provisions
cover all employees. To be excluded from
their coverage, an employee must be one
of those that these provisions expressly
exempt, strictly in accordance with the
exemption.
Under the IRR, exemption from the
coverage of holiday and SIL pay refer to
field personnel and other employees
whose
time
and
performance
is
unsupervised by the employer including
those who are engaged on task or
contract basis[.] Note that unlike Article
82 of the Labor Code, the IRR on
holiday and SIL pay do not exclude
employees engaged on task basis as a

separate and distinct category from
employees classified as field personnel.
Rather, these employees are altogether
merged
into
one
classification
of
exempted employees.
Because of this difference, it may be
argued that the Labor Code may be
interpreted to mean that those who are
engaged on task basis, per se, are
excluded from the SIL and holiday
payment since this is what the Labor Code
provisions, in contrast with the IRR,
strongly
suggest.
The
arguable
interpretation of this rule may be
conceded to be within the discretion
granted to the LA and NLRC as the quasijudicial bodies with expertise on labor
matters.
However, as early as 1987 in the case of
Cebu Institute of Technology v. Ople49 the
phrase those who are engaged on task or
contract basis in the rule has already
been
interpreted
to
mean
as
follows:chanroblesvirtuallawlibrary
[the phrase] should however, be related
with "field personnel" applying the rule on
ejusdem
generis
that
general
and
unlimited terms are restrained and limited
by the particular terms that they follow
xxx
Clearly,
petitioner's
teaching
personnel
cannot
be deemed
field
personnel which refers "to non-agricultural
employees who regularly perform their
duties away from the principal place of
business or branch office of the employer
and whose actual hours of work in the
field
cannot
be
determined
with
reasonable certainty. [Par. 3, Article 82,
Labor Code of the Philippines]. Petitioner's
claim that private respondents are not
entitled to the service incentive leave
benefit cannot therefore be sustained.
In short, the payment of an employee on
task or pakyaw basis alone is insufficient
to exclude one from the coverage of SIL
and holiday pay. They are exempted from
the coverage of Title I (including the
holiday and SIL pay) only if they qualify as

7272
73

field personnel.
The IRR therefore
validly qualifies and limits the general
exclusion of workers paid by results
found in Article 82 from the coverage of
holiday and SIL pay. This is the only
reasonable
interpretation
since
the
determination of excluded workers who
are paid by results from the coverage of
Title I is determined by the Secretary of
Labor in appropriate regulations.
Entitlement to holiday pay
in determining whether workers engaged
on pakyaw or task basis is entitled to
holiday and SIL pay, the presence (or
absence) of employer supervision as
regards
the
workers
time
and
performance is the key: if the worker is
simply engaged on pakyaw or task basis,
then the general rule is that he is
entitled to a holiday pay and SIL pay
unless exempted from the exceptions
specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of
the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls
within the meaning of field personnel
under the law, then he is not entitled to
these monetary benefits.
Macasio does not fall under the
classification of field personnel
Based on the definition of field personnel
under Article 82, we agree with the CA
that Macasio does not fall under the
definition of field personnel. The CAs
finding in this regard is supported by the
established facts of this case: first,
Macasio regularly performed his duties at
Davids principal place of business;
second, his actual hours of work could be
determined with reasonable certainty;
and, third, David supervised his time and
performance of duties. Since Macasio
cannot be considered a field personnel,
then he is not exempted from the grant of
holiday, SIL pay even as he was engaged
on pakyaw or task basis.
Not being a field personnel, we find the
CA to be legally correct when it reversed
the NLRCs ruling dismissing Macasios
complaint for holiday and SIL pay for
having been rendered with grave abuse of

discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month
pay however, we find that the CA legally
erred in finding that the NLRC gravely
abused its discretion in denying this
benefit to Macasio.
The governing law on 13th month pay is
PD No. 851.53 As with holiday and SIL pay,
13th month pay benefits generally cover all
employees; an employee must be one of
those expressly enumerated to be
exempted. Section 3 of the Rules and
Regulations Implementing P.D. No. 851 54
enumerates the exemptions from the
coverage
of
13th
month
pay
benefits. Under Section 3(e), employers
of those who are paid on xxx task basis,
and those who are paid a fixed
amount for performing a specific
work,
irrespective
of
the
time
consumed
in
the
performance
thereof55 are exempted.
Note that unlike the IRR of the Labor Code
on holiday and SIL pay, Section 3(e) of
the Rules and Regulations Implementing
PD No. 851 exempts employees paid on
task basis without any reference to field
personnel. This could only mean that
insofar as payment of the 13th month pay
is concerned, the law did not intend to
qualify the exemption from its coverage
with the requirement that the task worker
be a field personnel at the same time.
The Late Alberto B. Javier, as substituted
by his surviving wife, Ma. Theresa M.
Javier, and children, Kladine Javier, et
al.
Vs.
Philippine
Transmarine
Carriers, Inc., et al.G.R. No. 204101.
July 2, 2014
The seafarer is entitled to
medical
treatment
at cost
to the
employer apart
from disability benefits and
sickness
allowance

7373
74

The employment of seafarers and

its incidents are governed by the
contracts they sign every time they
are hired or rehired. These
contracts have the force of law
between the parties as long as
their stipulations are not contrary
to law, morals, public order or
public policy.24 Every seaman and
the vessel owner (directly or
represented by a local manning
agency) are required to execute
the POEA-SEC as a condition sine
qua
non
to
the
seafarers
deployment for overseas work.25
While the seafarers and their
employers are governed by their
mutual agreements, the POEA rules
and regulations require that the
POEA-SEC, which contains the
standard terms and conditions of
the seafarers employment in
foreign ocean-going vessels, be
integrated in every seafarers
contract.26
In the present case, Section 20-B
of the 2000 POEA-SEC27 (the
governing POEA-SEC at the time
the respondents employed Alberto
in 2003) is the applicable provision.
Under this section, the employers
assume several kinds of liabilities
to the seafarer for any workrelated illness or injury that the
seafarer may have suffered during
the term of the contract.
In reading these provisions, the Court

observes the evident intent of the POEASEC to treat these liabilities of the
employer separately and distinctly from
one another by treating the different items
of liability under separate paragraphs.
These individual paragraphs, in turn, show
the bases of each liability that are unique
from the others. This formulation is in
keeping with the POEAs mandate under
Executive Order No. 247 to secure the
best terms and conditions of employment
of Filipino contract workers and ensure
compliance therewith and to promote
and protect the well-being of Filipino
workers overseas.
Accordingly, Section 20-B (2), paragraph
2, of the POEA-SEC imposes on the
employer the liability to provide, at its
cost, for the medical treatment of the
repatriated seafarer for the illness or
injury that he suffered on board the
vessel until the seafarer is declared fit to
work or the degree of his disability is
finally determined by the companydesignated physician. This liability for
medical expenses is conditioned upon the
seafarers compliance with his own
obligation to report to the companydesignated physician within three (3) days
from his arrival in the country for
diagnosis and treatment.28 The medical
treatment is aimed at the speedy recovery
of the seafarer and the restoration of his
previous healthy working condition.
Since the seafarer is repatriated to the
country to undergo treatment, his inability
to perform his sea duties would normally
result in depriving him of compensation
income. To address this contingency,
Section 20-B (3), paragraph 1, of the
POEA-SEC imposes on the employer the
obligation to provide the seafarer with
sickness allowance that is equivalent
to his basic wage until the seafarer is
declared fit to work or the degree of his
permanent disability is determined by the
company-designated physician. The period
for the declaration should be made within
the period of 120 days or 240 days, as the
case may be.
Once a finding of permanent (total or
partial) disability is made either within the
120-day period or the 240-day period,29
Section 20-B (6) of the POEA-SEC requires
the employer to pay the seafarer
disability benefits for his permanent
total or partial disability caused by the
work-related illness or injury. In practical
terms, a finding of permanent disability
means a permanent reduction of the
earning power of a seafarer to perform
future sea or on board duties;30
permanent disability benefits look to the
future as a means to alleviate the

7474
75

seafarers financial condition based on the
level of injury or illness he incurred or
contracted.
The separate treatment of, and the
distinct considerations in, these three
kinds of liabilities under the POEA-SEC can
only mean that the POEA-SEC intended to
make the employer liable for each of these
three kinds of liabilities. In other words,
employers must: (1) pay the seafarer
sickness allowance equivalent to his basic
wage in addition to the medical treatment
that they must provide the seafarer with
at their cost; and (2) compensate the
seafarer for his permanent total or partial
disability as finally determined by the
company-designated physician.31
Significantly, too, while Section 20 of the
POEA-SEC did not expressly state that the
employers liabilities are cumulative in
nature so as to hold the employer liable
for the sickness allowance, medical
expenses and disability benefits it does
not also state that the compensation and
benefits are alternative or that the grant
of one bars the grant of the others.
Under this setup, the Court must be
guided by the principle that as a labor
contract, the POEA-SEC is imbued with
public interest. Accordingly, its provisions
must be construed fairly, reasonably and
liberally in favor of the seafarer in the
pursuit of his employment on board
ocean-going vessels. After all, the
constitutional policy, which we here
uphold and emphasize in construing as we
do these POEA-SEC provisions, accords
and guarantees full protection to labor,
both local and overseas.32
Notably, POEA Memorandum Circular No.
10, Series of 2010 (or the Amended
Standard Terms and Conditions Governing
the Overseas Employment of Filipino
Seafarers On-Board Ocean-Going Ships)33
makes more explicit the POEA-SECs
intent we earlier discussed. As matters
stand, the pertinent POEA-SEC provisions
now expressly and clearly state that, in
addition to the obligation of the employers
to provide the seafarer with the needed

medical attention at their cost, they shall
likewise provide the latter sickness
allowance equivalent to his basic wage.34
It also expressly states that the disability
benefits to which the seafarer may be
entitled shall be based solely on the listed
disability gradings without regard to the
duration
of
the
seafarers
medical
treatment or the period with which he was
given sickness allowance.35 Without doubt,
medical expenses, sickness allowance and
disability benefits are separate and
distinct from one another. Employers are
liable to provide these compensation and
benefits, subject to the satisfaction of the
requisite degree of proof.
Girly G. Ico Vs. Systems Technology
Institute, Inc., et al.G.R. No. 185100.
July 9, 2014
When another employee is soon after
appointed to a position which the
employer claims has been abolished, while
the employee who had to vacate the same
is transferred against her will to a position
which does not exist in the corporate
structure, there is evidently a case of
illegal constructive dismissal.
Colegio De San Juan De Letran-Calamba
Vs. Engr. Deborah P. TardeoG.R. No.
190303. July 9, 2014
The Office of the Voluntary
Arbitrator and the Court of Appeals
are one in holding that respondent
was
not
guilty
of
serious
misconduct when she omitted a
portion of the invitation, and, in
effect,
declared
respondents
suspension from employment for
one semester, unlawful. For failing
to adduce substantial evidence to
prove that respondent was guilty of
serious misconduct, both bodies
held that respondents suspension
from employment is unwarranted.
Misconduct is defined as improper

and wrongful conduct. It is the
transgression of some established
and definite rule of action, a
forbidden act, a dereliction of duty,
willful in character, and implies
wrongful intent and not mere error

7575
76

in judgment. Of course, ordinary
misconduct would not justify the
termination of the services of an
employee. The law is explicit that
the
misconduct
should
be
serious. It is settled that in order
for misconduct to be serious, it
must be of such grave and
aggravated character and not
merely trivial or unimportant. As
amplified by jurisprudence, the
misconduct must (1) be serious;
(2) relate to the performance of
the employees duties; and (3)
show that the employee has
become unfit to continue working
for the employer.20cralawred
Under Article 282 of the labor

Code, the misconduct, to be just
cause for termination, must be
serious. This implies that it must
be of such grave and aggravated
character and not merely trivial or
unimportant. Examples of serious
misconduct justifying termination,
as held in some of our decisions,
include: sexual harassment (the
managers acts of fondling the
hands, massaging the shoulder and
caressing
the
nape
of
the
secretary); fighting within company
premises,
uttering
obscene,
insulting or offensive words against
a superior; misrepresenting that a
student
is
his
nephew
and
pressuring and intimidating a coteacher to change a students
failing grade to passing.21cralawred
Although respondent was not

terminated from employment but
was merely suspended from work
for one semester or equivalent to
101
days
school
days,
her
infraction should still be measured
against the foregoing standards
considering that the charge leveled
against her is serious misconduct.
As correctly pointed out by the appellate
court, there is no substantial evidence to
prove that in not including a portion of the
invitation to her fund request, respondent
acted in malicious and contemptuous

manner with the intent to cause damage
to the petitioner. In other words, there is
no
basis
for
the
allegation
that
respondents
act
constituted
serious
misconduct that warrants the imposition
of penalty of suspension.
Indeed,
considering the fact that before the act
complained of, respondent has been
rendering service untarnished for 23
years, it is not easy to conclude that for
P600.00, respondent would willfully and
for wrongful intentions omit portions of
the documents taken from the PPS
website. In other words, as found by the
Voluntary Arbitrator and the Court of
Appeals, there is no substantial proof of
petitioners allegation of malicious conduct
against respondent.
The Court recognizes the right of the
employers to discipline its employees for
serious violations of company rules after
affording the latter due process and if the
evidence warrants.23 Such right, however,
should be exercised in consonance with
sound discretion putting into mind the
basic elements of justice and fair play.
Alone Amar P. Tagle Vs. Anglo-Eastern
Crew Management, Phils., Inc., AngloEastern Crew Management (ASIA)
and Capt. Gregorio B. SialsaG.R. No.
209302. July 9, 2014
core issue being whether or not
petitioner is entitled to disability
benefits on account of his medical
condition.
The rule is that a seafarers right to

disability benefits is a matter
governed by law, contract and
medical findings. The relevant legal
provisions are Articles 191 to 193
of the Labor Code and Section 2,
Rule X of the Amended Rules on
Employee Compensation (AREC).
The relevant contracts are the
POEA-SEC,
the
collective
bargaining agreement, if any, and
the
employment
agreement
between the seafarer and his
employer.3

7676
77

fter an assiduous assessment of the
evidence, however, the Court finds that
petitioners claim for permanent disability
benefits is without basis at all.
First. Petitioners complaint is premature.
A perusal of the detailed medical reports
issued
by
the
company-designated
physicians reveals that despite the
examinations and procedures that were
conducted on petitioner, they were not yet
able to form a definitive assessment of his
ailment. Oft-repeated in the medical
reports
of
the
company-designated
physicians is the fact that despite the
described medical examinations conducted
on petitioner, he was to be re-evaluated
following continued physical therapy and
medications. Then, when the companydesignated
physician
suggested
a
disability grading of Grade 12 (neck)
slight stiffness of the neck and Grade 11
(chest-trunk-spine) slight rigidity or 1/3
loss of motion or lifting power of the
trunk, he was still required to come back
for further re-evaluation, as he did when
he reported back in December 2008 and
on January 6, 2009. Unfortunately,
despite orders from the companydesignated physician to come back once
more on February 3, 2009 for reevaluation, he never did.
In other words, when petitioner decided to
seek the opinion of Dr. Escutin, it was yet
to be established by the companydesignated physicians whether he was
totally or partially disabled, as the
disability grading was tentatively given
and only as a suggestion, from the
results of the various examinations
conducted on him as of that time.
The fact that the company-designated
physicians needed to further examine
petitioners condition following continued
medication and therapy cannot be denied.
While initial treatment and medication
proved successful in alleviating his back
injury, he still continued to suffer on and
off bouts of pain on his neck. After that,
he again complained of back pains, so he
was treated and required once more to
report for re-evaluation. Thus, considering
the sporadic nature of his condition, it was

reasonable for the company-designated
physicians to require him to be routinely
re-evaluated.
Second.
Even
assuming
ex
gratia
argumenti that the company-designated
physicians had arrived at a final
conclusion of Grade 11/12 disability,
petitioners evidence would still cast doubt
on such findings. In stark contrast to the
detailed medical reports by the companydesignated physicians, a reading of the
medical report of Dr. Escutin shows that it
was not supported by any diagnostic tests
and/or procedures sufficient to refute the
results of those administered to petitioner
by the company-designated physicians.
Third. Assuming that petitioner indeed
suffered the most severe of back injuries,
in addition to his neck injury, he could still
not be entitled to his claim for permanent
total disability benefits. It should be
remembered that under the terms of the
POEA-SEC, for an illness suffered by a
seafarer to be compensable, it must first
fall within the definition of the term workrelated illness, that is, any sickness as a
result of an occupational disease listed
under Section 32-A with the conditions set
therein satisfied.
While
work-relatedness
is
indeed
presumed,41
the
Court,
in
Leonis
Navigation Co., Inc. v. Villamater,42
explained that the legal presumption in
Section 20(B)(4) of the POEA-SEC should
be read together with the requirements
specified by Section 32-A of the same
contract, in that Section 20(B)(4) only
affords a disputable presumption.
Thus, for disability to be compensable
under Section 20 (B)(4) of the POEA-SEC,
two elements must concur: (1) the injury
or illness must be work-related; and (2)
the work-related injury or illness must
have existed during the term of the
seafarers employment contract. In
other
words,
to
be
entitled
to
compensation and benefits under this
provision, it is not sufficient to simply
establish that the seafarers illness or
injury has rendered him permanently or

7777
78

partially disabled; it must also be shown
that there is a causal connection
between the seafarers illness or injury
and the work for which he had been
contracted.43
In this case, the record is bereft of any
evidence to prove satisfaction of the said
conditions. Petitioners claim of permanent
total disability as a result of his neck and
back condition is anchored solely on his
bare and uncorroborated insistence that
he was declared fit to work as seaman
after
his
Pre-Employment
Medical
Examination (PEME); that he acquired his
illness during the term of his employment
with respondents; and that his illness was
a necessary result of his collapse after
being exposed to heat while in the boiler
room and because of the 40 degree
Celsius temperatures of the Dubai
summertime.
There is even no substantiation at all that
his collapse while on board the MV Al
Ishaa directly caused, or at least
increased the risk of, his neck and back
injury. No medical history and/or record
prior to his deployment on board the
vessel MV Al Ishaa or any evidence as to
the nature of his work was ever presented
or alluded to in order to demonstrate that
the working conditions on board the said
vessel increased the risk of contracting his
illness.
Magsaysay Maritime Corporation, et al. Vs.

Henry M. Simbajon G.R. No. 203472.
July 9, 2014
Compensability of Simbajons disease
The employment of seafarers and its
incidents, including claims for death
benefits, are governed by the contracts
they sign every time they are hired or
rehired. Such contracts have the force of
law between the parties as long as its
stipulations are not contrary to law,
morals, public order or public policy.54 By
way of background, every seaman and the
vessel owner (directly or represented by a
local manning agency) are required to
execute the POEA-SEC as a condition sine
qua non to the seafarers deployment for

overseas work.55cralawred
While the seafarers and their employers
are governed by their mutual agreements,
the POEA rules and regulations require
that the POEA-SEC be integrated in every
contract. This contains the standard terms
and
conditions
of
the
seafarers
employment
in
foreign
ocean-going
vessels, 56 Under its Section 32-A, for an
occupational disease and the resulting
disability or death from it to be
compensable,
all
of
the
following
conditions
must
first
be
satisfied:chanRoblesvirtualLawlibrary
The seafarers work must involve the
risks
described
herein;chanroblesvirtuallawlibrary
The disease was contracted as a result
of the seafarers exposure to the
described
risks;chanroblesvirtuallawlibrary
The disease was contracted within a
period of exposure and under such
other factors necessary to contract
it; andChanRoblesVirtualawlibrary
There was no notorious negligence on
the part of the seafarer.57
An examination of the surrounding facts
and circumstances regarding Simbajons
sickness will show that the third condition
from the above enumeration is absent in
this case.
Simbajon started exhibiting the symptoms
of DM Type II barely six days after
embarkation. If his disease had been
acquired because of his exposure to
different kinds of work-related stress, it is
very unusual that it developed in a
very short span of time.
To support his contention, Simbajon also
pointed out that his PEME results cleared
him from pre-identified diseases including
Diabetes mellitus. This is a point,
however, that we have considered in other
rulings. In Nisda v. Sea Serve Maritime
Agency,58 we noted that it is an accepted
rule that PEMEs are usually not

7878
79

exploratory in nature.
The tests
conducted are not intended to be an indepth and thorough examination of an
applicants
medical
condition.
They
merely determine whether the examinee
is fit to work at sea or fit for sea
service; they do not describe the real
state
of
health
of
an
applicant.59cralawred
Thus, Simbajon cannot rely on his PEME
results alone to support his claim that his
disease only developed after embarkation.
This is particularly true since several
points during his treatment, his DM Type
II was found to be asymptomatic, i.e, as
symptomless or presenting no subjective
evidence of disease.60 Thus, it is probable
that Simbajons disease was already preexisting even before he boarded NCLs
vessel; his diabetes was not detected
because it was asymptomatic.
For failure to prove that his disease was
contracted within his six days of service
because of factors necessary to contract
it, we cannot support Simbajons assertion
that his DM Type II was a work-related
disease that should merit compensation
from the petitioners.
Fit-to-work assessment of the
company-designated physicians
versus the unfit-to-work findings
of Simbajons physician
We now resolve the issue of the conflicting
findings of the petitioners designated
physicians and Simbajons own physician.
The company-designated physicians have
declared Simbajon as fit to work after
172
days
of
treatment
from
his
disembarkation on August 15, 2004. On
the other hand, Simbajons chosen
physician, Dr. Vicaldo, came out with the
findings that Simbajons illness had
rendered him unfit to resume work as a
seaman in any capacity, with a Grade VI
(50%) disability rating.
In Philippine Hammonia Ship Agency, Inc.
v. Dumadag,61 we have ruled that the
POEA-SEC is the law between the
parties and as such, its provisions
bind both of them. Under the POEA-SEC,

the applicable provision to resolve the
issue of conflicting medical findings is
Section
20-B
(3),
which
states:chanRoblesvirtualLawlibrary
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.
xxx
If a doctor appointed by the seafarer
disagrees with the assessment, a
third doctor may be agreed jointly
between the Employer and the
seafarer. The third doctors decision
shall be final and binding on both
parties. [emphasis ours]
The glaring disparity between the findings
of the petitioners designated physicians
and Dr. Vicaldo calls for the intervention
of a third independent doctor, agreed
upon by petitioners and Simbajon. In this
case, no such third-party physician was
ever consulted to settle the conflicting
findings of the first two sets of
doctors. After being informed of Dr.
Vicaldos unfit-to-work findings, Simbajon
proceeded to file his complaint for
disability benefits with the LA. This move
totally
disregarded
the
mandated
procedure under the POEA-SEC requiring
the referral of the conflicting medical
opinions to a third independent doctor for
final determination.62 Dr. Vicaldo, too, is a
medical practitioner not unknown to this
Court, as he has issued certifications in
several disability claims that proved
unsuccessful.63cralawred
In Philippine Hammonia, we have ruled
that the duty to secure the opinion of
a third doctor belongs to the
employee
asking
for
disability
benefits.6By failing to observe the
required procedure under the POEA-SEC,

7979
80

he clearly violated its terms, i.e., the law
between the parties. And without a
binding third-party opinion, the fit-to-work
certification of petitioners designated
physicians prevails over that of Dr.
Vicaldos unfit-to-return-to-work finding.
Simbajon is not entitled to
permanent and total disability
benefits
We now resolve Simbajons claim that his
inability to resume his usual work as a
cook for a period exceeding 120 days,
automatically entitles him to permanent
and total disability benefits based on a
Grade I (120%) impediment rating.
Under this ruling,69 a finding by the
company-designated doctor that the
seafarer needs further treatment
beyond the initial 120-day period
results in the extension of the period
for the declaration of the existence of
a permanent partial or total disability
to
240
days. Thus, contrary to
Simbajons claim, his inability to resume
work after the lapse of more than 120
days from the time he suffered his illness
does not by itself automatically entitle him
to permanent and total disability benefits.
In the present case, Simbajons several
consultations
with
the
companydesignated doctors revealed that his DM
Type II was asymptomatic. Because of
this finding, the company-designated
doctors had to conduct further treatments
and prescribe his continuous medication
before finally concluding that he was fit to
return to work on February 2, 2005, or
172 days from his disembarkation. The
period is 68 days short of the 240 days
provided in Vergara. Within this period,
the company can continue to treat the
employee or conduct an observation
period (while continuing to pay his total
temporary disability pay), before the
Vergara deadline is reached.
Petitioners failure to rehire
Simbajon despite the fit to
work declaration
We can only surmise petitioners reasons
for not reemploying Simbajon despite the

effectivity of his contract. However, we
cannot accept his argument that his nonrehiring translates to the permanent and
total character of his disability.
For one, we have already determined that
his DM Type II was not a work-related
disease for failure to comply with the
POEA-SECs requisites for compensability.
Not being work-related, it cannot be the
basis of any disability claims. The findings
of Simbajons chosen physician cannot
also be considered due to the absence of
the medical opinion of a third independent
physician.
We further note that this argument was
only raised in Simbajons motion for
reconsideration with the NLRC. This was
never reiterated in his pleadings with the
CA and in his comment to the present
petition.
At the very least, Simbajon could have
used his non-rehiring to support the
argument
that
his
contract
was
prematurely terminated by petitioners. He
was declared fit to work but he was not
reaccepted in his former or a similar
position despite the remaining 104 days in
his contract.
But Simbajon never made an issue out of
this. Even at the level of the labor
tribunals, his pleadings focused solely on
the classification of his disability as
permanent and total. Premature contract
termination and entitlement to permanent
and total disability benefits are two
different labor issues. One is based on the
untimely termination of the contract
without any just or valid cause, while the
other is on the compensation that the law
aims to give to seafarers who are
rendered unable to resume sea service
due to work-related disease.
Thus, we cannot rule that Simbajons
contract had been pre-terminated without
any just or valid cause, and hold him
entitled to payment of his salaries for the
unexpired portion of his contract.73

8080
81

The above amendment finally clarifies the

basis for the declaration of a temporary or
permanent disability of a seafarer. For
work-related
illnesses
acquired
by
seafarers from the time the 2010
amendment to the POEA-SEC took effect,
the declaration of disability should no
longer be based on the number of days
the seafarer was treated or paid his
sickness allowance, but rather on the
disability grading he received, whether
from the company-designated physician or
from the third independent physician, if
the medical findings of the physician
chosen by the seafarer conflicts with that
of the company-designated doctor.
Olsen Cruise Lines Limited G.R. No.

180343. July 9, 2014
First. The employment relationship
between Constantino and the
petitioners is governed by the
POEA-SEC, otherwise known as the
Amended Standard Terms and
Conditions
Governing
the
Employment of Filipino Seafarers
On-Board Ocean-Going Vessels.23
Thus, when the seafarer enters into
an individual contract with the
employer, as Constantino did in
February 2002,24 the terms and
conditions of the contract must
be in accordance with the
POEA-SEC and shall be strictly
and faithfully observed.25 It is
customary
therefore that the
individual contract between the
seafarer and the employer (such as
the contract between Constantino
and the petitioners) is verified and
approved by the POEA. As had
been declared by the Court in an
earlier ruling, the POEA-SEC is the
law
between
the
parties,
together with their CBA, if there
any.26cralawred
Under the POEA-SEC, it is the

company-designated physician who
declares the fitness to work of a
seafarer who sustains a workrelated injury/illnes or the degree
of the seafarers disability. Section
20 (B) 3 of the POEA-SEC
provides:ChanRoblesVirtualawlibrar
y
Upon sign-off from the vessel for

medical treatment, the seafarer
shall be entitled to sickness
allowance equivalent to his basic
wage until he is declared fit to
work or the degree of his
permanent
disability
has
been assessed by the companydesignated physician but in no
case shall this period exceed one
hundred twenty (120 days)
Bahia Shipping Services, Inc. and Fred
We cannot fault VA Guerrero and the
Otherwise
we
would
be
violating
petitioners due process rights. Petitioners
never controverted such claim precisely
because Simbajon never raised it as an
issue. Moreover, the CA and the labor
tribunals rulings never touched on this.
Hence, it is beyond the ambit of our
review.
On a final note, this Court would like to
point out the amendments made of the
POEA-SEC
which
now
provides:chanRoblesvirtualLawlibrary
In case of permanent total or partial
disability of the seafarer caused by either
injury or illness the seafarer shall be
compensated in accordance with the
schedule of benefits enumerated in
Section 32 of this Contract. Computation
of his benefits arising from an illness or
disease shall be governed by the rates
and the rules of compensation
applicable at the time the illness or
disease was contracted.
The disability shall be based solely on
the disability gradings provided under
Section 32 of this Contract, and shall
not be measured or determined by
the number of days a seafarer is
under treatment or the number of
days in which sickness allowance is
paid.74 [emphasis and underscoring ours]

8181
82

NLRC for dismissing the complaint as it
was in accordance with the above-cited
provision of the POEA-SEC. Dr. Lim, the
company-designated physician, declared
Constantino fit to work after almost six
months
of
extensive
examination,
treatment and rehabilitation (therapy
sessions) by the company-accredited
specialists,
including
an
orthopedic
surgeon, upon his repatriation.
Dr. Almeda examined Constantino only
once (at most for several hours) and he
only interpreted the medical findings
of the company-accredited doctors. In
short, he applied his expertise on existing
medical findings of other physicians. It
also totally disregarded the petitioners
submission that its team of doctors
examined and treated Constantino 12
times for a period of almost six months
and, each time they treated him, they
issued a report of Constantinos medical
condition,
the
particular
treatment
administered and medicines prescribed,
which eventually became the basis of Dr.
Lims fit-to-work declaration.
We thus find no merit on Constantinos
objections on Dr. Lims qualification or the
lack of it when Dr. Lim declared him fit to
work. Since Constantino failed to show
any bad faith that attended the company
doctors medical reports, or that the
reports were self-serving and were issued
to allow the petitioners to avoid liability,
we rule that the NLRC did not commit any
grave abuse of discretion in its ruling;
In Philippine Hammonia,27 where we
encountered a similar disability claim, we
said: Dumadag cannot insist that the
favorable reports of his physicians be
chosen over the certification of the
company-designated physician, especially
if we were to consider that the physicians
he consulted examined him for only for a
day (or shorter) on four different dates
x x x Moreover, we point out that they
merely relied on the same medical history,
diagnoses and analyses provided by the
company-designated specialists.
Under
the circumstances, we cannot simply say
that their findings are more reliable than
the
conclusions
of
the
companydesignated physicians28
Second. There is no dispute that under
the POEA-SEC, Constantino was not
precluded from seeking a second
opinion on his medical condition or
disability. The third paragraph of the
Section 20 (B)3 of the POEA-SEC states
that If a doctor appointed by the
seafarer
disagrees
with
the
assessment
(of
the
companydesignated physician), a third doctor
may be agreed jointly between the
Employer and the seafarer. The third
doctors decision shall be final and
binding on both parties
Republic of the Philippines, rep by the
Hon. Secretary, DOLE Vs. Namboku
Peak, Inc./Phil-Japan Workers UnionSolodarity of Union in the Philippines
for
Empowerment
and
Reforms
(PJWU-Super),
et
al. G.R. No.
169745/G.R. No. 170091. July 18, 2014
The court or tribunal exercising quasijudicial functions is bereft of any right or
personality to question the decision of an
appellate court reversing its decision.1
The Secretary of Labor is not the real
party-in- interest vested with personality
to file the present petitions. A real partyin-interest is the party who stands to be
benefited or injured by the judgment in
the suit, or the party entitled to the avails
of the suit.40 As thus defined, the real
parties-in-interest in these cases would
have been PALCEA-SUPER and PJWUSUPER. It would have been their duty to
appear and defend the ruling of the
Secretary of Labor for they are the ones
who were interested that the same be
sustained. Of course, they had the option
not to pursue the case before a higher
court, as what they did in these cases. As
to the Secretary of Labor, she was
impleaded in the Petitions for Certiorari
filed before the CA as a nominal party
because one of the issues involved therein
was whether she committed an error of
jurisdiction. But that does not make her a
real party-in-interest or vests her with
authority to appeal the Decisions of the
CA in case it reverses her ruling. Under
Section 1,41 Rule 45 of the Rules of Court,

8282
83

only
real
parties-in-interest
who
participated in the litigation of the case
before the CA can avail of an appeal by
certiorari.
Here, both cases emanated from the

petitions for certification election filed with
the
Med-Arbiter
and
subsequently
appealed to the Secretary of Labor. She
had occasion to hear the parties
respective contentions and rule thereon.
As the officer who rendered the decision
now subject of these cases, the Secretary
of Labor should have remained impartial
and detached from the time the cases
reached her until the same were being
scrutinized on appeal.53
Estrella D. S. Baez Vs. Social Security
System and De la Salle UniversityG.R.
No. 189574. July 18, 2014
In order for the beneficiary of an
employee to be entitled to death
benefits under the SSS, the cause
of death of the employee must be
a sickness listed as an occupational
disease by ECC; or any other
illness caused by employment,
subject to proof that the risk of
contracting the same is increased
by the working conditions.20
It is undisputed that SLE is not

listed as an occupational disease
under Annex A of the Rules on
Employees Compensation. Thus,
petitioner
has
to
prove
by
substantial evidence the causal
relationship between her husbands
illness and his working conditions.
For petitioners claim to prosper,

she must submit such proof as
would constitute a reasonable basis
for concluding either that the
conditions of employment caused
her husbands ailment or that such
working conditions had aggravated
the risk of
contracting that
ailment.21
While there are certain chemicals accepted
as increasing the risks of contracting SLE
such as chlorinated pesticides and
crystalline silica,23 the law requires proof
by substantial evidence, or such relevant

evidence which a reasonable mind might
accept as adequate to justify a conclusion,
that the nature of his employment or
working conditions increased the risk of
contracting the ailment or that its
progression or aggravation was brought
about thereby.24
St. Luke's Medical Center, Incorporated

Vs. Daniel Quebral, et al. G.R. No.
193324. July 23, 2014
The petition is meritorious. This
Court finds that the penalty of
dismissal meted on Quebral is
commensurate to the offense he
committed.
Quebral cannot feign ignorance of

the policy limiting to patients the
privilege of the use of validated
parking tickets. First, it is written
on the parking ticket itself. Having
used said parking tickets many
times, it was incumbent upon him
to read the terms and conditions
stated thereon. And second, even
assuming he was not able to read
said policy, this Court agrees with
petitioner that this only serves as a
testament of his inefficiency in his
job as he is not aware of his
employers policies despite being
employed for 7 years. Moreover, as
Wellness Center Assistant whose
task is to extend all needed
assistance to the ECU patients, it is
expected that he is aware of all
matters relating to patient rights
and privileges.
This Court, likewise, does not subscribe to
respondents argument that since there is
no showing that the offense had
prejudiced the operations of petitioner as
there are no records of damage sustained
by the latter he does not deserve to be
dismissed from employment. A company
has the right to dismiss its employees as a
measure of self-protection.24 It need not
wait for it to suffer actual damage or loss
before it can rightfully dismiss an
employee who it has already found to
have been dishonest. The fact that

8383
84

petitioner did not suffer losses from the

dishonesty of the respondent does not
excuse
the
latter
from
any
culpability.25 Whether he has already
settled the amount he was supposed to
pay for parking if not for the validated
parking
tickets
is
of
no
26
consequence.
The fact remains that he
was dishonest in the performance of his
duties which is a valid ground for
termination of employment.
Crisanto F. Castro, Jr. Vs. Ateneo De Naga
University, Fr. Joel Tabora and Mr.
Edwin BernalG.R. No. 175293. July 23,
2014
The employer is obliged to reinstate the
dismissed employee and to pay his wages
during the period of appeal of the decision
in the latters favor until the reversal of
the decision.
I
Execution of the receipt and quitclaim was
not a settlement of the petitioners claim
for accrued salaries
The text of the receipt and quitclaim was
clear and straightforward, and it was to
the effect that the sum received by the
petitioner represented full payment of
benefits pursuant to the Employees
retirement plan. As such, both the NLRC
and the CA should have easily seen that
the quitclaim related only to the
settlement of the retirement benefits,
which benefits could not be confused with
the reliefs related to the complaint for
illegal dismissal.
Worthy to stress is that retirement is of a
different species from the reliefs awarded
to an illegally dismissed employee.
Retirement is a form of reward for an
employees loyalty and service to the
employer, and is intended to help the
employee enjoy the remaining years of his
life, and to lessen the burden of worrying
about his financial support or upkeep.29 In
contrast, the reliefs awarded to an illegally
dismissed employee are in recognition of
the
continuing
employer-employee
relationship that has been severed by the
employer without just or authorized
cause, or without compliance with due

process.
II
Claim for accrued benefits should be
sustained
despite dismissal of the petitioners
complaint
The petitioner argues that according to
Roquero v. Philippine Airlines, Inc., 30 the
employer is obliged to reinstate and to
pay the wages of the dismissed employee
during the period of appeal until its
reversal by the higher Court; and that
because he was not reinstated either
actually or by payroll, he should be held
entitled to the accrued salaries.
The argument of the petitioner is correct.
Article 279 of the Labor Code, as
amended, entitles an illegally dismissed
employee to reinstatement. Article 223 of
the Labor Code requires the reinstatement
to be immediately executory even pending
appeal. With its intent being ostensibly to
promote the benefit of the employee,
Article 223 cannot be the source of any
right of the employer to remove the
employee should he fail to immediately
comply with the order of reinstatement.31
In Roquero, the Court ruled that the
unjustified refusal of the employer to
reinstate the dismissed employee would
entitle the latter to the payment of his
salaries effective from the time when the
employer failed to reinstate him; thus, it
became the ministerial duty of the LA to
implement the order of reinstatement.32
According to Triad Security & Allied
Services v. Ortega, Jr.,33 the law
mandates the prompt reinstatement of the
dismissed or separated employee, without
need of any writ of execution.
Hence, for as long as the employer
continuously fails to actually implement
the reinstatement aspect of the decision of
the LA, the employers obligation to the
employee for his accrued backwages and
other benefits continues to accumulate.36
Rosemarie Esmarialino Vs. Employees'
Compensation
Commission,
Social

8484
85

Security System (SSS) and Jimenez
Protective and Security Agency G.R.
No. 192352. July 23, 2014
The CA, ECC and SSS uniformly
found that Rosemarie cannot be
granted death benefits as she had
failed to offer substantial evidence
to prove her claims. Besides, even
if this Court were to exercise
leniency
and
resort
to
reevaluating the factual findings
below, still, the instant petition is
susceptible to denial. The SSS, ECC
and CA decisions are amply
supported, hence, the Court finds
no compelling reason to order their
reversal.
In
Benito
E.
Lorenzo
v.
Government
Service
Insurance
System (GSIS) and Department of
Education
(DepEd),16
a
case
involving a teacher, who likewise
died of leukemia, the Court ruled
that:chanroblesvirtuallawlibrary
[T]he coverage of leukemia as an

occupational disease relates to
ones employment as an operating
room personnel ordinarily exposed
to anesthetics. x x x There was no
showing that her work involved
frequent and sufficient exposure to
substances
established
as
occupational risk factors of the
disease. x x x.
xxxx
x x x Petitioner failed to show that

the progression of the disease was
brought about largely by the
conditions in [x x xs] work. Not
even a medical history or records
was
presented
to
support
petitioners claim.
xxxx
x x x [A] bare allegation [is] no

different from a mere speculation.
As we held in Raro v. Employees
Compensation
Commission:chanroblesvirtuallawli
brary
The law, as it now stands requires

the claimant to prove a positive
thing the illness was caused by
employment and the risk of
contracting the disease is increased
by the working conditions. To say
that since the proof is not
available, therefore, the trust fund
has the obligation to pay is
contrary to the legal requirement
that proof must be adduced. The
existence of otherwise non-existent
proof cannot be presumed.
It is well to stress that the
principles
of
presumption
of
compensability and aggravation
found in the old Workmens
Compensation Act is expressly
discarded
under
the
present
compensation
scheme.
As
illustrated in the said Raro case,
the new principle being applied is a
system based on social security
principle; thus, the introduction of
proof of increased risk. As further
declared
therein:chanroblesvirtuallawlibrary
The present
system
is
also
administered by social insurance
agencies - the Government Service
Insurance System
and Social
Security System - under the
Employees
Compensation
Commission. The intent was to
restore a sensible equilibrium
between the employer's obligation
to pay workmen's compensation
and the employee's right to receive
reparation
for
work-connected
death or disability.
xxxx
Compassion for the victims of
diseases not covered by the law
ignores the need to show a greater
concern for the trust fund to which
the tens of millions of workers and

8585
86

their
families
look
to
for
compensation whenever covered
accidents, diseases and deaths
occur.17 (Citations omitted)
It is worth noting that in an

attempt to prove that Edwin's
employment increased his chances
of contracting leukemia, Rosemarie
presented copies of her husband's
daily time records.18
However,
even if the Court were to co-relate
these to the medical abstract 19
submitted by Rosemarie, there is
nothing in the documents from
which the Court can infer or
conclude that indeed, Edwin's risk
of contracting leukemia increased
by reason of his work conditions.
Heritage Hotel Manila, acting through its
owner, Grand Plaza Hotel Corp. Vs.
Secretary of Labor & Employment, et
al.G.R. No. 172132. July 23, 2014
Although case law has repeatedly held
that the employer was but a bystander in
respect of the conduct of the certification
election to decide the labor organization to
represent the employees in the bargaining
unit, and that the pendency of the
cancellation of union registration brought
against the labor organization applying for
the certification election should not
prevent the conduct of the certification
election, this review has to look again at
the seemingly never-ending quest of the
petitioner employer to stop the conduct of
the certification election on the ground of
the pendency of proceedings to cancel the
labor organizations registration it had
initiated
on
the ground
that
the
membership of the labor organization was
a mixture of managerial and supervisory
employees
with
the
rank-and-file
employees.
ISSUE: should the petition for the
cancellation of union registration based on
mixed membership of supervisors and
managers in a labor union, and the nonsubmission of reportorial requirements to
the DOLE justify the suspension of the
proceedings for the certification elections
or even the denial of the petition for the
certification election?
Basic in the realm of labor union rights is

that the certification election is the sole
concern of the workers,29 and the
employer is deemed an intruder as far as
the certification election is concerned.30
Thus, the petitioner lacked the legal
personality to assail the proceedings for
the certification election,31 and should
stand aside as a mere bystander who
could not oppose the petition, or even
appeal the Med-Arbiters orders relative to
the conduct of the certification election.32
As the Court has explained in Republic v.
Kawashima Textile Mfg., Philippines, Inc.33
(Kawashima):chanRoblesvirtualLawlibrary
Except when it is requested to bargain
collectively, an employer is a mere
bystander to any petition for certification
election;
such
proceeding
is
nonadversarial and merely investigative, for
the purpose thereof is to determine which
organization will represent the employees
in their collective bargaining with the
employer.
The
choice
of
their
representative is the exclusive concern of
the employees; the employer cannot have
any partisan interest therein; it cannot
interfere with, much less oppose, the
process by filing a motion to dismiss or an
appeal from it; not even a mere allegation
that some employees participating in a
petition for certification election are
actually managerial employees will lend an
employer legal personality to block the
certification election. The employer's only
right in the proceeding is to be notified or
informed thereof.
The petitioners meddling in the conduct of
the certification election among its
employees unduly gave rise to the
suspicion that it intended to establish a
company union.34 For that reason, the
challenges
it
posed
against
the
certification election proceedings were
rightly denied.
Under the long established rule, too, the
filing of the petition for the cancellation of
NUWHRAIN-HHMSCs registration should
not bar the conduct of the certification

8686
87

election.35 In that respect, only a final
order for the cancellation of the
registration
would
have
prevented
NUWHRAIN-HHMSC from continuing to
enjoy all the rights conferred on it as a
legitimate labor union, including the right
to the petition for the certification
election.36 This rule is now enshrined in
Article 238-A of the Labor Code, as
amended by Republic Act No. 9481,37
which reads:chanRoblesvirtualLawlibrary
Article 238-A. Effect of a Petition for
Cancellation of Registration. A petition
for cancellation of union registration shall
not
suspend
the
proceedings
for
certification election nor shall it prevent
the filing of a petition for certification
election.
give
the
Regional
Director
ample
discretion in dealing with a petition for
cancellation of a union's registration,
particularly, determining whether the
union still meets the requirements
prescribed by law. It is sufficient to give
the Regional Director license to treat the
late filing of required documents as
sufficient
compliance
with
the
requirements of the law. After all, the law
requires the labor organization to submit
the annual financial report and list of
members in order to verify if it is still
viable and financially sustainable as an
organization so as to protect the employer
and employees from fraudulent or fly-bynight unions. With the submission of the
required documents by respondent, the
purpose of the law has been achieved,
though belatedly.
xxxx
Still, the petitioner assails the failure of
NUWHRAIN-HHMSC to submit its periodic
financial reports and updated list of its
members pursuant to Article 238 and
Article 239 of the Labor Code. It contends
that the serious challenges against the
legitimacy of NUWHRAIN-HHMSC as a
union raised in the petition for the
cancellation of union registration should
have cautioned the Med-Arbiter against
conducting the certification election.
The petitioner does not convince us.
In The Heritage Hotel Manila v. National
Union of Workers in the Hotel, Restaurant
and Allied Industries-Heritage Hotel Manila
Supervisors
Chapter
(NUWHRAINHHMSC),38 the Court declared that the
dismissal
of
the
petition
for
the
cancellation
of
the
registration
of
NUWHRAIN-HHMSC was proper when
viewed against the primordial right of the
workers to self-organization, collective
bargaining negotiations and peaceful
concerted
actions,
viz:chanRoblesvirtualLawlibrary
xxxx
[Articles 238 and 239 of the Labor Code]
We cannot ascribe abuse of discretion to

the Regional Director and the DOLE
Secretary in denying the petition for
cancellation of respondent's registration.
The union members and, in fact, all the
employees belonging to the appropriate
bargaining unit should not be deprived of
a bargaining agent, merely because of the
negligence of the union officers who were
responsible for the submission of the
documents to the BLR.
Labor authorities should, indeed, act with
circumspection in treating petitions for
cancellation of union registration, lest they
be accused of interfering with union
activities. In resolving the petition,
consideration must be taken of the
fundamental rights guaranteed by Article
XIII, Section 3 of the Constitution, i.e.,
the rights of all workers to selforganization, collective bargaining and
negotiations, and peaceful concerted
activities. Labor authorities should bear in
mind that registration confers upon a
union the status of legitimacy and the
concomitant right and privileges granted
by law to a legitimate labor organization,
particularly the right to participate in or
ask for certification election in a
bargaining unit. Thus, the cancellation of a
certificate of registration is the equivalent

8787
88

of snuffing out the life of a labor
organization.
For
without
such
registration, it loses - as a rule - its rights
under the Labor Code.
It is worth mentioning that the Labor
Code's provisions on cancellation of union
registration
and
on
reportorial
requirements
have
been
recently
amended by Republic Act (R.A.) No. 9481,
An Act Strengthening the Workers
Constitutional Right to Self-Organization,
Amending for the Purpose Presidential
Decree No. 442, As Amended, Otherwise
Known as the Labor Code of the
Philippines, which lapsed into law on May
25, 2007 and became effective on June
14, 2007. The amendment sought to
strengthen the workers right to selforganization and enhance the Philippines'
compliance
with
its
international
obligations
as
embodied
in
the
International Labor Organization (ILO)
Convention No. 87, pertaining to the nondissolution of workers organizations by
administrative authority. Thus, R.A. No.
9481
amended
Article
239
to
read:chanRoblesvirtualLawlibrary
ART. 239. Grounds for Cancellation of
Union Registration.--The following may
constitute grounds for cancellation of
union
registration:chanRoblesvirtualLawlibrary
(a) Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
took part in the ratification;
(b) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor
Code
Article
242-A,
which
provides:chanroblesvirtuallawlibrary
ART. 242-A. Reportorial Requirements.-The following are documents required to
be submitted to the Bureau by the

legitimate
labor
organization
concerned:chanRoblesvirtualLawlibrary
(a) Its constitution and by-laws, or
amendments thereto, the minutes of
took part in the ratification of the
constitution and by-laws within thirty (30)
days from adoption or ratification of the
constitution and by-laws or amendments
thereto;
(b) Its list of officers, minutes of the
election of officers, and list of voters
within thirty (30) days from election;
(c) Its annual financial report within thirty
(30) days after the close of every fiscal
year; and
(d) Its list of members at least once a
year or whenever required by the Bureau.
Failure to comply with the above
requirements shall not be a ground
for cancellation of union registration
but shall subject the erring officers or
members to suspension, expulsion
from membership, or any appropriate
penalty.
xxxx
The ruling thereby wrote finis to the
challenge being posed by the petitioner
against the illegitimacy of NUWHRAINHHMSC.
The remaining issue to be resolved is
which among Toyota Motor, Dunlop
Slazenger and Tagaytay Highlands applied
in resolving the dispute arising from the
mixed membership in NUWHRAIN-HHMSC.
This
is
not
a
novel
matter.
In
Kawashima,39 we have reconciled our
rulings in Toyota Motor, Dunlop Slazenger
and Tagaytay Highlands by emphasizing
on the laws prevailing at the time of filing
of the petition for the certification election.
Presently, then, the mixed membership

8888
89

does not result in the illegitimacy of the
registered labor union unless the same
was done through misrepresentation, false
statement or fraud according to Article
239 of the Labor Code. In Air Philippines
Corporation
v.
Bureau
of
Labor
Relations,41 we categorically explained
that
Clearly, then, for the purpose of decertifying a union, it is not enough to

establish that the rank-and-file union
includes ineligible employees in its
membership. Pursuant to Article 239 (a)
and (c) of the Labor Code, it must be
shown that there was misrepresentation,
false statement or fraud in connection
with the adoption or ratification of the
constitution and by-laws or amendments
thereto, the minutes of ratification, or in
connection with the election of officers,
minutes of the election of officers, the list
of voters, or failure to submit these
documents together with the list of the
newly elected-appointed officers and their
postal addresses to the BLR.
National Union of Workers in Hotel
Restaurant and Allied Industries
[NUWRAIN-APL-IUF], Philippine Plaza
Chapter Vs. Philippine Plaza Holdings,
Inc.G.R. No. 177524. July 23, 2014
Nature of a CBA; rules in the
interpretation of CBA provisions
A collective bargaining agreement, as
used in Article 252 (now Article 262)27
of the Labor Code, is a contract
executed at the request of either the
employer or the employees exclusive
bargaining representative with respect
to wages, hours of work and all other
terms and conditions of employment,
including proposals for adjusting any
grievances or questions under such
agreement.28
Jurisprudence settles
that a CBA is the law between the
contracting parties who are obliged
under the law to comply with its
provisions.29
As a contract and the governing law
between the parties, the general rules
of statutory construction apply in the
interpretation of its provisions. Thus,

if the terms of the CBA are plain, clear
and leave no doubt on the intention of
the contracting parties, the literal
meaning of its stipulations, as they
appear on the face of the contract,
shall prevail.30 Only when the words
used are ambiguous and doubtful or
leading to several interpretations of
the parties agreement that a resort to
interpretation and construction is
called for.31
No service charges were due from
the specified
entries/transactions; they either
fall within the
CBA-excepted
Negotiated
Contracts and
Special Rates or did not involve
a sale
of food, beverage, etc.
The Union anchors its claim for
services charges on Sections 68 and
69 of the CBA, in relation with Article
96 of the Labor Code. Section 68
states that the sale of food, beverage,
transportation, laundry and rooms are
subject to service charge at the rate of
ten percent (10%). Excepted from the
coverage of the 10% service charge
are
the
so-called
negotiated
contracts and special rates.
Following the wordings of Section 68
of the CBA, three requisites must be
present for the provisions on service
charges to operate: (1) the transaction
from which service charge is sought to
be collected is a sale; (2) the sale
transaction covers food, beverage,
transportation, laundry and rooms;
and (3) the sale does not result from
negotiated contracts and/or at
special rates.
In plain terms, all transactions
involving a sale of food, beverage,
transportation, laundry and rooms are
generally covered. Excepted from the
coverage
are,
first,
non-sale
transactions or transactions that do

8989
90

not involve any sale even though they
involve food, beverage, etc. Second,
transactions that involve a sale but do
not involve food, beverage, etc. And
third,
transactions
involving
negotiated contracts and special
rates i.e., a sale of food, beverage,
etc.
resulting
from
negotiated
contracts or at special rates; nonsale transactions involving food,
beverage,
etc.
resulting
from
negotiated contracts and/or special
rates; and sale transactions, but not
involving
food,
beverage,
etc.,
resulting from negotiated contracts
and special rates.
Notably, the CBA does not specifically
define
the
terms
negotiated
contracts
and
special
rates. Nonetheless, the CBA likewise
does not explicitly limit the use of
these
terms
to
specified
transactions. With particular reference
to negotiated contracts, the CBA
does not confine its application to
airline contracts as argued by the
Union. Thus, as correctly declared by
the
CA,
the
term
negotiated
contracts should be read as applying
to all types of negotiated contracts and
not to airlines contracts only. This is
in line with the basic rule of
construction that when the terms are
clear and leave no doubt upon the
intention of the contracting parties, the
literal meaning of its stipulations shall
prevail. A constricted interpretation of
this term, i.e., as applicable to
airlines contracts only, must be
positively
shown
either
by
the
wordings of the CBA or by sufficient
evidence of the parties intention to
limit its application.
The Union
completely failed to provide support
for its constricted reading of the term
negotiated contracts, either from the
wordings of the CBA or from the
evidence.
The PPHI did not violate Article 96 of
the
Labor Code when they refused the
Unions
claim for service charges on the
specified entries/transactions
Article 96 of the Labor Code provides for
the minimum percentage distribution
between the employer and the employees
of the collected service charges, and its
integration in the covered employees
wages in the event the employer
terminates its policy of providing for its
collection. It pertinently reads:
Art. 96. Service Charges.
x x x In case the service charge is
abolished, the share of the covered
employees shall be considered integrated
in their wages.
This last paragraph of Article 96 of the
Labor Code presumes the practice of
collecting service charges
and the
employers
termination
of
this
practice. When this happens, Article 96
requires the employer to incorporate the
amount that the employees had been
receiving as share of the collected service
charges into their wages. In cases where
no service charges had previously been
collected (as where the employer never
had any policy providing for collection of
service charges or had never imposed the
collection of service charges on certain
specified transactions), Article 96 will not
operate.
In this case, the CA found that the PPHI
had not in fact been collecting services
charges
on
the
specified
entries/transactions that we pointed out
as either falling under negotiated
contracts and/or special rates or did not
involve a sale of food, beverage,
etc. Accordingly, Article 96 of the Labor
Code finds no application in this case; the
PPHI did not abolish or terminate the
implementation of any company policy
providing for the collection of service
charges on specified entries/transactions
that could have otherwise rendered it
liable to pay an amount representing the
covered employees share in the alleged
abolished service charges.

9090
91

The Unions claim for service charges
for the year
1997 and the early months of 1998
could not have
yet prescribed at the time it filed its
complaint on
May 3, 2001; Article 1155 of the Civil
Code applies
suppletorily to Article 291 of the
Labor Code
Article 291 (now Article 305)32 of the
Labor Code states that all money claims
arising from employer-employee relations
x x x shall be filed within three (3)
years from the time the cause of
action accrued; otherwise, they shall
forever be barred. [Emphasis supplied]
Like
other
causes
of
action,
the
prescriptive period for money claims
under Article 291 of the Labor Code is
subject to interruption. And, in the
absence of an equivalent Labor Code
provision for determining whether Article
291s three-year prescriptive period may
be interrupted, Article 1155 of the Civil
Code33 may be applied. Thus, the period
of prescription of money claims under
Article 291 is interrupted by: (1) the filing
of an action; (2) a written extrajudicial
demand by the creditor; and (3) a written
acknowledgment of the debt by the
debtor.
In the present petition, the facts
indisputably showed that as early as
1998, the Union demanded, via the 1st
audit report, from the PPHI the payment
and/or
distribution
of
the
alleged
uncollected service charges for the year
1997. From thereon, the parties went
through negotiations (LCMC) to settle and
reconcile on their respective positions and
claims.
Under these facts the Unions written
extrajudicial demand through its 1st
audit report and the successive
negotiation meetings between the
Union and the PPHI the running of
the three-year prescriptive period
under Article 291 of the Labor Code

could
have
effectively
been
interrupted.
Consequently,
the
Unions
claims
for
the
alleged
uncollected service charges for the
year 1997 could not have yet
prescribed at the time it filed its
complaint on May 3, 2001.
Joraina
Dragon
Talosig
Vs.
United
Philippine Lines, Inc., et al.G.R. No.
198388. July 28, 2014
The denial of petitioners claim is
based on two grounds: (1) that at
the time of his death, Talosig was
no longer under the employment of
respondents; and (2) that there
was neither any showing that the
cause of his death was one of
those covered by the POEA
Standard Employment Contract,
nor was there any proof that it was
work-related.
It is undeniable that the death of a

seafarer
must
have
occurred
during the term of his contract of
employment
for
it
to
be
compensable.
Records show that the contract of

Talosig was for the duration of 12
months commencing on the date of
his actual departure from point of
hire;12
he
was,
however,
repatriated for medical reasons on
24 December 2005. The CA ruled
that upon his repatriation, his
employment
was
effectively
terminated pursuant to Section 18
B(1) of the POEA Standard
Employment
Contract.13
Parenthetically, petitioner does not
question the fact of the termination
of Talosigs employment; she
alleges, though, that the obligation
of respondents to the seafarer
subsists even after his repatriation.
Section 32-A of the POEA Standard

Employment Contract considers the
possibility of compensation for the
death of a seafarer occurring after

9191
92

the termination of the employment
contract on account of a workrelated illness. But for death to be
compensable, under this provision,
the claimant must fulfill all the
requisites for compensability.
Further, petitioner is correct in that

a disputable presumption in favor
of the compensability of an illness
suffered by a seafarer during the
term of his contract is provided
under Section 20 B(4)14 of the
POEA
Standard
Employment
Contract.
This
disputable
presumption works in favor of the
employee pursuant to the following
mandate under Executive Order
No. 247 dated 21 July 1987, under
which the POEA-SEC was created:
to secure the best terms and
conditions
of
employment
of
Filipino
contract
workers
and
ensure compliance therewith and
to protect the well-being of
Filipino workers overseas. Hence,
unless
contrary
evidence
is
presented
by
the
seafarers
employer/s,
this
disputable
presumption stands.15
In this case, we agree with the CA

that colon cancer is not one of
those types of cancer that are
compensable under Section 32 of
the POEA Standard Employment
Contract.
As aptly ruled by the CA, petitioner
did not present any proof of a
causal connection or at least a
work
relation
between
the
employment of Talosig and his
colon cancer. Petitioner merely
relied on presumption of causality.
She failed either to establish or
even to mention the risks that
could have caused or, at the very
least, contributed to the disease
contracted by Talosig.
FLP
Enterprises
Inc.-Francesco
Shoes/Emilio Francisco B. Pajaro Vs.
Ma. Joeralyn D. Dela Cruz and Vilma
MalunesG.R. No. 198093. July 28, 2014
It is a fundamental rule that an employee

can be discharged from employment only
for a valid cause. Here, both the LA and
the NLRC found that respondents have
been validly terminated for gross and
habitual neglect of duties, constituting just
cause for termination under Article 282 of
the Labor Code. As a valid ground for
dismissal under said provision, neglect of
duty
must
be
both
gross
and
habitual. Gross negligence entails want of
care in the performance of ones duties,
while habitual neglect imparts repeated
failure to perform such duties for a period
of
time,
depending
on
the
circumstances.13
In this case, as the CA correctly ruled,15 in
order to sustain herein respondents
dismissal, FLPE must show, by substantial
evidence,
that
the
following
are
extant:chanroblesvirtuallawlibrary
1) the existence of the subject company
policy;
2) the dismissed employee must have
been properly informed of said policy;
3) actions or omissions on the part of the
dismissed
employee
manifesting
deliberate refusal or wilful disregard of
said company policy; and
4)
such actions or omissions have
occured repeatedly.
FLPE claims that its company policy that
requires its sales managers and staff to
keep the sales proceeds in a shoebox in
the stockroom and not inside the cash
register, have been in existence since
October 23, 2003. However, FLPE failed to
establish that such a company policy
actually exists, and if it does truly exist,
that it was, in fact, posted and/or
disseminated accordingly. Neither is there
anything in the records which reveals that
the dismissed respondents were informed
of said policy. The company vehemently
insists that it posted, announced, and
implemented the subject Safekeeping
Policy in all its retail stores, especially the
one in Alabang Town Center. It, however,
failed to substantiate said claim. It could
have easily produced a copy of said
memorandum bearing the signatures of

9292
93

Dela Cruz and Malunes to show that,
indeed, they have been notified of the
existence of said company rule and that
they have received, read, and understood
the same. FLPE could likewise have
simply called some of its employees to
testify
on
the
rules
existence,
dissemination,
and
strict
implementation. But aside from its selfserving and uncorroborated declaration,
and a copy of the supposed policy as
contained in the October 23, 2003
Memorandum, FLPE adduced nothing
more.
In termination cases, the burden of proof
rests on the employer to show that the
dismissal is for a just cause.17 The one
who alleges a fact has the burden of
proving it; thus, FLPE should prove its
allegation that it terminated respondents
for a valid and just cause. It must be
stressed that the evidence to prove this
fact must be clear, positive, and
convincing.18 When there is no showing of
a clear, valid, and legal cause for the
termination of employment, the law
considers the matter a case of illegal
dismissal.19
Unfortunately,
FLPE
miserably
failed
to
discharge
this
burden. To rule otherwise and simply
allow the presumption as to the existence
and dissemination of the supposed
company
policy would lead
to a
proliferation of fabricated notices, and
entice further abuse by unscrupulous
persons. Workers could then be arbitrarily
terminated without much of an effort,
running afoul of the States clear duty to
show compassion and afford the utmost
protection to laborers.
Assuming arguendo that respondents
were aware of the alleged company policy,
FLPE failed to prove that they are guilty of
disobedience amounting to gross and
habitual neglect of duty. On March 9,
2008, Dela Cruz did not even report to
work because it was her rest day. As for
Malunes, she admitted putting the sales
proceeds inside the cash register but she
only did so upon the instructions of the
store manager, who is basically part of
management. There is likewise want of
competent
evidence
showing
that
respondents have repeatedly violated said
policy in the past.
True, an employer has the discretion to
regulate all aspects of employment and
the workers have the corresponding
obligation to obey company rules and
regulations. Deliberately disregarding or
disobeying
the
rules
cannot
be
countenanced, and any justification that
the disobedient employee might put forth
is deemed inconsequential.20 However,
the Court must emphasize that the
prerogative of an employer to dismiss an
employee on the ground of willful
disobedience to company policies must be
exercised in good faith and with due
regard to the rights of labor.21
Royale Homes Marketing Corporation Vs.
Fidel P. AlcantaraG.R. No. 195190. July
28, 2014
Not every form of control that a
hiring party imposes on the hired
party is indicative of employeeemployer relationship. Rules and
regulations that merely serve as
guidelines
towards
the
achievement of a mutually desired
result without dictating the means
and methods of accomplishing it do
not establish employer-employee
relationship.1cralawre
The juridical relationship of the
parties
based on their written contract
The primary evidence of the nature of the
parties relationship in this case is the
written contract that they signed and
executed in pursuance of their mutual
agreement.
While the existence of
employer-employee relationship is a
matter of law, the characterization made
by the parties in their contract as to the
nature of their juridical relationship cannot
be simply ignored, particularly in this case
where the parties written contract
unequivocally states their intention at the
time they entered into it.
n this case, the contract,27 duly signed
and not disputed by the parties,

9393
94

conspicuously provides that no employeremployee relationship exists between
Royale Homes and Alcantara, as well as
his sales agents. It is clear that they did
not want to be bound by employeremployee relationship at the time of the
signing of the contract.
Since the terms of the contract are clear
and leave no doubt upon the intention of
the contracting parties, the literal meaning
of its stipulations should control.28 No
construction is even needed as they
already
expressly
state
their
intention. Also, this Court adopts the
observation of the NLRC that it is rather
strange on the part of Alcantara, an
educated man and a veteran sales broker
who claimed to be receiving P1.2 million
as his annual salary, not to have
contested the portion of the contract
expressly indicating that he is not an
employee of Royale Homes if their true
intention were otherwise.
The juridical relationship of the
parties based on Control Test
In determining the existence of an
employer-employee
relationship,
this
Court has generally relied on the four-fold
test, to wit: (1) the selection and
engagement of the employee; (2) the
payment of wages; (3) the power of
dismissal; and (4) the employers power
to control the employee with respect to
the means and methods by which the
work is to be accomplished.29 Among the
four, the most determinative factor in
ascertaining the existence of employeremployee relationship is the right of
control test.30 It is deemed to be such
an important factor that the other
requisites
may
even
be
disregarded.31 This holds true where the
issues to be resolved is whether a person
who performs work for another is the
latters employee or is an independent
contractor,32 as in this case. For where
the person for whom the services are
performed reserves the right to control
not only the end to be achieved, but also
the means by which such end is reached,
employer-employee
relationship
is
deemed to exist.33cralawred
In concluding that Alcantara is an
employee of Royale Homes, the CA
ratiocinated that since the performance of
his tasks is subject to company rules,
regulations, code of ethics, and periodic
evaluation, the element of control is
present.
The Court disagrees.
Not every form of control is indicative of
employer-employee
relationship.
A
person who performs work for another
and is subjected to its rules, regulations,
and code of ethics does not necessarily
become an employee.34 As long as the
level of control does not interfere with the
means and methods of accomplishing the
assigned tasks, the rules imposed by the
hiring party on the hired party do not
amount to the labor law concept of control
that is indicative of employer-employee
relationship.
In this case, the Court agrees with Royale
Homes that the rules, regulations, code of
ethics, and periodic evaluation alluded to
by Alcantara do not involve control over
the means and methods by which he was
to perform his job.
Understandably,
Royale Homes has to fix the price, impose
requirements on prospective buyers, and
lay down the terms and conditions of the
sale, including the mode of payment,
which the independent contractors must
follow. It is also necessary for Royale
Homes to allocate its inventories among
its independent contractors, determine
who has priority in selling the same, grant
commission or allowance based on
predetermined criteria, and regularly
monitor the result of their marketing and
sales efforts. But to the mind of this
Court, these do not pertain to the means
and methods of how Alcantara was to
perform and accomplish his task of
soliciting sales. They do not dictate upon
him the details of how he would solicit
sales or the manner as to how he would
transact business with prospective clients.
Payment of Wages

9494
95

The element of payment of wages is also
absent in this case. As provided in the
contract,
Alcantaras
remunerations
consist only of commission override of
0.5%, budget allocation, sales incentive
and other forms of company support.
There is no proof that he received fixed
monthly salary. No payslip or payroll was
ever presented and there is no proof that
Royale
Homes
deducted
from
his
supposed salary withholding tax or that it
registered him with the Social Security
System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund. In fact, his
Complaint merely states a ballpark figure
of his alleged salary of P100,000.00, more
or less.
All of these indicate an
independent
contractual
relationship.44
Besides,
if
Alcantara
indeed considered himself an employee of
Royale Homes, then he, an experienced
and professional broker, would have
complained that he was being denied
statutorily mandated benefits. But for
nine consecutive years, he kept mum
about it, signifying that he has agreed,
consented, and accepted the fact that he
is not entitled to those employee benefits
because he is an independent contractor.
This Court is, therefore, convinced that

Alcantara is not an employee of Royale
Homes,
but
a
mere
independent
contractor.
The NLRC is, therefore,
correct in concluding that the Labor
Arbiter has no jurisdiction over the case
and that the same is cognizable by the
regular courts.
Wesleyan
University-Philippines
Vs.
Nowella Reyes G.R. No. 208321. July
30, 2014
The issue in this petition boils down to the
legality of respondent Nowella Reyes
termination as University Treasurer of
petitioner
Wesleyan
University
Philippines (WUP) on the ground of loss of

trust and confidence.
Loss of trust and confidence as a
ground for termination
We now proceed to the substantive issue
on the propriety of respondents dismissal
due to loss of trust and confidence. As

provided in Art. 282(c) of Presidential
Decree No. 442, otherwise known as the
Labor
Code
of
the
Philippines:chanRoblesvirtualLawlibrary
Article 282. Termination by employer. An
employer may terminate an employment
for
any
of
the
following
causes:cralawlawlibrary
xxxx
c. Fraud or willful breach by the employee
of the trust reposed in him by his
employer
or
duly
authorized
representative;chanrobleslaw
the first requisite is that the employee
concerned must be one holding a position
of trust and confidence, thus, one who is
either: (1) a managerial employee; or (2)
a fiduciary rank-and-file employee, who,
in the normal exercise of his or her
functions, regularly handles significant
amounts of money or property of the
employer. The second requisite is that
the loss of confidence must be based on a
willful breach of trust and founded on
clearly established facts.
In Lima Land, Inc. v. Cuevas,24 We
discussed the difference between the
criteria for determining the validity of
invoking loss of trust and confidence as a
ground for terminating a managerial
employee on the one hand and a rankand-file employee on the other. In the
said case, We held that with respect to
rank-and-file personnel, loss of trust and
confidence, as ground for valid dismissal,
requires proof of involvement in the
alleged events in question, and that mere
uncorroborated assertions and accusations
by the employer would not suffice. With
respect to a managerial employee, the
mere existence of a basis for believing
that such employee has breached the
trust of his employer would suffice for his
dismissal.
Respondents
classification is

employment
9595
96

irrelevant in light of her proven willful
breach
There is no doubt that respondent held a
position of trust; thus, greater fidelity is
expected of her. She was not an ordinary
rank-and-file employee but an employee
occupying a very sensitive position. As
University Treasurer, she handled and
supervised all monetary transactions and
was the highest custodian of funds
belonging to WUP.26 To be sure, in the
normal exercise of her functions, she
regularly handled significant amounts of
money of her employer and managed a
critical department.
The presence of the first requisite is
certain. So is as regards the second
requisite. Indeed, the Court finds that
petitioner adequately proved respondents
dismissal was for a just cause, based on a
willful breach of trust and founded on
clearly established facts as required by
jurisprudence. At the end of the day, the
question of whether she was a managerial
or rank-and-file employee does not matter
in this case because not only is there basis
for believing that she breached the trust
of her employer, her involvement in the
irregularities attending to petitioners
finances has also been proved.
To recall, petitioner, per its account,
allegedly lost trust and confidence in
respondent owing to any or an interplay of
the following events: (1) she encashed a
check payable to the University Treasurer
in the amount of three hundred thousand
pesos (PhP 300,000); (2) she encashed
crossed checks payable to the University
Treasurer,
when
the
intention
of
management in this regard was to merely
transfer funds from one of petitioners
accounts to another in the same bank; (3)
she allowed the Treasury Department to
encash the checks issued to WUP
personnel rather than requiring the latter
to have said checks encashed by the
bank, in violation of the imprest system of
accounting;
(4)
she
caused
the
disbursement
of
checks
without
supporting check vouchers; (5) there were
unliquidated cash advances; and (6)

spurious duplicate checks bearing her
signature were encashed causing damage
to petitioner.
University of Santo Tomas Faculty Union
Vs. University of Santo TomasG.R. No.
203957. July 30, 2014
Jurisdiction over the Present
Case
On the issue of jurisdiction, we

affirm with modification the ruling
of the CA. The Labor Arbiter has no
jurisdiction over the present case;
however, despite the lack of
jurisdiction, we rule on the issues
presented. We recognize that a
remand to the voluntary arbitration
stage will give rise to the possibility
that this case will still reach this
Court through the parties appeals.
Furthermore, it does not serve the
cause of justice if we allow this
case to go unresolved for an
inordinate amount of time.
Article 217(c) of the Labor Code
provides that the Labor Arbiter
shall refer to the grievance
machinery
and
voluntary
arbitration as provided in the CBA
those cases that involve the
interpretation of said agreements.
Article 261 of the Labor Code
further provides that all unresolved
grievances
arising
from
the
interpretation or implementation of
the CBA, including violations of
said agreement, are under the
original and exclusive jurisdiction
of the voluntary arbitrator or panel
of voluntary arbitrators. Excluded
from this original and exclusive
jurisdiction is gross violation of the
CBA, which is defined in Article 261
as
flagrant
and/or
malicious
refusal
to
comply
with
the
economic provisions of the CBA.
Despite the allegation that UST
refused to comply with the
economic provisions of the 19962001 CBA, we cannot characterize
USTs refusal as flagrant and/or

9696
97

malicious. Indeed, USTs literal
interpretation of the CBA was, in
fact, what led USTFU to file its
complaint. To our mind, USTFU
actually went beyond the text of
the 1996-2001 CBA when it
claimed that the integrated tuition
fee increase as described in Section
1D(2) is the basis for USTs alleged
deficiency.
Accrual of Cause of Action and
Prescription of Claims
The 1996-2001 CBA, as well as the
applicable laws, is silent as to when USTs
alleged violation becomes actionable.
Thus, we apply Article 1150 of the Civil
Code of the Philippines: The time for
prescription for all kinds of actions, when
there is no special provision which ordains
otherwise, shall be counted from the day
they may be brought.26 Prescription of
an action is counted from the time the
action may be brought.27cralawred
It is error to state that USTFUs cause of
action accrued only upon USTs categorical
denial of its claims on 2 March 2007.
USTFUs cause of action accrued when
UST allegedly failed to comply with the
economic provisions of the 1996-2001
CBA. Upon such failure by UST, USTFU
could have brought an action against UST.
that unfair labor practices prescribe within
one year from accrual of such unfair labor
practice; otherwise, they shall be forever
barred. Article 291 of the same Code
provides that money claims arising from
employer-employee relations prescribe
within three (3) years from the time the
cause of action accrued; otherwise they
shall be forever barred. USTFUs claims
under the 1996-2001 CBA, whether
characterized as one for unfair labor
practice or for money claims from
employer-employee
relations,
have
already prescribed when USTFU filed a
complaint before the LA.
USTFU filed its complaint under the theory
of unfair labor practice. Thus, USTFU had
one year from USTs alleged failure to
contribute, or slide in, the correct

amount to the fund to file its complaint.
USTFU had one year for every alleged
breach by UST: school year (SY) 19971998, SY 1998-1999, SY 1999-2000, SY
2000-2001, SY 2001-2002, and SY 20022003. USTFU did not file any complaint
within
the
respective
one-year
prescriptive periods. USTFU decided
to file its complaint only in 2007,
several years after the accrual of its
several possible causes of action. Even
if USTFU filed its complaint under the
theory of money claims from employeremployee relations, its cause of action still
has prescribed.
Status Maritime Corporation, et al. Vs.
Spouses Margarito B. Delalamon and
Priscila A. DelalamonG.R. No. 198097.
July 30, 2014
In view of the factual milieu of
the
case, the 3-day mandatory
reporting
requirement can be dispensed
with.
As a general rule, a medically

repatriated seafarer is required to
submit
himself
to
a
postemployment medical examination
by the companys designated
physicians within three (3) working
days upon his return.
Equally outlined in the provision is the
single instance which exempts a medially
repatriated seafarer from complying with
the 3-day mandatory reporting rule that is
when he is physically incapacitated to do
so, in which case a written notice of such
fact to the employer within the same
period shall be deemed as sufficient
compliance.
We applied the exemption in Wallem
Maritime Services, Inc. v. NLRC30 and
excused the failure of the seafarer to
report within the three-day period for the
reason that when he disembarked from
the vessel, he was terminally ill and in
need of urgent medical attention. His
employer manning agency was also found

9797
98

sufficiently notified when his wife went to
the office a month later to inquire about
his
husbands
sickness
benefits.31cralawred
outlined in Article 217 of the Labor Code,

as amended by Section 9 of Republic Act
(R.A.)
No.
6715,
to
wit:chanRoblesvirtualLawlibrary
The very same circumstances exist in the

present factual setting. When Margarito
was repatriated on September 6, 2006 he
was already
suffering from Renal
Insufficiency: Diabetes Mellitus; IHD
Blood+CBC+Anemia. Less than a week
thereafter, he was confined at the Las
Pias Doctors Hospital for the same
ailment of renal insufficiency but this time
aggravated
by
coronary
artery
disease.
He
started
undergoing
hemodialysis treatments in December
when his ailment worsened to end stage
renal disease due to a cyst at the right
renal cortical. He became bedridden
thereafter until he passed away on
September 11, 2007.
ART. 217. Jurisdiction of Labor

Arbiters and the Commission -- (a)
Except as otherwise provided under this
Code the Labor Arbiter shall have original
and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days
after the submission of the case by the
parties for decision without extension,
even in the absence of stenographic
notes, the following cases involving all
workers, whether agricultural or nonagricultural:
Unfair labor practice cases;
Termination disputes;
If accompanied with a claim for
reinstatement, those cases that
workers may file involving
wages, rates of pay, hours of work
and other terms and conditions
of employment;
Claims for actual, moral, exemplary
and other forms of damages
arising
from
employeremployee relations;
Cases arising from any violation of
Article 264 of this Code including
questions involving the legality of
strikes and lockouts; and
Except
claims
for
Employees
Compensation,
Social
Security,
Medicare and maternity benefits,
all other claims, arising from
employer-employee
relations,
including those of persons in
domestic or household service,
involving an amount exceeding five
thousand
pesos
(P5,000.00)
regardless of whether accompanied
with a claim for reinstatement.
x x x.35chanrobleslaw
The medical episodes that transpired after

his disembarkation from the vessel show
that he was already in a deteriorating
physical condition when he arrived in the
Philippines. Thus, it cannot be reasonably
expected of him to prioritize the errand of
personally reporting to the petitioners
office instead of yielding to the physical
strain caused by his serious health
problems.
Nevertheless,
Margarito
is
disqualified
from receiving compensation benefits
for
knowingly concealing his pre-existing
illness
of diabetes.
Notwithstanding that his failure to

report within 3-days is excusable,
Margarito is still disqualified from
receiving any compensation or
benefits for his illness because he
did not disclose during his PEME
that
he
was
suffering
from
diabetes.
Indophil Textile Mills, Inc. Vs. Engr.
Salvador Adviento G.R. No. 171212.
August 4, 2014
The jurisdiction of the LA and the NLRC is
While we have upheld the present trend to

refer worker-employer controversies to
labor courts in light of the aforequoted
provision, we have also recognized that
not all claims involving employees can be
resolved solely by our labor courts,
specifically when the law provides

9898
99

otherwise.36 For this reason, we have
formulated
the
reasonable
causal
connection rule, wherein if there is a
reasonable causal connection between the
claim
asserted
and
the
employeremployee relations, then the case is within
the jurisdiction of the labor courts; and in
the absence thereof, it is the regular
courts that have jurisdiction.37 Such
distinction is apt since it cannot be
presumed that money claims of workers
which do not arise out of or in connection
with
their
employer-employee
relationship, and which would therefore
fall within the general jurisdiction of the
regular courts of justice, were intended by
the legislative authority to be taken away
from the jurisdiction of the courts and
lodged with Labor Arbiters on an exclusive
basis.38cralawred
In fact, as early as Medina vs. Hon.
Castro-Bartolome,39
in
negating
the
jurisdiction of the LA, although the parties
involved were an employer and two
employees, the Court succinctly held
that:chanRoblesvirtualLawlibrary
The pivotal question to Our mind is
whether or not the Labor Code has any
relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no
relevance, any discussion concerning
the statutes amending it and whether
or not they have retroactive effect is
unnecessary.
It is obvious from the complaint that the
plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for
damages for tortious acts allegedly
committed by the defendants. Such
being the case, the governing statute
is the Civil Code and not the Labor
Code. It results that the orders under
review are based on a wrong premise.40
Indeed, jurisprudence has evolved the
rule that claims for damages under Article
217(a)(4) of the Labor Code, to be
cognizable by the LA, must have a
reasonable causal connection with any of
the
claims
provided
for
in
that
article.43
Only if there is such a
connection with the other claims can a
claim for damages be considered as
arising
from
employer-employee
relations.44cralawred
In the case at bench, we find that such
connection is nil.
True, the maintenance of a safe and
healthy workplace is ordinarily a subject of
labor cases. More, the acts complained of
appear to constitute matters involving
employee-employer
relations
since
respondent used to be the Civil Engineer
of petitioner. However, it should be
stressed that respondents claim for
damages is specifically grounded on
petitioners gross negligence to provide a
safe, healthy and workable environment
for its employees - a case of quasi-delict.
In the case at bar, respondent alleges that
due to the continued and prolonged
exposure to textile dust seriously inimical
to his health, he suffered work-contracted
disease which is now irreversible and
incurable, and deprived him of job
opportunities.52
Clearly,
injury
and
damages were allegedly suffered by
respondent,
an
element
of
quasidelict. Secondly, the previous contract of
employment between petitioner and
respondent cannot be used to counter the
element of no pre-existing contractual
relation since petitioners alleged gross
negligence in maintaining a hazardous
work environment cannot be considered a
mere breach of such contract of
employment, but falls squarely within the
elements of quasi-delict under Article
2176 of the Civil Code since the
negligence is direct, substantive and
independent
It also bears stressing that respondent is
not praying for any relief under the Labor
Code of the Philippines. He neither claims
for reinstatement nor backwages or
separation pay resulting from an illegal
termination. The cause of action herein
pertains to the consequence of petitioners
omission which led to a work-related

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disease suffered by respondent, causing
harm or damage to his person. Such
cause of action is within the realm of Civil
Law, and jurisdiction over the controversy
belongs to the regular courts.56cralawred
Where the resolution of the dispute
requires
expertise,
not
in
labor
management relations nor in wage
structures and other terms and conditions
of employment, but rather in the
application of the general civil law, such
claim falls outside the area of competence
of expertise ordinarily ascribed to the LA
and the NLRC.59cralawred
dreams. It is our duty, given the

facts and the law, to approximate
justice for her.
Sameer Overseas Placement Agency failed

to show that there was just cause for
causing Joys dismissal. The employer,
Wacoal, also failed to accord her due
process of law.
Indeed, employers have the prerogative to
impose productivity and quality standards
at work.58 They may also impose
reasonable rules to ensure that the
employees comply with these standards.59
Failure to comply may be a just cause for
their dismissal.60 Certainly, employers
cannot be compelled to retain the services
of an employee who is guilty of acts that
are inimical to the interest of the
employer.61 While the law acknowledges
the plight and vulnerability of workers, it
does not authorize the oppression or selfdestruction
of
the
employer.62
Management prerogative is recognized in
law and in our jurisprudence.
Conrado A. Lim Vs. HMR Philippines, Inc.,

et al.G.R. No. 201483. August 4, 2014
article 279 of the Labor Code is
clear in providing that an illegally
dismissed employee is entitled to
his full backwages computed from
the time his compensation was
withheld up to the time of his
actual
reinstatement,
to
This prerogative, however, should not be
abused. It is tempered with the

Art. 279. Security of tenure. In
employees right to security of tenure. 63
cases of regular employment, the
Workers are entitled to substantive and
employer shall not terminate the
procedural
due
process
before
services of an employee except for
termination. They may not be removed
a just cause or when authorized by
from employment without a valid or just
this Title. An employee who is
cause as determined by law and without
unjustly dismissed from work
going through the proper procedure.
shall
be
entitled
to
Security of tenure for labor is guaranteed
seniority
rights
and
other
by our Constitution.64cralawred
privileges and to his full
backwages,
inclusive
of
Employees are not stripped of their
allowances, and to his other
security of tenure when they move to
benefits or their monetary
work in a different jurisdiction. With
equivalent computed from the
respect to the rights of overseas Filipino
time his compensation was
workers, we follow the principle of lex loci
withheld from him up to the
contractus. the law of the place where
time
of
his
actual
the contract is made)
reinstatement.
Sameer Oversees Placement Agency, Inc.
By our laws, overseas Filipino workers
Vs. Joy C. Cabiles G.R. No. 170139.
(OFWs) may only be terminated for a just
August 5, 2014 Concurring and Dissenting
or authorized cause and after compliance
OpinionJ. Brion
with procedural due process requirements.
This case involves an overseas
Filipino worker with shattered
100100
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Petitioners allegation that respondent was
inefficient in her work and negligent in her
duties69 may, therefore, constitute a just
cause for termination under Article
282(b), but only if petitioner was able to
prove it.
The burden of proving that there is just
cause for termination is on the employer.
The employer must affirmatively show
rationally adequate evidence that the
dismissal was for a justifiable cause.70
Failure to show that there was valid or
just
cause
for
termination
would
necessarily mean that the dismissal was
illegal.71cralawred
To show that dismissal resulting from
inefficiency in work is valid, it must be
shown that: 1) the employer has set
standards of conduct and workmanship
against which the employee will be
judged; 2) the standards of conduct and
workmanship
must
have
been
communicated to the employee; and 3)
the communication was made at a
reasonable time prior to the employees
performance assessment.
In this case, petitioner merely alleged that
respondent failed to comply with her
foreign employers work requirements and
was inefficient in her work.74No evidence
was shown to support such allegations.
Petitioner did not even bother to specify
what requirements were not met, what
efficiency standards were violated, or
what particular acts of respondent
constituted inefficiency.
There was also no showing that
respondent was sufficiently informed of
the standards against which her work
efficiency and performance were judged.
The parties conflict as to the position
held by respondent showed that even
the matter as basic as the job title
was not clear.
Respondent Joy Cabiles, having been
illegally dismissed, is entitled to her salary
for the unexpired
portion of
the
employment contract that was violated
together
with
attorneys
fees
and
reimbursement of amounts withheld from
her salary.
Section 10 of Republic Act No. 8042,
otherwise known as the Migrant Workers
and Overseas Filipinos Act of 1995, states
that
overseas
workers
who
were
terminated
without
just,
valid,
or
authorized cause shall be entitled to the
full reimbursement of his placement fee
with interest of twelve (12%) per annum,
plus his salaries for the unexpired portion
of his employment contract or for three
(3) months for every year of the
unexpired term, whichever is less.
We uphold the finding that respondent is
entitled to all of these awards. The award
of the three-month equivalent of
respondents salary should, however,
be
increased
to
the
amount
equivalent to the unexpired term of
the employment contract.
In Serrano v. Gallant Maritime Services,
Inc. and Marlow Navigation Co., Inc.,82
this court ruled that the clause or for
three (3) months for every year of the
unexpired term, whichever is less83 is
unconstitutional for violating the equal
protection clause and substantive due
process.84cralawred
A statute or provision which was declared
unconstitutional is not a law. It confers
no rights; it imposes no duties; it affords
no protection; it creates no office; it is
inoperative as if it has not been passed at
all.85cralawred
We are aware that the clause or for three
(3) months for every year of the
unexpired term, whichever is less was
reinstated in Republic Act No. 8042 upon
promulgation of Republic Act No. 10022 in
2010. Republic Act No. 10022 was
promulgated on March 8, 2010. This
means that the reinstatement of the
clause in Republic Act No. 8042 was not
yet in effect at the time of respondents
termination from work in 1997.86 Republic
Act No. 8042 before it was amended by

101101
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2

Republic Act No. 10022 governs this case.
When a law is passed, this court awaits an
actual case that clearly raises adversarial
positions in their proper context before
considering a prayer to declare it as
unconstitutional.
However, we are confronted with a unique
situation. The law passed incorporates the
exact
clause
already
declared
as
unconstitutional, without any perceived
substantial change in the circumstances.
This may cause confusion on the part of
the National Labor Relations Commission
and the Court of Appeals. At minimum,
the existence of Republic Act No. 10022
may delay the execution of the judgment
in this case, further frustrating remedies
to assuage the wrong done to petitioner.
Hence, there is a necessity to decide this
constitutional issue.
Moreover, this court is possessed with the
constitutional duty to [p]romulgate rules
concerning
the
protection
and
enforcement of constitutional rights.87
When cases become moot and academic,
we do not hesitate to provide for guidance
to bench and bar in situations where the
same violations are capable of repetition
but will evade review. This is analogous to
cases where there are millions of Filipinos
working abroad who are bound to suffer
from the lack of protection because of the
restoration of an identical clause in a
provision
previously
declared
as
unconstitutional.
In the hierarchy of laws, the Constitution
is supreme. No branch or office of the
government may exercise its powers in
any
manner
inconsistent
with
the
Constitution, regardless of the existence
of any law that supports such exercise.
The Constitution cannot be trumped by
any other law. All laws must be read in
light of the Constitution. Any law that is
inconsistent with it is a nullity.
Thus, when a law or a provision of law is
null because it is inconsistent with the
Constitution, the nullity cannot be cured

by reincorporation or reenactment of the
same or a similar law or provision. A law
or provision of law that was already
declared unconstitutional remains as such
unless circumstances have so changed as
to warrant a reverse conclusion.
We reiterate our finding in Serrano v.
Gallant Maritime that limiting wages
that should be recovered by an
illegally dismissed overseas worker to
three months is both a violation of
due process and the equal protection
clauses of the Constitution.
Equal protection of the law is a guarantee
that persons under like circumstances and
falling within the same class are treated
alike, in terms of privileges conferred and
liabilities enforced.97 It is a guarantee
against undue favor and individual or
class privilege, as well as hostile
discrimination or the oppression of
inequality.98cralawr
Overseas workers regardless of their
classifications are entitled to security of
tenure, at least for the period agreed upon
in their contracts. This means that they
cannot be dismissed before the end of
their contract terms without due process.
If they were illegally dismissed, the
workers right to security of tenure is
violated.
The rights violated when, say, a fixedperiod local worker is illegally terminated
are neither greater than nor less than the
rights violated when a fixed-period
overseas worker is illegally terminated. It
is state policy to protect the rights of
workers without qualification as to the
place of employment.119 In both cases, the
workers are deprived of their expected
salary, which they could have earned had
they not been illegally dismissed. For both
workers, this deprivation translates to
economic insecurity and disparity.120 The
same is true for the distinctions between
overseas workers with an employment
contract of less than one year and
overseas workers with at least one year of

102102
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3

employment
contract,
and
between
overseas workers with at least a year left
in their contracts and overseas workers
with less than a year left in their contracts
when they were illegally dismissed.
incompetence, and negligence in

the keeping of school or student
records, or tampering with or
falsification of records.
For this reason, we cannot subscribe to

the argument that [overseas workers]
are contractual employees who can never
acquire regular employment status, unlike
local workers121 because it already
justifies differentiated treatment in terms
of the computation of money claims.
Putting a cap on the money claims of
certain overseas workers does not
increase the standard of protection
afforded to them. On the other hand,
foreign employers are more incentivized
by the reinstated clause to enter into
contracts of at least a year because it
gives them more flexibility to violate our
overseas workers rights. Their liability for
arbitrarily terminating overseas workers is
decreased at the expense of the workers
whose rights they violated. Meanwhile,
these
overseas
workers
who
are
impressed with an expectation of a stable
job overseas for the longer contract period
disregard other opportunities only to be
terminated earlier. They are left with
claims that are less than what others in
the same situation would receive. The
reinstated clause, therefore, creates a
situation where the law meant to protect
them makes violation of rights easier and
simply benign to the violator.
Dr. Phylis C. Rio Vs. Colegio De Sta. RosaMakati and/or Sr. Marilyn B. Gustilo
G.R. No. 189629. August 6, 2014
the antecedents of the letter dated
30 July 2002 show that respondent
Colegio de Sta. Rosa-Makati had
enough reason to, as it did,
terminate
the
services
of
petitioner.
Based on Article 282 of the Labor

Code,15 in relation to Section 94 of
the 1992 Manual of Regulations for
Private Schools,16 petitioner was
legally dismissed on the ground of
gross
inefficiency
and
As
we
already
held,
gross
inefficiency is closely related to
gross neglect because both involve
specific acts of omission resulting
in damage to another.17 Gross
neglect of duty or gross negligence
refers to negligence characterized
by the want of even slight care,
acting or omitting to act in a
situation where there is a duty to
act, not inadvertently but willfully
and intentionally, with a conscious
indifference
to
consequences
insofar as other persons may be
affected.18cralawred
As
borne
by
the
records,
petitioners actions fall within the
purview of the above-definitions.
Petitioner
failed
to
diligently
perform
her
duties.
It
was
unrefuted that: (1) there were
dates when a medical examination
was supposed to have been
conducted and yet the dates fell on
weekends; (2) failure to conduct
medical
examination
on
all
students for two (2) to five (5)
consecutive years; (3) lack of
medical records on all students;
and (4) students having medical
records prior to their enrollment.
Our Haus Realty Development Corporation
Vs. Alexander Parian, et al. G.R. No.
204651. August 6, 2014
No substantial distinction between
deducting and charging a facilitys
value from the employees wage;
the
legal
requirements
for
creditability
apply to both
To justify its non-compliance with the
requirements for the deductibility of a
facility, Our Haus asks us to believe that
there is a substantial distinction between
the deduction and the charging of a
facilitys value to the wages. Our Haus

103103
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4

explains that in deduction, the amount of
the wage (which may already be below
the minimum) would still be lessened by
the facilitys value, thus needing the
employees consent. On the other hand, in
charging, there is no reduction of the
employees wage since the facilitys value
will just be theoretically added to the
wage for purposes of complying with the
minimum wage requirement.39cralawred
Our Haus argument is a vain attempt to
circumvent the minimum wage law by
trying to create a distinction where none
exists.
In reality, deduction and charging both
operate to lessen the actual takehome pay of an employee; they are two
sides of the same coin. In both, the
employee receives a lessened amount
because supposedly, the facilitys value,
which is part of his wage, had already
been paid to him in kind. As there is no
substantial distinction between the two,
the requirements set by law must apply to
both.
As the CA correctly ruled, these
requirements, as summarized in Mabeza,
are
the
following:chanRoblesvirtualLawlibrary
proof must be shown that such facilities
are customarily furnished by
the trade;
the provision of deductible facilities
must be voluntarily accepted in
writing by the employee; and
The facilities must be charged at fair
and reasonable value.40
We examine Our Haus compliance with
each of these requirements in seriatim.
The facility must be customarily
furnished by the trade
In a string of cases, we have concluded
that one of the badges to show that a
facility is customarily furnished by the
trade is the existence of a company
policy or guideline showing that
provisions
for
a
facility
were
designated as part of the employees
salaries.41 To comply with this, Our Haus

presented in its motion for reconsideration
with the NLRC the joint sinumpaang
salaysay of four of its alleged employees.
These employees averred that they were
recipients of free lodging, electricity and
water, as well as subsidized meals from
Our Haus.42cralawred
We agree with the NLRCs finding that the
sinumpaang
salaysay
statements
submitted by Our Haus are self-serving.
For one, Our Haus only produced the
documents when the NLRC had already
earlier determined that Our Haus failed to
prove that it was traditionally giving the
respondents their board and lodging. This
document did not state whether these
benefits had been consistently enjoyed by
the rest of Our Haus employees.
Moreover, the records reveal that the
board and lodging were given on a per
project basis. Our Haus did not show if
these benefits were also provided in its
other construction projects, thus negating
its claimed customary nature.
Even assuming the sinumpaang salaysay
to be true, this document would still work
against Our Haus case. If Our Haus really
had the practice of freely giving lodging,
electricity and water provisions to its
employees, then Our Haus should not
deduct its values from the respondents
wages. Otherwise, this will run contrary to
the affiants claim that these benefits were
traditionally given free of charge.
Apart from company policy, the employer
may also prove compliance with the first
requirement by showing the existence of
an
industry-wide
practice
of
furnishing the benefits in question
among enterprises engaged in the
same line of business. If it were
customary among construction companies
to provide board and lodging to their
workers and treat their values as part of
their wages, we would have more reason
to conclude that these benefits were really
facilities.
As part of the project cost that
construction companies already charge to

104104
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5

their clients, the value of the housing of
their workers cannot be charged again to
their employees salaries. Our Haus
cannot pass the burden of the OSH costs
of its construction projects to its
employees by deducting it as facilities.
This is Our Haus obligation under the law.
Lastly, even if a benefit is customarily
provided by the trade, it must still pass
the purpose test set by jurisprudence.
Under this test, if a benefit or privilege
granted to the employee is clearly for the
employers convenience, it will not be
considered
as
a
facility
but
a
supplement.45 Here, careful consideration
is given to the nature of the employers
business in relation to the work performed
by the employee. This test is used to
address inequitable situations wherein
employers consider a benefit deductible
from the wages even if the factual
circumstances show that it clearly
redounds to the employers greater
advantage.
While the rules serve as the initial test in
characterizing a benefit as a facility, the
purpose test additionally recognizes that
the employer and the employee do not
stand at the same bargaining positions on
benefits that must or must not form part
of an employees wage. In the ultimate
analysis, the purpose test seeks to
prevent a circumvention of the minimum
wage law.
a1. The purpose test in jurisprudence
Under the law,46 only the value of the
facilities may be deducted from the
employees wages but not the value of
supplements. Facilities include articles or
services for the benefit of the employee or
his family but exclude tools of the trade or
articles or services primarily for the
benefit of the employer or necessary to
the
conduct
of
the
employers
business.47cralawred
The law also prescribes that the
computation of wages shall exclude
whatever benefits, supplements or
allowances
given
to
employees.
Supplements are paid to employees on
top of their basic pay and are free of

charge.48 Since it does not form part of
the wage, a supplements value may not
be included in the determination of
whether an employer complied with the
prescribed minimum wage rates.
In the present case, the board and lodging
provided by Our Haus cannot be
categorized
as
facilities
but
as
supplements. In SLL International Cables
Specialist v. National Labor Relations
Commission,49 this Court was confronted
with
the
issue
on
the
proper
characterization of the free board and
lodging provided by the employer. We
explained:chanRoblesvirtualLawlibrary
The Court, at this point, makes a
distinction
between
facilities
and
supplements. It is of the view that the
food and lodging, or the electricity and
water allegedly consumed by private
respondents in this case were not facilities
but supplements. In the case of Atok-Big
Wedge Assn. v. Atok-Big Wedge Co., the
two terms were distinguished from one
another in this wise:cralawlawlibrary
Supplements, therefore, constitute extra
remuneration or special privileges or
benefits given to or received by the
laborers over and above their ordinary
earnings or wages. Facilities, on the
other hand, are items of expense
necessary for the laborer's and his family's
existence and subsistence so that by
express provision of law (Sec. 2[g]), they
form part of the wage and when furnished
by the employer are deductible therefrom,
since if they are not so furnished, the
laborer would spend and pay for them just
the same.
In short, the benefit or privilege given to
the employee which constitutes an extra
remuneration above and over his basic or
ordinary earning or wage is supplement;
and when said benefit or privilege is part
of the laborers' basic wages, it is a facility.
The distinction lies not so much in the
kind of benefit or item (food, lodging,
bonus or sick leave) given, but in the

105105
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6

purpose for which it is given. In the
case at bench, the items provided were
given freely by SLL for the purpose of
maintaining the efficiency and health
of its workers while they were
working at their respective projects.50
Ultimately, the real difference lies not on
the kind of the benefit but on the
purpose why it was given by the
employer. If it is primarily for the
employees gain, then the benefit is a
facility; if its provision is mainly for the
employers advantage, then it is a
supplement. Again, this is to ensure that
employees are protected in circumstances
where the employer designates a benefit
as deductible from the wages even though
it clearly works to the employers greater
convenience or advantage.
Under the purpose test, substantial
consideration must be given to the nature
of the employers business in relation to
the character or type of work performed
by the employees involved.
Our Haus is engaged in the construction
business, a labor-intensive enterprise. The
success of its projects is largely a function
of the physical strength, vitality and
efficiency of its laborers. Its business will
be jeopardized if its workers are weak,
sickly, and lack the required energy to
perform strenuous physical activities.
Thus, by ensuring that the workers are
adequately and well fed, the employer is
actually investing on its business.
Unlike in office enterprises where the work
is focused on desk jobs, the construction
industry relies heavily and directly on the
physical capacity and endurance of its
workers. This is not to say that desk jobs
do not require muscle strength; we simply
emphasize that in the construction
business, bulk of the work performed are
strenuous physical activities.
Moreover, in the construction business,
contractors are usually faced with the
problem
of
meeting
target
deadlines. More often than not, work is
performed continuously, day and night, in

order to finish the project on the
designated turn-over date. Thus, it will be
more convenient to the employer if its
workers are housed near the construction
site to ensure their ready availability
during
urgent
or
emergency
circumstances. Also, productivity issues
like tardiness and unexpected absences
would be minimized. This observation
strongly bears in the present case since
three of the respondents are not residents
of the National Capital Region. The board
and lodging provision might have been a
substantial
consideration
in
their
acceptance of employment in a place
distant from their provincial residences.
Based on these considerations, we
conclude that even under the purpose
test, the subsidized meals and free
lodging provided by Our Haus are actually
supplements. Although they also work to
benefit the respondents, an analysis of the
nature of these benefits in relation to Our
Haus business shows that they were
given primarily for Our Haus greater
convenience and advantage. If weighed on
a scale, the balance tilts more towards
Our Haus side. Accordingly, their values
cannot be considered in computing the
total amount of the respondents wages.
The provision of deductible facilities
must be voluntarily accepted in
writing
by the employee In Mayon Hotel, we
reiterated that a facility may only be
deducted from the wage if the employer
was authorized in writing by the
concerned employee.51 As it diminishes
the take-home pay of an employee, the
deduction must be with his express
consent.
Again, in the motion for reconsideration
with the NLRC, Our Haus belatedly
submitted five kasunduans, supposedly
executed by the respondents, containing
their conformity to the inclusion of the
values of the meals and housing to their
total wages. Oddly, Our Haus only offered
these documents when the NLRC had
already ruled that respondents did not

106106
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7

accomplish any written authorization, to
allow deduction from their wages. These
five kasunduans were also undated,
making us wonder if they had really been
executed when respondents first assumed
their jobs.
Moreover, in the earlier sinumpaang
salaysay by Our Haus four employees, it
was not mentioned that they also
executed a kasunduan for their board and
lodging benefits. Because of these
surrounding
circumstances
and
the
suspicious
timing
when
the
five
kasunduans were submitted as evidence,
we agree with the CA that the NLRC
committed no grave abuse of discretion in
disregarding these documents for being
self serving.
The facility must be charged at
a fair and reasonable value Our Haus
admitted that it deducted the amount of
P290.00 per week from each of the
respondents for their meals. But it now
submits that it did not actually withhold
the entire amount as it did not figure in
the computation the money it expended
for the salary of the cook, the water, and
the LPG used for cooking, which amounts
to P249.40 per week per person. From
these, it appears that the total meal
expense per week for each person is
P529.40, making Our Haus P290.00
deduction
within
the
70%
ceiling
prescribed by the rules.
However, Our Haus valuation cannot be
plucked out of thin air. The valuation of a
facility must be supported by relevant
documents such as receipts and
company records for it to be considered
as fair and reasonable. In Mabeza, we
noted:chanRoblesvirtualLawlibrary
Curiously, in the case at bench, the only
valuations relied upon by the labor
arbiter in his decision were figures
furnished by the private respondent's
own
accountant,
without
corroborative evidence. On the pretext
that records prior to the July 16, 1990
earthquake were lost or destroyed,
respondent failed to produce payroll
records, receipts and other relevant

documents, where he could have, as has
been pointed out in the Solicitor General's
manifestation, secured certified copies
thereof from the nearest regional
office of the Department of Labor, the
SSS or the BIR.52 [emphasis ours]
In the present case, Our Haus never
explained how it came up with the
values it assigned for the benefits it
provided; it merely listed its supposed
expenses
without
any
supporting
document. Since Our Haus is using these
additional expenses (cooks salary, water
and LPG) to support its claim that it did
not withhold the full amount of the meals
value, Our Haus is burdened to present
evidence to corroborate its claim. The
records however, are bereft of any
evidence to support Our Haus meal
expense computation. Even the value it
assigned for the respondents living
accommodations was not supported by
any documentary evidence. Without any
corroborative evidence, it cannot be said
that Our Haus complied with this third
requisite.
Benson Industries Employees Union-ALUTUCP and/or Vilma Genon, et al. Vs.
Benson Industries, Inc. G.R. No.
200746. August 6, 2014
Closure of business may be considered as
a reversal of an employers fortune
whereby there is a complete cessation of
business operations and/or an actual
locking-up
of
the
doors
of
the
establishment, usually due to financial
losses. Under the Labor Code, it is treated
as an authorized cause for termination,
aimed at preventing further financial drain
upon an employer who cannot anymore
pay its employees since business has
already
stopped.
As
a
form
of
recompense, the employer is required to
pay its employees separation benefits,
except when the closure is due to
serious business losses.1
While serious business losses generally
exempt the employer from paying
separation benefits, it must be pointed
that the exemption only pertains to the

107107
10
8

obligation of the employer under Article
297 of the Labor Code. This is because of
the
laws
express
parameter
that
mandates payment of separation benefits
in case of closures or cessation of
operations
of
establishment
or
undertaking
not
due
to
serious
business losses or financial reverses.
The policy distinction underlying Article
297 that is, the distinction between
closures due to serious business losses
and those which are not was deftly
discussed by the Court in the case of
Cama v. Jonis Food Services, Inc.,21 as
follows:chanRoblesvirtualLawlibrary
The Constitution, while affording full
protection
to
labor,
nonetheless,
recognizes the right of enterprises to
reasonable returns on investments, and to
expansion and growth. In line with this
protection afforded to business by the
fundamental law, Article 283 [(now,
Article 297)] of the Labor Code clearly
makes a policy distinction. It is only in
instances of retrenchment to prevent
losses and in cases of closures or
cessation
of
operations
of
establishment or undertaking not due
to serious business losses or financial
reverses
that
employees
whose
employment has been terminated as a
result are entitled to separation pay. In
other words, Article 283 [(now, Article
297)] of the Labor Code does not obligate
an employer to pay separation benefits
when the closure is due to serious losses.
To require an employer to be generous
when it is no longer in a position to do so,
in our view, would be unduly oppressive,
unjust, and unfair to the employer. Ours
is a system of laws, and the law in
protecting the rights of the working man,
authorizes neither the oppression nor the
self-destruction of the employer. x x x. 22
(Emphasis supplied)
When the obligation to pay separation
benefits, however, is not sourced from law
(particularly, Article 297 of the Labor
Code), but from contract,23 such as an
existing collective bargaining agreement
between the employer and its employees,
an examination of the latters provisions

becomes necessary in order to determine
the governing parameters for the said
obligation. To reiterate, an employer
which closes shop due to serious business
losses is exempt from paying separation
benefits under Article 297 of the Labor
Code for the reason that the said provision
explicitly requires the same only when the
closure is not due to serious business
losses; conversely, the obligation is
maintained when the employers closure is
not due to serious business losses. For a
similar exemption to obtain against a
contract, such as a CBA, the tenor of the
parties agreement ought to be similar to
the laws tenor. When the parties,
however, agree to deviate therefrom, and
unqualifiedly covenant the payment of
separation benefits irrespective of the
employers financial position, then the
obligatory force of that contract prevails
and its terms should be carried out to its
full effect. Verily, it is fundamental that
obligations arising from contracts have the
force of law between the contracting
parties and thus should be complied with
in good faith;24 and parties are bound by
the stipulations, clauses, terms and
conditions they have agreed to, the only
limitation being that these stipulations,
clauses, terms and conditions are not
contrary to law, morals, public order or
public policy.25 Hence, if the terms of a
CBA are clear and there is no doubt as to
the intention of the contracting parties,
the literal meaning of its stipulations shall
prevail.
In this case, it is undisputed that a CBA
was forged by the employer, Benson, and
its employees, through the Union, to
govern their relations effective July 1,
2005 to June 30, 2010. It is equally
undisputed that Benson agreed to and was
thus obligated under the CBA to pay its
employees who had been terminated
without any fault attributable to them
separation benefits at the rate of 19 days
for every year of service.
Thus, in view of the foregoing, the Court
disagrees with the CA in negating
Bensons obligation to pay petitioners their

108108
10
9

full separation benefits under the said

agreement. The postulation that Benson
had closed its establishment and ceased
operations due to serious business losses
cannot be accepted as an excuse to clear
itself of any liability since the ground of
serious business losses is not, unlike
Article 297 of the Labor Code, considered
as an exculpatory parameter under the
aforementioned CBA. Clearly, Benson,
with full knowledge of its financial
situation, freely and voluntarily entered
into such agreement with petitioners.
Hence, having failed to show that the
subject CBA provision on separation
benefits is contrary to law, morals, public
order or public policy, or that the same
can be interpreted as one with a condition
for instance, that the parties actually
contemplated non-payment of separation
benefits in the event of closure due to
serious business losses the Court is
constrained to reinstate the October 24,
2008 VA Decision ordering Benson to pay
each of the petitioners separation benefits
in an amount equivalent to four (4) days
for every year of service based on the
latest rate of pay of the [individual
petitioner] concerned, subject to whatever
legally valid deductions chargeable against
[said individual petitioner], whenever
applicable.33cralawred
OSG
Shipmanagement
Manila
Inc.,
Mercedes M. Ravanopolous, OSG
Shipmanagement (UK) Ltd. and M/T
Delphina Vs. Joselito B. PellazarG.R.
No. 198367. August 6, 2014
A. Disability benefits as a
matter of contract and law
Mere lapse of the 120 day
period does
not
warrant
payment
of
permanent
total disability benefits
In Vergara v. Hammonia Maritime
Services,22 the Court interpreted the
interplay of these legal and contractual
provisions relating to the kind of disability
recognized and the period involved. The
Court
observed:chanRoblesvirtualLawlibrary
As these provisions operate, the seafarer,
upon sign-off from his vessel, must report

to the company-designated physician
within three (3) days from arrival for
diagnosis
and
treatment.
For
the
duration of the treatment but in no
case to exceed 120 days, the seaman
is on temporary total disability as he is
totally unable to work. He receives his
basic wage during this period until he is
declared fit to work or his temporary
disability is acknowledged by the company
to be permanent, either partially or
totally, as his condition is defined under
the POEA Standard Employment Contract
and by applicable Philippine laws. If the
120 days initial period is exceeded and no
such declaration is made because the
seafarer
requires
further
medical
attention, then the temporary total
disability period may be extended up to a
maximum of 240 days, subject to the
right of the employer to declare within this
period that a permanent partial or total
disability already exists. The seaman may
of course also be declared fit to work at
any time such declaration is justified by
his medical condition.
In other words, the mere lapse of the
120-day
period
itself
does
not
automatically warrant the payment of
permanent
total
disability
benefits. Hence, the NLRC could not have
gravely abused its discretion in not
granting
Pellazar
permanent
total
disability benefits based on this as the
entitlement to disability is governed not
by the period of disability per se but by
the specific provisions of the law and
contract. It must be observed that
Pellazar continued to undergo medical
treatment under the care of the
petitioners company designated doctors
until he was finally given a Grade 10
disability in August 2006.
Under the CBA and the POEA-SEC, it is the
company-designated physician who shall
determine a seafarers disability or his
fitness to work. In granting Pellazar a
Grade 10 disability rating in accordance
with the finding of the company
designated physician, the NLRC simply

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11
0

observed the provisions of the parties
POEA-SEC. For this reason, no grave
abuse of discretion can similarly be
imputed against the NLRC.
It has been the consistent pronouncement
of this Court that the determination of just
compensation is basically a judicial
function. Also, it is settled that in the
computation of just compensation for land
taken for agrarian reform, both Section 17
of Republic Act No. 6657 (RA 6657 or the
Comprehensive Agrarian Reform Law of
1988/CARL) and the formula prescribed in
the applicable Administrative Order of the
Department of Agrarian Reform (DAR)
should be considered.
Wallem Maritime Services, Inc., and

Reginaldo
Oben/Wallem
Shipmanagement
Limited
Vs.
Donnabelle Pedrajas and Sean Jade
Pedrajas G.R. No. 192993. August 11,
2014
The death of a seaman during the term of
his employment makes the employer
liable to the former's heirs for death
compensation
benefits.10
This
rule,
however, is not absolute. The employer
may be exempt from liability if it can
successfully prove that the seaman's
death was caused by an injury directly
attributable to his deliberate or willful
act.11 Hence, respondents' entitlement to
any death benefit depends on whether
petitioners' evidence suffices to prove that
Hernani committed suicide, and the
burden
of
proof
rests
on
his
employer.12cralawred
Since the petitioners were able to prove
that Hernani committed suicide, Hernanis
death is not compensable and his heirs
are not entitled to any compensation or
benefits. It is settled that when the death
of a seaman resulted from a deliberate or
willful act on his own life, and it is directly
attributable to the seaman, such death is
not compensable.24cralawred
Remedios O. Yap Vs. Rover Maritime
Services Corporation, et al. G.R. No.
198342. August 13, 2014
While the accident may have led
petitioners
husband
to
seek
medical attention which resulted in

the discovery of his pneumonia and
cancer of the lungs, it cannot be
hastily assumed that it was
likewise
the
cause
of
his
disease.
Indeed,
ones
predisposition to develop cancer is
affected not only by ones work,
but also by many factors outside of
ones working environment. In the
absence of substantial evidence,
Dovee Yaps accidental slip on
board the vessel cannot be
automatically believed to have
increased his risk of contracting
lung cancer.42cralawred
Hence, while it is true that labor

contracts are impressed with public
interest and that the provisions of
the POEA Standard Employment
Contract
must
be
construed
logically and liberally in favor of
Filipino seamen in the pursuit of
their employment on board oceangoing vessels, still the rule is that
justice is in every case for the
deserving, to be dispensed with in
the light of established facts, the
applicable
law,
and
existing
jurisprudence.4
Lei Sheryll Fernandez Vs. Botica Claudio,
represented by Guadalupe Jose G.R.
No. 205870. August 13, 2014
While Article 22347 of the Labor
Code and Section 3(a), Rule VI of
the then New Rules of Procedure of
the NLRC48 require the party
intending to appeal from the LAs
ruling to furnish the other party a
copy of his memorandum of
appeal, the Court has held that the
mere failure to serve the same
upon the opposing party does not
bar the NLRC from giving due
course to an appeal.49 Such failure
is only treated as a formal lapse,
an excusable neglect, and, hence,
not
a
jurisdictional
defect
warranting the dismissal of an
appeal.50 Instead, the NLRC should
require the appellant to provide the
opposing party copies of the notice

110110
11
1

of appeal and memorandum of
appeal.51cralawred
In this case, however, the NLRC

could not be expected to require
compliance from Fernandez, the
appellant, since it was not aware
that the opposing party, Jose, was
not notified of her appeal. Hence, it
cannot be faulted in relying on
Fernandezs representation that
she had sent Jose, through her
counsel,
a
copy
of
her
memorandum
of
appeal
by
registered mail,52 as evidenced by
Registry
Receipt
No.
006511.53cralawred
George A. Arriola Vs. Pilipino Star Ngayon,
Inc., et al.G.R. No. 175689. August 13,
2014
The prescriptive period for filing an illegal
dismissal complaint is four years from the
time the cause of action accrued. This
four-year prescriptive period, not the
three-year period for filing money claims
under Article 291 of the Labor Code,
applies to claims for backwages and
damages due to illegal dismissal.
Arriolas claims for backwages and
damages have not yet prescribed
when
he filed his complaint with the
National
Labor Relations Commission
The Labor Arbiter, the National Labor
Relations Commission, and the Court of
Appeals all ruled that Arriolas claims for
unpaid salaries, backwages, damages, and
attorneys fees have prescribed. They
cited Article 291 of the Labor Code, which
requires that money claims arising from
employer-employee relations be filed
within three years from the time the cause
of
action
accrued:ChanRoblesVirtualawlibrary
Art. 291. MONEY CLAIMS. All money
claims arising from employer-employee
relations accruing during the effectivity of
this Code shall be filed within three (3)
years from the time the cause of action
accrued; otherwise they shall be forever
barred.
Article 291 covers claims for overtime
pay,43 holiday pay,44 service incentive
leave
pay,45
bonuses,46
salary
differentials,47 and illegal deductions by an
employer.48 It also covers money claims
arising from seafarer contracts.49cralawred
The provision, however, does not cover
money claims consequent to an illegal
dismissal such as backwages. It also does
not cover claims for damages due to
illegal dismissal.
These claims are
governed by Article 1146 of the Civil Code
of
the
Philippines,
which
Art. 1146. The following actions must be
instituted
within
four
years:ChanRoblesVirtualawlibrary
(1) Upon injury to the rights of the
plaintiff[.]
This court ruled that Callantas complaint
for
illegal
dismissal
had
not
yet
prescribed. Although illegal dismissal is a
violation of the Labor Code, it is not the
offense
contemplated
in
Article
290.56 Article 290 refers to illegal acts
penalized under the Labor Code, including
committing any of the prohibited activities
during strikes or lockouts, unfair labor
practices,
and
illegal
recruitment
activities.57 The three-year prescriptive
period under Article 290, therefore, does
not apply to complaints for illegal
dismissal.
Instead, by way of supplement,58 Article
1146 of the Civil Code of the Philippines
governs
complaints
for
illegal
dismissal. Under Article 1146, an action
based upon an injury to the rights of a
plaintiff must be filed within four
years.
This
court
explained:ChanRoblesVirtualawlibrary
. . . when one is arbitrarily and unjustly
deprived of his job or means of livelihood,
the action instituted to contest the legality
of one's dismissal from employment
constitutes,
in
essence,
an
action

111111
11
2

predicated upon an injury to the rights of
the plaintiff, as contemplated under Art.
1146 of the New Civil Code, which must
be brought within four 4 years.59
This four-year prescriptive period applies
to claims for backwages, not the threeyear prescriptive period under Article 291
of the Labor Code.
A claim for
backwages, according to this court, may
be a money claim by reason of its
practical effect.60 Legally, however, an
award of backwages is merely one of the
reliefs which an illegally dismissed
employee prays the labor arbiter and the
NLRC to render in his favor as a
consequence
of
the
unlawful
act
committed by the employer.61 Though it
results in the enrichment of the individual
[illegally
dismissed],
the award
of
backwages is not in redress of a private
right, but, rather, is in the nature of a
command upon the employer to make
public reparation for his violation of the
Labor Code.62cralawred
Actions for damages due to illegal
dismissal are likewise actions upon an
injury to the rights of the plaintiff. Article
1146 of the Civil Code of the Philippines,
therefore,
governs
these
actions.63cralawred
Callanta filed his complaint for illegal
dismissal with claims for backwages and
damages three years, one month, and five
days from his termination. Thus, this
court ruled that Callanta filed his claims
for backwages and damages well within
the
four-year
prescriptive
period.64cralawred
Applying these principles in this case, we
agree that Arriolas claims for unpaid
salaries have prescribed. Arriola filed his
complaint three years and one day from
the time he was allegedly dismissed and
deprived of his salaries. Since a claim for
unpaid salaries arises from employeremployee relations, Article 291 of the
Labor Code applies.72 Arriolas claim for
unpaid salaries was filed beyond the
three-year prescriptive period.
However, we find that Arriolas claims for

backwages, damages, and attorneys fees
arising from his claim of illegal dismissal
have not yet prescribed when he filed his
complaint with the Regional Arbitration
Branch for the National Capital Region of
the
National
Labor
Relations
Commission.
As
discussed,
the
prescriptive period for filing an illegal
dismissal complaint is four years from the
time the cause of action accrued. Since
an award of backwages is merely
consequent to a declaration of illegal
dismissal, a claim for backwages likewise
prescribes in four years.
The four-year prescriptive period under
Article 1146 also applies to actions for
damages due to illegal dismissal since
such actions are based on an injury to the
rights of the person dismissed.
In this case, Arriola filed his complaint
three years and one day from his alleged
illegal dismissal. He, therefore, filed his
claims for backwages, actual, moral and
exemplary damages, and attorneys fees
well within the four-year prescriptive
period.
All told, the Court of Appeals erred in
finding that Arriolas claims for damages
have already prescribed when he filed his
illegal dismissal complaint.
Arriola abandoned his employment
with Pilipino Star Ngayon, Inc.
We agree that Pilipino Star Ngayon, Inc.
did not illegally dismiss Arriola. As the
Court of Appeals ruled, the removal of
[Arriolas] column from private respondent
[Pilipino Star Ngayon, Inc.s newspaper] is
not tantamount to a termination of his
employment as his job is not dependent
on the existence of the column Tinig ng
Pamilyang OFWs.84 When Pilipino Star
Ngayon, Inc. removed Tinig ng Pamilyang
OFWs from publication, Arriola remained
as section editor.
Moreover, a newspaper publisher has the
management prerogative to determine
what columns to print in its newspaper.

112112
11
3

Arriola abandoned his employment with
Pilipino Star Ngayon, Inc. Abandonment
is the clear, deliberate and unjustified
refusal of an employee to continue his
employment, without any intention of
returning.87 It has two elements: first,
the failure to report for work or absence
without valid or justifiable reason and,
second, a clear intention to sever
employer-employee
relations
exists.88 The second element is the more
determinative factor and is manifested by
overt acts from which it may be deduced
that the employee has no more intention
to work.89cralawred
Assuming that Arriola started writing for

Imbestigador only on February 17, 2003,
he nonetheless failed to report for work at
Pilipino Star Ngayon, Inc. after November
15, 1999 and only filed his illegal
dismissal complaint on November 15,
2002. He took three years and one day to
remedy his dismissal. This shows his
clear intention to sever his employment
with Pilipino Star Ngayon, Inc.
Grace Christian High School, represented
by its Principal, Dr. Jame Tan Vs.
Filipinas A. Lavandera G.R. No.
177845. August 20, 2014
The Issue before the Court
The essential issue in this case is

whether or not the CA committed
reversible error in using the
multiplier 22.5 days in computing
the retirement pay differentials of
Filipinas.
The Courts Ruling
The petition is bereft of merit.
RA 7641, which was enacted on

December 9, 1992, amended
Article 287 of the Labor Code,
providing
for
the
rules
on
retirement pay to qualified private
sector employees in the absence of
any
retirement
plan
in
the
establishment. The said law32
states
that
an
employees
retirement benefits under any
collective bargaining [agreement

(CBA)] and other agreements shall
not be less than those provided
under the same that is, at least
one-half () month salary for
every year of service, a fraction of
at least six (6) months being
considered as one whole year
and that [u]nless the parties
provide for broader inclusions, the
term one-half () month salary
shall mean fifteen (15) days plus
one-twelfth (1/12) of the 13 th
month pay and the cash equivalent
of not more than five (5) days of
service incentive leaves.
The
foregoing
provision
is
applicable where (a) there is no
CBA or other applicable agreement
providing for retirement benefits to
employees, or (b) there is a CBA or
other
applicable
agreement
providing for retirement benefits
but it is below the requirement set
by law.33 Verily, the determining
factor in choosing which retirement
scheme to apply is still superiority
in
terms
of
benefits
provided.34cralawred
In the present case, GCHS has a
retirement plan for its faculty and
non-faculty members, which gives
it the option to retire a teacher who
has rendered at least 20 years of
service, regardless of age, with a
retirement pay of one-half ()
month for every year of service.
Considering, however, that GCHS
computed Filipinas retirement pay
without
including
one-twelfth
(1/12) of her 13th month pay and
the cash equivalent of her five (5)
days SIL, both the NLRC and the
CA correctly ruled that Filipinas
retirement benefits should be
computed in accordance with
amended by RA 7641, being the
more
beneficent
retirement
scheme. They differ, however, in
the resulting benefit differentials

113113
11
4

due to divergent interpretations of
the term one-half () month
salary as used under the law.
The Court, in the case of Elegir v.

Philippine Airlines, Inc.,35 has
recently affirmed that one-half
() month salary means 22.5
days: 15 days plus 2.5 days
representing
one-twelfth
(1/12) of the 13th month pay
and the remaining 5 days for
[SIL].36 The Court sees no reason
to depart from this interpretation.
GCHS argument37 therefore that
the 5 days SIL should be likewise
pro-rated to their 1/12 equivalent
must fail.
Section 5.2, Rule II38 of the Implementing
Rules of Book VI of the Labor Code, as
amended, promulgated to implement RA
7641, further clarifies what comprises the
month salary due a retiring employee,
to wit:chanRoblesvirtualLawlibrary
RULE II
Retirement Benefits
the Secretary of Labor and Employment,

of food, lodging or other facilities
customarily furnished by the employer to
his employees. The term does not include
cost of living allowance, profit-sharing
payments and other monetary benefits
which are not considered as part of or
integrated into the regular salary of the
employees.
(b) The cash equivalent of not more
than five (5) days of service incentive
leave;
(c) One-twelfth of the 13th month pay
due the employee.
(d) All other benefits that the employer
and employee may agree upon that
should be included in the computation of
the employees retirement pay.
x x x x (Emphases supplied)chanrobleslaw
The foregoing rules are, thus, clear that
the whole 5 days of SIL are included in
the computation of a retiring employees
pay,39 as correctly ruled by the CA.
xxxx
SEC. 5. Retirement Benefits.
xxxx
5.2 Components of One-half () Month
Salary. For the purpose of determining
the minimum retirement pay due an
employee under this Rule, the term onehalf month salary shall include all the
following:cralawlawlibrary
(a) Fifteen (15) days salary of the
employee based on his latest salary
rate. As used herein, the term salary
includes all remunerations paid by an
employer to his employees for services
rendered during normal working days and
hours, whether such payments are fixed
or ascertained on a time, task, piece or
commission basis, or other method of
calculating the same, and includes the fair
and reasonable value, as determined by
Crispin B. Lopez Vs. Irvine Construction

Corp. and Tomas Sy SantosG.R. No.
207253. August 20, 2014
The Issue Before the Court
The core issue for the Court's

resolution is whether or not the CA
erred in finding that the NLRC
gravely abused its discretion in
affirming the LA's ruling that Lopez
was illegally dismissed.
The Court's Ruling
The petition is meritorious.
Ruling on the propriety of Irvine's

course of action in this case
preliminarily
calls
for
a
determination
of
Lopez's
employment status that is, whether
Lopez was a project or a regular
employee.

114114
11
5

Case law states that the principal

test
for
determining
whether
particular employees are properly
characterized
as
"project
employees" as distinguished from
"regular employees," is whether or
not the "project employees" were
assigned to carry out a "specific
project
or
undertaking,"
the
duration and scope of which were
specified at the time the employees
were engaged for that project. The
project could either be (1) a
particular job or undertaking that is
within the regular or usual business
of the employer company, but
which is distinct and separate, and
identifiable as such, from the other
undertakings of the company; or
(2) a particular job or undertaking
that is not within the regular
business of the corporation. In
order to safeguard the rights of
workers against the arbitrary use
of the word "project" to prevent
employees from attaining the
status
of
regular
employees,
employers claiming that their
workers are project employees
should not only prove that the
duration
and
scope
of
the
employment was specified at the
time they were engaged, but also
that
there
was
indeed
a
project.30cralawlawlibrary
In this case, the NLRC found that
no substantial evidence had been
presented by Irvine to show that
Lopez had been assigned to carry
out
a
"specific
project
or
undertaking," with its duration and
scope specified at the time of
engagement. In view of the weight
accorded by the courts to factual
findings of labor tribunals such as
the NLRC, the Court, absent any
cogent reason to hold otherwise,
concurs with its ruling that Lopez
was not a project but a regular
employee.31 This conclusion is
bolstered by the undisputed fact
that Lopez had been employed by

Irvine since November 1994,32 or
more than 10 years from the time
he was laid off on December 27,
2005.33 Article 280 of the Labor
Code provides that any employee
who has rendered at least one year
of service, whether such service is
continuous or broken, shall be
considered a regular employee
As a regular employee, Lopez is
entitled to security of tenure, and,
hence, dismissible only if a just or
authorized cause exists therefor.
Among the authorized causes for
termination under Article 283 of
the Labor Code is retrenchment, or
what is sometimes referred to as a
"lay-off':chanRobles
It is defined as the severance of
employment, through no fault of and
without prejudice to the employee,
resorted to by management during the
periods of business recession, industrial
depression, or seasonal fluctuations, or
during lulls caused by lack of orders,
shortage of materials, conversion of the
plant to a new production program or the
introduction of new methods or more
efficient machinery, or of automation.34
Elsewise stated, lay-off is an act of the
employer
of
dismissing
employees
because of losses in the operation, lack of
work, and considerable reduction on the
volume of its business, a right recognized
and affirmed by the Court.35 However, a
lay-off would be tantamount to a dismissal
only if it is pennanent. When a lay-off is
only temporary, the employment status of
the employee is not deemed terminated,
but merely suspended.36cralawlawlibrary
Pursuant to Article 286 of the Labor Code,
the suspension of the operation of
business or undertaking in a temporary
lay-off situation must not exceed six (6)
months:37cralawlawlibrary
virtualLawlibraryWithin this sixmonth period, the employee should
either be recalled or permanently
retrenched.
Otherwise,
the
employee would be deemed to
have been dismissed, and the

115115
11
6

employee held liable therefor.
Notably, in both a permanent and
temporary lay-off, jurisprudence
dictates that the one-month notice
rule to both the DOLE and the
employee under Article 283 of the
Labor Code, as above cited, is
mandatory.40 Also, in both cases,
the lay-off, being an exercise of the
employer's
management
prerogative, must be exercised in
good faith that is, one which is
intended for the advancement of
employers' interest and not for the
purpose
of
defeating
or
circumventing the rights of the
employees under special laws or
under valid agreements.
As the NLRC correctly ruled in this case,
Lopez, who, as earlier discussed was a
regular employee of Irvine, was not
merely temporarily laid off from work but
was terminated from his employment
without any valid cause therefor; thus, the
proper disposition is to affirm the LA's
ruling that Lopez had been illegally
dismissed.
Although the NLRC did not expound

on the matter, it is readily
apparent that the supposed lay-off
of Lopez was hardly justified
considering the absence of any
causal
relation
between
the
cessation of Irvine's project in
Cavite with the suspension of
Lopez's work. To repeat, Lopez is a
regular
and
not
a
project
employee. Hence, the continuation
of his engagement with Irvine,
either in Cavite, or possibly, in any
of its business locations, should not
have
been
affected
by
the
culmination of the Cavite project
alone. In light of the wellentrenched rule that the burden to
prove the validity and legality of
the termination of employment
falls on the employer,47 Irvine
should have established the bona
fide suspension of its business
operations or undertaking that
would
have
resulted
in
the
temporary lay-off of its employees

for a period not exceeding six (6)
months in accordance with Article
286 of the Labor Code.
In this case, Irvine failed to prove
compliance with the parameters of Article
286 of the Labor Code. As the records
would show, it merely completed one of
its numerous construction projects which
does not, by and of itself, amount to a
bona
fide
suspension
of
business
operations or undertaking. In invoking
Article 286 of the Labor Code, the
paramount consideration should be
the dire exigency of the business of
the employer that compels it to put
some of its employees temporarily
out of work.51 This means that the
employer should be able to prove that it is
faced with a clear and compelling
economic reason which reasonably forces
it to temporarily shut down its business
operations or a particular undertaking,
incidentally resulting to the temporary layoff of its employees.
Due
to
the
grim
economic
consequences to the employee,
case law states that the employer
should also bear the burden of
proving that there are no posts
available
to
which
the
employee temporarily out of
work can be assigned.52
The same can be said of the
employee in this case as no
evidence was submitted by Irvine
to show any dire exigency which
rendered it incapable of assigning
Lopez to any of its projects. Add to
this the fact that Irvine did not
proffer any sufficient justification
for singling out Lopez for lay-off
among its other three hundred
employees, thereby casting a cloud
of doubt on Irvine's good faith in
pursuing this course of action.
Verily, Irvine cannot conveniently
suspend the work of any of its
employees in the guise of a
temporary lay-off when it has not
shown compliance with the legal
parameters under Article 286 of

116116
11
7

the Labor Code. With Irvine failing

to prove such compliance, the
resulting legal conclusion is that
Lopez had been constructively
dismissed; and since the same was
effected without any valid cause
and due process, the NLRC
properly affirmed the LA's ruling
that Lopez's dismissal was illegal.
Colegio De San Juan De Letran Vs. Isidra
Dela Rosa-Meris G.R. No. 178837.
September 1, 2014
To our mind, the acts of the
respondent in altering the grades
in the Clean Records even after the
same were already reviewed and
approved
by
the
subject
coordinators; of effecting the
alterations and erasures without
placing her initials thereon; of not
informing the subject coordinators
of such alterations and erasures; of
allowing the discrepancies to last
without any effort to reconcile the
same to avoid any doubts on the
grading system of petitioner; of
refusing to accept the memo
informing her of the aforesaid
tampering
and
snubbing
any
explanation relevant thereto, are
all acts of transgression of school
rules, regulations and policies.
Truly,
then,
respondent
had
committed a misconduct, serious
enough to warrant her dismissal
from employment under paragraph
(a) of Article 282 of the Labor
Code, as well as Section 94(b),
Article XVII of the Manual of
Regulations for Private Schools,
which
provides
that
the
employment of a teacher may be
terminated
for
negligence
in
keeping school or student records,
or tampering with or falsification of
the
same,
to
Section
94.
Causes
for
Terminating Employment In
addition
to
the
just
causes
enumerated in the Labor Code, the
employment of school personnel,
including
faculty,
may
be
terminated for any of the following
causes:ChanRoblesVirtualawlibrary
xxx
b) Negligence in keeping school
or
student
records,
or
tampering with or falsification
of the same;80
Negligence in keeping school or

student records, or tampering with
or falsification of the same can
neither be cured nor cossetted by
compassion towards the students,
because the means does not justify
the end. While respondents motive
for increasing the grades of certain
students in the Clean Records was
not known or could have been
noble, the fact is, unauthorized and
improper alterations were effected
in the official records of petitioner,
a clear violation of petitioners
Elementary Faculty Manual as well
as the Private School Manual
adhered to by petitioners and its
faculties. Respondent is deemed to
have exercised an unreasonable
degree of discretion in failing to
provide a concrete basis for
increasing the grades of certain
students. For this, respondent
should be made to face the
consequences of her actions. To
tolerate such conduct will, indeed,
undermine
the
integrity
of
petitioners grading system, and its
standing as an academic institution
as well.
It is now settled that petitioner duly
complied
with
the
requirement
of
substantial due process in terminating the
employment of respondent. We will now
determine
whether
petitioner
had
complied with the procedural aspect of
lawful dismissal.
In the termination of employment, the
employer must (a) give the employee a
written notice specifying the ground or
grounds of termination, giving to said

117117
11
8

employee reasonable opportunity within
which to explain his side; (b) conduct a
hearing or conference during which the
employee concerned, with the assistance
of counsel if the employee so desires, is
given the opportunity to respond to the
charge, present his evidence or rebut the
evidence presented against him; and (c)
give the employee a written notice of
termination indicating that upon due
consideration
of
all
circumstances,
grounds have been established to justify
his termination.82cralawred
Petitioners had complied with all of

the above-stated requirements
Based on the foregoing, it is clear that
respondent refused to present her side by
choice. It can be said that ample
opportunity was afforded to respondent to
defend herself from the charges levelled
on her, but she opted not to take it. In a
plethora of cases, we have ruled that the
essence of due process lies simply in an
opportunity to be heard; and not that an
actual
hearing
should
always
and
indispensably be held,89 especially when
the employee herself precluded the same
from happening, as in this case.
It is also worthy to note that failure on the
part of petitioner to convert the parents
concerns in writing does not deprive
respondent from facing the charges
against her, since the offense was
committed against petitioner as an
educational institution, the students being
merely a collateral damage thereof.
After
deliberately
and
knowingly
disregarding the show cause letters and
her opportunities to be heard, as well as
the termination letter, respondent cannot
now claim that she was denied due
process.
Indubitably,
respondent
was
dismissed from employment for a
just cause and in accordance with
due process under existing labor
laws,
rules
and
regulations.
Accordingly, she is not entitled to
reinstatement or separation pay,
backwages or other claims for

damages. No court, not even this
Court, can make an award that is
not based on law.90cralawred
Omni Hauling Services, Inc., Lolita Franco,
Aniceto Franco Vs. Bernardo Bon,
Roberto Tortoles, Romeo Torres,
Rodello Ramos, et al.G.R. No. 199388.
September 3, 2014
Article 280 of the Labor Code
distinguishes a project employee
from a regular employee in this
wise:ChanRoblesVirtualawlibrary
Art. 280. Regular and casual

employment. The provisions of
written agreement to the contrary
notwithstanding and regardless of
the oral agreement of the parties,
an employment shall be deemed to
be regular where the employee has
been engaged to perform activities
which are usually necessary or
desirable in the usual business or
trade of the employer, except
where the employment has
been fixed for a specific project
or undertaking the completion
or termination of which has
been determined at the time of
the
engagement
of
the
employee or where the work or
service to be performed is seasonal
in nature and the employment is
for the duration of the season.
x
x
x
x
(Emphasis
and
underscoring supplied)
A project employee is assigned to a

project which begins and ends at
determined
or
determinable
times.31 Unlike regular employees
who may only be dismissed for just
and/or authorized causes under the
Labor Code, the services of
employees who are hired as
project
employees
may
be
lawfully
terminated
at
the
completion
of
the
project.32cralawred
According to jurisprudence, the

118118
11
9

principal test for determining
whether particular employees are
properly characterized as project
employees as distinguished from
regular employees, is whether or
not the employees were assigned
to carry out a specific project or
undertaking, the duration (and
scope) of which were specified at
the time they were engaged for
that project. The project could
either be (1) a particular job or
undertaking that is within the
regular or usual business of the
employer company, but which is
distinct
and
separate,
and
undertakings of the company; or
(2) a particular job or undertaking
that is not within the regular
business of the corporation. In
order to safeguard the rights of
workers against the arbitrary use
of the word project to prevent
employees from attaining a regular
status, employers claiming that
their
workers
are
project
employees should not only
prove that the duration and
scope of the employment was
specified at the time they were
engaged, but also that there
was indeed a project.33cralawred
Even though the absence of a

written contract does not by itself
grant
regular
status
to
respondents, such a contract is
evidence that respondents were
informed of the duration and scope
of their work and their status as
project employees.34 As held in
Hanjin
Heavy
Industries
and
Construction Co., Ltd. v. Ibaez,35
citing numerous precedents on the
matter, where no other evidence
was offered, the absence of the
employment contracts raises a
serious question of whether the
employees were properly informed
of their employment status as
project employees at the time of
their
engagement,
viz.:ChanRoblesVirtualawlibrary
While the absence of a written

contract does not automatically
confer regular status, it has
been construed by this Court as
a red flag in cases involving the
question
of
whether
the
workers concerned are regular
or
project
employees.
In
Grandspan
Development
Corporation
v.
Bernardo
and
Audion Electric Co., Inc. v. National
Labor Relations Commission, this
Court took note of the fact that the
employer was unable to present
employment contracts signed by
the workers, which stated the
duration of the project. In another
case, Raycor v. Aircontrol Systems,
Inc. v. National Labor Relations
Commission, this Court refused to
give any weight to the employment
contracts offered by the employers
as evidence, which contained the
signature of the president and
general manager, but not the
signatures of the employees. In
cases where this Court ruled that
construction workers repeatedly
rehired retained their status as
project employees, the employers
were able to produce employment
contracts clearly stipulating that
the workers employment was
coterminous with the project to
support their claims that the
employees were notified of the
scope and duration of the project.
Hence, even though the absence of
a written contract does not by itself
grant
regular
status
to
respondents, such a contract is
evidence that respondents were
informed of the duration and
scope of their work and their status
as project employees. In this
case, where no other evidence
was offered, the absence of an
employment contract puts into
serious question whether the
employees
were
properly

119119
12
0

informed at the onset of their
employment status as project
employees.
It
is
doctrinally
entrenched that in illegal dismissal
cases, the employer has the
burden of proving with clear,
accurate, consistent and convincing
evidence that a dismissal was
valid. x x x.36 (Emphases supplied;
citations omitted)
In this case, records are bereft of

any
evidence
to
show
that
respondents were made to sign
employment contracts explicitly
stating that they were going to be
hired as project employees, with
the period of their employment to
be co-terminus with the original
period of Omnis service contract
with the Quezon City government.
Neither is petitioners allegation
that
respondents
were
duly
apprised of the project-based
nature
of
their
employment
supported by any other evidentiary
proof. Thus, the logical conclusion
is that respondents were not
clearly and knowingly informed of
their employment status as mere
project
employees,
with
the
duration and scope of the project
specified at the time they were
engaged. As such, the presumption
of regular employment should be
accorded in their favor pursuant to
Article 280 of the Labor Code which
provides that [employees] who
have rendered at least one year of
service, whether such service is
continuous or broken [ as
respondents in this case ] shall be
considered
as
[regular
employees] with respect to the
activity in which [they] are
employed and [their] employment
shall continue while such activity
actually exists. Add to this the
obvious fact that respondents have
been engaged to perform activities
which are usually necessary or
desirable in the usual business or
trade of Omni, i.e., garbage
hauling, thereby confirming the

strength
of
the
aforesaid
conclusion.
The
determination
that
respondents are regular and not
merely
project
employees
resultantly
means
that
their
services could not have been
validly terminated at the expiration
of the project, or, in this case, the
service contract of Omni with the
Quezon
City
government.
As
regular employees, it is incumbent
upon petitioners to establish that
respondents had been dismissed
for a just and/or authorized cause.
However, petitioners failed in this
respect; hence, respondents were
illegally dismissed.
Philippine
Touristers,
Inc.
and/or
Alejandro R. Yague, Jr. Vs. Mas
Transit Workers Union-Anglo KMU and
its members represented by Abraham
Tumala, Jr.G.R. No. 201237. September
3, 2014
For an appeal from the LAs ruling to the
NLRC to be perfected, Article 223 (now
Article 229)61 of the Labor Code requires
the posting of a cash or surety bond in an
amount equivalent to the monetary award
in the judgment appealed
While it has been settled that the posting
of a cash or surety bond is indispensable
to the perfection of an appeal in cases
involving monetary awards from the
decision of the LA,62 the Rules of
Procedure of the NLRC63 (the Rules),
particularly Section 6, Rule VI thereof,
nonetheless allows the reduction of the
bond upon a showing of (a) the existence
of a meritorious ground for reduction,
and (b) the posting of a bond in a
reasonable amount in relation to the
monetary award.
In this regard, it bears stressing that the
reduction of the bond provided thereunder
is not a matter of right on the part of the
movant and its grant still lies within the
sound discretion of the NLRC upon a
showing of meritorious grounds and the

120120
12
1

reasonableness of the bond tendered
under the circumstances.64cralawred
Here, it is not disputed that petitioners
filed
an
appeal
memorandum
and
complied with the other requirements for
perfecting an appeal, save for the posting
of the full amount equivalent to the
monetary
award
of
P12,833,210.00. Instead, petitioners filed
a motion to reduce bond claiming that
they
were
suffering
from
liquidity
problems and, in support of their claim,
submitted PTIs AFS which showed a
deficit in income.68 Since this claim was
not amply controverted by respondents,
and considering further the significance of
petitioners argument raised in their
appeal, i.e., that there exists no
employer-employee relationship between
PTI and the individual respondents, on the
basis of which lies their non-liability, the
Court deems that the NLRC did not
gravely abuse its discretion in deciding
that
these
circumstances
constitute
meritorious grounds for the reduction of
the bond.69cralawred
under Article 28 of the Civil Code.

Prefatorily, we would like to stress that
the instant case falls under Article 28 of
the Civil Code on human relations, and not
unfair competition under Republic Act No.
8293,7 as the present suit is a damage
suit and the products are not covered by
patent registration.
A fortiori, the
existence
of
patent
registration
is
immaterial in the present case.
The concept of unfair competition under
Article 28 is very much broader than that
covered by intellectual property laws.
Under the present article, which follows
the
extended
concept
of
unfair
competition in American jurisdictions, the
term covers even cases of discovery of
trade secrets of a competitor, bribery of
his employees, misrepresentation of all
kinds, interference with the fulfillment of a
competitors contracts, or any malicious
interference
with
the
latters
business.8cralawred
With that settled, we now come to the
issue of whether or not petitioner
committed acts amounting to unfair
competition under Article 28 of the Civil
Code.
Willaware
Products
Corporation
Vs.
Jesichris Manufacturing Corporation
G.R. No. 195549. September 3, 2014
We find the petition bereft of merit.
Hence, the present Petition for
Review wherein petitioner raises
Article 28 of the Civil Code provides that
the following issues for our
unfair
competition
in
agricultural,
resolution:ChanRoblesVirtualawlibr
commercial or industrial enterprises or in
ary
labor
through
the
use
of
force,
intimidation,
deceit,
machination
or not
any
(1) Whether or not there is unfair competition under human
relations
when the
parties re
unjust,
oppressive or high-handed
competitors and there is actually no damage on theother
part of
Jesichris?
give
to adamages
right of action
(2) Consequently, if there is no unfair competition,method
shouldshall
there
berise
moral
and
by the person who thereby suffers
attorneys fees?
(3) Whether or not the addition of nominal damagesdamage.
is proper although no rights have been
established?
From on
theautomotive
foregoing, itparts,
is clear
that what
(4) If ever the right of Jesichris refers to its copyright
should
it beis
being sought
bebyprevented
is this
not
considered in the light of the said copyrights were considered
to betovoid
no less than
competition per se but the use of unjust,
Honorable Court in SC GR No. 161295?
high- handed
methods
(5) If the right involved is goodwill then the issue is:oppressive
whether or or
not Jesichris
has established
6
which
may
deprive
others
of
a
fair
chance
goodwill?
to
engage
in
business
or
to
earn
a
living.
Plainly,
what
the
law
prohibits
is
unfair
In essence, the issue for our
competition
and
not
competition
where
resolution is: whether or not
the means used are fair and legitimate.
petitioner
committed
acts
amounting to unfair competition
121121
12
2

In order to qualify the competition as
unfair, it must have two characteristics:
(1) it must involve an injury to a
competitor or trade rival, and (2) it must
involve acts which are characterized as
contrary
to
good
conscience,
or
shocking to judicial sensibilities, or
otherwise unlawful; in the language of our
law, these include force, intimidation,
deceit, machination or any other unjust,
oppressive or high-handed method. The
public injury or interest is a minor factor;
the essence of the matter appears to be a
private
wrong
perpetrated
by
unconscionable means.9cralawred
Here, both characteristics are present.
First, both parties are competitors or trade
rivals, both being engaged in the
manufacture of plastic-made automotive
parts. Second, the acts of the petitioner
were clearly contrary to good conscience
as petitioner admitted having employed
respondents
former
employees,
deliberately copied respondents products
and even went to the extent of selling
these
products
to
respondents
customers.10cralawred
To bolster this point, the CA correctly
pointed out that petitioners hiring of the
former employees of respondent and
petitioners act of copying the subject
plastic
parts
of
respondent
were
tantamount to unfair competition.
Thus, it is evident that petitioner is
engaged in unfair competition as shown
by his act of suddenly shifting his business
from
manufacturing
kitchenware
to
plastic-made automotive parts; his luring
the employees of the respondent to
transfer to his employ and trying to
discover the trade secrets of the
respondent.12cralawred
Moreover, when a person starts an
opposing place of business, not for the
sake of profit to himself, but regardless of
loss and for the sole purpose of driving his
competitor out of business so that later on
he can take advantage of the effects of his
malevolent purpose, he is guilty of wanton

wrong.
Ricardo A. Dalusong Vs. Eagle Clarc
Shipping Philippines, Inc., et al.G.R.
No. 204233. September 3, 2014
Section 20(B)(3)15 of the POEA-SEC
provides that [i]f a doctor appointed by
the
seafarer
disagrees
with
the
assessment [of the company-designated
doctor], a third doctor may be agreed
jointly between the Employer and the
seafarer, and [t]he third doctors
decision shall be final and binding on both
parties. In this case, there was no third
doctor appointed by both parties whose
decision would be binding on the parties.
Hence, it is up to the labor tribunal and
the courts to evaluate and weigh the
merits of the medical reports of the
company-designated
doctor and the
16
seafarers doctor. The Labor Arbiter did
not give probative value to the medical
report issued by petitioners doctor
primarily because there was no evidence
of tests and examinations conducted to
support his medical report. On the other
hand, the NLRC ruled that [t]he findings
of [petitioners] doctor, who gave him
Grade 1 Disability rating is more
appropriate and applicable to the injury
suffered by [petitioner].17 The Court of
Appeals gave more credence to the
findings
of
the
company-designated
doctor, which were supported by multiple
tests and examinations on petitioner,
compared to the medical report of
petitioners
doctor
which
was
not
supported
by
adequate
tests
and
examinations.
Just because the seafarer is unable to
perform his job and is undergoing medical
treatment for more than 120 days does
not automatically entitle the seafarer to
total
and
permanent
disability
compensation.26 In this case, petitioners
medical treatment lasted more than 120
days but less than 240 days, after which
the company-designated doctor gave
petitioner a final disability grading under
the POEA schedule of disabilities of grade
11 - complete immobility of an ankle joint
in normal position. Thus, before the

122122
12
3

maximum 240-day medical treatment
period expired, petitioner was issued a
final disability grade 11 which is merely
equivalent
to
a
permanent
partial
disability, since under Section 32 of the
POEA-SEC, only those classified under
grade 1 are considered total and
permanent disability. Clearly, petitioner is
only
entitled
to
permanent
partial
disability
compensation,
since
his
condition cannot be considered as
permanent total disability.
Nancy S. Montinola Vs. Court of Appeals

G.R. No. 198656. September 8, 2014
Illegally suspended employees, similar to
illegally dismissed employees, are entitled
to moral damages when their suspension
was attended by bad faith or fraud,
oppressive to labor, or done in a manner
contrary to morals, good customs, or
public policy.
The sole issue in this case is whether
Montinolas illegal suspension entitled her
to an award of moral and exemplary
damages and attorneys fees.
Montinola is entitled to moral and
exemplary damages. She is also entitled
to attorneys fees.
The
Labor
Code
Art. 279. Security of Tenure In cases of
regular employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized
by this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up
to the time of his actual reinstatement.
Security of tenure of workers is not only
statutorily protected, it is also a
constitutionally guaranteed right.61 Thus,
any deprivation of this right must be
attended by due process of law.62 This
means that any disciplinary action which
affects employment must pass due

process scrutiny in both its substantive
and procedural aspects.
The constitutional protection for workers
elevates their work to the status of a
vested right. It is a vested right protected
not only against state action but against
the arbitrary acts of the employers as
well. This court in Philippine Movie
Pictures Workers Association v. Premier
Productions, Inc.63 categorically stated
that [t]he right of a person to his labor is
deemed to be property within the meaning
of constitutional guarantees.64 Moreover,
it is of that species of vested constitutional
right that also affects an employees
liberty and quality of life. Work not only
contributes to defining the individual, it
also assists in determining ones purpose.
Work provides for the material basis of
human dignity.
Suspension from work is prima facie a
deprivation of this right. Thus, termination
and suspension from work must be
reasonable to meet the constitutional
requirement of due process of law. It will
be reasonable if it is based on just or
authorized causes enumerated in the
Labor Code.65cralawred
On the other hand, articulation of
procedural due process in labor cases is
found in Article 277(b) of the Labor Code,
which states:ChanRoblesVirtualawlibrary
(b) Subject to the constitutional right of
workers to security of tenure and their
right to be protected against dismissal
except for a just and authorized cause and
without prejudice to the requirement of
notice under Article 283 of this Code, the
employer shall furnish the worker whose
employment is sought to be terminated a
written notice containing a statement of
the causes for termination and shall afford
the latter ample opportunity to be heard
and to defend himself with the assistance
of his representative if he so desires in
accordance with the company rules and
regulations promulgated pursuant to
guidelines set by the Department of Labor

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4

and Employment. Any decision taken by
the employer shall be without prejudice to
the right of the worker to consent the
validity or legality of his dismissal by filing
a complaint with the regional branch of
the National Labor Relations Commission.
The
burden
of
proving
that
the
termination was for a valid or authorized
cause shall rest on the employer.
The procedure can be summarized in this
manner. First, the employer must furnish
the employee with a written notice
containing the cause for termination.
Second, the employer must give the
employee an opportunity to be heard. This
could be done either through a position
paper or through a clarificatory hearing.66
The employee may also be assisted by a
representative or counsel. Finally, the
employer must give another written notice
apprising the employee of its findings and
the penalty to be imposed against the
employee, if any.67 In labor cases, these
requisites
meet
the
constitutional
requirement of procedural due process,
which
contemplates
notice
and
opportunity to be heard before judgment
is rendered, affecting ones person or
property.68cralawred
In this case, PAL complied with procedural
due process as laid out in Article 277,
paragraph (b) of the Labor Code. PAL
issued a written notice of administrative
charge, conducted a clarificatory hearing,
and
rendered
a
written
decision
suspending
Montinola.
However,
we
emphasize that the written notice of
administrative charge did not serve the
purpose required under due process. PAL
did not deny her allegation that there
would be a waiver of the clarificatory
hearing if she insisted on a specific notice
of administrative charge. With Montinola
unable to clarify the contents of the notice
of administrative charge, there were
irregularities in the procedural due process
accorded to her.
Moreover,
PAL
denied
substantial due process.
Montinola
PAL, however, merely relied on these

pieces
of
information
in
finding
administrative
liability
against
Montinola:ChanRoblesVirtualawlibrary
1) a list of offenses found in PALs Code of
Discipline
that
Montinola
allegedly
violated;
2) a list of flight crew members that were
checked at the Honolulu airport; and
3) a list of all items confiscated from all
these flight crew members.
The lists are not sufficient to show the
participation of any of the flight crew
members, least of all Montinola. None of
the evidence presented show that the
customs officials confiscated any of these
items from her. Thus, the evidence by
themselves do not show that Montinola
pilfered airline items.
Together with the manner in which the
investigation
proceeded,
i.e.,
that
Montinola was prevented from asking for
clarification of the charges against her,
the absence of substantial evidence is so
apparent that disciplining an employee
only on these bases constitutes bad faith.
The employee is entitled to moral
damages when the employer acted a) in
bad faith or fraud; b) in a manner
oppressive to labor; or c) in a manner
contrary to morals, good customs, or
public policy.
Bad faith implies a conscious and
intentional design to do a wrongful act for
a
dishonest
purpose
or
moral
obliquity.73Cathay Pacific Airways v.
Spouses Vazquez74 established that bad
faith must be proven through clear and
convincing evidence.75 This is because
[b]ad faith and fraud . . . are serious
accusations that can be so conveniently
and casually invoked, and that is why they
are never presumed. They amount to
mere slogans or mudslinging unless
convincingly substantiated by whoever is
alleging them.76 Here, there was clear

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5

and convincing evidence of bad
adduced in the lower tribunals.
faith
PALs actions in implicating Montinola and

penalizing her for no clear reason show
bad faith. PALs denial of her request to
clarify the charges against her shows its
intent to do a wrongful act for moral
obliquity. If it were acting in good faith, it
would have gathered more evidence from
its contact in Honolulu or from other
employees before it started pointing
fingers. PAL should not have haphazardly
implicated Montinola and denied her
livelihood even for a moment.
PAL
apparently
granted
Montinola
procedural due process by giving her a
notice of administrative charge and
conducting a hearing. However, this was
more apparent than real. The notice of
administrative charge did not specify the
acts committed by Montinola and how
these acts violated PALs Code of
Discipline. The notice did not state which
among the items confiscated by the US
customs officials were originally found in
Montinolas possession. Worse, the panel
of PAL officers led by Atty. Pascual did not
entertain any query to clarify the charges
against her.
When the alleged participation of the
employee in the illicit act which serves as
a basis for the disciplinary action is not
clear from the notice, the opportunity to
be heard will not be reasonable. The
notice fails to meet reasonable standards.
It does not have enough information to
enable the employee to adequately
prepare a defense.
Nothing in PALs action supports the
finding that Montinola committed specific
acts constituting violations of PALs Code
of Discipline.
This act of PAL is contrary to morals, good
customs, and public policy. PAL was
willing to deprive Montinola of the wages
she would have earned during her year of
suspension even if there was no
substantial evidence that she was involved
in the pilferage.
Moral damages are, thus, appropriate. In
Almira v. B.F. Goodrich Philippines, this
court noted that unemployment brings
untold hardships and sorrows on those
dependent on the wage-earner.81 This is
also true for the case of suspension.
Suspension is temporary unemployment.
During the year of her suspension,
Montinola and her family had to survive
without her usual salary. The deprivation
of economic compensation caused mental
anguish,
fright,
serious
anxiety,
besmirched reputation, and wounded
feelings. All these are grounds for an
award of moral damages under the Civil
Code.82cralawr
II
Montinola is also entitled to exemplary
damages.
Under Article 2229 of the Civil Code,
[e]xemplary or corrective damages are
imposed, by way of example or correction
for the public good, in addition to the
moral,
temperate,
liquidated
or
compensatory damages. As this court has
stated in the past: Exemplary damages
are designed by our civil law to permit the
courts to reshape behaviour that is
socially deleterious in its consequence by
creating negative incentives or deterrents
against such behaviour.83cralawred
If the case involves a contract, Article
2332 of the Civil Code provides that the
court may award exemplary damages if
the defendant acted in a wanton,
fraudulent,
reckless,
oppressive
or
malevolent manner. Thus, in Garcia v.
NLRC,84 this court ruled that in labor
cases, the court may award exemplary
damages if the dismissal was effected in
a wanton, oppressive or malevolent
manner.85cralawred
It is socially deleterious for PAL to
suspend Montinola without just cause in
the manner suffered by her. Hence,
exemplary damages are necessary to
deter future employers from committing

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6

the same acts.
fees and expenses of litigation should be

recovered.
III
Montinola is also entitled to attorneys
fees.
Article 2208 of the Civil Code enumerates
the instances when attorneys fees can be
awarded:ChanRoblesVirtualawlibrary
ART. 2208. In the absence of stipulation,
attorneys fees and expenses of litigation,
other than judicial costs, cannot be
recovered,
except:ChanRoblesVirtualawlibrary
(1) When
awarded;
exemplary
damages
are
(2) When the defendants act or omission

has compelled the plaintiff to litigate with
third persons or to incur expenses to
protect his interest;
(3) In criminal cases of malicious
prosecution against the plaintiff;
(4) In case of a clearly unfounded civil
action or proceeding against the plaintiff;
(5) Where the defendant acted in gross
and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and
demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
(8) In actions for indemnity under
workmens compensation and employers
liability laws;
(9) In a separate civil action to recover
civil liability arising from a crime;
(10) When at least double judicial costs
are awarded;
(11) In any other case where the court
deems it just and equitable that attorneys
In all cases, the attorneys fees and

expenses of litigation must be reasonable.
(Emphasis supplied)
This case qualifies for the first, second,
and seventh reasons why attorneys fees
are awarded under the Civil Code.
First, considering that we have awarded
exemplary
damages
in
this
case,
attorneys fees can likewise be awarded.
Second,
PALs
acts
and
omissions
compelled Montinola to incur expenses to
protect her rights with the National Labor
Relations Commission and the judicial
system. She went through four tribunals,
and she was assisted by counsel. These
expenses would have been unnecessary if
PAL had sufficient basis for its decision to
discipline Montinola.
Finally, the action included recovery for
wages. To bring justice to the illegal
suspension of Montinola, she asked for
backwages for her year of suspension.
Northwest
Airlines,
Inc.
Vs.
Ma.
Concepcion M. Del Rosario G.R. No.
157633. September 10, 2014
An act of dishonesty by an employee who
has been put in charge of the employers
money and property amounts to breach of
the trust reposed by the employer, and
normally leads to loss of confidence in her.
Such dishonesty comes within the just and
valid causes for the termination of her
employment under Article 282 of the
Labor Code.
The just and valid causes for the dismissal
of an employee, as enumerated in Article
282 of the Labor Code, include: (a)
serious misconduct or willful disobedience
by the employee of the lawful orders of his
employer or representative in connection
with her work; (b) gross and habitual
neglect by the employee of her duties; (c)
fraud or willful breach by the
employee of the trust reposed in her
by her employer or duly authorized
representative; (d) commission of a

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7

crime or offense by the employee against
the person of her employer or any
immediate member of her family or her
duly authorized representative; and (e)
other causes analogous to the foregoing.
The dishonesty imputed to the petitioner
included the making of double entries in
the production reports and thereby
enriching herself by pocketing the extra
cash generated from the double entries.
Contrary to her assertion that there was
no substantial evidence to justify her
dismissal,
the
production
reports
containing the double entries were
presented as evidence; and her double
entries were confirmed in the affidavit
executed by Redelito Caranay, Jr., her coemployee. As such, the finding of the just
cause for her dismissal did not emanate
from mere speculation, suspicion or
assumption.
Lastly, the petitioner posits that the CA
should have applied the pronouncement in
Serrano v. National Labor Relations
Commission19 instead of that in Wenphil
Corporation v. National Labor Relations
Commission.20 To recall, the Court held in
Wenphil Corporation that the employer
should still be sanctioned with an order to
indemnify the dismissed employee despite
the termination being for cause provided
the employer did not observe due process.
This holding was modified in Serrano, with
the Court ruling that where due process
(i.e., the two-notice rule) was not
observed, the employer should award the
dismissed employee full backwages as the
penalty for the violation of due process.
Essentially, Serrano tightened the penalty
in Wenphil Corporation from mere
indemnity to full backwages.
The position of the petitioner is untenable
for two reasons. Firstly, Serrano has been
abandoned in Agabon v. National Labor
Relations Commission ,21 in which the
Court ruled that if the termination was
valid but due process was not followed,
the employee remains dismissed but the
employer must pay an indemnity heavier
than that imposed in Wenphil Corporation
but lighter than full backwages. In effect,
Agabon partly restored the doctrine in

Wenphil Corporation. And, secondly, both
Wenphil Corporation and Serrano should
apply only when there is a finding that the
termination was valid but the requirement
of due process was not followed.
Obviously, neither would be applicable to
the petitioner whose dismissal was valid
and legal, and the respondent as her
employer complied with the demands of
due process.
Rosalie L. Gargoles Vs. Reylita S. Del
RosarioG.R. No. 158583. September 10,
2014
An act of dishonesty by an employee who
has been put in charge of the employers
money and property amounts to breach of
the trust reposed by the employer, and
normally leads to loss of confidence in her.
Such dishonesty comes within the just and
valid causes for the termination of her
employment under Article 282 of the
Labor Code.
The just and valid causes for the dismissal
of an employee, as enumerated in Article
282 of the Labor Code, include: (a)
serious misconduct or willful disobedience
by the employee of the lawful orders of his
employer or representative in connection
with her work; (b) gross and habitual
neglect by the employee of her duties; (c)
fraud or willful breach by the
employee of the trust reposed in her
by her employer or duly authorized
representative; (d) commission of a
crime or offense by the employee against
the person of her employer or any
immediate member of her family or her
duly authorized representative; and (e)
other causes analogous to the foregoing.
The dishonesty imputed to the petitioner
included the making of double entries in
the production reports and thereby
enriching herself by pocketing the extra
cash generated from the double entries.
Contrary to her assertion that there was
no substantial evidence to justify her
dismissal,
the
production
reports
containing the double entries were
presented as evidence; and her double
entries were confirmed in the affidavit
executed by Redelito Caranay, Jr., her co-

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8

employee. As such, the finding of the just
cause for her dismissal did not emanate
from mere speculation, suspicion or
assumption.
It is true that every person is entitled to

be presumed innocent of wrongdoing. The
objective of the presumption has been to
lay the burden of proof on the shoulders
of the alleger of wrongdoing. The
presumption extends to the petitioner and
to every other employee charged with any
wrongdoing that may cause them to be
sanctioned, including being dismissed
from employment. But the presumption,
which is disputable, by no means excuses
the employee charged with wrongdoing
from answering and defending herself
once the presumption has been overcome
by a showing to the contrary. The failure
of the employee to rebut or disprove the
proof of wrongdoing then establishes the
charge against her.12 This is especially
true in a case for dismissal grounded on
loss of confidence or breach of trust, in
which the employer may proceed to
dismiss the erring employee once the
employer becomes morally convinced that
she was guilty of a breach of trust and
confidence.13 Based on the record, the
petitioner did not sufficiently contradict or
rebut the charge of dishonesty.
Interorient Maritime Enteprises, Inc. Vs.
Victor M. Creer, III G.R. No. 181921.
September 17, 2014 Concurring Opinion
J. Leonen
The oft repeated rule is that whoever
claims
entitlement
to
the
benefits
provided by law should establish his or her
right
thereto
by
substantial
evidence.1cralawred
For a seamans claim for disability to
prosper, it is mandatory that within three
days from his repatriation, he is examined
by a company-designated physician.
Non-compliance with this mandatory
requirement results in the forfeiture of the
right to claim for compensation and
disability benefits.
It is undisputed that on May 7, 2002,
Victors
employment
contract
was
completed. He arrived in Manila on May
9, 2002; the following day, or on May 10,

2002, he reported to the office of
InterOrient. Although he averred that he
informed InterOrient about the pain he
experienced while on board the vessel, the
company allegedly only advised him to
consult a doctor but did not give any
referral.
We are not persuaded by Victors
contention. It must be stressed that his
repatriation was not due to any medical
reasons but because his employment
contract had already expired. Other than
his
self-serving
allegation
that
he
experienced pain while on board, he was
not able to substantiate the same. There
was no showing that he reported his injury
to his officers while on board the vessel;
neither did he prove that he sought
medical
attention
but
was
refused. Likewise, other than his bare and
self-serving assertion that he informed
InterOrient about his pain, he presented
no evidence or tangible proof that he
indeed requested for medical attention,
much more that he was rebuffed.
On the contrary, the records show that
when
he
reported
to
InterOrient
immediately after his repatriation, he
signed a Receipt and Release stating that
he has not contracted or suffered any
illness or injury from work and that he
was discharged in good and perfect
health. Moreover, we are baffled why, if
indeed Victor needed medical services, he
opted to consult several doctors other
than
the
company-designated
physician. He offered no explanation for
this.
The rationale for the rule [on mandatory
post-employment medical examination
within three days from repatriation by a
company-designated physician] is that
reporting the illness or injury within three
days from repatriation fairly makes it
easier for a physician to determine the
cause of the illness or injury. Ascertaining
the real cause of the illness or injury
beyond the period may prove difficult. To
ignore the rule might set a precedent with

128128
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9

negative repercussions, like opening
floodgates to a limitless number of
seafarers claiming disability benefits, or
causing unfairness to the employer who
would have difficulty determining the
cause of a claimants illness because of
the passage of time. The employer would
then have no protection against unrelated
disability claims.28cralawred
In fine, we hold that Victors noncompliance with the three-day rule on
post-employment medical examination is
fatal to his cause. As a consequence, his
right to claim for compensation and
disability benefits is forfeited. On this
score alone, his Complaint could have
been dismissed outright.
Victors illness is not compensable.
Even if we disregard the mandatory threeday rule on post-employment medical
examination by the company-designated
physician, Victors claim for disability
benefits must still fail for not being
compensable.
For an illness to be compensable, Section
20(B)(6)29 of the 2000 Amended Standard
Terms and Conditions Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels (2000 Amended
Standard Terms and Conditions), deemed
incorporated in the POEA Contract,
requires the concurrence of two elements:
first, that the illness must be workrelated; and second, that the work-related
illness must have existed during the term
of
the
seafarers
employment
contract.30cralawred
a) Victor failed to show that his illness
existed during the term of his contract.
In this case, Victor submitted no proof
that his illness was contracted during the
term of his contract with InterOrient. As
already mentioned, the reason for Victors
repatriation was the completion/expiration
of his contract and not because of any
sickness. Other than his uncorroborated
and
self-serving
assertion
that
he
experienced chest pains while on board
the vessel, there was absolutely no proof
at all that he consulted a doctor while on
board, or that he reported the same to his

superiors so that he will be provided with
medical assistance. On the contrary, upon
repatriation, he signed a Receipt and
Release wherein he acknowledged that he
worked under normal conditions on board
the vessel; that he did not contract or
suffer any injury; and that he was
discharged in good health. Victor never
alleged that he was coerced into signing
the Receipt and Release or that he did not
understand the same. Thus, it was crucial
that Victor presented concrete proof
showing that he acquired or contracted
the x x x illness that resulted to his
disability
during
the
term
of
his
employment contract.31 Proof of this
circumstance was particularly crucial
considering the absence of any evidence
that he reported his illness while on board
and after his repatriation.32 However, all
that Victor put forward were bare
allegations that he experienced what
appeared to be symptoms of pulmonary
tuberculosis on board the vessel, and the
dogged insistence that his working
conditions are proof enough that his work
contributed to his contracting the disease.
b) Victor failed to show that his illness is
work-related.
Work-related illness is defined under the
2000 Amended Standard Terms and
Condition as any sickness resulting in
disability or death due to an occupational
disease listed under Section 32-A of [the
said] contract[,] with the conditions set
therein satisfied.33 There is no question
that Pulmonary Tuberculosis is listed as an
occupational disease under Section 32A(18). However, for the disability caused
by this occupational disease to be
compensable, the POEA Contract provides
conditions
that
must
be
satisfied,
viz:ChanRoblesVirtualawlibrary
SECTION 32-A OCCUPATIONAL
DISEASES
For an occupational disease and the
resulting disability or death to be
compensable,
all
of
the
following
conditions
must
be
satisfied:ChanRoblesVirtualawlibrary

129129
13
0

1. The seafarers work must involve the
risks describe herein;
2. The disease was contracted as a result
of the seafarers exposure to the
describe[d] risks;
3. The disease was contracted within a
period of exposure and under such other
factors necessary to contract it;
4. There was no notorious negligence on
the part of the seafarer. x x x (Emphasis
supplied)
Victor miserably failed to comply with
these conditions.
While pulmonary tuberculosis is listed as
an occupational disease, the Court is not
convinced
that
Victors
pulmonary
tuberculosis is work-acquired or workaggravated because if it were so, then at
the outset, Victor should have already
been
diagnosed
with
pulmonary
tuberculosis when he sought medical help
one month from his repatriation. Instead,
Dr.
Ayuyao
diagnosed
him
with
Community Acquired Pneumonia I and
Bronchial Asthma34 sicknesses which
aside from being different from pulmonary
tuberculosis, were not shown to have any
relation thereto.
Furthermore, while it is undisputed that
Victors work as a Galley Boy/2nd Cook
involved the risks provided in the POEA
Contract (first condition), i.e., overwork or
fatigue and exposure to rapid variations in
temperature, there was failure to prove
that the TB was contracted as a result of
his exposure to the said described risks
(second condition).
No evidence on
record shows how Victors working
conditions caused or aggravated his
TB. On the contrary, Victor himself
acknowledged that he worked under
normal conditions while on board the
vessel.
Likewise, the third and fourth conditions
were not satisfied. There was no credible
evidence on record to prove that the TB

was contracted within a period of
exposure and under such other factors
necessary to contract it. Neither is there
substantial evidence presented to show
that his working conditions activated the
disease-causing organism that may be
dormant in his system. As pointed out by
both parties, pulmonary tuberculosis is
airborne and easily transmissible by
infected patients. The risk of being
infected, or acquiring, the tuberculosis
infection
is
mainly
determined
by
exogenous factors.35 The probability of
contact with a case of tuberculosis, the
intimacy and duration of that contact, the
degree of infectiousness of the case, and
the shared environment of the contact are
all
important
determinants
of
transmission.36 On the other hand, the
risk of developing the disease after being
infected
is
largely
dependent
on
endogenous factors.37 The tuberculosis
bacteria may lie dormant in the infected
persons immune system for years before
it becomes reactivated, or he may
ultimately develop the disease within the
first year or two after infection, depending
on the innate susceptibility to disease of
the
person
and
level
of
immunity.38 Simply put, there are so
many possibilities how and when Victor
could
have
acquired
pulmonary
tuberculosis. It is [t]he oft repeated rule
x x x that whoever claims entitlement to
the benefits provided by law should
establish his x x x right thereto by
substantial evidence.39
The general
principle is that one who makes an
allegation has the burden of proving it. A
party alleging a critical fact must support
his
allegation
with
substantial
evidence.
Any
decision
based
on
unsubstantiated allegation cannot stand
as it will offend due process.40cralawred
In fine, Victors claim for disability benefits
must be denied for failure to comply with
the mandatory three-day rule on postemployment medical examination without
any valid or justifiable reason, and for
being non-compensable there being no
showing that the illness existed during the
term of his employment contract or that it

130130
13
1

is work-related.
Jebsen Maritime Inc., et al. Vs. Wilfredo E.
RavenaG.R. No. 200566. September 17,
2014
Ravena is not entitled to
disability benefits;
he failed to comply with the
prescribed procedures
and to prove the required
connection or aggravation
between his illness and work
conditions
As we pointed out above, Section

20-B of the POEA-SEC governs the
compensation and benefits for the
work-related injury or illness that a
seafarer
on
board
sea-going
vessels may have suffered during
the term of his employment
contract. This section should be
read together with Section 32-A of
the POEA-SEC that enumerates the
various
diseases
deemed
occupational
and
therefore
compensable. Thus, for a seafarer
to be entitled to the compensation
and benefits under Section 20-B,
the disability causing illness or
injury must be one of those listed
under Section 32-A.
Of course, the law recognizes that

under
certain
circumstances,
certain diseases not otherwise
considered as an occupational
disease under the POEA-SEC may
nevertheless have been caused or
aggravated
by
the
seafarer's
working conditions.
In these
situations, the law recognizes the
inherent paucity of the list and the
difficulty, if not the outright
improbability, of accounting for all
the known and unknown diseases
that may be associated with,
caused or aggravated by such
working conditions.
Hence, the POEA-SEC provides for

a disputable presumption of workrelatedness for non-POEA-SEClisted occupational disease and the
resulting illness or injury which he

may have suffered during the term
of his employment contract.
This disputable presumption is

made in the law to signify that the
non-inclusion
in
the
list
of
compensable
diseases/illnesses
does not translate to an absolute
exclusion
from
disability
benefits.
In other words, the
disputable presumption does not
signify an automatic grant of
compensation
and/or
benefits
claim; the seafarer must still prove
his
entitlement
to
disability
benefits by substantial evidence of
his illness' work-relatedness.
Thus, in situations where the seafarer
seeks to claim the compensation and
benefits that Section 20-B grants to him,
the law requires the seafarer to prove
that: (1) he suffered an illness; (2) he
suffered this illness during the term of his
employment contract; (3) he complied
with the procedures prescribed under
Section 20-B; (4) his illness is one of the
enumerated occupational disease or that
his illness or injury is otherwise workrelated; and (5) he complied with the four
conditions enumerated under Section 32-A
for an occupational disease or a
disputably-presumed work-related disease
to be compensable.
Under these considerations, Ravena's
claim must obviously fail; he failed to
substantially
satisfy
the
prescribed
requirements to be entitled to disability
benefits.
First, Ravena failed to comply with the
procedural requirements of Section 20-B
of the POEA-SEC. Under Section 20-B(3),
paragraph 2, a seafarer who was
repatriated for medical reasons must,
within three working days from his
disembarkation, submit himself to a postemployment medical examination (PEME)
to be conducted by the companydesignated physician.
Failure of the
seafarer to comply with this three-day
mandatory reporting requirement shall

131131
13
2

result in the forfeiture of his right to claim
the POEA-SEC granted benefits.
In this case, the records show that Ravena
was repatriated on May 12, 2007; he
reported to Jebsen only on June 18, 2007
or more than one (1) month from the time
of his disembarkation. Without doubt,
therefore, Ravena failed to comply with
his three-day reporting duty under the
POEA-SEC.
The reporting requirement, of course, is
not absolute as we have allowed, in
certain exceptional circumstances, a
seafarer's claim despite his non-reporting
within the mandated three-day period,
i.e., when the seafarer is physically
incapacitated to comply with the reporting
requirement, provided, he gives, within
the same three-day period, a written
notice of his incapacity to the manning
agency.
The facts of this case, unfortunately, do
not support a disregard of the three-day
reporting rule for as soon as he
disembarked
in
Manila,
Ravena
immediately went to his hometown in
Iloilo which is at a considerable distance
from Manila, compared with Jebsens
office which is in Manila. Even if he had
been physically incapacitated, it would
have been easier for him to contact
Jebsen in Manila than to go home in
Iloilo. We note that he took three days to
consult with a doctor in Iloilo City and five
days (or on May 12, 2007) to inform the
petitioners of his illness and the scheduled
Whipple surgery.
What made matters worse for Ravena was
his
failure
to
offer
an
adequate
explanation that could have excused his
non-reporting
within
the
three-day
period.
In the pleadings that he
submitted before the LA, the NLRC and
even before the CA, he simply claimed
that "he opted to go straight home to
Iloilo when no agents from [Jebsens] were
present to fetch him and attend to his
medical need." Yet, he did not explain
why, this absence notwithstanding, he did
not go to and report directly and

personally to Jebsens or to its designatedphysician for the mandatory medical check
up. Note that this duty to report to the
company-designated physician for the
required medical examination lies with
him; the POEA-SEC did not impose on
Jebsens, as the local agent of the foreign
employer, any duty to meet him upon his
arrival and bring him to the companydesignated physician for the medical
examination. Thus, assuming that no
Jebsens employee picked him up upon his
arrival, the absence did not excuse him
from complying with his reporting duty
within the three-day mandated period.
In addition, there is absolutely no
evidence on the record showing a
determination
of
total
or
partial
permanent
disability
with
the
corresponding
determination
of
the
appropriate disability grading that could
have formed the basis for his disability
claims.
Under Section 20-B(3), the companydesignated physician initially determines
either the fitness-to-work or the degree of
the permanent disability (total or partial)
of the seafarer who suffered and was
repatriated for work-related illness or
injury. The seafarer, of course, is not
irretrievably
bound
by
such
determination. Should he disagree with
the determination of the companydesignated physician, the POEA-SEC
allows him to seek a second opinion from
an independent physician of his choice. If
the assessment of his chosen physician
conflicts with those of the companydesignated physician, the seafarer and the
employer may agree on a third doctor
whose determination shall be final and
binding on them.
In this case, neither Dr. Cruz nor Ravena's
chosen physician made any determination
of Ravena's disability. In fact, we note
that Ravena's physician did not even
certify that he was no longer fit-to-work,
or at the very least determine the
appropriate disability grading; he simply

132132
13
3

stated that he must not be away from a
treatment area for an indefinite period of
time. On the other hand, Dr. Cruz
certified that Ravena's illness is not at all
work-related.
Second, Ampullary cancer is not an
occupational disease. Section 32-A of the
POEA-SEC considers only two types of
cancers as compensable occupational
disease: (1) cancer of the epithelial lining
of
the
bladder;
and
(2)
cancer,
epitheliomatous or ulceration of the skin
or of the corneal surface of the eye due to
certain chemicals.37cralawlawlibrary
The LA and the CA may have correctly
afforded Ravena the benefit of the legal
presumption of work-relatedness. The
legal correctness of the CA's appreciation
of Ravena's claim, however, ends here for
as we pointed out above, Section 20-B(4)
affords only a disputable presumption that
should be read together with the
conditions specified by Section 32-A of the
POEA-SEC. Under Section 32-A, for the
disputably-presumed disease resulting in
disability to be compensable, all of the
following
conditions
must
be
satisfied:chanRoblesvirtualLawlibrary
The seafarer's work must involve the
risks describe therein;
The disease was contracted as a result
of the seafarer's exposure to the
described risks;
The disease was contracted within a
period of exposure and under such
factors necessary to contract it;
and
There was no notorious negligence on
the part of the seafarer.
Ravena failed to prove the workrelatedness of his ampullary cancer as he
failed to satisfy these conditions.
For one, he did not enumerate his specific
duties as a 4th engineer or the specific
tasks which he performed on a daily basis
on board M/V Tate J. Also, he did not
show how his duties or the tasks that he
performed caused, contributed to the
development of, or aggravated his

ampullary cancer. He likewise did not
specify the substances or chemicals which
he claimed he was exposed to.
Further, he failed to prove that he had
indeed
been
exposed
to
the
chemicals/substances he claimed he was
exposed to during his employment
contract; how these substances/chemicals
could have caused his ampullary cancer;
or measures that the company did or did
not take to control the hazards occasioned
by the use of such substances/chemicals,
to prevent or to lessen his exposure to
them.
To be exact, he simply claimed that "his
assignment had always been on (sic) the
engine room" and that "exposure to
various substances over the years caused
his disease."38 These bare allegations,
however, are not the equivalent of the
substantial evidence that the law requires
of Ravena to adduce for the grant of his
disability benefits claim.
he cause of ampullary cancer is medically
unknown, although certain risk factors
are believed to contribute to its
development, i.e., genetic factors, like
patients
with
familial
adenomatous
polyposis,
and
certain
genetic
43
alterations; smoking;
and
certain
diseases
such
as
diabetes
milletus.44
Ampullary cancer is a rare
condition and experts are not certain what
preventive steps, if any, may be taken,
although it is known to be more prevalent
in men than women.45cralawlawlibrary
Hence, granting, arguendo, that Ravena
had in fact been exposed to various, albeit
unspecified, substances/chemicals while
working on board M/V Tate J, his
exposure could still not be deemed, for
purposes of disability compensation, to
have caused, aggravated or contributed to
the development of his ampullary cancer
given the nature of the contributory risk
factors that we cited above.
In the same manner, neither could "a diet

133133
13
4

consisting mostly of processed and red
meat on board M/V Tate J" be reasonably
considered as having caused, aggravated
or contributed to the development of his
ampullary cancer. We point out again that
the medically determined risk factors for
the development of ampullary cancer are
genetic factors and alterations, smoking
and certain diseases. A diet high in
processed and red meat is far from being
related to these risk factors.
As a final word and a cautionary
clarification, we do not here rule with
absolute precision on the non-causing,
non-aggravating,
or
non-contributing
effect that any or all substances/chemicals
and a processed-and-red-meat-rich diet
may have on ampullary cancer. We are
not experts on the matter and we
recognize the considerable degree of
uncertainty inherent in the field of
medicine and its study. Our ruling on this
petition should, therefore, be understood
strictly in the light of and limited to the
surrounding circumstances of this case.
Stated differently, we declare that

Ravena's ampullary cancer is not workrelated, and therefore not compensable,
because he failed to prove, by substantial
evidence, its work-relatedness and his
compliance with the parameters that the
law had precisely set out in disability
benefits claim. For, while we adhere to
the principle of liberality in favour of the
seafarer in construing the POEA-SEC, we
cannot
allow
claims
for
disability
compensation based on surmises. Liberal
construction is never a license to
disregard the evidence on record and to
misapply the law.46cralawlawlibrary
Hacienda Leddy/Ricardo Gamboa, Jr. Vs.
Paquito Villegas G.R. No. 179654.
September 22, 2014
Petitioner disputed that there exists an
him and Villegas. He claimed that
respondent was paid on a piece-rate basis
without supervision.12 Petitioner added
that since his job was not necessary or
desirable in the usual business or trade of
the hacienda, he cannot be considered as
a regular employee. Petitioner insisted

that it was Villegas who has stopped
working in the hacienda and that he was
not dismissed.
A perusal of the records would show that
respondent, having been employed in the
subject Hacienda while the same was still
being managed by petitioner's father until
the latter's death in 1993, is undisputed
as the same was even admitted by
Gamboa in his earlier pleadings.14 While
refuting that Villegas was a regular
employee, petitioner however failed to
categorically deny that Villegas was
indeed employed in their hacienda albeit
he insisted that Villegas was merely a
casual employee doing odd jobs.
The rule is long and well settled that, in
illegal dismissal cases like the one at
bench, the burden of proof is upon the
employer to show that the employees
termination from service is for a just and
valid cause. The employers case succeeds
or fails on the strength of its evidence and
not the weakness of that adduced by the
employee, in keeping with the principle
that the scales of justice should be tilted
in favor of the latter in case of doubt in
the evidence presented by them. Often
described as more than a mere scintilla,
the quantum of proof is substantial
evidence which is understood as such
relevant evidence as a reasonable mind
might accept as adequate to support a
conclusion,
even
if
other
equally
reasonable minds might conceivably opine
otherwise.15cralawlawlibrary
In the instant case, if we are to follow the
length of time that Villegas had worked
with the Gamboas, it should be more than
20 years of service.
Even Gamboa
admitted that by act of generosity and
compassion, Villegas was given a privilege
of erecting his house inside the hacienda
during his employment.16 While it may
indeed be an act of good will on the part
of the Gamboas, still, such act is usually
done by the employer either out of
gratitude for the employees service or for
the employer's convenience as the nature
of the work calls for it. Indeed, petitioner's

134134
13
5

length of service is an indication of the
regularity of his employment. Even
assuming that he was doing odd jobs
around the farm, such long period of
doing said odd jobs is indicative that the
same was either necessary or desirable to
petitioner's trade or business. Owing to
the length of service alone, he became a
regular employee, by operation of law,
one year after he was employed.
Article 280 of the Labor Code, describes a
regular employee as one who is either (1)
engaged to perform activities which are
business or trade of the employer; and (2)
those casual employees who have
rendered at least one year of service,
whether continuous or broken, with
respect to the activity in which he is
employed.
In Integrated Contractor and Plumbing
Works, Inc. v. National Labor Relations
Commission,17 we held that the test to
determine whether employment is regular
or not is the reasonable connection
between the particular activity performed
by the employee in relation to the usual
business or trade of the employer. If the
employee has been performing the job for
at least one year, even if the performance
is not continuous or merely intermittent,
the law deems the repeated and
continuing need for its performance as
sufficient evidence of the necessity, if not
indispensability of that activity to the
business. Clearly, with more than 20 years
of service, Villegas, without doubt, passed
this test to attain employment regularity.
While length of time may not be the
controlling test to determine if Villegas is
indeed a regular employee, it is vital in
establishing if he was hired to perform
tasks
which
are
necessary
and
indispensable to the usual business or
trade of the employer. If it was true that
Villegas worked in the hacienda only in the
year 1993, specifically February 9, 1993
and February 11, 1993, why would then
he be given the benefit to construct his
house in the hacienda? More significantly,
petitioner admitted that Villegas had

worked in the hacienda until his father's
demise. Clearly, even assuming that
Villegas' employment was only for a
specific duration, the fact that he was
repeatedly re-hired over a long period of
time shows that his job is necessary and
trade of the employer.
Gamboa likewise argued that Villegas was
paid on a piece-rate basis.18 However,
payment on a piece-rate basis does not
negate regular employment. The term
wage is broadly defined in Article 97 of
the Labor Code as remuneration or
earnings, capable of being expressed in
terms of money whether fixed or
ascertained on a time, task, piece or
commission basis. Payment by the piece is
just a method of compensation and does
not
define
the
essence
of
the
relations.19cralawlawlibrary
We are likewise unconvinced that it was
Villegas who suddenly stopped working.
Considering that he was employed with
the Gamboas for more than 20 years and
was even given a place to call his home, it
does not make sense why Villegas would
suddenly stop working therein for no
apparent reason. To justify a finding of
abandonment of work, there must be
proof of a deliberate and unjustified
refusal on the part of an employee to
resume his employment. The burden of
proof is on the employer to show an
unequivocal intent on the part of the
employee to discontinue employment.
Mere absence is not sufficient. It must be
accompanied by manifest acts unerringly
pointing to the fact that the employee
simply
does
not
want
to
work
anymore.20cralawlawlibrary
Petitioner failed to discharge this burden.
Other than the self-serving declarations in
the affidavit of his employee, petitioner
did not adduce proof of overt acts of
Villegas showing his intention to abandon
his work. Abandonment is a matter of
intention; it cannot be inferred or
presumed from equivocal acts. On the
contrary, the filing of the instant illegal
dismissal complaint negates any intention

135135
13
6

on his part to sever their employment
relationship. The delay of more than 1
year in filing the instant illegal dismissal
case likewise is non-issue considering
that the complaint was filed within a
reasonable period during the three-year
period provided under Article 291 of the
Labor Code.21 As aptly observed by the
appellate court, Villegas appeared to be
without educational attainment. He could
not have known that he has rights as a
regular employee that is protected by law.
The Labor Code draws a fine line between
regular and casual employees to protect
the interests of labor. We ruled in Baguio
Country Club Corporation v. NLRC 22 that
"its language evidently manifests the
intent to safeguard the tenurial interest of
the worker who may be denied the rights
and benefits due a regular employee by
virtue of lopsided agreements with the
economically powerful employer who can
maneuver to keep an employee on a
casual status for as long as convenient."
Thus, notwithstanding any agreements to
the contrary, what determines whether a
certain employment is regular or casual is
not the will and word of the employer, to
which the desperate worker often accedes,
much less the procedure of hiring the
employee or the manner of paying his
salary. It is the nature of the activities
performed in relation to the particular
business
or
trades
considering
all
circumstances, and in some cases the
length of time of its performance and its
continued existence.23cralawlawlibrary
All these having discussed, as a regular
worker, Villegas is entitled to security of
tenure under Article 279 of the Labor
Code and can only be removed for cause.
We found no valid cause attending to his
dismissal and found also that his dismissal
was without due process.
The failure of the petitioner to comply with
these procedural guidelines renders its
dismissal of Villegas illegal. An illegally
dismissed employee should be entitled to
either reinstatement if viable, or
separation pay if reinstatement is no
longer viable, plus backwages in either
instance.24
Considering
that
reinstatement is no longer feasible
employee and the employer, separation
pay should be granted. The basis for
computing separation pay is usually the
length of the employees past service,
while that for backwages is the actual
period when the employee was unlawfully
prevented from working.25 It should be
emphasized, however, that the finality of
the illegal dismissal decision becomes the
reckoning point. In allowing separation
pay, the final decision effectively declares
that the employment relationship ended
so that separation pay and backwages are
to be computed up to that point. The
decision also becomes a judgment for
money from which another consequence
flows the payment of interest in case of
delay.26cralawlawlibrary
Government
Service
Insurance
Corporation Vs. Jose M. CapaciteG.R.
No. 199780. September 24, 2014
We
find
the
petition
meritorious.
PD 626, as amended, defines

compensable sickness as any
illness definitely accepted as an
occupational disease listed by the
Commission, or any illness caused
by employment subject to proof by
the employee that the risk of
contracting the same is increased
by the working conditions. Of
particular
significance
in
this
definition is the use of the
conjunction or, which indicates
alternative situations.
Based on this definition, we ruled

in GSIS v. Vicencio12 that for
sickness and the resulting death of
an employee to be compensable,
the claimant must show either: (1)
that it is a result of an occupational
disease listed under Annex "A" of
the Amended Rules on Employees'
Compensation with the conditions
set therein satisfied; or (2) if not
so listed, that
the risk of
contracting
the
disease
was

136136
13
7

increased
conditions.
by
the
working
While item 17, Annex A of the

Amended Rules of Employees
Compensation
considers
lung
cancer to be a compensable
occupational disease, it likewise
provides that the employee should
be employed as a vinyl chloride
worker or a plastic worker. In this
case, however, Elma did not work
in an environment involving the
manufacture of chlorine or plastic,
for her lung cancer to be
considered
an
occupational
disease.13 There was, therefore, no
basis for the CA to simply
categorize her illness as an
occupational disease without first
establishing the nature of Elmas
work. Both the law and the
implementing rules clearly state
that
the
given
alternative
conditions must be satisfied for a
disease to be compensable.
No proof exists showing that Elmas
lung cancer
was induced or aggravated by her
working conditions
We also do not find that Elmas cause of
death was work-connected. As we earlier
pointed out, entitlement to death benefits
depends on whether the employees
disease is listed as an occupational
disease or, if not so listed, whether the
risk of contracting the disease has been
increased by the employees working
conditions.
Insurance trust fund should only be
applied to legitimate claims for
compensation benefits
While PD 626, as amended, is a social
legislation whose primary purpose is to
provide meaningful protection to the
working class against the hazards of
disability, illness, and other contingencies
resulting in loss of income, it was not
enacted
to
cover
all
ailments
of
workingmen. The law discarded, among
others, the concepts of "presumption of
compensability" and "aggravation" and

substituted a system based on social
security principles. The intent was to
restore a sensible equilibrium between the
employer's obligation to pay workmen's
compensation and the employee's right to
receive reparation for work-connected
death or disability.21cralawlawlibrary
The new employee compensation program
now directs that all covered employers
throughout the country be required by law
to contribute fixed and regular premiums
or contributions to a trust fund for their
employees. Benefits are paid from this
trust fund. If diseases not intended by
the law to be compensated are
inadvertently or recklessly included,
the integrity of the trust fund would
be
endangered.
In
this
sense,
compassion for the victims of diseases not
covered by the law ignores the need to
show a greater concern for the trust
fund to which the tens of millions of
workers and their families look up to for
compensation
whenever
covered
accidents,
salary
and
deaths
occur.22cralawlawlibrary
As an agency charged by law to manage
and administer the limited trust fund of
the government officials and employees,
the GSIS has the difficult task of insuring
all legitimate claims. Suffice it to say that
a misplaced compassion for victims of
diseases or injuries would prejudice the
very same workers and their beneficiaries
in times of need.
In sum, for insufficiency of evidence of
causation or aggravation, we cannot grant
Joses claim for compensation benefits.
Mount Carmel College Employees Union
(MCCEU)/Romulo S. Bascar, et al. Vs.
Mount Carmel College, Incoporated
G.R. No. 187621. September 24, 2014
Thus, the first question that must
be resolved is whether the CA
correctly ruled that the NLRC did
not commit any grave abuse of
discretion when it allowed the
respondents appeal despite the
blacklisting of CBIC at the time it

137137
13
8

issued the appeal bond.
Section 6 requiring the issuance of a bond
by a reputable bonding company duly
accredited by the NLRC or the Supreme
Court was substantially carried over to the
2005 Revised Rules of Procedure of the
NLRC13 and the 2011 NLRC Rules of
Procedure.14
In this regard, the Court
has ruled that in a judgment involving a
monetary award, the appeal shall be
perfected only upon: (1) proof of
payment of the required appeal fee; (2)
posting of a cash or surety bond
issued
by
a
reputable
bonding
company;
and
(3)
filing
of
a
memorandum of appeal.15cralawlawlibrary
In this case, it was not disputed that at
the time CBIC issued the appeal bond, it
was already blacklisted by the NLRC. The
latter, however, opined that respondents
should not be faulted if the Bacolod
branch office of the bonding company
issued the surety bond and that
[r]espondents acted in good faith when
they transacted with the bonding company
for
the
issuance
of
the
surety
bond.16cralawlawlibrary
Good faith, however, is not an excuse for
setting
aside
the
mandatory
and
jurisdictional requirement of the law. In
Cawaling
v.
Menese,17
the
Court
categorically ruled that the defense of
good faith does not render the issued
bond valid.
The condition of posting a cash or surety
bond is not a meaningless requirement
it is meant to assure the workers that if
they prevail in the case, they will receive
the money judgment in their favor upon
the
dismissal
of
the
formers
appeal.19
Such aim is defeated if the
bond issued turned out to be invalid due
to
the
surety
companys
expired
accreditation.20
Much more in this case
where
the
bonding
company
was
blacklisted at the time it issued the appeal
bond. The blacklisting of a bonding
company
is
not
a
whimsical
exercise. When a bonding company is
blacklisted, it meant that it committed
certain prohibited acts and/or violations of

law,
prescribed
rules
and
regulations.21 Trivializing it would release
a blacklisted bonding company from the
effects sought to be achieved by the
blacklisting and would make the entire
process insignificant.
Also, the lifting of CBICs blacklisting on
January 24, 2005 does not render the
bond it issued on March 15, 2004
subsequently valid. It should be stressed
that what the law requires is that the
appeal bond must be issued by a
reputable
bonding
company
duly
accredited by the NLRC or the Supreme
Court at the time of the filing of the
appeal. To rule otherwise would make
the
requirement
ineffective,
and
employers
using
fly-by-night
and
untrustworthy bonding companies could
easily manipulate their obligation to post a
valid bond by raising such justification.
On the foregoing point alone, it is clear
that the CA committed a reversible error
when it ruled out any grave abuse of
discretion on the part of the NLRC in
admitting the respondents appeal and
reversing the decision of the LA. It should
be stressed that the requirement of the
posting of an appeal bond by a reputable
company is jurisdictional.22 It cannot be
subject to the NLRCs discretion and there
is a little leeway for condoning a liberal
interpretation
of
the
rule.23cralawlawlibrary
Even if the Court were to relax the rules
and consider the respondents appeal, the
Court still finds that the CA committed an
error when it ruled that the NLRC did not
commit grave abuse of discretion in
finding that the petitioners retrenchment
was valid under the circumstances of the
case.
Retrenchment, as an authorized
cause for the dismissal of employees,
finds basis in Article 28324 of the Labor
Code
Standards25 have been laid down by the
Court in order to prevent its abuse by an
employer,
to

138138
13
9

purported overwhelming evidence consists

largely of generalizations, suppositions
(1) That retrenchment is reasonably necessary and likely
and to
bare
prevent
conclusions
business
of losses
Cantos'
which,
direct
if
already incurred, are not merely de minimis, but substantial,
involvement
serious,
or participation
actual and real,
inorthe
if
only expected, are reasonably imminent as perceived
alleged
objectively
anomalous
and in good
execution
faith by theof
employer;
PDTAs for eleven (11) POs, mostly
(2) That the employer served written notice both to the
between
employees
2005and
and
to2006,
the Department
which as the
of
46
Labor and Employment at least one month prior toevidence
the intended
shows,
date of even
retrenchment;
pertained to
(3) That the employer pays the retrenched employees
CTEPI
separation
and pay
not equivalent
to Temic.
to We
one (1)
thus
month pay or at least one-half () month pay wonder
for every how
year of
Temic
service,
arrived
whichever
at is
its
higher;
conclusion that Cantos was caught red(4) That the employer exercises its prerogative to retrench
handed employees
to have patently
in good faith
violated
for the
the
advancement of its interest and not to defeat or circumvent
company's
theclear
employees
policies,
rightparticularly
to security
of tenure; and
its purchasing procedures, which he
(5) That the employer used fair and reasonable criteria
even
in ascertaining
co-authored.
who47cralawred
would be dismissed
and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain
In conclusion,
workers.26 we
(Emphasis
quote with
ours)
approval the
following
CA
In
the
present
case,
the
observation:chanRoblesvirtualLawlibrary
respondents justification for implementing
the retrenchment of the petitioners was
xxx [the petitioner] did not commit
due to the alleged closure or cessation of
any act which was dishonest or
its
elementary
and
high
school
deceitful. He did not use his authority
departments. According to them, the
as
the
Purchasing
Manager
to
continued
operations
of
these
misappropriate company property and
departments
was
an
exercise
of
derive benefits therein nor did he
management prerogative to protect its
abuse the trust reposed in him by
business and it was no longer viable to
respondent Temic with respect to his
maintain the two departments as it was
responsibilities.
There
was
no
already being subsidized by the college
demonstration of moral perverseness
department.
As proof thereof, the
that would justify the claimed loss of
respondent submitted its audited Financial
trust and confidence attendant to
Statements for the years 1997, 1998 and
[the] petitioner's job. Temic failed to
1999. Respondent also alleged that such
adduce any proof that [the] petitioner
closure was recognized by the Tuition Fee
ever profited from the transactions
Law, which mandates that 70% of the
involved in the purchase orders. The
tuition incremental proceeds should be
supplies described in the purchase
allocated for salaries, wages and other
orders are still with the company
benefits of its personnel. Respondent
even up to the time when petitioner's
claimed that in its case, personnel benefits
services were terminated. And neither
are already eating into the portion of the
was there evidence shown that the
budget
allocated
for
capital
and
same deviates from the specifications
administrative development, and faced
of the company or has no more use to
further with the demands of the
the company.53
employees of additional increase in
salaries and benefits, it had no choice
Exocet Security and Allied Services
but to close down.27cralawlawlibrary
Corporation
and/or
Ma.
Teresa
Temic Automotive (Phils), Inc. Vs. Renato
Marcelo Vs. Armando D. SerrandoG.R.
G.R. No. 200729. September 29, 2014
No. 198538. September 29, 2014
45
As we see it, the overwhelming evidence
The Issue
which Temic claims supported the rulings
of LA Reyno and the NLRC that Cantos

The sole issue for resolution is
was validly dismissed does not exist. This
whether or not Serrano was
139139
14
0

constructively dismissed.
While there is no specific provision in the
Labor Code which governs the floating
status or temporary off-detail of
security guards employed by private
security agencies, this situation was
considered by this Court in several cases
as a form of temporary retrenchment or
lay-off.18 The concept has been defined as
that period of time when security guards
are in between assignments or when they
are made to wait after being relieved from
a previous post until they are transferred
to a new one.19 As pointed out by the CA,
it takes place when the security agencys
clients decide not to renew their contracts
with the agency, resulting in a situation
where the available posts under its
existing contracts are less than the
number of guards in its roster. It also
happens in instances where contracts for
security services stipulate that the client
may
request
the agency for the
replacement of the guards assigned to it,
even for want of cause, such that the
replaced security guard may be placed on
temporary off-detail if there are no
available posts under the agencys
existing contracts.20cralawlawlibrary
replaced security guard may be

placed on temporary off-detail if
there are no available posts under
respondents existing contracts.
When a security guard is placed on a
floating status, he does not receive
any
salary
or
financial
benefit
provided by law. Due to the grim
economic consequences to the employee,
the employer should bear the burden of
proving that there are no posts available
to which the employee temporarily out of
work can be assigned. (emphasis
supplied)
As the circumstance is generally outside

the control of the security agency or the
employer, the Court has ruled that when
a security guard is placed on a
floating status, he or she does not
receive any salary or financial benefit
provided by law. Pido v. National Labor
Relations
Commission21
explains
why:chanRoblesvirtualLawlibrary
It must be emphasized, however, that

although placing a security guard on
floating status or a temporary offdetail is considered a temporary
retrenchment measure, there is similarly
no provision in the Labor Code which
treats of a temporary retrenchment or layoff. Neither is there any provision which
provides for its requisites or its duration.22
Nevertheless, since an employee cannot
be laid-off indefinitely, the Court has
applied Article 292 (previously Article 286)
of the Labor Code by analogy to set the
specific period of temporary lay-off to a
maximum of six (6) months.
Thus, this Court has held, citing
Sebuguero v. NLRC,23 that the placement
of the employee on a floating status
should not last for more than six months.
After six months, the employee should be
recalled for work, or for a new
assignment; otherwise, he is deemed
terminated.
Verily, a floating status requires the dire

exigency of the employers bona fide
suspension of operation of a business or
undertaking. In security services, this
happens when the security agencys
clients which do not renew their contracts
are more than those that do and the new
ones that the agency gets. Also, in
instances when contracts for security
services stipulate that the client may
request
the
agency
for
the
replacement of the guards assigned
to it even for want of cause, the
Thus, to validly terminate a security guard

for lack of service assignment for a
continuous period of six months under
Secs. 6.5 and 9.3 of DO 14-01, the
security agency must comply with the
provisions of Article 289 (previously Art.
283) of the Labor Code,25 which mandates
that a written notice should be served on
the employee on temporary off-detail or
floating status and to the DOLE one (1)
month before the intended date of
termination. This is also clear in Sec. 9.2
of DO 14-01

140140
14
1

In the controversy now before the Court,
there is no question that the security
guard, Serrano, was placed on floating
status after his relief from his post as a
VIP security by his security agencys
client. Yet, there is no showing that his
security agency, petitioner Exocet, acted
in bad faith when it placed Serrano on
such floating status. What is more, the
present case is not a situation where
Exocet did not recall Serrano to work
within the six-month period as
required by law and jurisprudence.
Exocet did, in fact, make an offer to
Serrano to go back to work. It is just
that the assignmentalthough it does not
involve a demotion in rank or diminution
in salary, pay, benefits or privilegeswas
not the security detail desired by Serrano.
Clearly,Serranos lack of assignment for
more than six months cannot be
attributed to petitioner Exocet. On the
contrary, records show that, as early as
September 2006, or one month after
Serrano was relieved as a VIP security,
Exocet had already offered Serrano a
position in the general security service
because there were no available
clients requiring positions for VIP
security. Notably, even though the new
assignment does not involve a demotion
in rank or diminution in salary, pay, or
benefits, Serrano declined the position
because it was not the post that
suited his preference, as he insisted
on being a VIP Security.
Thus, it is manifestly unfair and
unacceptable to immediately declare the
mere lapse of the six-month period of
floating status as a case of constructive
dismissal, without looking into the peculiar
circumstances that resulted in the security
guards failure to assume another post.
This is especially true in the present case
where the security guards own refusal to
accept a non-VIP detail was the reason
that he was not given an assignment
within the six-month period. The security
agency, Exocet, should not then be held
liable.
Indeed, from the facts presented, Serrano

was guilty of wilful disobedience to a
lawful order of his employer in connection
with his work, which is a just cause for his
termination under Art.288 (previously Art.
282)of the Labor Code.31 Nonetheless,
Exocet did not take Serranos wilful
disobedience against him. Hence, Exocet
is considered to have waived its right to
terminate Serrano on such ground.
In this factual milieu, since respondent
Serrano was not actually or constructively
dismissed from his employment by
petitioner Exocet, it is best that petitioner
Exocet direct him to report for work, if any
security assignment is still available to
him. If respondent Serrano still refuses to
be assigned to any available guard
position, he shall be deemed to have
abandoned
his
employment
with
petitioner.
If no security assignment is available for
respondent, petitioner Exocet should
comply with the requirements of DO 1401, in relation to Art. 289 of the Labor
Code, and serve a written notice on
Serrano and the DOLE one (1) month
before the intended date of termination,
and pay Serrano separation pay
equivalent to half month pay for every
year of his actual service.
Am-Phil Food Concepts, Inc. Vs. Paolo
Jesus T. Padilla G.R. No. 188753.
October 1, 2014
For resolution is the issue of whether
respondent Paolo Jesus T. Padila was
dismissed through a valid retrenchment
implemented by petitioner Am-Phil Food
Concepts, Inc. Related to this, we must
likewise resolve the underlying issue of
whether it was proper for Labor Arbiter
Eric V. Chuanico to have ruled that Padilla
was illegally dismissed despite Am-Phils
pending
motion
for
leave
to
file
supplemental rejoinder.
Retrenchment and its
requirements
Thus, retrenchment has been described as
a measure of last resort when other less
drastic means have been tried and found

141141
14
2

to be inadequate.53cralawlawlibrary
Retrenchment is, therefore, not a tool to
be wielded and used nonchalantly. To
justify retrenchment, it must be due to
business losses or reverses which are
serious, actual and real.54cralawlawlibrary
There
are
substantive
requirements
relating to the losses or reverses that
must underlie a retrenchment. That these
losses are serious relates to their gravity
and that they are actual and real relates
to
their
veracity
and
verifiability.
Likewise,
that
a
retrenchment is anchored on serious,
actual, and real losses or reverses is to
say that the retrenchment is done in good
faith and not merely as a veneer to
disguise
the
illicit
termination
of
employees.
Equally significant is an
employers basis for determining who
among
its
employees
shall
be
retrenched. Apart from these substantive
requirements
are
the
procedural
requirements imposed by Article 283 of
the Labor Code.
Am-Phils 2001 to 2004 audited financial

statements, the sole proof upon which
Am-Phil relies on to establish its claim that
it suffered business losses, have been
deemed unworthy of consideration. These
audited financial statements were mere
annexes to the motion for leave to admit
supplemental
rejoinder
which
Labor
Arbiter Chuanico validly disregarded. No
credible explanation was offered as to why
these statements were not presented
when the evidence-in-chief was being
considered by the labor arbiter. It follows
that there is no clear and convincing
evidence to sustain the substantive
ground on which the supposed validity of
Padillas retrenchment rests.
Moreover, it is admitted that Am-Phil did
not serve a written notice to the
Department of Labor and Employment one
(1) month before the intended date of
Padillas retrenchment, as required by
Article
283
of
the
Labor
Code.56cralawlawlibrary
While it is true that Am-Phil gave Padilla

separation pay, compliance with none but
Thus, this court has outlined the
one (1) of the many requisites for a valid
requirements for a valid retrenchment,
retrenchment does not absolve Am-Phil of
each of which must be shown by clear and
liability.
convincing
evidence,
as
Padillas quitclaim and release
follows:chanRoblesvirtualLawlibrary
does not negate his having been
illegally dismissed
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but It
substantial,
actual and
real,Padilla
or if
is of noserious,
consequence
that
only expected, are reasonably imminent as perceived
objectively
and in good
faith by the
ostensibly
executed
a quitclaim
and
employer;
release in favor of Am-Phil. This courts
(2) that the employer served written notice both to the
employees and tointhe Department
of
pronouncements
F.F.
Marine
Labor and Employment at least one month prior toCorporation
the intendedv.
date
of retrenchment;
National
Labor Relations
57
(3) that the employer pays the retrenched employeesCommission,
separation pay
equivalent
to one
month
which
similarly
involved
an
pay or at least month pay for every year of service,
whichever
is higher;
invalid
retrenchment,
are
of
(4) that the employer exercises its prerogative to retrench
employees in good faith for the
note:chanRoblesvirtualLawlibrary
advancement of its interest and not to defeat or circumvent the employees right to security
of tenure; and
Considering
that
the
ground
for
(5) that the employer used fair and reasonable criteriaretrenchment
in ascertaining
who would
be dismissed
availed
of by petitioners
was
and who would be retained among the employees,
as status (i.e.,and
whether
they are
notsuch sufficiently
convincingly
temporary, casual, regular or managerial employees),
efficiency,
seniority,
physicalisfitness,
established,
the
retrenchment
hereby
age, and financial hardship for certain workers.55 (Citations
declared omitted)
illegal and of no effect. The
Am-Phil failed to establish
quitclaims
executed
by
retrenched
compliance with the requisites
employees in favor of petitioners were
for a valid retrenchment
therefore not voluntarily entered into by
them. Their consent was similarly vitiated
142142
14
3

by mistake or fraud. The law looks with

disfavor upon quitclaims and releases by
employees pressured into signing by
unscrupulous employers minded to evade
legal responsibilities. As a rule, deeds of
release or quitclaim cannot bar employees
from demanding benefits to which they
are legally entitled or from contesting the
legality of their dismissal. The acceptance
of those benefits would not amount to
estoppel. The amounts already received
by
the
retrenched
employees
as
consideration for signing the quitclaims
should, however, be deducted from their
respective monetary awards.58
Agile Maritime Resources, Inc., et al. Vs.
Apolinario N. SiadorG.R. No. 191034.
October 1, 2014
There was substantial evidence
to prove
that Dennis death was directly
attributable to his own action
In the present case, the LA, NLRC
and the CA28 uniformly found that
Dennis jumped from the ship.
Additionally, the petitioners cited
the
following
personal
circumstances that may have
driven Dennis to do what he did:
his dysfunctional family; the death
of his mother after a lingering
illness; the bitter parting with his
father whom he had not seen for
three (3)29 after he and his two (2)
brothers were thrown out from
their home in Talisay, Cebu; and
his disappointment with his sister
whose
medical
education
he
supported, only to learn that she
got married and did not even invite
him to the wedding.30cralawred
Based on these facts and the legal

presumption of sanity, we conclude
that the NLRC did not gravely
abuse its discretion when it
affirmed the LAs dismissal of the
complaint; we hold that the
seafarers death was due to his
willful act, as the employer posited
and proved.
Shift in the burden of evidence;
proof of insanity
Since the POEA-SEC requires the

employer to prove not only that the
death is directly attributable to the
seafarer himself but also that the
seafarer willfully caused his death,
evidence of insanity or mental
sickness may be presented to
negate
the
requirement
of
willfulness as
a
matter
of
counter-defense.
Since
the
willfulness may be inferred from
the physical act itself of the
seafarer (his jump into the open
sea), the insanity or mental illness
required to be proven must be one
that deprived him of the full control
of his senses; in other words, there
must be sufficient proof to negate
voluntariness.
But his strange behavior cannot be the
basis for a finding of grave abuse of
discretion because portions of the
Crewmembers
Statement
itself
rendered the basis for a finding of
insanity insufficient. To recall, a few
hours before the accident, Filipino crew
members approached Dennis to ask him if
anything was wrong with him and Dennis
simply replied that everything was in
order. No proof was ever adduced as well
showing that whatever personal problems
Dennis had were enough to negate the
voluntariness he showed in stepping
overboard.
The Court observes that, more often
than not, the question of willfulness in
causing ones death is explained away
as arising from insanity because the
very nature of the defense that the
employer is allowed to put up is
mentally tough to grasp. Differences of
opinion can arise and have arisen, as
in this case; hence, it becomes
imperative for the courts to proceed on
the basis of a correct framework of
review if stability and consistency in
rulings can be approximated.
Formerly
INC
Shipmanagement
Incorporated (now INC Navigation
Co., Phils, Inc.), et al. Vs. Benjamin I.
Rosales G.R. No. 195832. October 1,

143143
14
4

2014
It is the doctors findings which
should prevail over the simple
lapse of the 120-day period
The law and this pronouncement make it
clear that INC is obligated to pay for the
treatment of Rosales, plus his basic
wage, during the 120-day period from
repatriation while he is undergoing
treatment; he could not work during this
period and hence was on temporary
total disability.
Permanent disability transpires when
the inability to work continues beyond
one hundred twenty (120) days,
regardless of whether or not he loses the
use of any part of his body. In comparison
with the concept of permanent disability,
total disability means the incapacity of
an employee to earn wages in the
same or similar kind of work that he
was trained for, or is accustomed to
perform, or in any kind of work that a
person
of
his
mentality
and
attainments can do. It does not mean
absolute helplessness.
In disability compensation, it is not
the injury that is compensated; it is
the incapacity to work resulting in the
impairment
of
ones
earning
capacity.18cralawred
Thus, while Rosales was entitled to
temporary total disability benefits
during his treatment period (because he
could not totally work during this whole
period), it does not follow that he should
likewise be entitled to permanent total
disability benefits when his disability was
assessed by the company-designated
physician after his treatment. He may be
recognized to be have permanent
disability because of the period he was
out of work and could not work [in this
case, more than one hundred twenty
(120) days], but the extent of his
disability (whether total or partial) is
determined, not by the number of days
that he could not work, but by the
disability
grading
the
doctor
recognizes based on his resulting
incapacity
wages.
to
work
and
earn
his
It is the doctors findings that should

prevail as he/she is equipped with the
proper
discernment,
knowledge, experience and expertise on
what
constitutes
total
or
partial
disability. His declaration serves as the
basis for the degree of disability that can
range anywhere from Grade 1 to Grade
14.19
Notably,
this
is
a
serious
consideration that cannot be determined
by simply counting the number of
treatment lapsed days.
In light of these distinctions, to confuse
the concepts of permanent and total
disability is to trigger a situation where
disability would be determined by simply
counting the duration of the seafarers
illness. This system would inevitably
induce
the
unscrupulous
to
delay
treatment for more than one hundred
twenty (120) days to avail of the more
favorable award of permanent total
disability benefits.
Non-referral to a third physician,
whose decision shall be considered as
final
and binding, constitutes a breach of
the
POEA-SEC
After establishing the importance of the
physicians
assessment
of
disability
claims, the present case should have
already been resolved had it not been for
the conflicting findings of Dr. Cruz and Dr.
Vicaldo.
In the settlement of this conflict, we need
not provide a lengthy discussion as we
have resolved this matter in Philippine
Hammonia
Ship
Agency,
Inc.
v.
Dumadag,20 citing Section 20(B)(3) of the
POEA-SEC:chanRoblesvirtualLawlibrary
If a doctor appointed by the seafarer
disagrees with the assessment, a third
doctor may be agreed jointly between
the [e]mployer and the seafarer. The

144144
14
5

third doctors decision shall be final
and
binding
on
both
parties. (Emphasis ours)
This referral to a third doctor has been
held by this Court to be a mandatory
procedure as a consequence of the
provision that it is the companydesignated doctor whose assessment
should prevail. In other words, the
company can insist on its disability rating
even against a contrary opinion by
another doctor, unless the seafarer
expresses his disagreement by asking for
the referral to a third doctor who shall
make his or her determination and whose
decision is final and binding on the
parties. We have followed this rule in a
string of cases, among them, Philippine
Hammonia,21Ayungo
v.
Beamko
Shipmanagement
Corp.,22Santiago
v.
Pacbasin Shipmanagement, Inc.,23Andrada
v. Agemar Manning Agency,24 and
Masangkay v. Trans-Global Maritime
Agency, Inc.25 Thus, at this point, the
matter of referral pursuant to the
provision of the POEA-SEC is a settled
ruling.
Since Rosales signed the POEA-SEC, he
bound himself to abide by its conditions
throughout his employment. The records
show that after obtaining a medical
certificate from Dr. Vicaldo classifying his
illness as Grade 1 (contrary to Dr. Cruz
Grade 7 assessment that the company
insisted
on),
Rosales
immediately
proceeded to secure the services of a
counsel and forthwith filed a complaint for
disability benefits.26cralawred
By so acting, Rosales proceeded in a
manner contrary to the terms of his
contract with INC in challenging the
company doctors assessment; he failed to
signify his intent to submit the disputed
assessment to a third doctor and to wait
for arrangements for the referral of the
conflicting assessments of his disability to
a third doctor.
To definitively clarify how a conflict
situation should be handled, upon
notification that the seafarer disagrees

with the company doctors assessment
based on the duly and fully disclosed
contrary assessment from the seafarers
own doctor, the seafarer shall then signify
his intention to resolve the conflict by the
referral of the conflicting assessments to a
third doctor whose ruling, under the
POEA-SEC, shall be final and binding on
the parties.
Upon notification, the
company carries the burden of initiating
the process for the referral to a third
doctor commonly agreed between the
parties.
Thus, as matters stand in the present
case, the complaint was premature; it
should have been dismissed as early as
the LAs level since the fit-to-work
certification and grading by the companydesignated physician prevails unless a
third party doctor, sought by the parties,
declares otherwise.
Significantly, no reason was ever given
why the LA and the NLRC both
disregarded the third-doctor provision
under the POEA-SEC. For similarly ruling,
the CA fell into the same error.
29
cralawred
Once again, it appears to us, that the
third-doctor-referral provision of the
POEA-SEC, has been honored more in the
breach than in the compliance. This is
unfortunate considering that the provision
is intended to settle disability claims at
the parties level where the claims can be
resolved more speedily than if they were
to be brought to court.30cralawred
Even granting that the complaint should
be given due course, we hold that the
company-designated
physicians
assessment should prevail over that of the
private
physician.
The
companydesignated physician had thoroughly
examined and treated Rosales from
the time of his repatriation until his
disability grading was issued, which
was from February 20, 2006 until
October 10, 2006. In contrast, the
private physician only attended to

145145
14
6

Rosales
once,
on
November
9,
2006.31This is not the first time that
this Court met this situation. Under
these circumstances, the assessment of
the company-designated physician is more
credible for having been arrived at after
months of medical attendance and
diagnosis, compared with the assessment
of a private physician done in one day on
the basis of an examination or existing
medical records.
We are thus compelled to dismiss the
present complaint, as we had similarly
done in Philippine Hammonia,32 to impress
upon the public the significance of a
binding obligation. This pronouncement
shall not only speed up the processing of
maritime disability claims and decongest
court dockets; more importantly, our
ruling would restore faith and confidence
in obligations that have voluntarily been
entered upon. As an institution tasked to
uphold and respect the law, it is our
primary duty to ensure faithful compliance
with the law whether the dispute affects
strictly private interests or one imbued
with public interest. We shall not hesitate
to dismiss a petition wrongfully filed, or to
hold any persons liable for its malicious
initiation.
The Courts Ruling
The petition is without merit.
At the outset, the Court notes that
Rimandos acquittal in the estafa case
does not necessarily absolve her from any
civil liability to private complainants, Sps.
Aldaba. It is well-settled that the
acquittal of the accused does not
automatically preclude a judgment against
him on the civil aspect of the case. The
extinction of the penal action does not
carry with it the extinction of the civil
liability where: (a) the acquittal is based
on
reasonable
doubt
as
only
preponderance of evidence is required; (b)
the court declares that the liability of the
accused is only civil; and (c) the civil
liability of the accused does not arise from
or is not based upon the crime of which
the accused is acquitted. However, the

civil action based on delict may be
deemed extinguished if there is a finding
on the final judgment in the criminal
action that the act or omission from which
the civil liability may arise did not exist or
where the accused did not commit the
acts
or
omission
imputed
to
him.22cralawlawlibrary
In this case, Rimandos civil liability did
not arise from any purported act
constituting the crime of estafa as the RTC
clearly
found
that
Rimando
never
employed any deceit on Sps. Aldaba to
induce them to invest money in Multitel.
Rather, her civil liability was correctly
traced from being an accommodation
party to one of the checks she issued to
Sps. Aldaba on behalf of Multitel. In
lending her name to Multitel, she, in
effect, acted as a surety to the latter, and
as such, she may be held directly liable for
the value of the issued check.23 Verily,
Rimandos civil liability to Sps. Aldaba in
the amount of P500,000.00 does not arise
from or is not based upon the crime she is
charged with, and hence, the CA correctly
upheld the same despite her acquittal in
the estafa case.
In this relation, the CA is also correct in
holding that Rimandos acquittal and
subsequent exoneration in the BP 22
cases had no effect in the estafa case,
even if both cases were founded on the
same factual circumstances. In Nierras v.
Judge Dacuycuy,24 the Court laid down the
fundamental differences between BP 22
and
estafa,
to
What petitioner failed to mention in his
argument is the fact that deceit and
damage are essential elements in Article
315 (2-d) Revised Penal Code, but are not
required in Batas Pambansa Bilang 22.
Under the latter law, mere issuance of a
check that is dishonored gives rise to the
presumption of knowledge on the part of
the drawer that he issued the same
without sufficient funds and hence
punishable which is not so under the Penal

146146
14
7

Code. Other differences between the two
also include the following: (1) a drawer of
a dishonored check may be convicted
under Batas Pambansa Bilang 22 even if
he had issued the same for a pre-existing
obligation, while under Article 315 (2-d) of
the
Revised
Penal
Code,
such
circumstance negates criminal liability; (2)
specific and different penalties are
imposed in each of the two offenses; (3)
estafa is essentially a crime against
property,
while
violation
of
Batas
Pambansa Bilang 22 is principally a crime
against public interest as it does injury to
the entire banking system; (4) violations
of Article 315 of the Revised Penal Code
are mala in se, while those of Batas
Pambansa
Bilang
22
are
mala
prohibita.25chanrobleslaw
Owing to such differences, jurisprudence
in People v. Reyes26 even instructs that
the simultaneous filing of BP 22 and estafa
cases do not amount to double
jeopardy:chanRoblesvirtualLawl
Essentially, while a BP 22 case and an
estafa case may be rooted from an
identical set of facts, they nevertheless
present different causes of action, which,
under the law, are considered separate,
distinct, and independent from each
other. Therefore, both cases can proceed
to their final adjudication both as to
their criminal and civil aspects subject to
the prohibition on double recovery.28
Perforce, a ruling in a BP 22 case
concerning the criminal and civil liabilities
of the accused cannot be given any
bearing whatsoever in the criminal and
civil aspects of a related estafa case, as in
this instance.
Magsaysay Mitsui Osk Marine, Inc. and/or

MOL Tankship Management (Asia)
Pte. Ltd. Vs. Juanito G. BengsonG.R.
No. 198528. October 13, 2014
Time and again, this Court has held that
cardiovascular disease, coronary artery
disease, and other heart ailments are
work-related and, thus, compensable.
the Court finds that Bengsons illness is
work-related.
The
undisputed
facts
indicate that respondent has been working

for petitioners since 1988; that per his
service record,37 he has been serving as
Third Mate for twelve (12) years; and that
as Third Mate, he was saddled with heavy
responsibilities relative to navigation of
the vessel, ship safety and management
of emergencies. It is beyond doubt that
respondent was subjected to physical and
mental stress and strain: as Third Mate,
he is the ships fourth in command, and
he is the ships safety officer; these
responsibilities have been heavy burdens
on respondents shoulders all these years,
and
certainly
contributed
to
the
development of his illness. Besides, [i]t
is already recognized that any kind of
work or labor produces stress and strain
normally resulting in wear and tear of the
human body.38 Notably, it is a matter
of judicial notice that an overseas worker,
having to ward off homesickness by
reason of being physically separated from
his family for the entire duration of his
contract, bears a great degree of
emotional strain while making an effort to
perform his work well. The strain is even
greater in the case of a seaman who is
constantly subjected to the perils of the
sea while at work abroad and away from
his family.39cralawlawlibrary
Having worked for petitioners since 1988
under employment contracts that were
continuously renewed, it can be said that
respondent spent much of his productive
years with petitioners; his years of service
certainly took a toll on his body, and he
could not have contracted his illness
elsewhere except while working for
petitioners. To be sure, the Court has
ruled that the list of illnesses/diseases in
Section 32-A40 does not preclude other
illnesses/diseases not so listed from being
compensable. The POEA-SEC cannot be
presumed to contain all the possible
injuries that render a seafarer unfit for
further sea duties.41
And equally
significant, it is not the injury which is
compensated, but rather it is the
incapacity to work resulting in the
impairment
of
ones
earning
capacity.42cralawlawlibrary

147147
14
8

Anita N. Canuel, for herself and on behalf

of her minor children,
namely,
Charmaine, Charlene and Charl Smith,
all surnamed Canuel Vs. Magsaysay
Maritime Corporation, et al. G.R. No.
190161. October 13, 2014
First Requirement:
The Seafarers Death Should Be
Work-Related.
While the 2000 POEA-SEC does not

expressly define what a workrelated death means, it is
palpable from Part A (4) as abovecited that the said term refers to
the seafarers death resulting
from a work-related injury or
illness.
Given that the seafarers death in this
case resulted from a work-related injury
as defined in the 2000 POEA-SEC above, it
is clear that the first requirement for
death compensability is present.
As the records show, Nancing

suffered a work-related injury
within the term of his employment
contract when he figured in an
accident while performing his
duties as Third Assistant Engineer
at cylinder number 7 of the vessel
on February 20, 2007.41 The
foregoing circumstances aptly fit
the legal attribution of the phrase
arising out of and in the course of
employment
That Nancing was suffering from
lung cancer, which was found to
have been pre-existing, hardly
impels a contrary conclusion since
as the LA herein earlier noted
the February 20, 2007 injury
actually led to the deterioration of
his condition.44 As held in More
Maritime Agencies, Inc. v. NLRC,45
[i]f the injury is the proximate
cause of [the seafarers] death or
disability for which compensation is
sought, [his] previous physical
condition x x x is unimportant and
recovery may be had for injury
independent of any pre-existing
weakness or disease,
Clearly,
Nancings
injury
was
the
proximate
cause
of
his
death
considering that the same, unbroken by
any efficient, intervening cause, triggered
the following sequence of events: (a)
Nancings hospitalization at the Shanghai
Seamens Hospital47 where he was
diagnosed with bilateral closed traumatic
haemothorax;48(b) his repatriation and
eventual admission to the Manila Doctors
Hospital;49 and (c) his acute respiratory
failure, which was declared to be the
immediate
cause
of
his
death.50cralawlawlibrary
Thus, for the foregoing reasons, it

cannot be seriously disputed that
the first requirement for death
compensability concurs in this
case.
Second Requirement:
The Seafarers Death Should Occur
During The Term Of Employment.
With respect to the second requirement
for death compensability, the Court takes
this opportunity to clarify that while the
general rule is that the seafarers death
should occur during the term of his
employment,
the
seafarers
death
occurring after the termination of his
employment
due
to
his
medical
repatriation on account of a work-related
injury or illness constitutes an exception
thereto. This is based on a liberal
construction of the 2000 POEA-SEC as
impelled by the plight of the bereaved
heirs who stand to be deprived of a just
and reasonable compensation for the
seafarers death, notwithstanding its
evident work-connection. The present
petition is a case in point.
Here, Nancings repatriation occurred
during the eighth (8th) month of his one
(1) year employment contract. Were it not
for his injury, which had been earlier
established as work-related, he would not
have been repatriated for medical reasons
and his contract consequently terminated
pursuant to Part 1 of Section 18 (B) of the

148148
14
9

2000 POEA-SEC
The terminative consequence of a medical
repatriation case then appears to present
a rather prejudicial quandary to the
seafarer and his heirs. Particularly, if the
Court were to apply the provisions of
Section 20 of the 2000 POEA-SEC as
above-cited based on a strict and literal
construction thereof, then the heirs of
Nancing would stand to be barred from
receiving any compensation for the latters
death
despite
its
obvious
workrelatedness. Again, this is for the reason
that the work-related death would, by
mere legal technicality, be considered to
have occurred after the term of his
employment on account of his medical
repatriation. It equally bears stressing
that neither would the heirs be able to
receive any disability compensation since
the seafarers death in this case precluded
the determination of a disability grade,
which, following Section 20 (B)51 in
relation to Section 3252 of the 2000 POEASEC, stands as the basis therefor.
However, a strict and literal construction
of the 2000 POEA-SEC, especially when
the same would result into inequitable
consequences against labor, is not
subscribed to in this jurisdiction.
Concordant with the States avowed policy
to give maximum aid and full
protection to labor as enshrined in
Article XIII of the 1987 Philippine
Constitution,53 contracts of labor, such as
the 2000 POEA-SEC, are deemed to be so
impressed with public interest that the
more beneficial conditions must be
endeavoured in favor of the laborer.54 The
rule therefore is one of liberal
construction.
Applying the rule on liberal construction,
the Court is thus brought to the
recognition that medical repatriation cases
should be considered as an exception to
Section 20 of the 2000 POEA-SEC.
Accordingly, the phrase work-related
death of the seafarer, during the term
of his employment contract under
Part A (1) of the said provision should not
be strictly and literally construed to mean
that the seafarers work-related death

should have precisely occurred during the
term of his employment. Rather, it is
enough that the seafarers workrelated
injury
or
illness
which
eventually causes his death should
have occurred during the term of his
employment. Taking all things into
account, the Court reckons that it is by
this method of construction that undue
prejudice to the laborer and his heirs may
be obviated and the State policy on labor
protection be championed. For if the
laborers death was brought about
(whether fully or partially) by the work he
had harbored for his masters profit, then
it is but proper that his demise be
compensated. Here, since it has been
established that (a) the seafarer had been
suffering from a work-related injury or
illness during the term of his employment,
(b) his injury or illness was the cause for
his medical repatriation, and (c) it was
later determined that the injury or illness
for which he was medically repatriated
was the proximate cause of his actual
death although the same occurred after
the term of his employment, the abovementioned rule should squarely apply.
Perforce, the present claim for death
benefits should be granted.
To quell any confusion, it is but fitting to
make clear that a liberal construction of
Section 20 of the 2000 POEA-SEC as
above-discussed would not offend the
Courts ruling in Klaveness,57 which was
inaccurately relied upon by the CA to
justify its decision. The inaccuracy so
recognized stems from the glaring factual
and legal variance between Klaveness and
the present case. Upon careful scrutiny,
the seafarer in Klaveness was not
medically repatriated but was actually
signed off from the vessel after the
completion of his contract. He was
subsequently diagnosed to have urinary
bladder cancer, which was not proven to
be work-related, and died almost two
(2) years after the termination of his
contract of employment. Hence, since the
employment contract was terminated
without any connection to a work-related

149149
15
0

cause, but rather because of its mere
lapse, death benefits were denied to the
seafarers heirs. In contrast, the seafarer
in this case was medically repatriated
due to a work-related injury which
resulted to his death a month after his
confinement in a local hospital. Again,
were it not for said injury, the seafarer
would not have been medically repatriated
and his employment contract, in turn,
terminated. By these circumstances, it is
clear that the termination of the
employment contract was forced upon by
a work-related cause. As alluded earlier, it
would then be antithetical to the States
policy on labor to deprive the seafarers
heirs of death compensation despite its
palpable work-connection. Based on the
foregoing, it is, hence, apparent that the
Courts pronouncement herein would not
conflict that in Klaveness. Truth be told,
the defining parameter in workers
compensation cases should be the
element of work-relatedness which
was clearly absent in the contractcompletion situation in Klaveness.58 To
reiterate, if the death is work-related, as
herein ascribed, then the seafarers heirs
should not be denied compensation.
To reinforce the point, a survey of
previous Court rulings wherein death
compensability had been denied the heirs
of the seafarer actually demonstrates the
significance
of
the
work-relatedness
element in workers compensation cases.
For instance, in Gau Sheng Phils., Inc. v.
Joaquin,59 the illness of the seafarer
therein, who was terminated based on
mutual consent, was found to be noncompensable since he died of chronic
renal failure which was not listed as a
compensable illness. Likewise, in Aya-ay,
Sr. v. Arpaphil Shipping Corp.,60 the Court
denied the claim for death compensation
because
the
seafarer
therein
was
repatriated due to an eye injury but
subsequently died of a stroke, which was
not listed as a compensable illness under
the POEA-SEC. Death compensation was
also
denied
to
the
claimants
in
Hermogenes v. Osco Shipping Services,
Inc.,61 since no evidence was offered to
prove the cause of the termination of the

contract of employment, whereas it was
found that the seafarer therein died three
(3) years after his disembarkation of an
illness which was not shown to have been
contracted during his employment. An
identical ruling was rendered in Prudential
Shipping and Management Corp. v. Sta.
Rita,62 wherein the seafarer in said case
was repatriated due to umbilical hernia
but died one (1) year after of
cardiopulmonary arrest, which was not,
however, established as work-related.
Similarly, death compensation was denied
the claimants in Ortega v. CA,63
considering that the seafarer therein died
of lung cancer which was not found to be
work-related.
Meanwhile, on the opposite end of the
jurisprudential spectrum, the Court, in a
number of cases, granted claims for death
benefits although the seafarers death
therein
had
occurred
after
their
repatriation primarily because of the
causal connection between their work and
the illness which had eventually resulted
in their death.
In the 1999 case of Wallem Maritime
Service, Inc. v. NLRC,64 the death benefit
claims of the heirs of the seafarer who had
died after having been repatriated on
account of mutual consent between him
and his employer was allowed by the
Court
because
of
the
reasonable
connection between his job and his
illness. As pertinently stated in that
case:chanRoblesvirtualLawlibrary
It is not required that the employment be
the sole factor in the growth, development
or acceleration of the illness to entitle the
claimant to the benefits provided therefor.
It is enough that the employment had
contributed, even in a small degree,
to the development of the disease and
in bringing about his death.
It is indeed safe to presume that, at the
very least, the nature of Faustino
Inductivos employment had contributed
to the aggravation of his illness if

150150
15
1

indeed it was pre-existing at the time of
his employment and therefore it is but
just that he be duly compensated for it. It
cannot be denied that there was at
least
a
reasonable
connection
between his job and his lung
infection, which eventually developed
into septicemia and ultimately caused
his death. As a [utility man] on board
the vessel, he was exposed to harsh
sea weather, chemical irritants, dusts,
etc.,
all
of
which
invariably
contributed to his illness.
Neither is it necessary, in order to recover
compensation, that the employee must
have been in perfect condition or health at
the time he contracted the disease. Every
workingman brings with him to his
employment certain infirmities, and while
the employer is not the insurer of the
health of the employees, he takes them as
he finds them and assumes the risk of
liability. If the disease is the proximate
cause of the employees death for which
compensation is sought, the previous
physical condition of the employee is
unimportant and recovery may be had
therefor independent of any pre-existing
disease.65 (Emphases and underscoring
supplied)
Later,
the
Court,
in
Seagull
Shipmanagement and Transport, Inc. v.
NLRC66 a sickness and permanent
disability claims case decided under the
auspices of the 1984 version of the POEASEC (which, unlike the present standard
contract, only requires that the illness of
death occur during the term of the
employment whether work-related or not)
significantly
observed
that:chanRoblesvirtualLawlibrary
Even assuming that the ailment of the
worker was contracted prior to his
employment, this still would not deprive
him of compensation benefits. For what
matters
is that
his
work had
contributed, even in a small degree,
to the development of the disease and
in bringing about his eventual death.
Neither is it necessary, in order to recover
compensation, that the employee must

have been in perfect health at the time he
contracted the disease. A worker brings
with him possible infirmities in the course
of his employment, and while the
employer is not the insurer of the health
of the employees, he takes them as he
finds them and assumes the risk of
liability. If the disease is the proximate
cause of the employees death for
which compensation is sought, the
previous physical condition of the
employee
is
unimportant,
and
recovery may be had for said death,
independently of any pre-existing
disease. 67 (Emphases and underscoring
supplied; citations omitted)
The Court similarly took into account the
work-relatedness element in granting the
death benefits claim in Interorient
Maritime Enterprises, Inc. v. Remo,68 a
2010 case decided under the 1996 POEASEC which operated under parameters
identical to the 1984 POEA-SEC. Quoted
hereunder are the pertinent portions of
that ruling:chanRoblesvirtualLawlibrary
It was established on record that before
the late Lutero Remo signed his last
contract with private respondents as
Cook-Steward of the vessel M/T Captain
Mitsos L, he was required to undergo a
series of medical examinations. Yet, he
was declared fit to work by private
respondents
company
designatedphysician. On April 19, 1999, Remo was
discharged from his vessel after he was
hospitalized
in
Fujairah
for
atrial
fibrillation and congestive heart failure.
His death on August 28, 2000, even if
it
occurred
months
after
his
repatriation, due to hypertensive
cardio-vascular disease, could clearly
have been work related. Declared as
fit to work at the time of hiring, and
hospitalized while on service on account of
atrial fibrillation and congestive heart
failure, his eventual death due to
hypertensive cardio-vascular disease
could only be work related. The death due
to hypertensive cardio-vascular disease
could in fact be traced to Lutero Remos

151151
15
2

being the Cook-Steward. As CookSteward of an ocean going vessel,
Remo had no choice but to prepare
and eat hypertension inducing food, a
kind of food that eventually caused
his
hypertensive
cardio-vascular
disease, a disease which in turn
admittedly caused his death.
Private respondents cannot deny
liability for the subject death by
claiming that the seafarers death
occurred beyond the term of his
employment and worsely, that there
has been misrepresentation on the
part of the seafarer. For, as employer,
the private respondents had all the
opportunity to pre-qualify, thoroughly
screen and choose their applicants to
determine
if
they
are
medically,
psychologically and mentally fit for
employment. That the seafarer here was
subjected to the required pre-qualification
standards before he was admitted as
Cook-Steward, it thus has to be safely
presumed that the late Remo was in a
good state of health when he boarded the
vessel.69 (Emphases and underscoring
supplied; citation omitted)
Section 20 (A) of the 2000 POEA-SEC.

The provision cannot be construed
otherwise for to do so would not only
transgress prevailing constitutional policy
and deride the bearings of relevant case
law but also result in a travesty of fairness
and an indifference to social justice.
For all these reasons, the Court hereby
grants the petition.
More recently, in the 2013 case of InterOrient

Maritime,
Incorporated
v.
Candava,70 also decided under the
framework of the 1996 POEA-SEC, the
Court pronounced that the seafarers
death therein, despite occurring after his
repatriation, remains compensable for
having been caused by an illness duly
established to have been contracted in the
course
of
his
employment.71cralawlawlibrary
Concerned Citizens of Naval Biliran Vs.

Florante F. Ralar, Court Stenographer
III, Regional Trial Court, Branch 37,
Caibiran, Biliran A.M. No. P-14-3278.
October 21, 2014
The falsification of an official document
like the personal data sheet required for
employment in the Judiciary is gross
dishonesty, and constitutes a serious
administrative offense that warrants the
dismissal of the employee.
Imasen
Philippine
Manufacturing
Corporation Vs. Ramonchito T. Alcon
and Joann S. Papa G.R. No. 194884.
October 22, 2014
The Issue
The sole issue for this Court's

resolution
is
whether
the
respondents' infraction engaging
in
sexual
intercourse
inside
company premises during work
hours amounts to serious
misconduct within the terms of
Article 282 (now Article 296) of the
Labor
Code
justifying
their
dismissal.
Preliminary considerations:
tenurial security vis-a-vis
management prerogative
Thus,
considering
the
constitutional
mandate on labor as well as relative
jurisprudential context, the rule, restated
for a final time, should be as follows: if
the seafarers work-related injury or
illness (that eventually causes his
medical repatriation and, thereafter,
his death, as in this case) occurs
during the term of his employment,
then the employer becomes liable for
death compensation benefits under
The law and jurisprudence guarantee to

every employee security of tenure. This
textual and the ensuing jurisprudential
commitment to the cause and welfare of
the working class proceed from the social
justice principles of the Constitution that
the Court zealously implements out of its
concern for those with less in life. Thus,
the Court will not hesitate to strike down
as invalid any employer act that attempts
to undermine workers' tenurial security.

152152
15
3

All these the State undertakes under
Article 279 (now Article 293)22 of the
Labor Code which bar an employer from
terminating the services of an employee,
except for just or authorized cause and
upon observance of due process.
The just causes for dismissing an

employee are provided under Article 28226
(now Article 296)27 of the Labor Code.
Under Article 282(a), serious misconduct
by the employee justifies the employer in
terminating his or her employment.
In protecting the rights of the workers,

the law, however, does not authorize the
oppression or self-destruction of the
employer.23
The
constitutional
commitment to the policy of social justice
cannot be understood to mean that every
labor dispute shall automatically be
decided
in
favor
of
labor.24
The
constitutional and legal protection equally
recognize the employer's right and
prerogative to manage its operation
according to reasonable standards and
norms of fair play.
Misconduct is defined as an improper or

wrong conduct. It is a transgression of
some established and definite rule of
action, a forbidden act, a dereliction of
duty, willful in character, and implies
wrongful intent and not mere error in
judgment.28 To constitute a valid cause for
the dismissal within the text and meaning
of Article 282 of the Labor Code, the
employee's misconduct must be serious,
i.e., of such grave and aggravated
character and not merely trivial or
unimportant.29cralawred
Accordingly, except as limited by special

law, an employer is free to regulate,
according to his own judgment and
discretion, all aspects of employment,
including
hiring,
work
assignments,
working methods, time, place and manner
of work, tools to be used, processes to be
followed, supervision of workers, working
regulations, transfer of employees, worker
supervision, layoff of workers and the
discipline, dismissal and recall of
workers.25 As a general proposition, an
employer has free reign over every aspect
of its business, including the dismissal of
his employees as long as the exercise of
its management prerogative is done
reasonably, in good faith, and in a manner
not otherwise intended to defeat or
circumvent the rights of workers.
Additionally, the misconduct must be

related to the performance of the
employee's duties showing him to be
unfit to continue working for the
employer.30
Further,
and
equally
important and required, the act or conduct
must have been performed with
wrongful intent.31cralawred
In these lights, the Court's task in the

present petition is to balance the
conflicting rights of the respondents to
security of tenure, on one hand, and of
Imasen to dismiss erring employees
pursuant to the legitimate exercise of its
management prerogative, on the other.
Management's right to dismiss an
employee; serious misconduct as just
cause for the dismissal
To summarize, for misconduct or improper

behavior to be a just cause for dismissal,
the following elements must concur: (a)
the misconduct must be serious; (b) it
must relate to the performance of the
employee's duties showing that the
employee has become unfit to continue
working for the employer;32 and (c) it
must have been performed with wrongful
intent.
The respondents' infraction amounts
to
serious misconduct within the terms
of
Article 282 (now Article 296) of the
Labor Code justifying their dismissal
Dismissal situations (on the ground of
serious misconduct) involving sexual acts,
particularly sexual intercourse committed
by employees inside company premises
and during work hours, are not usual
violations33 and are not found in

153153
15
4

abundance under jurisprudence. Thus, in
resolving the present petition, we are
largely guided by the principles we
discussed above, as applied to the totality
of the circumstances that surrounded the
petitioners' dismissal.
Sexual acts and intimacies between two
consenting adults belong, as a principled
ideal, to the realm of purely private
relations. Whether aroused by lust or
inflamed by sincere affection, sexual acts
should be carried out at such place, time
and circumstance that, by the generally
accepted norms of conduct, will not offend
public decency nor disturb the generally
held or accepted social morals. Under
these parameters, sexual acts between
two consenting adults do not have a place
in the work environment.
Indisputably, the respondents engaged in
sexual intercourse inside
company
premises and during work hours.
These circumstances, by themselves, are
already punishable misconduct. Added to
these considerations, however, is the
implication that the respondents did not
only disregard company rules but flaunted
their disregard in a manner that could
reflect adversely on the status of ethics
and morality in the company.
Additionally, the respondents engaged in
sexual intercourse in an area where coemployees or other company personnel
have ready and available access. The
respondents likewise committed their act
at a time when the employees were
expected to be and had, in fact, been at
their respective posts, and when they
themselves were supposed to be, as all
other employees had in fact been,
working.
Under these factual premises and in the
context of legal parameters we discussed,
we cannot help but consider the
respondents' misconduct to be of grave
and aggravated character so that the
company was justified in imposing the
highest penalty available dismissal.
Their infraction transgressed the bounds
of socially and morally accepted human

public behavior, and at the same time
showed brazen disregard for the respect
that their employer expected of them as
employees. By their misconduct, the
respondents, in effect, issued an open
invitation for others to commit the same
infraction, with like disregard for their
employer's rules, for the respect owed to
their employer, and for their coemployees' sensitivities. Taken together,
these considerations reveal a depraved
disposition that the Court cannot but
consider as a valid cause for dismissal.
In ruling as we do now, we considered the
balancing
between
the
respondents'
tenurial rights and the petitioner's
interests - the need to defend their
management prerogative and to maintain
as well a high standard of ethics and
morality in the workplace. Unfortunately
for the respondents, in this balancing
under the circumstances of the case, we
have to rule against their tenurial rights in
favor of the employer's management
rights.
Radio Mindanao Network, Inc. Vs. Michael
Maximo R. Amurao III G.R. No.
167225. October 22, 2014
This appeal deals with the issue of
whether the quitclaim executed by
the employee was valid and
effective against him.
Ruling of the Court

That Michael was illegally dismissed from
his employment is beyond question. RMN
does not dispute this. Its only submission
now is that it was discharged from
whatever claims Michael had against it
arising from his employment by virtue of
the Affidavit of Release/Quitclaim he
signed in its favor. Accordingly, the
remaining question to resolve is whether
the quitclaim was valid and binding.
Worth noting is that Michael signed the
quitclaim to release RMN from any and all
claims that could be due to him by reason
of his employment after he receiving the
agreed settlement pay of P311,922.00.

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5

Not all quitclaims are per se invalid or
against public policy. A quitclaim is invalid
or contrary to public policy only: (1)
where there is clear proof that the waiver
was wrangled from an unsuspecting or
gullible person; or (2) where the terms of
settlement are unconscionable on their
face. In instances of invalid quitclaims, the
law steps in to annul the questionable
waiver. Indeed, there are legitimate
waivers that represent the voluntary and
reasonable settlements of laborers claims
that should be respected by the Court as
the law between the parties. Where the
party has voluntarily made the waiver,
with a full understanding of its terms as
well as its consequences, and the
consideration for the quitclaim is credible
and reasonable, the transaction must be
recognized as a valid and binding
undertaking, and may not later be
disowned simply because of a change of
mind.20 A waiver is essentially contractual.
In our view, the requisites for the validity
of Michaels quitclaim were satisfied. We
explain.
Firstly, Michael acknowledged in his
quitclaim that he had read and thoroughly
understood the terms of his quitclaim and
signed it of his own volition. Being a radio
broadcaster and production manager, he
occupied a highly responsible position in
the company. It would be implausible to
hold, therefore, that he could be easily
duped into simply signing away his rights.
Besides, the language and content of the
quitclaim were clear and uncomplicated
such that he could not claim that he did
not understand what he was signing.
Secondly,
the
settlement
pay
of
P311,922.00 was credible and reasonable
considering that Michael did not even
assail such amount as unconscionably low,
or even state that he was entitled to a
higher amount.
Thirdly, that he was required to sign the
quitclaim as a condition to the release of
the settlement pay21 did not prove that its
execution was coerced. Having agreed to

part with a substantial amount of money,
RMN took steps to protect its interest and
obtain its release from all obligations once
it paid Michael his settlement pay, which it
did in this case.
And, lastly, that he signed the quitclaim
out of fear of not being able to provide for
the needs of his family and for the
schooling of his children did not
immediately indicate that he had been
forced to sign the same.22 Dire necessity
should not necessarily be an acceptable
ground for annulling the quitclaim,
especially because it was not at all shown
that he had been forced to execute it. Nor
was it even proven that the consideration
for the quitclaim was unconscionably low,
and that he had been tricked into
accepting the consideration.23
With the quitclaim having been freely and
voluntarily signed, RMN was released and
absolved from any liability in favor of
Michael. Suffice it to say that the quitclaim
is ineffective in barring recovery of the full
measure of an employees rights only
when the transaction is shown to be
questionable and the consideration is
scandalously low and inequitable.24 Such
is not true here.
FVR Skills and Services Exponents, Inc.
(SKILLEX), Fulgencio V. Rana and
Monina R. Burgos Vs. Jovert Seva,
Josuel V. Valencerina, et al.G.R. No.
200857. October 22, 2014
The respondents are regular
employees,
not
project
employees.
Article 280 (now Article 294)23 of

the Labor Code governs the
determination
of
whether
an
employee is a regular or a project
employee.24
Under this provision, there are two

kinds
of
regular
employees,
namely: (1) those who were
engaged to perform activities which
are usually necessary or desirable
in the usual business or trade of

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15
6

the employer; and (2) those casual
employees who became regular
after one year of service, whether
continuous or broken, but only with
respect to the activity for which
they have been hired.
We distinguish these two types of

regular employees from a project
employee,
or
one
whose
employment was fixed for a
specific project or undertaking,
whose completion or termination
had been determined at the time of
engagement.
work and occupying the same

positions from the time they
were hired and until they were
dismissed in January 2009. The
petitioner did not present any
evidence to refute the respondents'
claim that from the time of their
hiring until the time of their
dismissal, there was no gap in
between the projects where they
were assigned to. The petitioner
continuously
availed
of
their
services by constantly deploying
them to its clients.
A careful look at the factual

circumstances of this case leads us
to the legal conclusion that the
respondents are regular and not
project employees.
The
primary
standard
in
determining regular employment is
the
reasonable
connection
between the particular activity
performed by the employee and
the employer's business or trade.
This connection can be ascertained
by considering the nature of the
work performed and its relation to
the scheme of the particular
business, or the trade in its
entirety.25cralawred
Guided by this test, we conclude
that the respondents' work as
janitors, service crews and
sanitation aides, are necessary
or desirable to the petitioner's
business of providing janitorial
and manpower services to its
clients
as
an
independent
contractor.
Also, the respondents had already
been working for the petitioner as
early as 1998. Even before the
service
contract
with
Robinsons,
the
respondents
were
already
under
the
petitioner's employ.26They had
been doing the same type of
Lastly, under Department Order

(DO) 18-02,27 the applicable labor
issuance to the petitioner's case,
the contractor or subcontractor is
considered as the employer of the
contractual employee for purposes
of enforcing the provisions of the
Labor Code and other social
legislation.28
DO
18-02
grants
contractual
employees all the rights and
privileges
due
a
regular
employee, including the following:
(a) safe and healthful working
conditions; (b) labor standards
such as service incentive leave,
rest
days,
overtime
pay,
holiday pay, 13th month pay
and separation pay; (c) social
security and welfare benefits; (d)
self-organization,
collective
bargaining and peaceful concerted
action; and (e) security of
tenure.29
In this light, we thus conclude that

although the respondents were
assigned as contractual employees
to the petitioner's various clients,
under the law, they remain to be
the petitioner's regular employees,
who are entitled to all the rights
and
benefits
of
regular
employment.
The respondents' employment
contracts, which were belatedly
signed, are voidable.

156156
15
7

The records show that at the time of the
respondents' dismissal, they had already
been continuously working for the
petitioner for more than a year. Despite
this, they never signed any employment
contracts with the petitioner, except the
contracts they belatedly signed when the
petitioner's own contract of janitorial
services with Robinsons neared expiration.
As already discussed, for an employee to
be validly categorized as a project
employee, it is necessary that the
specific project or undertaking had
been identified and its period and
completion date determined and
made known to the employee at the
time of his engagement. This provision
ensures that the employee is completely
apprised of the terms of his hiring and the
corresponding rights and obligations
arising from his undertaking. Notably, the
petitioner's
service
contract
with
Robinsons was from January 1 to
December 31, 2008. The respondents
were only asked to sign their employment
contracts for their deployment with
Robinsons halfway through 2008, when
the petitioner's service contract was about
to expire.
We find the timing of the execution of the
respondents'
respective
employment
contracts to be indicative of the
petitioner's calculated plan to evade the
respondents' right to security of tenure, to
ensure their easy dismissal as soon as the
Robinsons'
contract
expired.
The
attendant circumstances cannot but raise
doubts as to the petitioner's good faith.
If the petitioner really intended the
respondents to be project employees,
then the contracts should have been
executed right from the time of
hiring, or when the respondents were
first assigned to Robinsons, not when
the petitioner's service contract was
winding up. The terms and conditions of
the respondents' engagement should have
been disclosed and explained to them
from
the
commencement
of
their
employment. The petitioner's failure to do

so supports the conclusion that it had
been in bad faith in evading the
respondents' right to security of tenure.
In Glory Philippines, Inc. v. Vergara,30 the
Court rejected the validity of a fixed term
contract belatedly executed, and ruled
that its belated signing was a deliberate
employer ploy to evade the employees'
right to security of tenure.
Moreover, under Article 1390 of the Civil
Code, contracts where the consent of a
party was vitiated by mistake, violence,
intimidation, undue influence or fraud, are
voidable or annullable. The petitioner's
threat of non-payment of the respondents'
salaries clearly amounted to intimidation.
Under this situation, and the suspect
timing when these contracts were
executed, we rule that these employment
contracts
were
voidable
and
were
effectively
questioned
when
the
respondents filed their illegal dismissal
complaint.
The respondents were
illegally dismissed.
To be valid, an employee's dismissal
must comply with the substantive and
procedural
requirements
of
due
process.
Substantively,
a
dismissal
should be supported by a just or
authorized cause.32 Procedurally, the
employer must observe the twin notice
and hearing requirements in carrying out
an employee's dismissal.33
The
petitioner
argues
that
these
substantive and procedural requisites do
not apply to the respondents' case since
they were employed under fixed term
contracts. According to the petitioner, the
respondents' employment contracts lapsed
by operation of law as the necessary
consequence of the termination and nonrenewal of its service contract with
Robinsons. Because of this, there was no
illegal dismissal to speak of, only contract
expiration.
We do not agree with the petitioner.

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15
8

Having already determined that the
respondents are regular employees and
not project employees, and that the
respondents'
belated
employment
contracts could not be given any binding
effect for being signed under duress, we
hold that illegal dismissal took place when
the petitioner failed to comply with the
substantive and procedural due process
requirements of the law.
The petitioner also asserts that the
respondents' subsequent absorption by
Robinsons' new contractors - Fieldmen
Janitorial Service Corporation and Altaserv
- negates their illegal dismissal. This
reasoning is patently erroneous. The
charge of illegal dismissal was made only
against the petitioner which is a separate
juridical entity from Robinsons' new
contractors; it cannot escape liability by
riding on the goodwill of others.
By law, the petitioner must bear the legal
consequences of its violation of the
respondents' right to security of tenure.
The facts of this case show that since the
respondents' hiring, they had been under
the petitioner's employ as janitors, service
crews
and
sanitation
aides.
Their
services
had
been
continuously
provided to the petitioner without any
gap. Notably, the petitioner never
refuted
this
allegation
of
the
respondents. Further, there was no
allegation that the petitioner went out
of business after the non-renewal of
the Robinsons' service contract. Thus,
had it not been for the respondents'
dismissal, they would have been deployed
to the petitioner's other existing clients.
In DM. Consunji, Inc. v. Jamin,34 an
employee was dismissed after the
expiration of the project he was last
engaged in. After ruling that the
respondent-employee was a regular and
not a project employee, this Court
affirmed
the
grant
of
backwages,
computed from the time of the employee's
illegal
dismissal
until
his
actual
reinstatement. In these lights, we rule
that the respondents are entitled to their

full
backwages,
inclusive
of
their
allowances and other benefits from the
time of their dismissal up to their actual
reinstatement.35
With regard to the award of separation
pay, we agree with the CA's finding that
this litigation resulted to strained relations
between
the
petitioner
and
the
respondents. Thus, we also affirm the CA's
ruling that instead of reinstatement, the
respondents
should
be
paid
their
respective separation pays equivalent to
one (1) month pay for every year of
service.36
We cannot give credence to the
petitioner's assertion that under Section
10 of DO 18-02,37 the respondents are not
entitled to separation pay because their
employment was terminated due to the
completion of the project where they had
been engaged. This provision must be
construed with the rest of DO 18-02's
other provisions.
As earlier pointed out, Section 7 of DO 1802 treats contractual employees as the
independent
contractor's
regular
employees for purposes of enforcing the
Labor Code and other social legislation
laws. Consequently, a finding of regular
employment entitles them to the rights
granted to regular employees, particularly
the right to security of tenure and to
separation pay.
Thus, a holistic reading of DO 18-02,38
guides us to the conclusion that Section
10 only pertains to contractual employees
who are really project employees. They
are not entitled to separation pay since
the end of the project for which they had
been hired necessarily results to the
termination of their employment. On the
other hand, we already found that the
respondents are the petitioner's regular
employees. Thus, their illegal dismissal
entitles
them
to
backwages
and
reinstatement or separation pay, in case
reinstatement is no longer feasible.
Solidary liability of the petitioner's

158158
15
9

officers
Finally, we modify the CA's ruling that
Rana and Burgos, as the petitioner's
president and general manager, should be
held solidarity liable with the corporation
for its monetary liabilities with the
respondents.
A corporation is a juridical entity with legal
personality separate and distinct from
those acting for and in its behalf and, in
general, from the people comprising it.
The general rule is that, obligations
incurred by the corporation, acting
through its directors, officers and
employees, are its sole liabilities.39
A director or officer shall only be
personally liable for the obligations of the
corporation, if the following conditions
concur: (l)the complainant alleged in the
complaint that the director or officer
assented to patently unlawful acts of the
corporation, or that the officer was guilty
of gross negligence or bad faith; and (2)
the complainant clearly and convincingly
proved such unlawful acts, negligence or
bad faith.40
In the present case, the respondents
failed to show the existence of the first
requisite. They did not specifically allege
in their complaint that Rana and Burgos
willfully and knowingly assented to the
petitioner's patently unlawful act of forcing
the respondents to sign the dubious
employment contracts in exchange for
their salaries. The respondents also failed
to prove that Rana and Burgos had been
guilty of gross negligence or bad faith in
directing the affairs of the corporation.
To hold an officer personally liable for the
debts of the corporation, and thus pierce
the veil of corporate fiction, it is necessary
to clearly and convincingly establish the
bad faith or wrongdoing of such officer,
since bad faith is never presumed.41
Because the respondents were not able to
clearly show the definite participation of
Burgos and Rana in their illegal dismissal,
we uphold the general rule that corporate
officers are not personally liable for the

money
claims
of
the
discharged
employees, unless they acted with evident
malice and bad faith in terminating their
employment.42
Goodyear Philippines, Inc. and Remegio M.
Ramos Vs. Marina L. AngusG.R. No.
185449. November 12, 2014
In the absence of an express or implied
prohibition against it, collection of both
retirement benefits and separation pay
upon severance from employment is
allowed. This is grounded on the social
justice policy that doubts should always be
resolved in favor of labor rights.1
Angus is entitled to both separation pay
and early retirement benefit due to the
absence of a specific provision in the
CBA prohibiting recovery of both.
In Aquino v. National Labor Relations
Commission,33 citing Batangas Laguna
Tayabas Bus Company v. Court of
Appeals34 and University of the East v.
Hon. Minister of Labor35 the Court held
that an employee is entitled to recover
both separation pay and retirement
benefits in the absence of a specific
prohibition in the Retirement Plan or CBA.
Concomitantly, the Court ruled that an
employee's right to receive separation pay
in addition to retirement benefits depends
upon the provisions of the company's
Retirement Plan and/or CBA.36
It is worthy to mention at this point that
retirement benefits and separation pay are
not mutually exclusive.38 Retirement
benefits are a form of reward for an
employee's loyalty and service to an
employer39 and are earned under existing
laws, CBAs, employment contracts and
company policies.40 On the other hand,
separation pay is that amount which an
employee receives at the time of his
severance from employment, designed to
provide
the
employee
with
the
wherewithal during the period that he is
looking for another employment and is
recoverable only in instances enumerated
under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when
reinstatement is not feasible.41 In the
case at bar, Article 283[42 clearly entitles

159159
16
0

Angus to separation pay apart from the
retirement benefits she received from
petitioners.
Release and Quitclaim signed by Angus
is invalid.
The release and quitclaim signed by Angus
cannot be used by petitioners to legalize
the denial of Angus' rightful claims. As
aptly observed by the CA, the terms of the
quitclaim authorizes Angus to receive less
than what she is legally entitled to. "Under
prevailing jurisprudence, x x x a quitclaim
cannot bar an employee from demanding
benefits to which he is legally entitled."43
It was held to be "ineffective in barring
claims for the full measure of the worker's
rights and the acceptance of benefits
therefrom does not amount to estoppel".44
Moreover, release and quitclaims are often
looked upon with disfavor when the waiver
was not done voluntarily by employees
who were pressured into signing them by
unscrupulous employers seeking to evade
their obligations.45
Dr. Idol L. Bondoc Vs. Marilou R. Mantala

G.R. No. 203080. November 12, 2014
As per the admitting diagnosis[25
submitted by petitioner, the latter
was aware of macrosomia and the
fetal heartbeat not appreciated. He
also maintains that respondent's
baby was already dead due to
prolonged labor but she had
insisted on having a normal
delivery. However, this claim is
belied by the sworn statements of
respondent, her husband and her
sisters, all of whom averred that
they requested for a cesarean
section as per the advice given by
Dr. Atienza who examined her in
March 2009, and as confirmed at
the Bansud Health Center where
she was told that it would be risky
for her to have a normal delivery.
Moreover, Joel Mantala asserted
that what petitioner said to him
was that the baby was too big and
if born alive it would probably have
abnormalities so it would be better
that the baby is stillborn.
The Court is more inclined to

believe respondent's version which
was duly corroborated by Dr.
Fabon who heard petitioner saying
that: "Meron pa nga kami sa DR
macrosomnia, polyhydramnios pa,
pero paanakin na long 'yon.
Abnormal din naman ang bata
kahit mabuhay." This puts into
doubt petitioner's supposed finding
that the baby was already dead
upon respondent's admission at
OMPH and that it was respondent
who insisted on a normal delivery.
Even assuming that petitioner had
actually
confirmed
intrauterine
fetal death, this only aggravates
the patient's condition and it was
incumbent upon petitioner as the
obstetrician on duty to personally
attend
to
her
and
render
appropriate
management
or
treatment.
In
deliberately
leaving
the
respondent to a midwife and two
inexperienced assistants despite
knowing that she was under
prolonged painful labor and about
to give birth to a macrosomic baby
by vaginal delivery, petitioner
clearly committed a dereliction of
duty
and
a
breach
of
his
professional
obligations.
The
gravity of respondent's condition is
highlighted
by
the
expected
complications she suffered - her
stillborn baby, a ruptured uterus
that
necessitated
immediate
surgery and blood transfusion, and
vulvar hematomas.
Article II, Section 1 of the Code of
Medical Ethics of the Medical
Profession
in
the
Philippines
states:chanroblesvirtuallawlibrary
A physician should attend to his
patients
faithfully
and
conscientiously. He should secure
for them all possible benefits that
may depend upon his professional

160160
16
1

skill and care. As the sole tribunal
to adjudge the physician's failure
to fulfill his obligation to his
patients is, in most cases, his own
conscience, violation of this rule on
his part is discreditable and
inexcusable.26chanrobleslaw
A doctor's duty to his patient is not

required to be extraordinary. The
standard contemplated for doctors
is simply the reasonable average
merit
among
ordinarily
good
physicians, i.e. reasonable skill and
competence.27
Even
by
this
standard, petitioner fell short when
he
routinely
delegated
an
important task that requires his
professional skill and competence
to his subordinates who have no
requisite training and capability to
make crucial decisions in difficult
childbirths.
Petitioner's proffered excuse that it
was the practice in OMPH to allow
midwives to administer to patients
during deliveries, is unacceptable.
No proof of such alleged hospital
practice such as an official written
directive was presented. Besides, it
is
doubtful
whether
hospital
administrators
would
remedy
personnel shortage by permitting
inexperienced staff, by themselves,
to handle laboring patients with
high-risk
pregnancies
and
maternal/fetal complications.
As to the two other scheduled CS
performed by petitioner on the
same day, this will not exculpate
him from administrative liability. As
correctly pointed out by the CA,
there was no showing of similar
urgency in the said operations, and
petitioner could have referred
respondent to another competent
physician. He could have likewise
arranged for adjustment in the
operation schedules considering
that his personal attention and
management is urgently needed in
respondent's
difficult
and
complicated delivery. But there is
no indication in the records that
petitioner duly informed or referred
the matter to the other doctors or
the administrators of OMPH.
We therefore hold that the CA

correctly affirmed the Ombudsman
in finding the petitioner guilty of
grave misconduct. His violation of
the sworn duty to attend to his
patients
faithfully
and
conscientiously
is
inexcusable.
Such
flagrant
disregard
of
established rule and improper
conduct were proven by substantial
evidence.
Not only did petitioner routinely delegate
his responsibility to his subordinates, he
casually instructed them to press down
repeatedly on respondent's abdomen,
unmindful of her critical condition as borne
out by his very own findings. Worse,
petitioner haughtily and callously spoke of
respondent's case to the other doctors and
medical staff while performing a CS after
he had briefly attended to her at the
delivery room "...paanakin na long 'yon,
abnormal din naman ang bata kahit
mabuhay, kawawa lang siya." Such
insensitive and derisive language was
again heard from the petitioner when he
referred
for
the
second
time
to
respondent's traumatic delivery, saying
that: "Pinilit no 'ng tatlong ungas, ayon
lumusot pero patay ang bata, tapos ito,
mukhang pumutok" As a government
physician,
petitioner's
demeanor
is
unbecoming
and
bespeaks
of
his
indifference to the well-being of his
patients.
Petitioner thus not only committed a
dereliction of duty, but also transgressed
the ethical norms of his profession when
he failed to render competent medical
care with compassion and respect for his
patient's dignity.
A physician should be dedicated to

provide competent medical care
with full professional skill in

161161
16
2

accordance
with
the
current
standards of care, compassion,
independence and respect for
human dignity.28
Bernardina P.
Bartolome
Vs. Social
Security
System
and
Scanmar
Maritime Services, Inc. G.R. No.
192531. November 12, 2014
In resolving the case, the pivotal
issue is this: Are the biological
parents of the covered, but legally
adopted,
employee
considered
secondary beneficiaries and, thus,
entitled, in appropriate cases, to
receive
the
benefits
under
the
ECP?ChanRoblesVirtualawlibrary
The rule limiting death benefits
claims to the legitimate
parents is contrary to law
This brings us to the question of whether
or not petitioner is entitled to the death
benefits claim in view of John's workrelated demise. The pertinent provision, in
this regard, is Article 167 (j) of the Labor
Code,
as
amended,
which
reads:chanroblesvirtuallawlibrary
ART. 167. Definition of terms. - As used in
this Title unless the context indicates
otherwise:chanroblesvirtuallawlibrary
xxxx
(j) 'Beneficiaries' means the dependent
spouse until he remarries and dependent
children,
who
are
the
primary
beneficiaries. In their absence, the
dependent parents and subject to the
restrictions
imposed
on
dependent
children, the illegitimate children and
legitimate descendants who are the
secondary beneficiaries; Provided, that
the dependent acknowledged natural child
shall be considered as a primary
beneficiary when there are no other
dependent children who are qualified and
eligible for monthly income benefit.
(Emphasis supplied)
Concurrently, pursuant to the succeeding
Article 177(c) supervising the ECC "[T]o
approve rules and regulations governing
the processing of claims and the

settlement of disputes arising therefrom
as prescribed by the System," the ECC
has issued the Amended Rules on
Employees' Compensation, interpreting
the
above-cited
provision
as
RULE XV - BENEFICIARIES
SECTION 1. Definition, (a) Beneficiaries
shall be either primary or secondary, and
determined at the time of employee's
death.
(b) The following beneficiaries shall be
considered
primary:chanroblesvirtuallawlibrary
(1) The legitimate spouse living with the
employee at the time of the employee's
death until he remarries; and
(2)
Legitimate, legitimated, legally adopted
or acknowledged natural children, who
are unmarried not gainfully employed, not
over 21 years of age, or over 21 years of
age provided that he is incapacitated and
incapable of self - support due to physical
or mental defect which is congenital or
acquired
during
minority;
Provided,
further, that a dependent acknowledged
natural child shall be considered as a
primary beneficiary only when there are
no other dependent children who are
qualified and eligible for monthly income
benefit; provided finally, that if there are
two or more acknowledged natural
children, they shall be counted from the
youngest and without substitution, but not
exceeding five.
(c) The following beneficiaries shall be
considered
secondary:chanroblesvirtuallawlibrary
(1) The legitimate parents wholly
dependent upon the employee for regular
support;cralawlawlibrary
(2) The legitimate descendants and
illegitimate children who are unmarried,
not gainfully employed, and not over 21

162162
16
3

years of age, or over 21 years of age
provided that he is incapacitated and
incapable of self - support due to physical
or mental defect which is congenital or
acquired during minority. (Emphasis
supplied)
Guilty of reiteration, the ECC denied
petitioner's claim on the ground that she
is no longer the deceased's legitimate
parent, as required by the implementing
rules. As held by the ECC, the adoption
decree severed the relation between John
and petitioner, effectively divesting her of
the status of a legitimate parent, and,
consequently, that of being a secondary
beneficiary.
We disagree.
Rule XV, Sec. l(c)(l) of the Amended
Rules on Employees' Compensation
deviates from the clear language of
Art. 167 (j) of the Labor Code,
as amended
Examining
the
Amended
Rules
on
Employees' Compensation in light of the
Labor Code, as amended, it is at once
apparent that the ECC indulged in an
unauthorized administrative legislation. In
net effect, the ECC read into Art. 167 of
the
Code
an
interpretation
not
contemplated by the provision. Pertinent
in elucidating on this point is Article 7 of
the Civil Code of the Philippines, which
reads:chanroblesvirtuallawlibrary
Article 7. Laws are repealed only by
subsequent ones, and their violation or
non-observance shall not be excused by
disuse, or custom or practice to the
contrary.
When the courts declared a law to be
inconsistent with the Constitution, the
former shall be void and the latter shall
govern.
Administrative or executive acts,
orders and regulations shall be valid
only when they are not contrary to
the laws or the Constitution. (Emphasis
supplied)
As
applied,
this
Court
held
in
Commissioner of Internal Revenue v.
Fortune
Tobacco
Corporation16
As we have previously declared, rulemaking power must be confined to details
for regulating the mode or proceedings in
order to carry into effect the law as it has
been enacted, and it cannot be extended
to amend or expand the statutory
requirements or to embrace matters not
covered by the statute. Administrative
regulations
must
always
be
in
harmony with the provisions of the
law
because
any
resulting
discrepancy between the two will
always be resolved in favor of the
basic law. (Emphasis supplied)
Guided by this doctrine, We find that Rule
XV of the Amended Rules on Employees'
Compensation is patently a wayward
restriction of and a substantial deviation
from Article 167 (j) of the Labor Code
when it interpreted the phrase "dependent
parents" to refer to "legitimate parents."
In the same vein, the term "parents" in
the phrase "dependent parents" in the
afore-quoted Article 167 (j) of the Labor
Code is used and ought to be taken in its
general sense and cannot be unduly
limited to "legitimate parents" as what the
ECC did. The phrase "dependent parents"
should, therefore, include all parents,
whether legitimate or illegitimate and
whether by nature or by adoption. When
the law does not distinguish, one should
not
distinguish.
Plainly,
"dependent
parents" are parents, whether legitimate
or illegitimate, biological or by adoption,
who are in need of support or assistance.
Moreover, the same Article 167 (j), as
couched, clearly shows that Congress did
not intend to limit the phrase "dependent
parents" to solely legitimate parents. At
the risk of being repetitive, Article 167
provides that "in their absence, the
dependent parents and subject to the
restrictions
imposed
on
dependent
children, the illegitimate children and

163163
16
4

legitimate descendants who are secondary
beneficiaries."
Had
the
lawmakers
contemplated "dependent parents" to
mean legitimate parents, then it would
have simply said descendants and not
"legitimate descendants." The manner by
which the provision in question was
crafted undeniably show that the phrase
"dependent parents" was intended to
cover all parents - legitimate, illegitimate
or parents by nature or adoption.
Rule XV, Section l(c)(l) of the
Amended Rules on Employees'
Compensation is in contravention
of the equal protection clause
To insist that the ECC validly interpreted
the Labor Code provision is an affront to
the Constitutional guarantee of equal
protection under the laws for the rule, as
worded, prevents the parents of an
illegitimate
child
from
claiming
benefits under Art. 167 (j) of the
Labor Code, as amended by PD 626.
To Our mind, such postulation cannot be
countenanced.
As
jurisprudence
elucidates,
equal
protection simply requires that all persons
or things similarly situated should be
treated alike, both as to rights conferred
and responsibilities imposed. It requires
public bodies and institutions to treat
similarly situated individuals in a similar
manner.18 In other words, the concept of
equal justice under the law requires the
state to govern impartially, and it may not
draw distinctions between individuals
solely on differences that are irrelevant to
a legitimate governmental objective.19
The concept of equal protection, however,
does not require the universal application
of the laws to all persons or things without
distinction. What it simply requires is
equality among equals as determined
according to a valid classification. Indeed,
the equal protection clause permits
classification. Such classification, however,
to be valid must pass the test of
reasonableness. The test has four
requisites: (1) The classification rests on
substantial distinctions; (2) It is germane
to the purpose of the law; (3) It is not
limited to existing conditions only; and (4)

It applies equally to all members of the
same class. "Superficial differences do not
make for a valid classification."20
In the instant case, there is no compelling
reasonable basis to discriminate against
illegitimate parents. Simply put, the
above-cited rule promulgated by the ECC
that limits the claim of benefits to the
legitimate parents miserably failed the
test
of
reasonableness
since
the
classification is not germane to the law
being implemented. We see no pressing
government concern or interest that
requires protection so as to warrant
balancing the rights of unmarried parents
on one hand and the rationale behind the
law on the other. On the contrary, the
SSS can better fulfill its mandate, and the
policy of PD 626 - that employees and
their dependents may promptly secure
adequate benefits in the event of workconnected disability or death -will be
better served if Article 167 (j) of the Labor
Code is not so narrowly interpreted.
There being no justification for limiting
secondary parent beneficiaries to the
legitimate ones, there can be no other
course of action to take other than to
strike down as unconstitutional the phrase
"illegitimate" as appearing in Rule XV,
Section l(c)(l) of the Amended Rules on
Employees' Compensation.
Petitioner qualifies as John's
dependent parent
In attempting to cure the glaring
constitutional violation of the adverted
rule, the ECC extended illegitimate
parents an opportunity to file claims for
and receive death benefits by equating
dependency and legitimacy to the exercise
of parental authority. Thus, as insinuated
by the ECC in its assailed Decision, had
petitioner not given up John for adoption,
she could have still claimed death benefits
under the law.
To begin with, nowhere in the law nor in
the rules does it say that "legitimate
parents" pertain to those who exercise

164164
16
5

parental authority over the employee
enrolled under the ECP. It was only in the
assailed
Decision
wherein
such
qualification was made. In addition,
assuming arguendo that the ECC did not
overstep its boundaries in limiting the
adverted Labor Code provision to the
deceased's legitimate parents, and that
the
commission
properly
equated
legitimacy to parental authority, petitioner
can still qualify as John's secondary
beneficiary.
True, when Cornelio, in 1985, adopted
John, then about two (2) years old,
petitioner's parental authority over John
was severed. However, lest it be
overlooked, one key detail the ECC
missed, aside from Cornelio's death, was
that when the adoptive parent died
less than three (3) years after the
adoption decree, John was still a
minor, at about four (4) years of age.
John's minority at the time of his
adopter's death is a significant factor in
the case at bar. Under such circumstance,
parental authority should be deemed to
have reverted in favor of the biological
parents. Otherwise, taking into account
Our consistent ruling that adoption is a
personal relationship and that there are
no collateral relatives by virtue of
adoption,[21 who was then left to care for
the minor adopted child if the adopter
passed away?
To be sure, reversion of parental authority
and legal custody in favor of the biological
parents is not a novel concept. Section 20
of Republic Act No. 855222 (RA 8552),
otherwise
known
as
the
Domestic
Adoption
Act,
Section 20. Effects of Rescission. - If
the petition [for rescission of adoption] is
granted, the parental authority of the
adoptee's
biological
parent(s),
if
known, or the legal custody of the
Department shall be restored if the
adoptee
is
still
a
minor
or
incapacitated. The reciprocal rights and
obligations of the adopter(s) and the

adoptee
to
each
other
shall
be
extinguished, (emphasis added)
The provision adverted to is applicable
herein by analogy insofar as the
restoration of custody is concerned. The
manner
herein
of
terminating
the
adopter's parental authority, unlike the
grounds for rescission,23 justifies the
retention of vested rights and obligations
between the adopter and the adoptee,
while the consequent restoration of
parental authority in favor of the biological
parents, simultaneously, ensures that the
adoptee, who is still a minor, is not left to
fend for himself at such a tender age.
To emphasize, We can only apply the rule
by analogy, especially since RA 8552 was
enacted after Cornelio's death. Truth be
told, there is a lacuna in the law as to
which provision shall govern contingencies
in all fours with the factual milieu of the
instant petition. Nevertheless, We are
guided by the catena of cases and the
state policies behind RA 855224 wherein
the paramount consideration is the best
interest of the child, which We invoke to
justify this disposition. It is, after all, for
the best interest of the child that someone
will remain charged for his welfare and
upbringing should his or her adopter fail
or is rendered incapacitated to perform his
duties as a parent at a time the adoptee is
still in his formative years, and, to Our
mind, in the absence or, as in this case,
death of the adopter, no one else could
reasonably be expected to perform the
role of a parent other than the adoptee's
biological one.
Moreover, this ruling finds support on the
fact that even though parental authority is
severed by virtue of adoption, the ties
between the adoptee and the biological
parents are not entirely eliminated. To
demonstrate, the biological parents, in
some instances, are able to inherit from
the adopted, as can be gleaned from Art.
190
of
the
Family
Code:chanroblesvirtuallawlibrary

165165
16
6

Art. 190. Legal or intestate succession to
the estate of the adopted shall be
governed
by
the
following
rules:chanroblesvirtuallawlibrary
xxx
(2) When the parents, legitimate or
illegitimate, or the legitimate ascendants
of the adopted concur with the adopter,
they shall divide the entire estate, onehalf to be inherited by the parents or
ascendants and the other half, by the
adopters;cralawlawlibrary
xxx
(6) When only collateral blood relatives of
the adopted survive, then the ordinary
rules of legal or intestate succession shall
apply.
Similarly, at the time of Cornelio Colcol's
death, which was prior to the effectivity of
the Family Code, the governing provision
is Art. 984 of the New Civil Code, which
Art. 984. In case of the death of an
adopted child, leaving no children or
descendants, his parents and relatives by
consanguinity and not by adoption, shall
be his legal heirs.
From the foregoing, it is apparent that the
biological parents retain their rights of
succession to the estate of their child who
was the subject of adoption. While the
benefits arising from the death of an SSS
covered employee do not form part of the
estate of the adopted child, the pertinent
provision on legal or intestate succession
at least reveals the policy on the rights of
the biological parents and those by
adoption vis-a-vis the right to receive
benefits from the adopted.
In the same way that certain rights still
attach by virtue of the blood relation, so
too should certain obligations, which, We
rule, include the exercise of parental
authority, in the event of the untimely
passing of their minor offspring's adoptive
parent. We cannot leave undetermined

the fate of a minor child whose second
chance at a better life under the care of
the adoptive parents was snatched from
him by death's cruel grasp. Otherwise, the
adopted child's quality of life might have
been better off not being adopted at all if
he would only find himself orphaned in the
end. Thus, We hold that Cornelio's death
at the time of John's minority resulted in
the restoration of petitioner's parental
authority over the adopted child.
On top of this restoration of parental
authority,
the
fact
of
petitioner's
dependence on John can be established
from the documentary evidence submitted
to the ECC. As it appears in the records,
petitioner, prior to John's adoption, was a
housekeeper. Her late husband died in
1984, leaving her to care for their seven
(7) children. But since she was unable to
"give a bright future to her growing
children" as a housekeeper, she consented
to Cornelio's adoption of John and
Elizabeth in 1985.
Following Cornelio's death in 1987, so
records reveal, both petitioner and John
repeatedly reported "Brgy. Capurictan,
Solsona, Ilocos Norte" as their residence.
In fact, this very address was used in
John's
Death
Certificate25cralawred
executed in Brazil, and in the Report of
Personal
Injury
or
Loss
of
Life
accomplished by the; master of the vessel
boarded by John.26 Likewise, this is John's
known address as per the ECC's assailed
Decision.27 Similarly, this same address
was used by petitioner in filing her claim
before the SSS La Union branch and,
thereafter, in her appeal with the ECC.
Hence, it can be assumed that aside from
having been restored parental authority
over John, petitioner indeed actually
execised the same, and that they lived
together under one roof.
Moreover, John, in his SSS application,28
named
petitioner
as
one
of
his
beneficiaries for his benefits under RA
8282, otherwise known as the "Social
Security Law." While RA 8282 does not

166166
16
7

cover compensation for work-related
deaths or injury and expressly allows the
designation of beneficiaries who are not
related by blood to the member unlike in
PD 626, John's deliberate act of indicating
petitioner as his beneficiary at least
evinces that he, in a way, considered
petitioner as his dependent. Consequently,
the confluence of circumstances - from
Cornelio's death during John's minority,
the restoration of petitioner's parental
authority,
the
documents
showing
singularity of address, and John's clear
intention to designate petitioner as a
beneficiary - effectively made petitioner,
to Our mind, entitled to death benefit
claims as a secondary beneficiary under
PD 626 as a dependent parent.
All told, the Decision of the ECC dated

March 17, 2010 is bereft of legal basis.
Cornelio's adoption of John, without more,
does not deprive petitioner of the right to
receive the benefits stemming from John's
death as a dependent parent given
Cornelio's untimely demise during John's
minority. Since the parent by adoption
already died, then the death benefits
under the Employees' Compensation
Program shall accrue solely to herein
petitioner,
John's
sole
remaining
beneficiary.
Conchita J. Racelis Vs. United Philippine
Lines, Inc. and/or Holland America
Lines, Inc. and Fernando T. Lising
G.R. No. 198408. November 12, 2014
The Courts Ruling
Deemed incorporated in every

seafarers employment contract,
denominated as the POEA-SEC or
the
Philippine
Overseas
Employment
AdministrationStandard Employment Contract, is
a set of standard provisions
determined and implemented by
the POEA, called the Standard
Terms and Conditions Governing
the
Employment
of
Filipino
Seafarers on Board Ocean Going
Vessels, which are considered to
be the minimum requirements
acceptable to the government for
the
employment
of
Filipino
seafarers on board foreign oceangoing
vessels.47chanroblesvirtuallawlibrar
y
Among other basic provisions, the

POEA-SEC specifically, its 2000
version stipulates that the
beneficiaries
of
a
deceased
seafarer may be able to claim
death benefits for as long as they
are able to establish that (a) the
seafarers
death
is
workrelated, and (b) such death had
occurred during the term of his
employment contract.
While it is true that Brainstem
(pontine) Cavernous Malformation
is not listed as an occupational
disease under Section 32-A of the
2000 POEA-SEC, Section 20 (B) (4)
of the same explicitly provides that
[t[he liabilities of the employer
when the seafarer suffers workrelated injury or illness during the
term of his contract are as
follows: (t)hose illnesses not
listed in Section 32 of this
Contract
are
disputably
presumed as work related. In
other words, the 2000 POEA-SEC
has
created
a
disputable
presumption
in
favor
of
compensability[,] saying that those
illnesses not listed in Section 32
are disputably presumed as workrelated. This means that even if
the illness is not listed under
Section 32-A of the POEA-SEC as
an occupational disease or illness,
it will still be presumed as workrelated, and it becomes incumbent
on the employer to overcome the
presumption.52 This presumption
should be overturned only when
the employers refutation is found
to be supported by substantial
evidence,53 which, as traditionally
defined is such relevant evidence
as a reasonable mind might accept
as
sufficient
to
support
a
conclusion.54

167167
16
8

Bahia Shipping Services, Inc., et al. Vs.

Joel P. Hipe, Jr. G.R. No. 204699.
November 12, 2014
Pursuant to the afore-quoted
provision, two (2) elements must
concur for an injury or illness of a
seafarer to be compensable: (a)
the injury or illness must be workrelated; and (b) that the workrelated injury or illness must have
existed during the term of the
seafarers
employment
contract.70chanroblesvirtuallawlibra
ry
In the present case, Hipe was

made to continuously perform work
aboard the vessel beyond his sixmonth contract without the benefit
of a formal contract. Considering
that
any
extension
of
his
employment is discretionary on the
part of respondents and that the
latter offered no explanation why
Hipe was not repatriated when his
contract expired on June 5, 2008,
the CA correctly ruled that he was
still
under
the
employ
of
respondents when he sustained an
injury
on
June
22,
2008.
Consequently, the injury suffered
by Hipe was a work-related injury
and his eventual repatriation on
August 5, 2008, for which he was
treated/rehabilitated can only be
considered
as
a
medical
repatriation.
Nonetheless,
Hipe
was
subsequently declared fit to work
by
the
company-designated
physician on October 9, 2008, or
merely
65
days
after
his
repatriation, thus negating the
existence
of
any
permanent
disability for which compensability
is
sought.
Said
fit-to-work
certification must stand for two (2)
reasons:cralawlawlibrary
First, while Hipes personal doctor

disagreed
with
the
abovementioned assessment, opining
that it would be impossible for him

to work as seaman-plumber71 and
recommending a disability grade of
five, records show, however, that
such opinion was not supported by
any
diagnostic
tests
and/or
procedures as would adequately
refute the fit-to-work assessment,
but merely relied on a review of
Hipes medical history and his
physical examination;72 and
Second, Hipe failed to comply with the

procedure laid down under Section 20 (B)
(3) of the 2000 POEA-SEC with regard to
the joint appointment by the parties of a
third doctor whose decision shall be final
and binding on them in case the seafarers
personal doctor disagrees with the
company-designated physicians fit-towork assessment. In Philippine Hammonia
Ship
Agency,
Inc.
v.
Dumadag73
(Philippine Hammonia), the Court held
that the seafarers non-compliance with
the said conflict-resolution procedure
results in the affirmance of the fit-to-work
certification of the company-designated
physician
In light of the contrasting diagnoses of the
company-designated physician and Hipes
personal doctor, Hipe filed his complaint
before the NLRC but prematurely did so
without any regard to the conflictresolution procedure under Section 20 (B)
(3) of the 2000 POEA-SEC. Thus,
consistent with Philippine Hammonia, the
fit-to-work certification of the companydesignated physician ought to be upheld.
In
fine,
given
that
Hipes
permanent
disability
was
not
established through substantial
evidence for the reasons abovestated, the NLRC did not gravely
abuse its discretion in dismissing
the
complaint
for
permanent
disability
benefits,
thereby
warranting the reversal of the CAs
contrary ruling. Verily, while the
Court adheres to the principle of
liberality in favor of the seafarer in
construing the POEA-SEC, when
the
evidence
presented
then

168168
16
9

negates compensability, the claim

for
disability
benefits
must
necessarily fail,75 as in this case.
P.J. Lhuillier, Inc. and Mario Ramon
Ludea Vs. Flodeliz Velayo G.R. No.
198620. November 12, 2014
WHETHER
OR
NOT
THE MISAPPROPRIATION BY A
PAWNSHOP PERSONNEL IN THE
AMOUNT OF [P]540.00, COUPLED
WITH
SUBSEQUENT
DENIALS,
AMOUNT
TO
A
SERIOUS
MISCONDUCT IN OFFICE?
WHETHER OR NOT THE IMPOSITION OF
THE PENALTY OF TERMINATION FROM
OFFICE [UPON] A PAWNSHOP PERSONNEL
WHO MISAPPROPRIATED AN AMOUNT OF
P540.00 FROM THE COFFERS OF THE
PAWNSHOP,
AND
WHO
MADE
SUBSEQUENT DENIALS, IS CRUEL AND
UNJUST?12
It need not be stressed that the nature or
extent of the penalty imposed on an erring
employee must be commensurate to the
gravity of the offense as weighed against
the degree of responsibility and trust
expected of the employee's position. On
the other hand, the respondent is not just
charged with a misdeed, but with loss of
trust and confidence under Article 282(c)
of the Labor Code, a cause premised on
the fact that the employee holds a
position whose functions may only be
performed by someone who enjoys the
trust and confidence of management.
Needless to say, such an employee bears
a greater burden of trustworthiness than
ordinary workers, and the betrayal of the
trust reposed is the essence of the loss of
trust and confidence which is a ground for
the employee's dismissal.15
The respondent's misconduct must
be viewed in light of the strictly
fiduciary
nature of her position.
In addition to its pawnshop operations,
the PJLI offers its "Pera Padala" cash
remittance service whereby, for a fee or
"sending charge," a customer may remit
money to a consignee through its network
of pawnshop branches all over the

country. On October 29, 2007, a customer
sent P500.00 through its branch in
Capistrano, Cagayan de Oro City, and paid
a remittance fee of P40.00. Inexplicably,
however, no corresponding entry was
made to recognize the cash receipt of
P540.00 in the computerized accounting
system (operating system) of the PJLI.
The respondent claimed that she tried
very hard but could not trace the source
of her unexplained cash surplus of
P540.00, but a branch audit conducted
sometime in December 2007 showed that
it came from a "Pera Padala" customer.
To be sure, no significant financial injury
was sustained by the PJLI in the loss of a
mere P540.00 in cash, which, according to
the respondent she sincerely wanted to
account for except that she was preempted by fear of what her branch
manager might do once she learned of it.
But
in
treating
the
respondent's
misconduct as a simple negligence or a
simple mistake, both the CA and the NLRC
grossly failed to consider that she held a
position of utmost trust and confidence in
the company.
There are two classes of corporate
positions of trust: on the one hand are the
managerial employees whose primary
duty consists of the management of the
establishment in which they are employed
or of a department or a subdivision
thereof, and other officers or members of
the managerial staff; on the other hand
are
the
fiduciary
rank-and-file
employees, such as cashiers, auditors,
property custodians, or those who, in the
normal exercise of their functions,
regularly handle significant amounts of
money or property. These employees,
though
rank-and-file,
are
routinely
charged with the care and custody of the
employer's money or property, and are
thus classified as occupying positions of
trust and confidence.16
The respondent was first hired by the
petitioners as an accounting clerk on June
13, 2003, for which she received a basic

169169
17
0

monthly salary of P9,353.00. On October
29, 2007, the date of the subject incident,
she performed the function of vault
custodian and cashier in the petitioners'
Branch 4 pawnshop in Capistrano,
Cagayan de Oro City. In addition to her
custodial duties, it was the respondent
who electronically posted the day's
transactions in the books of accounts of
the branch, a function that is essentially
separate from that of cashier or custodian.
It is plain to see then that when both
functions are assigned to one person to
perform, a very risky situation of
conflicting interests is created whereby
the cashier can purloin the money in her
custody and effectively cover her tracks,
at least temporarily, by simply not
recording in the books the cash receipt
she misappropriated. This is commonly
referred to as lapping of accounts.17 Only
a most trusted clerk would be allowed to
perform the two functions, and the
respondent enjoyed this trust.
The series of willful misconduct
committed by the respondent in
mishandling the unaccounted cash
receipt exposes her as unworthy
of the utmost trust inherent in her
position as branch cashier and vault
custodian and bookkeeper.
The respondent insists that she never
intended to appropriate the money but
was afraid that Tuling would scold her,
and that she kept the money for a long
time in her drawer and only decided to
take it home after her search for the
cause of the cash overage had proved
futile. Both the CA and the NLRC agreed
with her, and held that what she
committed was a simple mistake or simple
negligence.
The Court disagrees.
Granting arguendo that for some reason
not due to her fault, the respondent could
not trace the source of the cash surplus,
she
nonetheless
well
knew
and
understood the company's policy that
unexplained cash must be treated as
miscellaneous income under the account
"Other Income," and that the same must

be so recognized and recorded at the end
of the day in the branch books or
"operating system." No such entry was
made by the respondent, resulting in
unrecorded cash in her possession of
P540.00, which the company learned
about only two months thereafter through
a branch audit.
Significantly, when Tuling returned on
November 3, 2007 from her leave of
absence, the respondent did not just
withhold from her the fact that she had an
unaccounted overage, but she refused to
seek her help on what to do about it,
despite having had five days to mull over
the matter until Tuling's return.
In order that an employer may invoke loss
of trust and confidence in terminating an
employee under Article 282(c) of the
Labor Code, certain requirements must be
complied with, namely: (1) the employee
must be holding a position of trust and
confidence; and (2) there must be an act
that would justify the loss of trust and
confidence.18 While loss of trust and
confidence should be genuine, it does not
require proof beyond reasonable doubt,19
it being sufficient that there is some basis
to believe that the employee concerned is
responsible for the misconduct and that
the nature of the employee's participation
therein rendered him unworthy of trust
and
confidence
demanded
by
his
position.20
The petitioners are fully justified in
claiming loss of trust and confidence in the
respondent. While it is natural and
understandable
that
the
respondent
should feel apprehensive about Tuling's
reaction concerning her cash overage,
considering that it was their first time to
be working together in the same branch,
we must keep in mind that the
unaccounted cash can only be imputed to
the respondent's own negligence in failing
to keep track of the transaction from
which the money came. A subsequent
branch audit revealed that it came from a
"Pera Padala" remittance, implying that

170170
17
1

although the amount had been duly
remitted to the consignee, the sending
branch failed to record the payment
received from the consigning customer.
For days following the overage, the
respondent tried but failed to reconcile her
records, and for this inept handling of a
"Pera Padala" remittance, she already
deserved to be sanctioned.
Further, as a matter of strict company
policy, unexplained cash is recognized at
the end of the day as miscellaneous
income. Inexplicably, despite being with
the company for four years as accounting
clerk and cashier, the respondent failed to
make the required entry in the branch
operating
system
recognizing
miscellaneous income. Such an entry
could have been easily reversed once it
became clear how the overage came
about. But the respondent obviously
thought that by skipping the entry, she
could keep Tuling from learning about the
overage. Her trustworthiness as branch
cashier
and
bookkeeper
has
been
irreparably tarnished. The respondent's
untrustworthiness is further demonstrated
when she began to concoct lies concerning
the overage: first, by denying its
existence to Tuling and again to the
company auditor; later, when she falsely
claimed that a computer glitch or
malfunction had prevented her from
posting the amount on October 29, 2007;
and finally, when she was forced to admit
before the company's investigating panel
that she took and spent the money.[21
Mere substantial evidence is
sufficient to establish loss of trust
and confidence
The respondent's actuations were willful
and deliberate. A cashier who, through
carelessness, lost a document evidencing
a cash receipt, and then wilfully chose not
to
record
the
excess
cash
as
miscellaneous income and instead took it
home and spent it on herself, and later
repeatedly denied or concealed the cash
overage when confronted, deserves to be
dismissed.
Article 28222 of the Labor Code allows an

employer to dismiss an employee for
willful breach of trust or loss of
confidence. It has been held that a special
and unique employment relationship
exists between a corporation and its
cashier. Truly, more than most key
positions, that of a cashier calls for utmost
trust and confidence,23 and it is the breach
of this trust that results in an employer's
loss of confidence in the employee.24 In
San Miguel Corporation v. NLRC, et
al.,25cralawred
the
Court
held:chanroblesvirtuallawlibrary
As a rule this Court leans over backwards
to help workers and employees continue
in their employment. We have mitigated
penalties imposed by management on
erring employees and ordered employers
to reinstate workers who have been
punished enough through suspension.
However,
breach
of
trust
and
confidence and acts of dishonesty and
infidelity inthe handling of funds
and
properties are
an
entirely
different matter. 26 (Emphasis ours)
It has been held that in dismissing a
cashier on the ground of loss of
confidence, it is sufficient that there is
some basis for the same or that the
employer has a reasonable ground to
believe that the employee is responsible
for the misconduct, thus making him
unworthy of the trust and confidence
reposed in him.27 Therefore, if there is
sufficient evidence to show that the
employer has ample reason to distrust the
employee, the labor tribunal cannot justly
deny the employer the authority to
dismiss him.[28 Indeed, employers are
allowed wider latitude in dismissing an
employee for loss of trust and confidence,
as the Court held in Atlas Fertilizer
Corporation v. NLRC:[29
As a general rule, employers are allowed a
wider latitude of discretion in terminating
the services of employees who perform
functions which by their nature require the
employer's full trust and confidence. Mere
existence of basis for believing that the

171171
17
2

employee has breached the trust of the
employer is sufficient and does not require
proof beyond reasonable doubt. Thus,
when an employee has been guilty of
breach of trust or his employer has ample
reason to distrust him, a labor tribunal
cannot deny the employer the authority to
dismiss him. x x x.30 (Citations omitted)
Furthermore, it must also be stressed that
only substantial evidence is required in
order to support a finding that an
employer's trust and confidence accorded
to its employee had been breached. As
explained in Lopez v. Alturas Group of
Companies:[31
[T]he language of Article 282(c) of the
Labor Code states that the loss of trust
and confidence must be based on
willful breach of the trust reposed in
the employee by his employer. Such
breach is willful if it is done intentionally,
knowingly,
and
purposely,
without
justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly,
heedlessly or inadvertently. Moreover, it
must
be
based
on
substantial
evidence and not on the employer's
whims or caprices or suspicions
otherwise, the employee would eternally
remain at the mercy of the employer. Loss
of confidence must not be indiscriminately
used as a shield by the employer against a
claim that the dismissal of an employee
was arbitrary. And, in order to constitute a
just cause for dismissal, the act
complained of must be work-related
and
shows
that
the
employee
concerned
is
unfit
to
continue
working for the employer. In addition,
loss of confidence as a just cause for
termination
of
employment
is
premised on the fact that the
employee concerned holds a position
of responsibility, trust and confidence or
that the employee concerned is entrusted
with confidence with respect to delicate
matters, such as the handling or care
and protection of the property and
assets of the employer. The betrayal of
this trust is the essence of the offense for
which an employee is penalized.32
(Emphasis
original)
and
underscoring
in
the
In holding a position requiring full trust

and confidence, the respondent gave up
some of the rigid guarantees available to
ordinary employees. She insisted that her
misconduct
was
just
an
"innocent
mistake," and maybe it was, had it been
committed by other employees. But surely
not as to the respondent who precisely
because of the special trust and
confidence given her by her employer
must be penalized with a more severe
sanction.33
A cashier's inability to safeguard
and account for missing cash is
sufficient
cause to dismiss her.
The respondent insisted that she never
intended to misappropriate the missing
fund, but in Santos v. San Miguel Corp.,34
the Court held that misappropriation of
company funds, notwithstanding that the
shortage has been restituted, is a valid
ground to terminate the services of an
employee
for
loss
of
trust
and
confidence.35 Also, in Caeda v. Philippine
Airlines, Inc. ,36 the Court held that it is
immaterial what the respondent's intent
was concerning the missing fund, for the
undisputed fact is that cash which she
held in trust for the company was missing
in her custody. At the very least, she was
negligent and failed to meet the degree of
care and fidelity demanded of her as
cashier. Her excuses and failure to give a
satisfactory explanation for the missing
cash only gave the petitioners sufficient
reason to lose confidence in her. 37 As it
was held in Metro Drug Corporation v.
NLRC:38
It would be most unfair to require an
employer to continue employing as its
cashier a person whom it reasonably
believes is no longer capable of giving full
and wholehearted trustworthiness in the
stewardship
of
company
funds.39chanrobleslaw
Joel
b.
Monana
Vs.
MEC
Global
Shipmanagement and Manning Corp.

172172
17
3

and HD Herm Davelsberg GMBHG.R.

No. 196122. November 12, 2014
This labor case involves a seafarer's claim
for disability benefits. It involves an
application of Section 20(B) of the
Philippine
Overseas
Employment
Administration
Standard
Employment
Contract (POEA contract). The POEA
contract states that for an illness to be
compensable, (1) it must be work-related
and (2) it must have existed during the
term of the seafarer's employment
contract.1
Peak Ventures Corporation and/or El Tigre
Security Investigation Agency Vs.
Heirs of Nestor B. Villareal G.R. No.
184618. November 19, 2014
The twin reliefs that should be given to an
illegally dismissed employee are full
backwages
and
reinstatement.1 Backwages restore the
lost income of an employee and is
computed from the time compensation
was
withheld
up
to
actual
reinstatement.2
Anent
reinstatement,
only when it is not viable is separation pay
given.3chanroblesvirtuallawlibrary
Abosta Shipmanagement Corporation Vs.
Wilhilm M. Hilario G.R. No. 195792.
November 24, 2014
The Court is left with the issue of whether
such breach would entitle respondent to
the payment of actual damages for the
failure of 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 liability for
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 not deploy
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.17chanroblesvirtuallawlibrary
True, the promotion and choice of
personnel is an exercise of management
prerogative. 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

173173
17
4

prerogatives, such as existing laws and
the principle of equity and substantial
justice.19chanroblesvirtuallawlibrary
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.20chanroblesvirtuallawlibrary
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.23chanroblesvirtuallawlibrary
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
turn, 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.
Government Service Insurance System Vs.

Aurelia Y. Calumpiano G.R. No.
196102. November 26, 2014
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 it is not. And
because it is a listed occupational
disease, the "increased risk theory"
does not apply - again, contrary to
the CA's declaration; no proof of
causation is required.
It can also be said that given

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 malee 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

174174
17
5

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."32chanrobleslaw
Jeannete V. Manalo, Vilma P. Barrious,
Lourdes Lynn Michelle Fernandez and
Leila B. Taio Vs. TNS Philippines Inc.,
and Gary Ocampo G.R. No. 208567.
November 26, 2014
Upon review of the records, the
evidence
failed
to
clearly,
accurately,
consistently,
and
convincingly show that petitioners
were still project employees of
TNS.

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 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 employees 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
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
oclock in the morning up to 6:00 oclock
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.
Philippine Airlines, Inc. Vs. Reynaldo V.
Paz G.R. No. 192924. November 26,
2014
The rule is that the employee is entitled to
reinstatement salaries notwithstanding the
reversal of the LA decision granting him
said relief. In Roquero v. Philippine
Airlines,28 the Court underscored that it is
obligatory on the part of the employer to
reinstate and pay the wages of the
dismissed employee during the period of
appeal until reversal by the higher court.
This is so because the order of
reinstatement is immediately executory.
Unless there is a restraining order issued,

175175
17
6

it is ministerial upon the LA to implement
the order of reinstatement. The unjustified
refusal of the employer to reinstate a
dismissed employee entitles him to
payment of his salaries effective from the
time the employer failed to reinstate
him.29
It is clear from the records that PAL failed
to reinstate the respondent pending
appeal of the LA decision to the NLRC. It
can be recalled that the LA rendered the
decision ordering the reinstatement of the
respondent on March 5, 2001. And,
despite the self-executory nature of the
order of reinstatement, the respondent
nonetheless secured a partial writ of
execution on May 25, 2001. Even then,
the respondent was not reinstated to his
former position or even through payroll.
A scrutiny of the circumstances, however,
will show that the delay in reinstating the
respondent was not due to the unjustified
refusal of PAL to abide by the order but
because of the constraints of corporate
rehabilitation. It bears noting that a year
before the respondent filed his complaint
for illegal dismissal on June 25, 1999, PAL
filed
a
petition
for
approval
of
rehabilitation plan and for appointment of
a rehabilitation receiver with the SEC. On
June 23, 1998, the SEC appointed an
Interim
Rehabilitation
Receiver.
Thereafter, the SEC issued an Order31
dated July 1, 1998, suspending all claims
for payment against PAL.
The inopportune event of PALs entering
rehabilitation receivership justifies the
delay or failure to comply with the
reinstatement order of the LA. Thus, in
Garcia,
the
Court
held:chanroblesvirtuallawlibrary
It is settled that upon appointment by the
SEC of a rehabilitation receiver, all actions
for claims before any court, tribunal or
board against the corporation shall ipso
jure be suspended. As stated early on,
during the pendency of petitioners
complaint before the Labor Arbiter, the
SEC placed respondent under an Interim
Rehabilitation Receiver. After the Labor
Arbiter rendered his decision, the SEC

replaced
the
Interim
Rehabilitation
Receiver with a Permanent Rehabilitation
Receiver.
Case law recognizes that unless there is a
restraining order, the implementation of
the order of reinstatement is ministerial
and mandatory. This injunction or
suspension of claims by legislative fiat
partakes of the nature of a restraining
order that constitutes a legal justification
for respondents non-compliance with the
reinstatement order. Respondents failure
to exercise the alternative options of
actual
reinstatement
and
payroll
reinstatement was thus justified. Such
being the case, respondents obligation to
pay the salaries pending appeal, as the
normal effect of the non-exercise of the
options, did not attach.32 (Citations
omitted)
In light of the fact that PALs failure to
comply with the reinstatement order was
justified by the exigencies of corporation
rehabilitation, the respondent may no
longer claim salaries which he should have
received during the period that the LA
decision ordering his reinstatement is still
pending appeal until it was overturned by
the NLRC. Thus, the CA committed a
reversible error in recognizing the
respondents right to collect reinstatement
salaries albeit suspending its execution
while PAL is still under corporate
rehabilitation.
Stanley Fine Furniture, Elena and Carlos
Wang Vs. Victor T. Gallano and
Enriquito Siarez G.R. No. 190486.
November 26, 2014
To terminate the employment of
workers
simply because they
asserted their legal rights by filing
a complaint is illegal. It violates
their right to security of tenure and
should not be tolerated.
Fuji Television, Inc. Vs. Arlene S. Espiritu

G.R. Nos. 204944-45. December 3, 2014
It is the burden of the employer to
prove that a person whose services
it pays for is an independent

176176
17
7

contractor rather than a regular
employee with or without a fixed
term. That a person has a disease
does not per se entitle the
employer to terminate his or her
services. Termination is the last
resort. At the very least, a
competent public health authority
must certify that the disease
cannot be cured within six (6)
months, even with appropriate
treatment.
whether it supports her argument that she

was a regular employee, or the argument
of Fuji that she was an independent
contractor. We shall scrutinize whether
the nature of Arlenes work was necessary
and desirable to Fujis business or whether
Fuji only needed the output of her work. If
the circumstances show that Arlenes work
was necessary and desirable to Fuji, then
she is presumed to be a regular employee.
The burden of proving that she was an
independent contractor lies with Fuji.
III
Determination of employment status;
burden of proof
In labor cases, the quantum of proof

required
is
substantial
evidence.136
Substantial evidence has been defined
as such amount of relevant evidence
which a reasonable mind might accept as
adequate
to
justify
a
conclusion.137chanRoblesvirtualLawlibrary
In this case, there is no question that

Arlene rendered services to Fuji. However,
Fuji
alleges
that
Arlene
was
an
independent contractor, while Arlene
alleges that she was a regular employee.
To resolve this issue, we ascertain
whether
an
employer-employee
relationship existed between Fuji and
Arlene.
This court has often used the four-fold
test to determine the existence of an
employer-employee relationship. Under
the four-fold test, the control test is the
most important.134 As to how the elements
in the four-fold test are proven, this court
has
discussed
[t]here is no hard and fast rule designed
to establish the aforesaid elements. Any
competent and relevant evidence to prove
the relationship may be admitted.
Identification cards, cash vouchers, social
security registration, appointment letters
or
employment
contracts,
payrolls,
organization charts, and personnel lists,
serve as evidence of employee status.135
If the facts of this case vis--vis the fourfold test show that an employer-employee
relationship existed, we then determine
the status of Arlenes employment, i.e.,
whether she was a regular employee.
Relative to this, we shall analyze Arlenes
fixed-term
contract
and
determine
If Arlene was a regular employee, we then

determine whether she was illegally
dismissed. In complaints for illegal
dismissal, the burden of proof is on the
employee to prove the fact of dismissal.138
Once the employee establishes the fact of
dismissal,
supported
by
substantial
evidence, the burden of proof shifts to the
employer to show that there was a just or
authorized cause for the dismissal and
that
due
process
was
observed.139chanRoblesvirtualLawlibrary
IV
Whether the Court of Appeals
correctly affirmed the National Labor
Relations Commissions finding that
Arlene was a regular employee
Art.
280.
Regular
and
casual
employment. The provisions of written
agreement
to
the
contrary
notwithstanding and regardless of the oral
agreement of the parties, an employment
shall be deemed to be regular where the
employee has been engaged to perform
activities which are usually necessary or
the
employer,
except
where
the
employment has been fixed for a specific

177177
17
8

project or undertaking the completion or
termination of which has been determined
at the time of the engagement of the
employee or where the work or services to
be performed is seasonal in nature and
the employment is for the duration of the
season.
An employment shall be deemed to be
casual if it is not covered by the preceding
paragraph; Provided, That, any employee
who has rendered at least one year of
service,
whether
such
service
is
continuous or broken, shall be considered
a regular employee with respect to the
activity in which he is employed and his
employment shall continue while such
activity exist.
This provision classifies employees into
regular, project, seasonal, and casual. It
further classifies regular employees into
two kinds: (1) those engaged to perform
activities which are usually necessary or
the employer; and (2) casual employees
who have rendered at least one year of
service,
whether
such
service
is
continuous or broken.
Another classification of employees, i.e.,
employees with fixed-term contracts, was
recognized in Brent School, Inc. v.
Zamora150 where this court discussed
Logically, the decisive determinant in the
term employment should not be the
activities that the employee is called upon
to perform, but the day certain agreed
upon
by
the
parties
for
the
commencement and termination of their
employment relationship, a day certain
being understood to be that which must
necessarily come, although it may not be
known when.151 (Emphasis in the
original)
This court further discussed that there are
employment contracts where a fixed term
is
an
essential
and
natural
appurtenance152
such
as
overseas
employment contracts and officers in
educational
institutions.153chanRoblesvirtualLawlibrary
Distinctions among fixed-term
employees, independent contractors,
and regular employees
GMA
Network,
Inc.
v.
Pabriga154
expounded the doctrine on fixed-term
contracts laid down in Brent in the
following
manner:chanroblesvirtuallawlibrary
Cognizant of the possibility of abuse in the
utilization of fixed-term employment
contracts, we emphasized in Brent that
where from the circumstances it is
apparent that the periods have been
imposed to preclude acquisition of tenurial
security by the employee, they should be
struck down as contrary to public policy or
morals. We thus laid down indications or
criteria under which term employment
cannot be said to be in circumvention of
the
law
on
security
of
tenure,
namely:chanroblesvirtuallawlibrary
1) The fixed period of employment was
knowingly and voluntarily agreed upon by
the parties without any force, duress, or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the
employer and the employee dealt with
each other on more or less equal terms
with no moral dominance exercised by the
former or the latter.
These indications, which must be read
together, make the Brent doctrine
applicable only in a few special cases
wherein the employer and employee are
on more or less in equal footing in
entering into the contract. The reason for
this is evident: when a prospective
employee, on account of special skills or
market forces, is in a position to make
demands upon the prospective employer,
such prospective employee needs less
protection than the ordinary worker.
Lesser limitations on the parties freedom
of contract are thus required for the

178178
17
9

protection of the employee.155 (Citations
omitted)
For as long as the guidelines laid down in
Brent are satisfied, this court will
recognize the validity of the fixed-term
contract.
In Labayog v. M.Y. San Biscuits, Inc.,156
this
court
upheld
the
fixed-term
employment of petitioners because from
the time they were hired, they were
informed that their engagement was for a
specific
period.
This
court
stated
[s]imply put, petitioners were not regular
employees. While their employment as
mixers, packers and machine operators
was necessary and desirable in the usual
business of respondent company, they
were employed temporarily only, during
periods when there was heightened
demand for production. Consequently,
there could have been no illegal dismissal
when their services were terminated on
expiration of their contracts. There was
even no need for notice of termination
because they knew exactly when their
contracts
would
end.
Contracts
of
employment for a fixed period terminate
on their own at the end of such period.
Contracts of employment for a fixed
period are not unlawful. What is
objectionable is the practice of some
scrupulous
employers
who
try
to
circumvent the law protecting workers
from the capricious termination of
employment.157 (Citation omitted)
that their employer was engaged in hiring

workers for five (5) months only to
prevent regularization. In the absence of
these facts, the fixed-term contracts were
upheld
as
valid.160chanRoblesvirtualLawlibrary
On the other hand, an independent
contractor
is
defined
as:chanroblesvirtuallawlibrary
. . . one who carries on a distinct and
independent business and undertakes to
perform the job, work, or service on its
own account and under ones own
responsibility according to ones own
manner and method, free from the control
and direction of the principal in all matters
connected with the performance of the
work except as to the results thereof.161
In view of the distinct and independent
business of independent contractors, no
employer-employee relationship exists
between independent contractors and
their principals.
Independent contractors are recognized
under
Article
106
of
the
Labor
Art. 106. Contractor or subcontractor.
Whenever an employer enters into a
contract with another person for the
performance of the formers work, the
employees of the contractor and of the
latters subcontractor, if any, shall be paid
in accordance with the provisions of this
Code.
....
Caparoso v. Court of Appeals158 upheld the

validity of the fixed-term contract of
employment. Caparoso and Quindipan
were hired as delivery men for three (3)
months. At the end of the third month,
they were hired on a monthly basis. In
total, they were hired for five (5) months.
They filed a complaint for illegal
dismissal.159 This court ruled that there
was no evidence indicating that they were
pressured into signing the fixed-term
contracts. There was likewise no proof
The Secretary of Labor and Employment

may, by appropriate regulations, restrict
or prohibit the contracting-out of labor to
protect the rights of workers established
under this Code. In so prohibiting or
restricting, he may make appropriate
distinctions
between
labor-only
contracting and job contracting as well as
differentiations within these types of
contracting and determine who among the
parties involved shall be considered the

179179
18
0

employer for purposes of this Code, to
prevent any violation or circumvention of
any provision of this Code.
There is labor-only contracting where
the person supplying workers to an
employer does not have substantial capital
or investment in the form of tools,
equipment, machineries, work premises,
among others, and the workers recruited
and placed by such person are performing
activities which are directly related to the
principal business of such employer. In
such cases, the person or intermediary
shall be considered merely as an agent of
the employer who shall be responsible to
the workers in the same manner and
extent as if the latter were directly
employed by him.
In Department Order No. 18-A, Series of
2011, of the Department of Labor and
Employment, a contractor is defined as
having:chanroblesvirtuallawlibrary
Section 3. . . .
....
(c) . . . an arrangement whereby a
principal agrees to put out or farm out
with a contractor the performance or
completion of a specific job, work or
service within a definite or predetermined
period, regardless of whether such job,
work or service is to be performed or
completed within or outside the premises
of the principal.
This department order also states that
there is a trilateral relationship in
legitimate
job
contracting
and
subcontracting arrangements among the
principal, contractor, and employees of
the contractor. There is no employeremployee
relationship
between
the
contractor and principal who engages the
contractors services, but there is an
the contractor and workers hired to
accomplish
the
work
for
the
principal.162chanRoblesvirtualLawlibrary
Jurisprudence has recognized another kind

of independent contractor: individuals with
unique skills and talents that set them
apart from ordinary employees. There is
no trilateral relationship in this case
because
the
independent
contractor
himself or herself performs the work for
the principal. In other words, the
relationship is bilateral.
In Orozco v. Court of Appeals,163
Wilhelmina Orozco was a columnist for the
Philippine Daily Inquirer. This court ruled
that she was an independent contractor
because of her talent, skill, experience,
and her unique viewpoint as a feminist
advocate.164 In addition, the Philippine
Daily Inquirer did not have the power of
control over Orozco, and she worked at
her
own
pleasure.165chanRoblesvirtualLawlibrary
Semblante v. Court of Appeals166 involved
a masiador167 and a sentenciador.168 This
court ruled that petitioners performed
their
functions
as
masiador
and
sentenciador free from the direction and
control of respondents169 and that the
masiador and sentenciador relied mainly
on their expertise that is characteristic of
the cockfight gambling.170 Hence, no
employer-employee relationship existed.
Bernarte
v.
Philippine
Basketball
Association171
involved
a
basketball
referee. This court ruled that a referee is
an independent contractor, whose special
skills and independent judgment are
required specifically for such position and
cannot possibly be controlled by the hiring
party.172chanRoblesvirtualLawlibrary
In these cases, the workers were found to
be independent contractors because of
their unique skills and talents and the lack
of control over the means and methods in
the performance of their work.
In other words, there are different kinds
of
independent
contractors:
those
engaged in legitimate job contracting and
those who have unique skills and talents
that set them apart from ordinary

180180
18
1

employees.
and other relevant circumstances.
Since no employer-employee relationship

exists between independent contractors
and their principals, their contracts are
governed by the Civil Code provisions on
contracts
and
other
applicable
173
laws. chanRoblesvirtualLawlibrary
For example, a prospective employee with

a bachelors degree cannot be said to be
on equal footing with a grocery bagger
with a high school diploma. Employees
who qualify for jobs requiring special
qualifications such as [having] a Masters
degree or [having] passed the licensure
exam are different from employees who
qualify for jobs that require [being a]
high school graduate; with pleasing
personality. In these situations, it is clear
that those with special qualifications can
bargain with the employer on equal
footing. Thus, the level of protection
afforded to these employees should be
different.
A contract is defined as a meeting of

minds between two persons whereby one
binds himself, with respect to the other, to
give something or to render some
service.174 Parties are free to stipulate on
terms and conditions in contracts as long
as these are not contrary to law, morals,
good customs, public order, or public
policy.175 This presupposes that the
parties to a contract are on equal footing.
They can bargain on terms and conditions
until they are able to reach an agreement.
On
the other hand,
contracts
of
employment are different and have a
higher level of regulation because they are
impressed with public interest. Article
XIII, Section 3 of the 1987 Constitution
provides
full
protection
to
labor:chanroblesvirtuallawlibrary
In contracts of employment, the employer
and the employee are not on equal
footing. Thus, it is subject to regulatory
review by the labor tribunals and courts of
law. The law serves to equalize the
unequal. The labor force is a special class
that is constitutionally protected because
of the inequality between capital and
labor.176 This presupposes that the labor
force is weak.
However, the level of protection to labor
should vary from case to case; otherwise,
the state might appear to be too
paternalistic in affording protection to
labor. As stated in GMA Network, Inc. v.
Pabriga, the ruling in Brent applies in
cases where it appears that the employer
and employee are on equal footing.177
The level of protection to labor must be
determined on the basis of the nature of
the work, qualifications of the employee,
Fujis argument that Arlene was an

independent contractor under a fixed-term
contract is contradictory. Employees under
fixed-term
contracts
cannot
be
independent contractors because in fixedterm contracts, an employer-employee
relationship exists. The test in this kind of
contract is not the necessity and
desirability of the employees activities,
but the day certain agreed upon by the
parties for the commencement and
termination
of
the
employment
relationship.179 For regular employees,
the necessity and desirability of their work
in the usual course of the employers
business are the determining factors. On
the other hand, independent contractors
do
not
have
employer-employee
relationships with their principals.
Hence, before the status of employment
can be determined, the existence of an
employer-employee relationship must be
established.
The four-fold test180 can be used in
determining
whether
an
employeremployee
relationship
exists.
The
elements of the four-fold test are the
following:
(1)
the
selection
and
engagement of the employee; (2) the
payment of wages; (3) the power of
dismissal; and (4) the power of control,
which
is
the
most
important

181181
18
2

element.181chanRoblesvirtualLawlibrary
Application of the four-fold test
Arlene was a regular employee

with a fixed-term contract
The Court of Appeals did not err when it

relied on the ruling in Dumpit-Murillo and
affirmed the ruling of the National Labor
Relations Commission finding that Arlene
was a regular employee. Arlene was hired
by Fuji as a news producer, but there was
no showing that she was hired because of
unique skills that would distinguish her
from ordinary employees. Neither was
there any showing that she had a celebrity
status. Her monthly salary amounting to
US$1,900.00 appears to be a substantial
sum, especially if compared to her salary
when she was still connected with GMA.199
Indeed, wages may indicate whether one
is an independent contractor. Wages may
also indicate that an employee is able to
bargain with the employer for better pay.
However, wages should not be the
conclusive factor in determining whether
one is an employee or an independent
contractor.
The
test
for
determining
regular
employment is whether there is a
reasonable
connection
between
the
employees activities and the usual
business of the employer. Article 280
provides that the nature of work must be
business or trade of the employer as the
test for determining regular employment.
As stated in ABS-CBN Broadcasting
Corporation
v.
Nazareno:204chanRoblesvirtualLawlibrary
Fuji had the power to dismiss Arlene, as

provided for in paragraph 5 of her
professional employment contract.200 Her
contract also indicated that Fuji had
control over her work because she was
required to work for eight (8) hours from
Monday to Friday, although on flexible
time.201 Sonza was not required to work
for eight (8) hours, while Dumpit-Murillo
had to be in ABC to do both on-air and
off-air tasks.
On the power to control, Arlene alleged
that Fuji gave her instructions on what to
report.202 Even the mode of transportation
in carrying out her functions was
controlled by Fuji.
Having established that an employeremployee relationship existed between
Fuji and Arlene, the next questions for
resolution are the following: Did the Court
of Appeals correctly affirm the National
Labor Relations Commission that Arlene
had become a regular employee? Was the
nature of Arlenes work necessary and
desirable for Fujis usual course of
business?
In determining whether an employment

should be considered regular or nonregular, the applicable test is the
reasonable
connection
between
the
particular activity performed by the
employee in relation to the usual business
or trade of the employer. The standard,
supplied by the law itself, is whether the
work undertaken is necessary or desirable
in the usual business or trade of the
employer, a fact that can be assessed by
looking into the nature of the services
rendered and its relation to the general
scheme under which the business or trade
is pursued in the usual course. It is
distinguished from a specific undertaking
that is divorced from the normal activities
required in carrying on the particular
business or trade.205
However, there may be a situation where
an employees work is necessary but is
not always desirable in the usual course of
business of the employer. In this
situation, there is no regular employment.
Fuji is engaged in the business of
broadcasting,209
including
news
programming.210 It is based in Japan211
and has overseas offices to cover
international
news.212chanRoblesvirtualLawlibrary
Based on the record, Fujis Manila Bureau
Office is a small unit213 and has a few
employees.214 As such, Arlene had to do
all activities related to news gathering.

182182
18
3

Although Fuji insists that Arlene was a
stringer, it alleges that her designation
was
News
Talent/Reporter/Producer.215chanRoblesvi
rtualLawlibrary
A news producer plans and supervises
newscast . . . [and] work[s] with reporters
in the field planning and gathering
information. . . .216 Arlenes tasks
included [m]onitoring and [g]etting
[n]ews [s]tories, [r]eporting interviewing
subjects in front of a video camera, 217
the timely submission of news and
current events reports pertaining to the
Philippines[,] and traveling [sic] to [Fujis]
regional office in Thailand.218 She also
had to report for work in Fujis office in
Manila from Mondays to Fridays, eight (8)
hours per day.219 She had no equipment
and had to use the facilities of Fuji to
accomplish her tasks.
The Court of Appeals affirmed the finding
of
the
National
Labor
Relations
Commission that the successive renewals
of Arlenes contract indicated the necessity
and desirability of her work in the usual
course of Fujis business. Because of this,
Arlene had become a regular employee
with the right to security of tenure.
Arlenes contract indicating a fixed term
did not automatically mean that she could
never be a regular employee. This is
precisely what Article 280 seeks to avoid.
The ruling in Brent remains as the
exception rather than the general rule.
Further, an employee can be a regular
employee with a fixed-term contract. The
law does not preclude the possibility that
a regular employee may opt to have a
fixed-term contract for valid reasons. This
was recognized in Brent: For as long as it
was the employee who requested, or
bargained, that the contract have a
definite date of termination, or that the
fixed-term contract be freely entered into
by the employer and the employee, then
the validity of the fixed-term contract will
be upheld.230chanRoblesvirtualLawlibrary
The expiration of Arlenes contract does
not negate the finding of illegal dismissal

by Fuji. The manner by which Fuji
informed Arlene that her contract would
no longer be renewed is tantamount to
constructive dismissal. To make matters
worse, Arlene was asked to sign a letter of
resignation prepared by Fuji.235 The
existence of a fixed-term contract should
not mean that there can be no illegal
dismissal. Due process must still be
observed in the pre-termination of fixedterm contracts of employment.
In addition, the Court of Appeals and the
National Labor Relations Commission
found that Arlene was dismissed because
of her health condition. In the nonrenewal agreement executed by Fuji and
Arlene,
it
is
stated
WHEREAS,
the
SECOND
PARTY
is
undergoing chemotherapy which prevents
her from continuing to effectively perform
her functions under the said Contract such
as the timely submission of news and
current events reports pertaining to the
Philippines and travelling [sic] to the
FIRST
PARTYs
regional
office
in
236
Thailand.
(Emphasis supplied)
Disease as a ground for termination is
recognized under Article 284 of the Labor
Art. 284. Disease as ground for
termination. An employer may terminate
the services of an employee who has been
found to be suffering from any disease
and whose continued employment is
prohibited by law or is prejudicial to his
health as well as to the health of his coemployees: Provided, That he is paid
separation pay equivalent to at least one
(1) month salary or to one-half (1/2)
month salary for every year of service,
whichever is greater, a fraction of at least
six (6) months being considered as one
(1) whole year.
Book VI, Rule 1, Section 8 of the Omnibus
Rules Implementing the Labor Code

183183
18
4

Sec. 8. Disease as a ground for dismissal.
Where the employee suffers from a
disease and his continued employment is
prohibited by law or prejudicial to his
health or to the health of his coemployees, the employer shall not
terminate his employment unless there is
a certification by a competent public
health authority that the disease is of such
nature or at such a stage that it cannot be
cured within a period of six (6) months
even with proper medical treatment. If the
disease or ailment can be cured within the
period, the employer shall not terminate
the employee but shall ask the employee
to take a leave. The employer shall
reinstate such employee to his former
position immediately upon the restoration
of his normal health.
For dismissal under Article 284 to be valid,
two requirements must be complied with:
(1) the employees disease cannot be
cured within six (6) months and his
continued employment is prohibited by
law or prejudicial to his health as well as
to the health of his co-employees; and
(2) certification issued by a competent
public health authority that even with
proper medical treatment, the disease
cannot be cured within six (6) months.237
The burden of proving compliance with
these requisites is on the employer. 238
Non-compliance leads to the conclusion
that
the
dismissal
was
illegal.239chanRoblesvirtualLawlibrary
There is no evidence showing that Arlene
was accorded due process. After informing
her employer of her lung cancer, she was
not given the chance to present medical
certificates. Fuji immediately concluded
that Arlene could no longer perform her
duties because of chemotherapy. It did
not ask her how her condition would affect
her work. Neither did it suggest for her to
take a leave, even though she was
entitled to sick leaves. Worse, it did not
present any certificate from a competent
public health authority. What Fuji did was
to inform her that her contract would no
longer be renewed, and when she did not
agree, her salary was withheld. Thus, the

Court of Appeals correctly upheld the
finding of the National Labor Relations
Commission that for failure of Fuji to
comply with due process, Arlene was
illegally
dismissed.240chanRoblesvirtualLawlibrary
Joel N. Montellana Vs. La Consolacion
College Manila, Sr. Imelda A. Mora
and Albert Manalili G.R. No. 208890.
December 8, 2014
The primordial issue for the Courts

resolution is whether or not
Montallanas termination from work
was lawful and justified.cralawred
The Courts Ruling
The petition is meritorious.
Willful disobedience by the employee of
the lawful orders of his employer or
representative in connection with his
work is one of the just causes to
terminate an employee under Article 296
(a) (formerly Article 282 [a]) of the Labor
Code.64 In order for this ground to be
properly invoked as a just cause for
dismissal, the conduct must be willful
or
intentional,
willfulness
being
characterized by a wrongful and
perverse mental attitude.65 In Dongon
v. Rapid Movers and Forwarders Co.,
Inc.,66 willfulness was described as
attended by a wrongful and perverse
mental attitude rendering the employees
act
inconsistent
with
proper
subordination.67chanRoblesvirtualLawlibra
ry
It is well to stress that it is the employer
who bears the burden of proving, through
substantial evidence, that the aforesaid
just cause or any other authorized cause
for that matter forms the basis of the
employees dismissal from work.68 Failing
in which, the dismissal should be
adjudged as illegal.
In the case at bar, respondents failed to

184184
18
5

prove, by substantial evidence, that
Montallanas
non-compliance
with
respondents directive to apologize was
willful or intentional. The Court finds
itself in complete agreement with the
NLRC that the disobedience attributed to
Montallana
could
not
be
justly
characterized as willful within the
contemplation of Article 296 of the Labor
Code, in the sense above-described.
As culled from the records, aside from the
administrative complaint filed by Juan
against
Montallana
for
his
serious
misconduct, the former also filed a
criminal
complaint
for
grave
oral
defamation for the utterances he made
arising from the same incident before the
Manila City Prosecutors Office. In the
honest belief that issuing a letter of
apology would incriminate him in the said
criminal case and upon the advice of his
own lawyer at that Montallana wrote to
respondents
and
voluntarily
communicated that he was willing to issue
the required apology, but only had to
defer the same in view of his legal
predicament. As the Court sees it, the
tenor of his letters, and the circumstances
under which they were taken, at the very
least, exhibited Montallanas good faith in
dealing with respondents. This, therefore,
negates the theory that his failure to abide
by respondents directive to apologize was
attended by a wrong and perverse
mental attitude rendering the employees
act
inconsistent
with
proper
subordination, which would warrant his
termination from employment.
It beckons clarification that respondents
submission of the prosecutors March 5,
2010 Resolution to show that Juans
criminal complaint against Montallana was
dismissed way earlier than their June 1,
2011 directive to explain is not enough to
show that the latter took a willfully defiant
attitude
against
a
lawful
order,
considering that no other evidence was
presented to prove that the said
Resolution had already attained finality. In
fact, as pointed out by the NLRC, it was
only on September 11, 2012 that
Montallana was able to obtain a copy of

the
prosecutors
March
5,
2010
Resolution, or long after he had already
submitted his letter of explanation on June
9,
2011.69
Therefore,
respondents
assertion that Montallana had lied to them
cannot be given any credence.
Besides, even on the assumption that
there was willful disobedience, still, the
Court finds the penalty of dismissal too
harsh. It bears to stress that not every
case
of
insubordination
or
willful
disobedience by an employee reasonably
deserves the penalty of dismissal.70 The
penalty to be imposed on an erring
employee must be commensurate with the
gravity of his offense.71 To the Courts
mind, the case of an employee who is
compelled to apologize for a previous
infraction but fails to do so is not one
which
would
properly
warrant
his
termination, absent any proof that the
refusal was made in brazen disrespect of
his employer. While there is no question
that teachers are held to a peculiar
standard of behavior in view of their
significant role in the rearing of our youth,
educational institutions are, in the
meantime, held against a legal standard
imposed against all employers, among
which, is the reservation of the ultimate
penalty of dismissal for serious infractions
enumerated as just causes under Article
296 of the Labor Code. Unfortunately,
respondents herein failed to prove the
seriousness of Montallanas omission by
the evidentiary benchmark of substantial
evidence. And to add, on a related note,
while La Consolacions Administrative
Affairs Manual72 discloses that acts of
insubordination (particularly, that of
refusing or neglecting to obey the schools
lawful directive) are dismissible violations,
they are only so if imposed as a third
sanction. In the same vein, records are
bereft of any showing that Montallanas
failure to apologize was being punished as
such.
In fine, since respondents failed to prove,
by substantial evidence, that Montallanas
dismissal was based on a just or

185185
18
6

authorized cause under the Labor Code or
was
clearly
warranted
under
La
Consolacions
Administrative
Affairs
Manual, the Court rules that the dismissal
was illegal. Consequently, the NLRCs
identical ruling, which was erroneously
reversed by the CA on certiorari, must be
reinstated with the modification, however,
in that the order for respondents Mora and
Manalili to pay Montallana backwages73
should be deleted. It is a rule that
personal liability of corporate directors,
trustees or officers attaches only when:
(a) they assent to a patently unlawful act
of the corporation, or when they are guilty
of bad faith or gross negligence in
directing its affairs, or when there is a
conflict of interest resulting in damages to
the corporation, its stockholders or other
persons; (b) they consent to the issuance
of watered down stocks or when, having
knowledge of such issuance, do not
forthwith file with the corporate secretary
their written objection; (c) they agree to
hold themselves personally and solidarily
liable with the corporation; or (d) they are
made by specific provision of law
personally answerable for their corporate
action.74 None of these circumstances, in
so far as Mora and Manalili are concerned,
were shown to be present in this case;
hence, there is no reason for them to be
held
liable
for
Montallanas
backwages.chanrobleslaw
Noriel R. Montierro Vs. Rickmers Marine

Agency Phils., Inc. G.R. No. 210634.
January 14, 2015
ISSUES
The issues to be resolved are the

following: (1) whether it is the
120-day rule or the 240-day rule
that should apply to this case; (2)
whether it is the opinion of the
company doctor or of the personal
doctor of the seafarer that should
prevail; and (3) whether Montierro
is entitled to attorneys fees.
OUR RULING
120 day rule vs. 240 day rule
The Court has already delineated the

effectivity of the Crystal Shipping and
Vergara rulings in the 2013 case Kestrel
Shipping Co. Inc. v. Munar,29 by
explaining
as
Nonetheless, Vergara was promulgated on
October 6, 2008, or more than two (2)
years from the time Munar filed his
complaint and observance of the principle
of prospectivity dictates that Vergara
should not operate to strip Munar of his
cause of action for total and permanent
disability that had already accrued as a
result of his continued inability to perform
his customary work and the failure of the
company-designated physician to issue a
final assessment.
Thus, based on Kestrel, if the maritime
compensation complaint was filed
prior to 6 October 2008, the 120-day
rule applies; if, on the other hand, the
complaint was filed from 6 October
2008 onwards, the 240-day rule
applies.
In this case, Montierro filed his Complaint
on 3 December 2010, which was after the
promulgation of Vergara on 6 October
2008. Hence, it is the 240-day rule that
applies to this case, and not the 120-day
rule.
Company doctor vs. personal doctor
Vergara also definitively settled the
question how a conflict between two
disability assessments the assessment
of the company-designated physician and
that of the seafarers chosen physician
should be resolved.33 In that case, the
Court held that there is a procedure to be
followed regarding the determination of
liability for work-related death, illness or
injury in the case of overseas Filipino
seafarers. The procedure is spelled out in
the 2000 POEA-SEC, the execution of
which is a sine qua non requirement in
deployments for overseas work.34
The procedure is as follows: when a
seafarer sustains a work-related illness or
injury while on board the vessel, his

186186
18
7

fitness for work shall be determined by
the company-designated physician. The
physician has 120 days, or 240 days, if
validly extended, to make the assessment.
If the physician appointed by the seafarer
disagrees with the assessment of the
company-designated
physician,
the
opinion of a third doctor may be agreed
jointly between the employer and the
seafarer, whose decision shall be final and
binding on them.35
of ones cause.38 The rule, however, takes

a turn when it comes to labor cases.
Vergara ruled that the procedure in the

2000 POEA-SEC must be strictly followed;
otherwise, if not availed of or followed
strictly by the seafarer, the assessment of
the
company-designated
physician
stands.36
The CA thus relied on a wrong

consideration in resolving the issue of
attorneys fees. Be that as it may,
Montierro is not entitled to attorneys fees,
even if we apply the correct rule to this
case.
In this case, Montierro and Rickmers are

covered by the provisions of the same
2000 POEA-SEC. It is the law between
them. Hence, they are bound by the
mechanism for determining liability for a
disability
benefits
claim.
Montierro,
however, preempted the procedure when
he filed on 3 December 2010 a Complaint
for permanent disability benefits based on
his chosen physicians assessment, which
was made one month before the
company-designated doctor issued the
final disability grading on 3 January 2011,
the
213th
day
of
Montierros
treatment.
Montierro, as earlier mentioned, jumped

the gun when he filed his complaint one
month before the company-designated
doctor issued the final disability grading.
Hence, there was no unlawful withholding
of benefits to speak of. Precisely because
Montierro was still under treatment and
awaiting the final assessment of the
company-designated
physician,
the
formers act was premature.
Hence, for failure of Montierro to observe

the procedure provided by the POEA-SEC,
the assessment of the company doctor
should prevail.
Attorneys fees
On the premise that there was no showing
of bad faith on the part of the employer,
forcing Montierro to litigate, the CA
dropped the award of attorneys fees. We
arrive at the same conclusion by using
another route.
Indeed, the general rule is that attorney's
fees may not be awarded where there is
no sufficient showing of bad faith in a
party's persistence in a case other than an
erroneous conviction of the righteousness
The established rule in labor law is that

the withholding of wages need not be
coupled with malice or bad faith to
warrant the grant of attorneys fees under
Article 111 of the Labor Code.39 All that is
required is that lawful wages be not paid
without justification, thus compelling the
employee to litigate.40
Rommel B. Daraug Vs. KGJS Fleet

Management, Manila, Inc., et al.G.R.
No. 211211. January 14, 2015
Petitioners Claim for Benefits
Was Premature
Actually, petitioners filing of his

claim was premature. The Court
has held that a seafarer may have
basis to pursue an action for total
and permanent disability benefits,
if any of the following conditions
are
present:chanroblesvirtuallawlibrary
(a)
The
company-designated
physician
failed
to
issue
a
even after the lapse of the 120-day
period and there is no indication
that further medical treatment
would address his temporary total

187187
18
8

disability,
hence,
justify
an
extension of the period to 240
days;
(b) 240 days had lapsed without

any certification issued by the
company designated physician;
(c) The company-designated
physician declared that he is fit
for sea duty within the 120-day
or 240-day period, as the case
may be, but his physician of
choice and the doctor chosen
under Section 20-B(3) of the
POEA-SEC are of a contrary
opinion;
(d)
The
company-designated
employer,
believed
that
his
total as well;
(e)
The
company-designated
disability grading;
(f)
The
company-designated
physician determined that his
medical
condition
is
not
the POEA-SEC but his doctor-ofchoice and the third doctor
(g)
The
company-designated
physician declared him totally and
permanently disabled but the
employer refuses to pay him the
corresponding benefits; and
(h)
The
company-designated
physician declared him partially
and permanently disabled within
the 120-day or 240-day period but
he
remains
incapacitated
to
perform his usual sea duties after
the lapse of said periods.34
Significantly,
however,
when
petitioner filed his complaint with
the arbitration office on April 5,
2010, he had yet to consult his
own physician, Dr. Jacinto. It
means that, at that time, he was
simply armed with: 1] the medical
findings
of
the
companydesignated physician that he was
fit to work; and 2] his Affidavit
Complaint35 where he made his
own conclusion that his right leg
was again fractured because of the
incident that occurred in the M/V
Ibis Arrow
Petitioner is not
Entitled to his
Monetary Claims
In view of the foregoing, petitioner

is not entitled to his monetary
claims. It should be remembered
that permanent total disability
means disablement of an employee
to earn wages in the same kind of
work, or work of similar nature,
that he was trained for or
accustomed to perform, or any
kind of work which a person of his
mentality and attainment could do.
In disability compensation, it is not
the injury which is compensated,
but rather the incapacity to work
resulting in the impairment of ones
earning capacity.38 As petitioner
was never actually incapacitated, it
would be highly unjust if he would
be awarded the disability benefits
which the law accords only to the
deserving and utterly unfair to the
respondents if they would be made
to pay.
Unicol Management Services, Inc. Link
Marine Pte. Ltd. and/or Victoriano B.
Tirol III Vs. Delia Malipot, in behalf of
Glicerio Malipot G.R. No. 206562.
January 21, 2015
In essence, the main issue for resolution
is whether seaman Glicerio committed

188188
18
9

suicide during the term of his employment

contract which would exempt petitioners
from paying the death compensation
benefits to his beneficiaries.
the employer is liable to pay the heirs of
the deceased seafarer for death benefits
once it is established that he died during
the effectivity of his employment contract.
However, the employer may be exempt
from liability if it can successfully prove
that the seamans death was caused by an
injury directly attributable to his deliberate
or willful act.28 Thus, since petitioners
were able to substantially prove that
seaman Glicerios death is directly
attributable to his deliberate act of
hanging himself, his death, therefore, is
not compensable and his heirs not entitled
to any compensation or benefits.
G.R. No. 197011. January 28, 2015
Closure or cessation of business is
the complete or partial cessation of
the operations and/or shut-down of
the establishment of the employer.
It is carried out to either stave off
the financial ruin or promote the
business interest of the employer.
Closure
of
business
as
an
authorized cause for termination of
employment is governed by Article
28323 of the Labor Code, as
amended.
If the business closure is due to

serious losses or financial reverses,
the
employer
must
present
sufficient proof of its actual or
imminent losses; it must show
proof that the cessation of or
withdrawal
from
business
operations was bona fide in
character.24 A written notice to the
DOLE thirty days before the
intended date of closure is also
required, the purpose of which is to
inform the employees of the
specific date of termination or
closure of business operations, and
which must be served upon each
and every employee of the
company one month before the
date of effectivity to give them
sufficient time to make the
necessary
arrangement.25chanRoblesvirtualLa
wlibrary
The ultimate test of the validity of

closure
or
cessation
of
establishment or undertaking is
that it must be bona fide in
character. And the burden of
proving such falls upon the
employer.26chanRoblesvirtualLawlib
rary
After evaluating the evidence on
record, we uphold the factual
findings and conclusions of the
labor tribunals that petitioner was
dismissed
without
just
or
authorized cause, and that the
announced cessation of business
operations was a subterfuge for
getting rid of petitioner. While the
introduction of additional evidence
before the NLRC is not proscribed,
the said tribunal was still not
persuaded by the company closure
purportedly averted only by the
alleged fresh funding procured by
respondent Tan, for the latter claim
remained
unsubstantiated.
The
CAs finding of serious business
losses is not borne by the evidence
on record. The financial statements
supposedly bearing the stamp
mark of BIR were not signed by an
independent auditor. Besides, the
non-compliance
with
the
requirements under Article 283 of
the Labor Code, as amended, gains
relevance in this case not for the
purpose of proving the illegality of
the company closure or cessation
of
business,
which
did
not
materialize, but as an indication of
bad
faith
on
the
part
of
respondents in hastily terminating
petitioners employment. Under the
circumstances,
the
subsequent
investigation and termination of
petitioner
on
grounds
of
dishonesty, loss of confidence and
abandonment of work, clearly
appears as an afterthought as it

189189
19
0

was done only after petitioner had
filed an illegal dismissal case and
respondents have been summoned
for hearing before the LA.
Cheryll Santos Leus Vs. St. Scholastica's

College Westgrove and/or Sr. Edna
Quiambao, OSB G.R. No. 187226.
January 28, 2015
Cheryll Santos Leus (petitioner) was hired
by St. Scholasticas College Westgrove
(SSCW), a Catholic educational institution,
as a non-teaching personnel, engaged in
pre-marital sexual relations, got pregnant
out of wedlock, married the father of her
child, and was dismissed by SSCW, in that
order. The question that has to be
resolved is whether the petitioners
conduct constitutes a ground for her
dismissal.
Second Issue: Validity of the
Petitioners Dismissal
The validity of the petitioners dismissal
hinges on the determination of whether
pregnancy out of wedlock by an employee
of a catholic educational institution is a
cause for the termination of her
employment.
In resolving the foregoing question, the
Court will assess the matter from a strictly
neutral and secular point of view the
relationship between SSCW as employer
and the petitioner as an employee, the
causes provided for by law in the
termination of such relationship, and the
evidence on record. The ground cited for
the petitioners dismissal, i.e., pre-marital
sexual
relations
and,
consequently,
pregnancy out of wedlock, will be
assessed as to whether the same
constitutes a valid ground for dismissal
pursuant to Section 94(e) of the 1992
MRPS.
The labor tribunals respective
conclusions
that
the
petitioners
pregnancy
is a disgraceful or immoral conduct
were arrived at arbitrarily.
However, the Court finds no substantial
evidence to support the aforementioned
conclusion arrived at by the labor
tribunals. The fact of the petitioners

pregnancy out of wedlock, without more,
is not enough to characterize the
petitioners conduct as disgraceful or
immoral. There must be substantial
evidence to establish that pre-marital
sexual
relations
and,
consequently,
pregnancy out of wedlock, are indeed
considered disgraceful or immoral.
The totality of the circumstances
surrounding the conduct alleged to be
disgraceful or immoral must be
assessed
against the prevailing norms of
conduct.
In Chua-Qua v. Clave,37 the Court
stressed that to constitute immorality, the
circumstances of each particular case
must be holistically considered and
evaluated in light of the prevailing
norms of conduct and applicable laws.38
Otherwise stated, it is not the totality of
the
circumstances
surrounding
the
conduct per se that determines whether
the same is disgraceful or immoral, but
the conduct that is generally accepted by
society as respectable or moral. If the
conduct does not conform to what society
generally views as respectable or moral,
then the conduct is considered as
disgraceful or immoral. Tersely put,
substantial evidence must be presented,
which would establish that a particular
conduct, viewed in light of the prevailing
norms
of
conduct,
is
considered
disgraceful or immoral.
Thus, the determination of whether a
conduct is disgraceful or immoral involves
a two-step process: first, a consideration
of the totality of the circumstances
surrounding the conduct; and second, an
assessment of the said circumstances vis-vis the prevailing norms of conduct, i.e.,
what the society generally considers moral
and respectable.
That the petitioner was employed by a
Catholic educational institution per se
does not absolutely determine whether
her pregnancy out of wedlock is

190190
19
1

disgraceful or immoral. There is still a
necessity to determine whether the
petitioners pregnancy out of wedlock is
considered disgraceful or immoral in
accordance with the prevailing norms of
conduct.
Public and secular morality should
determine the prevailing norms of
conduct,
not religious morality.
conduct is proscribed by the beliefs of one

religion or the other.
The petitioners pregnancy out of
wedlock is not a disgraceful or
immoral
conduct since she and the father of
her
child have no impediment to marry
each
other.
However, determining what the prevailing

norms
of
conduct
are
considered
disgraceful or immoral is not an easy task.
An individuals perception of what is moral
or respectable is a confluence of a myriad
of influences, such as religion, family,
social status, and a cacophony of others.
In stark contrast to Santos, the Court

does not find any circumstance in this
case which would lead the Court to
conclude that the petitioner committed a
disgraceful or immoral conduct. It bears
stressing that the petitioner and her
boyfriend, at the time they conceived a
child, had no legal impediment to marry.
Indeed, even prior to her dismissal, the
petitioner married her boyfriend, the
father of her child. As the Court held in
Radam, there is no law which penalizes an
unmarried mother by reason of her sexual
conduct or proscribes the consensual
sexual activity between two unmarried
persons; that neither does such situation
contravene any fundamental state policy
enshrined in the Constitution.
Accordingly, when the law speaks of

immoral
or,
necessarily,
disgraceful
conduct, it pertains to public and secular
morality; it refers to those conducts which
are
proscribed
because
they
are
detrimental to conditions upon which
depend the existence and progress of
human society. Thus, in Anonymous v.
Radam,43 an administrative case involving
a court utility worker likewise charged
with disgraceful and immoral conduct,
applying the doctrines laid down in
Estrada,
It bears stressing that the right of an
employee to security of tenure is
protected
by
the
Constitution.
Perfunctorily, a regular employee may not
be dismissed unless for cause provided
under the Labor Code and other relevant
laws, in this case, the 1992 MRPS. As
stated above, when the law refers to
morality, it necessarily pertains to public
and secular morality and not religious
morality. Thus, the proscription against
disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS, which is
made as a cause for dismissal, must
necessarily refer to public and secular
morality. Accordingly, in order for a
conduct to be considered as disgraceful or
immoral, it must be detrimental (or
dangerous) to those conditions upon
which depend the existence and progress
of human society and not because the
Admittedly, the petitioner is employed in

an educational institution where the
teachings and doctrines of the Catholic
Church, including that on pre-marital
sexual relations, is strictly upheld and
taught to the students. That her
indiscretion, which resulted in her
pregnancy out of wedlock, is anathema to
the doctrines of the Catholic Church.
However, viewed against the prevailing
norms of conduct, the petitioners conduct
cannot be considered as disgraceful or
immoral; such conduct is not denounced
by public and secular morality. It may be
an unusual arrangement, but it certainly is
not disgraceful or immoral within the
contemplation of the law.
To stress, pre-marital sexual relations
between two consenting adults who have
no impediment to marry each other, and,
consequently, conceiving a child out of
wedlock, gauged from a purely public and

191191
19
2

secular view of morality, does not amount
to a disgraceful or immoral conduct under
Section 94(e) of the 1992 MRPS.
There is no substantial evidence to
prove that the petitioners pregnancy
out of
wedlock caused grave scandal to
SSCW
and its students.
he Court finds that SSCW failed to adduce
substantial evidence to prove that the
petitioners indiscretion indeed caused
grave scandal to SSCW and its students.
Other than the SSCWs bare allegation,
the records are bereft of any evidence
that would convincingly prove that the
petitioners conduct indeed adversely
affected SSCWs integrity in teaching the
moral doctrines, which it stands for. The
petitioner
is
only
a
non-teaching
personnel; her interaction with SSCWs
students is very limited. It is thus quite
impossible that her pregnancy out of
wedlock caused such a grave scandal, as
claimed by SSCW, as to warrant her
dismissal.
The petitioners dismissal is not a
valid exercise of SSCWs management
prerogative.
The Court has held that management is
free to regulate, according to its own
discretion and judgment, all aspects of
employment,
including
hiring,
work
assignments, working methods, time,
place and manner of work, processes to
be followed, supervision of workers,
working
regulations,
transfer
of
employees, work supervision, lay off of
workers and discipline, dismissal and
recall of workers. The exercise of
management prerogative, however, is not
absolute as it must be exercised in good
faith and with due regard to the rights of
labor. Management cannot exercise its
prerogative in a cruel, repressive, or
despotic
manner.53chanRoblesvirtualLawlibrary
SSCW, as employer, undeniably has the
right to discipline its employees and, if
need be, dismiss them if there is a valid
cause to do so. However, as already
explained, there is no cause to dismiss the
petitioner. Her conduct is not considered

by law as disgraceful or immoral. Further,
the
respondents
themselves
have
admitted that SSCW, at the time of the
controversy, does not have any policy or
rule against an employee who engages in
pre-marital sexual relations and conceives
a child as a result thereof. There being no
valid basis in law or even in SSCWs policy
and rules, SSCWs dismissal of the
petitioner is despotic and arbitrary and,
thus, not a valid exercise of management
prerogative.
In sum, the Court finds that the petitioner
was illegally dismissed as there was no
just cause for the termination of her
employment. SSCW failed to adduce
substantial evidence to establish that the
petitioners conduct, i.e., engaging in premarital sexual relations and conceiving a
child out of wedlock, assessed in light of
the prevailing norms of conduct, is
considered disgraceful or immoral. The
labor tribunals gravely abused their
discretion in upholding the validity of the
petitioners dismissal as the charge
against the petitioner lay not on
substantial evidence, but on the bare
allegations of SSCW. In turn, the CA
committed reversible error in upholding
the validity of the petitioners dismissal,
failing to recognize that the labor tribunals
gravely abused their discretion in ruling
for the respondents.
Ma. Charito C. Gadia, Ernesto M. Penas,
Gemmabelle B. Remo, Lorena S.
Quesea, et al. Vs. Skyke Asia,
Inc./Chuck
Skykes/Mike
Hinds/Michael Henderson G.R. No.
209499. January 28, 2015
In Omni Hauling Services, Inc. v. Bon, the
Court extensively discussed how to
determine whether an employee may be
properly deemed project-based or regular,
to wit:
A project employee is assigned to a
project which begins and ends at
determined or determinable times. Unlike
regular employees who may only be
dismissed for just and/or authorized

192192
19
3

causes under the Labor Code, the services
of employees who are hired as project[based] employees may be lawfully
terminated at the completion of the
project.
According to jurisprudence, the principal
test for determining whether particular
employees are properly characterised as
project[- based] employees as
distinguished from regular employees, is
whether or not the employees were
assigned to carry out a specific project or
undertaking, the duration (and scope) of
which were specified at the time they
were engaged for that project. The project
could either be (1) a particular job or
undertaking that is within the regular or
usual business of the employer company,
but which is distinct and separate, and
undertakings of the company; or (2) a
particular job or undertaking that is not
within the regular business of the
corporation. In order to safeguard the
rights of workers against the arbitrary use
of the word project to prevent
employees from attaining a regular status,
employers claiming that their workers are
project[-based] employees should not
only prove that the duration and scope of
the employment was specified at the time
they were engaged, but also, that there
was indeed a project.
Verily, for an employee to be considered
project-based, the employer must show
compliance with two (2) requisites,
namely that: (a) the employee was
assigned to carry out a specific project or
undertaking; and (b) the duration and
scope of which were specified at the time
they were engaged for such project.
In this case, records reveal that Sykes
Asia adequately informed petitioners of
their employment status at the time of
their engagement, as evidenced by the
latters employment contracts which
similarly provide that they were hired in
connection with the Alltel Project, and that
their positions were project-based and as
such is co-terminus to the project. In this

light, the CA correctly ruled that
petitioners were indeed project-based
employees, considering that: (a) they
were hired to carry out a specific
undertaking, i.e., the Alltel Project; and
(b) the duration and scope of such project
were made known to them at the time of
their engagement, i.e., co-terminus with
the project.
As regards the second requisite, the CA
correctly stressed that [t]he law and
jurisprudence dictate that the duration of
the undertaking begins and ends at
determined or determinable times while
clarifying that [t]he phrase determinable
times simply means capable of being
determined or fixed. In this case, Sykes
Asia substantially complied with this
requisite when it expressly indicated in
petitioners employment contracts that
their positions were co-terminus with the
project. To the mind of the Court, this
caveat sufficiently apprised petitioners
that their security of tenure with Sykes
Asia would only last as long as the Alltel
Project was subsisting. In other words,
when the Alltel Project was terminated,
petitioners no longer had any project to
work on, and hence, Sykes Asia may
validly terminate them from employment.
In sum, respondents have shown by
substantial evidence that petitioners were
merely project-based employees, and as
such, their services were lawfully
terminated upon the cessation ofthe Alltel
Project.
Veritas
Maritime
Corporation
and/or
Erickson Marquez G.R. No. 206285.
February 4, 2015
Petitioners Claim for Benefits
Was Premature
Actually, Gepanagas filing of his

claim was premature. The Court
has held that a seafarer may have
basis to pursue an action for total
and permanent disability benefits,
if any of the following conditions is
present:chanroblesvirtuallawlibrary

193193
19
4

physician declared him totally and

permanently disabled but the
employer refuses to pay him the
corresponding benefits; and
(a)
The
company-designated
physician
failed
to
issue
a
even after the lapse of the 120-day
period and there is no indication
that further medical treatment
would address his temporary total
disability,
hence,
justify
an
extension of the period to 240
days;
(b) 240 days had lapsed without
any certification issued by the
company designated physician;
(c) The company-designated
physician declared that he is fit
for sea duty within the 120-day
or 240-day period, as the case
may be, but his physician of
choice and the doctor chosen
under Section 20-B(3) of the
POEA-SEC are of a contrary
opinion;
(d)
The
company-designated
employer,
believed
that
his
total as well;
(e)
The
company-designated
disability grading;
(f)
The
company-designated
physician determined that his
medical
condition
is
not
the POEA-SEC but his doctor-ofchoice and the third doctor
(g)
The
company-designated
(h)
The
company-designated
physician declared him partially
and permanently disabled within
the 120-day or 240-day period but
he
remains
incapacitated
to
perform his usual sea duties after
the lapse of said periods.25
In this case, when Gepanaga filed

his complaint with the arbitration
office on March 25, 2009, he had
yet
to
consult
his
own
physician, Dr. Villa. Indeed, the
Court has observed that when
Gepanaga filed his complaint, he
was armed only with the belief that
he had yet to fully recover from his
injured finger because of the
incident that occurred on board the
M.V. Melbourne Highway. It was
only on June 9, 2009, a few days
before he filed his position paper
on June 15, 2009, that Gepanaga
sought the services of Dr. Villa.
Emer Milan, Randy Masangkay, Wilfredo
Javier, et al. Vs. National Labor
Relations Commission, Solid Mills,
Inc. and/or Philip Ang G.R. No.
202961. February 4, 2015
An employer is allowed to withhold
terminal pay and benefits pending
the
employee's
return
ofits
properties.
I
The
National
Labor
Relations
Commission
may
preliminarily
determine issues related to rights
arising from an employer-employee
relationship
The National Labor Relations Commission
has
jurisdiction
to
determine,
preliminarily, the parties rights over a
property, when it is necessary to
determine an issue related to rights or

194194
19
5

claims arising from an employer-employee
relationship.
Article 217 provides that the Labor
Arbiter, in his or her original jurisdiction,
and
the
National
Labor
Relations
Commission, in its appellate jurisdiction,
may determine issues involving claims
arising
from
employeremployee
relations.
Claims
arising
from
an
employeremployee relationship are not limited to
claims by an employee. Employers may
also have claims against the employee,
which arise from the same relationship.
This court ruled that since the transfer of
ownership of the vehicle to the employee
was connected to his separation from the
employer and arose from the employeremployee relationship of the parties, the
employers claim fell within the Labor
Arbiters jurisdiction.
As a general rule, therefore, a claim only
needs to be sufficiently connected to the
labor issue raised and must arise from an
employer- employee relationship for the
labor tribunals to have jurisdiction.
In this case, respondent Solid Mills claims
that its properties are in petitioners
possession by virtue of their status as its
employees. Respondent Solid Mills allowed
petitioners to use its property as an act of
liberality. Put in other words, it would not
have allowed petitioners to use its
property had they not been its employees.
The return of its properties in petitioners
possession by virtue of their status as
employees is an issue that must be
resolved to determine whether benefits
can be released immediately. The issue
raised by the employer is, therefore,
connected to petitioners claim for benefits
and is sufficiently intertwined with the
parties employer- employee relationship.
Thus, it is properly within the labor
tribunals jurisdiction.
II
Institution of clearance procedures
has legal bases
Requiring clearance before the release of
last payments to the employee is a
standard procedure among employers,
whether public or private. Clearance
procedures are instituted to ensure that
the properties, real or personal, belonging
to the employer but are in the possession
of the separated employee, are returned
to the employer before the employees
departure.
As a general rule, employers are
prohibited from withholding wages from
employees. The Labor Code provides:
Art. 116. Withholding of wages and
kickbacks prohibited. It shall be
unlawful for any person, directly or
indirectly, to withhold any amount from
the wages of a worker or induce him to
give up any part of his wages by force,
stealth, intimidation, threat or by
any other means whatsoever without the
workers consent.
The Labor Code also prohibits the
elimination or diminution of benefits.
Thus:
Art.
100.
Prohibition
against
elimination or diminution of benefits.
Nothing in this Book shall be construed to
eliminate or in any way diminish
supplements, or other employee benefits
being enjoyed at the time of promulgation
of this Code.
However, our law supports the employers
institution of clearance procedures before
the release of wages. As an exception to
the general rule that wages may not be
withheld and benefits may not be
diminished,
The Civil Code provides that the employer
is authorized to withhold wages for debts

195195
19
6

due:
Article 1706. Withholding of the wages,
except for a debt due, shall not be made
by the employer.
Debt in this case refers to any obligation
due from the employee to the employer.
It includes any accountability that the
employee may have to the employer.
There is no reason to limit its scope to
uniforms and equipment, as petitioners
would argue.
More importantly, respondent Solid Mills
and NAFLU, the union representing
petitioners, agreed that the release of
petitioners
benefits
shall
be
less
accountabilities.
Accountability, in its ordinary sense,
means obligation or debt. The ordinary
meaning of the term accountability does
not limit the definition of accountability to
those incurred in the worksite. As long as
the debt or obligation was incurred by
virtue
of
the
employer-employee
relationship, generally, it shall be included
in the employees accountabilities that are
subject to clearance procedures.
It may be true that not all employees
enjoyed the privilege of staying in
respondent Solid Mills property. However,
this alone does not imply that this
privilege when enjoyed was not a result of
the
employer-employee
relationship.
Those who did avail of the privilege were
employees of respondent Solid Mills.
Petitioners possession should, therefore,
be included in the term accountability.
Accountabilities
of
employees
are
personal. They need not be uniform
among all employees in order to be
included in accountabilities incurred by
virtue
of
an
employer-employee
relationship.
Petitioners do not categorically deny
respondent Solid Mills ownership of the
property, and they do not claim superior
right to it. What can be gathered from the

findings of the Labor Arbiter, National
Labor Relations Commission, and the
Court of Appeals is that respondent Solid
Mills allowed the use of its property for the
benefit of petitioners as its employees.
Petitioners were merely allowed to
possess and use it out of respondent Solid
Mills liberality. The employer may,
therefore, demand the property at will.
The return of the propertys possession
became an obligation or liability on the
part of the employees when the employeremployee relationship ceased. Thus,
respondent Solid Mills has the right to
withhold petitioners wages and benefits
because of this existing debt or liability. In
Solas v. Power and Telephone Supply
Phils., Inc., et al., this court recognized
this right of the employer when it ruled
that the employee in that case was not
constructively dismissed
The law does not sanction a situation
where employees who do not even assert
any claim over the employers property
are allowed to take all the benefits out of
their
employment
while
they
simultaneously withhold possession of
their employers property for no rightful
reason.
Withholding of payment by the employer
does not mean that the employer may
renege on its obligation to pay employees
their wages, termination payments, and
due benefits. The employees benefits are
also not being reduced. It is only
subjected to the condition that the
employees return properties properly
belonging to the employer. This is only
consistent with the equitable principle that
no one shall be unjustly enriched or
benefited at the expense of another.
For these reasons, we cannot hold that
petitioners are entitled to interest of their
withheld
separation
benefits.
These
benefits were properly withheld by
respondent Solid Mills because of their
refusal to return its property.

196196
19
7

III
did all that was required by law.
Mahilom and Damian are not entitled

to the benefits claimed
The preferential treatment given by <;>ur

law to labor, however, is not a license for
abuse. It is not a signal to commit acts of
unfairness that will unreasonably infringe
on the property rights of the company.
Both labor and employer have social
utility, and the law is not so biased that it
does not find a middle ground to give each
their due.
Teodora Mahilom is
separation benefits.
not
entitled
to
Both
the
National
Labor
Relations
Commission and the Court of Appeals
found that Teodora Mahilom already
retired long before respondent Solid Mills
closure. They found that she already
received her retirement benefits. We have
no reason to disturb this finding. This
court is not a trier of facts. Findings of the
National Labor Relations Commission,
especially when affirmed by the Court of
Appeals, are binding upon this court.
Moreover, Teodora Mahiloms claim for
retirement benefits was not included in
her complaint filed before the Labor
Arbiter. Hence, it may not be raised in the
appeal.
Similarly, the National Labor Relations
Commission and the Court of Appeals
found that Carlito Damian already
received his terminal benefits. Hence, he
may no longer claim terminal benefits.
The fact that respondent Solid Mills has
not yet demolished Carlito Damians house
in SMI Village is not evidence that he did
not receive his benefits. Both the National
Labor Relations Commission and the Court
of Appeals found that he executed an
affidavit stating that he already received
the benefits.
Our laws provide for a clear preference for
labor. This is in recognition of the
asymmetrical power of those with capital
w~en they are left to negotiate with their
workers without the standards and
protection of law. In cases such as these,
the collective bargaining unit of workers
are able to get more benefits and in
exchange, the owners are able to continue
with the program of cutting their losses or
wind down their operations due to serious
business losses. The company in this case
Clearly, in this case, it is for the workers

to return their housing in exchange for the
release of their benefits. This is what they
agreed upon. It is what is fair in the
premises.
Andy D. Balite, Delfin M. Anzaldo and
Monaliza Dl. Bihasa Vs. SS Ventures
International, Inc., Sung Sik Lee and
Evelyn Rayala G.R. No. 195109.
February 4, 2015
The issue for the Courts resolution
is whether or not (a) retirement
pay,
and
(b)
representation,
transportation, and cellular phone
usage
allowances
should
be
awarded in favor of Villena.
A. ON RETIREMENT PAY.
Verily, the Court is not unaware of its
rulings wherein it pronounced that
retirement pay and separation pay are not
mutually exclusive (unless there is a
specific prohibition in the collective
bargaining agreement or retirement plan
against the payment of both benefits);
however, with Villenas entitlement to
retirement pay not included as an issue in
an illegal dismissal case which had
already been finally decided, it is quite
absurd
for
Villena
to
submit
a
contemporaneous claim for retirement
pay on the execution phase of these
proceedings. In fine, the plea to include
retirement pay in the execution of the
final and executory August 31, 2001 CA
Decision and March 22, 2007 NLRC
Resolution, under the phrase other
benefits, cannot be granted.

197197
19
8

B.
ON
TRANSPORTATION,
REPRESENTATION, AND CELLULAR PHONE
USAGE ALLOWANCES.
necessary and desirable in its usual

business or trade thereby qualifying them
as regular employees,
Meanwhile, on the matter of the claimed

allowances, it is clear from BATELEC IIs
pleadings
and
submissions
that
representation allowance, transportation
allowance, and cellular phone usage
allowance are given to the Finance
Manager/Department Manager as part of
their benefits, unlike the separate
entitlement to retirement pay which may
be recovered only upon a meritorious
subsequent
application
when
the
employee decides to retire. Consequently,
these allowances ought to be included in
the other benefits pertaining to the
position of Finance Manager to which
Villena is entitled to and which were
awarded to her under the final and
executory
CA
Decision
and
NLRC
Resolution.
Here, respondent, in its position paper,

expressly admitted that petitioners were
employed as route helpers in anticipation
of the high volume of work in its plants
and sales offices. As such, respondents
contention that petitioners could not have
attained regular employment status for
they merely rendered services for periods
of less than a year cannot be sustained in
view of the Magsalin doctrine previously
cited. Indeed, the pernicious practice of
engaging employees for a fixed period
short of the six-month probationary period
of employment, and again, on a day-today basis thereafter, mocks the law.
With the award of the "other benefits

pertaining to the position of Finance
Manager" made by the CA in its August
31, 2001 Decision lapsing into finality, the
same had already become immutable and
unalterable; means that they may no
longer be modified in any respect, even if
the modification is meant to correct what
is perceived to be an erroneous conclusion
of fact or law. Thus, it was an error on the
part of the CA to still consider, rule upon,
and vary the previous CA Ruling, i.e.,
August 31, 2001 CA Decision, on the
entitlement of Villena to the benefits of
representation,
transportation,
and
cellular phone usage allowances. On this
score, therefore, the claim ofVillena is
granted.
Romeo Basan, et al. Vs. Coca-Cola Bottlers
Philippines G.R. Nos. 174365-66.
February 4, 2015
As for the primordial issue in this case, it
must be noted that the same has already
been resolved in Magsalin v. National
Organization of Working Men, wherein this
Court has categorically declared that the
nature of work of route helpers hired by
Coca Cola Bottlers Philippines, Inc. is
here are two kinds of regular employees,

namely: (1) those who are engaged to
perform activities which are usually
business or trade of the employer; and (2)
those who have rendered at least one
year of service, whether continuous or
broken, with respect to the activities in
which they are employed. Simply stated,
regular employees are classified into: (1)
regular employees by nature of work; and
(2) regular employees by years of service.
The former refers to those employees who
perform a particular activity which is
business or trade of the employer,
regardless of their length of service; while
the latter refers to those employees who
have been performing the job, regardless
of the nature thereof, for at least a year.
Petitioners, in this case, fall under the first
kind of regular employee above. As route
helpers who are engaged in the service of
loading and unloading softdrink products
of respondent company to its various
delivery points, which is necessary or
desirable in its usual business or trade,
petitioners are considered as regular
employees. That they merely rendered
services for periods of less than a year is
of no moment since for as long as they

198198
19
9

were performing activities necessary to

the business of respondent, they are
deemed as regular employees under the
Labor Code, irrespective of the length of
their service.
While fixed term employment is not per se
illegal or against public policy, the criteria
above must first be established to the
satisfaction of this Court. Yet, the records
of this case reveal that for years,
petitioners were repeatedly engaged to
perform
functions
necessary
to
respondents business for fixed periods
short of the six-month probationary period
of employment. If there was really no
intent to circumvent security of tenure,
respondent should have made it clear to
petitioners that they were being hired only
for fixed periods in an agreement freely
entered into by the parties. To this Court,
respondents act of hiring and re-hiring
petitioners for periods short of the legal
probationary period evidences its intent to
thwart petitioners security of tenure,
especially in view of an awareness that
ordinary workers, such as petitioners
herein, are never on equal terms with
their employers. It is rather unjustifiable
to allow respondent to hire and rehire
petitioners on fixed terms, never attaining
regular status.
Maersk-Filipinas Crewing, Inc., A.P. Moller
Singapore PTE Limited and Jesus
Agbayani Vs. Toribio C. AvestruzG.R.
No. 207010. February 18, 2015
Petitioners maintain that Avestruz
was dismissed on the ground of
insubordination, consisting of his
repeated failure to obey his
superiors
order
to
maintain
cleanliness in the galley of the
vessel as well as his act of
insulting a superior officer by
words or deeds.
employee, and must pertain to the duties

which he had been engaged to discharge
In this case, the contents of Captain
Woodwards e-mails do not establish that
Avestruzs conduct had been willful, or
characterized by a wrongful and perverse
attitude.
Similarly, the Court affirms the finding of
the CA that Avestruz was not accorded
procedural due process, there being no
compliance with the provisions of Section
17 of the POEA-SEC as above-cited, which
requires the two-notice rule.
Onofre V. Montero, et al. Vs. Times
Transporation Co., Inc., et al.G.R. No.
190828. March 16, 2015
Settled is the rule that when one is
arbitrarily and unjustly deprived of his job
or means of livelihood, the action
instituted to contest the legality of ones
dismissal from employment constitutes, in
essence, an action predicated upon an
injury to the rights of the plaintiff, as
contemplated under Article 1146 of the
New Civil Code, which must be brought
within four years.
The petitioners contend that the period
when they filed a labor case on May 14,
1998 but withdrawn on March 22, 1999
should be excluded from the computation
of the four-year prescriptive period for
illegal dismissal cases. However, the Court
had already ruled that the prescriptive
period continues even after the withdrawal
of the case as though no action has been
filed at all. The applicability of Article 1155
of the Civil Code in labor cases was upheld
in the case of Intercontinental
Broadcasting Corporation v. Panganiban
where the Court held that although the
commencement of a civil action stops the
running of the statute of prescription or
limitations, its dismissal or voluntary
abandonment by plaintiff leaves the
parties in exactly the same position as
though no action had been commenced at
all.
Insubordination, as a just cause for the

dismissal of an employee, necessitates the
concurrence of at least two requisites: (1)
the employees assailed conduct must
have been willful, that is, characterized by
a wrongful and perverse attitude; and (2)
the order violated must have been
In like manner, while the filing of the
reasonable, lawful, made known to the
199199
20
0

complaint for illegal dismissal before the
LA interrupted the running of the
prescriptive period, its voluntary
withdrawal left the petitioners in exactly
the same position as though no complaint
had been filed at all. The withdrawal of
their complaint effectively erased the
tolling of the reglementary period.
A prudent review of the antecedents of

the claim reveals that it has in fact
prescribed due to the petitioners
withdrawal of their labor case docketed as
NLRC RAB-I-01-1007. Hence, while the
filing of the said case could have
interrupted the running of the four-year
prescriptive period, the voluntary
withdrawal of the petitioners effectively
cancelled the tolling of the prescriptive
period within which to file their illegal
dismissal case, leaving them in exactly the
same position as though no labor case had
been filed at all. The running of the fouryear prescriptive period not having been
interrupted by the filing of NLRC RAB-I01-1007, the petitioners cause of action
had already prescribed in four years after
their cessation of employment on October
26, 1997 and November 24, 1997.
Consequently, when the petitioners filed
their complaint for illegal dismissal,
separation pay, retirement benefits, and
damages in 2002, their claim, clearly, had
already been barred by prescription.
Fonterra Brands Phils., Inc. Vs. Leonardo
Largado and Teotimo EstrellanoG.R.
No. 205300. March 18, 2015
As correctly held by the Labor
Arbiter and the NLRC, the
termination of respondents
employment with Zytron was
brought about by the cessation of
their contracts with the latter. We
give credence to the Labor Arbiters
conclusion that respondents were
the ones who refused to renew
their contracts with Zytron, and the
NLRCs finding that they
themselves acquiesced to their
transfer to A.C. Sicat.
By refusing to renew their contracts with
Zytron, respondents effectively resigned

from the latter. Resignation is the
voluntary act of employees who are
compelled by personal reasons to
dissociate themselves from their
employment, done with the intention of
relinquishing an office, accompanied by
the act of abandonment.
In this regard, We defer to the findings of
the CA anent A.C. Sicats status as a
legitimate job contractor, seeing that it is
consistent with the rules on job
contracting and is sufficiently supported
by the evidence on record.
A person is considered engaged in
legitimate job contracting or
subcontracting if the following conditions
concur:
The contractor or subcontractor

carries on a distinct and
independent business and
undertakes to perform the job,
work or service on its own account
and under its own responsibility
according to its own manner and
method, and free from the control
and direction of the principal in all
matters connected with the
performance of the work except as
to the results thereof;
The contractor or subcontractor
has substantial capital or
investment; and
The agreement between the
principal and contractor or
subcontractor assures the
contractual employees entitlement
to all labor and occupational safety
and health standards, free exercise
of the right to self-organization,
security of tenure, and social and
welfare benefits.
On the other hand, contracting is

prohibited when the contractor or
subcontractor merely recruits, supplies or
places workers to perform a job, work or
service for a principal and if any of the
following elements are present, thus:

200200
20
1

1. The contractor or subcontractor
does not have substantial capital or
investment which relates to the
job, work or service to be
performed and the employees
recruited, supplied or placed by
such contractor or subcontractor
are performing activities which are
directly related to the main
business of the principal; or
2. The contractor does not exercise
the right to control over the
performance of the work of the
contractual employee.
Hocheng Philippines Corporation Vs. Antonio

M. FarralesG.R. No. 211497. March 18, 2015
Theft committed by an employee against a
person other than his employer, if proven by
substantial evidence, is a cause analogous to
serious misconduct. Misconduct is improper or
wrong conduct, it is the transgression of some
established and definite rule of action, a
forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not
mere error in judgment. The misconduct to be
serious must be of such grave and aggravated
character and not merely trivial or unimportant.
Such misconduct, however serious, must,
nevertheless, be in connection with the
employees work to constitute just cause for his
separation.
But where there is no showing of a clear, valid
and legal cause for termination of employment,
the law considers the case a matter of illegal
dismissal. If doubts exist between the evidence
presented by the employer and that of the
employee, the scales of justice must be tilted in
favor of the latter. The employer must
affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause.

201201

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1

COMPILATION OF SUPREME COURT DECISIONS

LABOR LAW AND

the entire duration of his contract, bears a

The company-designated physician must

Respondent was repatriated on September 18,

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

April 19, 2006 is less than the statutory 240-day

of the instant petition concerns the

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

cannot furthermore be considered as the

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

It is entrenched in our jurisprudence that

employment contract. Section 32(A) of

The contractual liability of an employer to

Here, Suarez did not present substantial

Based on the above, an injury or illness is

The Court is inclined to accept the findings

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

The CA has no basis in holding that

A Collective Bargaining Agreement

any other contract, it has the force

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

affidavits, corroborated by the affidavits of

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

establish his cases merits.

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

dismissed for the petitioners' failure to

employment is rendered impossible,

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

supporting the claims of respondent.

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

to the strained relations between the

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

franchisors may impose guidelines that

This case concerns the authority of

Restated, the issues are: (a) whether or

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

sectors and establishments enumerated in

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

convenience, is an entity shielded by a

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

Guzman, CBB's former Associate Director,

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

laid down in the POEA-SEC and/or

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS