SYCIP, GORRES, VELAYO G.R. No.

161366
& COMPANY,
Petitioner, Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
CAROL DE RAEDT, Promulgated:
Respondent. June 16, 2009
x-----------------------------------------------------------------------------------------x
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review[1] challenging the 7 October 2003
Decision[2] and 17 December 2003 Resolution[3] of the Court of Appeals in CAG.R. SP No. 59916.The Court of Appeals reversed the 16 February 2000
Decision[4] of the National Labor Relations Commission and partially reinstated the
14 July 1999 Decision[5] of Labor Arbiter Monroe C. Tabingan holding that
respondent Carol De Raedt (De Raedt) was illegally dismissed by petitioner Sycip,
Gorres, Velayo & Company (SGV).
The Facts
Sometime in June 1989, the Philippine Government and the Commission for
European Communities (Commission) entered into a Financing Memorandum
whereby the Commission undertook to provide financial and technical assistance
for the implementation of rural micro projects in five provinces of the Cordillera

area in Northern Luzon.Consequently, the Central Cordillera Agricultural

Programme (CECAP) project was launched to be implemented by the Department
of Agriculture (DA).
On 22 May 1989, the DA contracted Travers Morgan International Ltd. (TMI) to
provide the required technical assistance services for CECAP.
On 1 July 1989, TMI and SGV entered into a Sub-Consultancy Agreement for the
latter to undertake part of the technical assistance services requirements of the
CECAP. SGV would provide for the Technical Assistance Services. Hence, SGV
proposed qualified consultants as defined by the Terms of Reference.
The acceptance and appointment of the proposed consultants to the project were
subject to the unanimous approval of the TMI, the DA and the Commission. For
the position of Sociologist, SGV proposed Felino Lorente (Lorente). However,
Thomas Gimenez (Gimenez) of the DA disputed the qualifications of Lorente and
recommended instead De Raedt.
Martin Tull (Tull) of TMI replied to Gimenez that TMI would consider De Raedt
for the sociologist position. Thus, Gimenez volunteered to call De Raedt to advise
her of a possible assignment to the CECAP.

Eventually, the DA advised SGV that De Raedts nomination, among others, had
been approved by the Commission and the DA and that she was expected to start
her assignment on 3 July 1989.
On 6 July 1989, De Raedt wrote SGV expressing her conformity to the consultancy
contract, thus she was advised to sign the same. De Raedt signed the contract on 14
July 1989 but her start-up date with the CECAP was moved to 15 August 1989
with the approval of the DA because she was in Thailand to finish an assignment.
While the CECAP was in progress, TMI received verbal and written complaints
from the project staff regarding De Raedts performance and working relations with
them.

An investigation was then conducted by the TMI on the above

complaints. Thereafter, the TMI confirmed that De Raedts retention would be
counter-productive to the progress of the project because a number of project staff
found it difficult to work with her. Thus, the TMI directed SGV to withdraw De
Raedt from the CECAP.
In compliance with TMIs instructions, SGV facilitated De Raedts withdrawal from
the CECAP.
De Raedt filed a case against SGV for illegal dismissal and damages before the
Arbitration Branch of the NLRC.
The Labor Arbiter rendered a decision in favor of De Raedt.
SGV appealed the decision of the Labor Arbiter to the NLRC, which rendered
judgment in favor of SGV.
De Raedt filed a petition for certiorari with the Court of Appeals, which reversed
the NLRC in a Decision promulgated on 7 October 2003.
SGV filed a motion for reconsideration, which was denied by the Court of Appeals
in its Resolution dated 17 December 2003.
Hence, this petition.
The Ruling of the Labor Arbiter
The Labor Arbiter found De Raedt as an employee of SGV. How she conducted
herself and how she carried out the project were dependent on and prescribed by
SGV and TMI, respectively. The Labor Arbiter further ruled that SGV is
considered as the employer of De Raedt since it acted indirectly in the interest of
TMI, the entity directly in-charge of the CECAP project for which De Raedt was
hired. Moreover, the Labor Arbiter found SGV as the entity which is the source of
De Raedts income and other benefits.

The Labor Arbiter found no sufficient valid ground to terminate De Raedts services
although procedural due process was observed. The dispositive portion of the 14
July 1999 Decision of the Labor Arbiter reads:
WHEREFORE, judgment is hereby rendered declaring complainant to
have been illegally dismissed by respondent. Consequently, respondent
Sycip, Gorres & Velayo and Co. is hereby ordered to pay complainant
the following:
a) Unpaid salaries corresponding to the unexpired portion of the contract
in the amount of Eight Hundred Two Thousand (P802,000.00) Pesos;
b) Moral damages in the amount of Two Hundred Fifty Thousand
(P250,000.00) Pesos;
c)
Exemplary damages in the amount of One Hundred
Thousand (P100,000.00) Pesos;
d) 10% of the total award as attorneys fees amounting to One Hundred
Fifteen Thousand Two Hundred Pesos (P115,200.00).
The computations of which are hereto attached as Annex A and made an
integral part hereof.
SO ORDERED.[6]

The Ruling of the NLRC

The NLRC reversed the ruling of the Labor Arbiter and found that there was no
employer-employee relationship between SGV and De Raedt.
The NLRC agreed with the Labor Arbiters finding that SGV had no discretion in
the selection of De Raedt for the position of Sociologist in the CECAP. The
selection was made by the TMI, upon recommendation of Gimenez of the DA, to
be approved by the DA and the Commission. The engagement of De Raedt was
coursed through SGV.
The payment of De Raedts service fee was done through SGV but the funds came
from the TMI as shown by SGVs billings to TMI for De Raedts professional fee.

As regards the power of dismissal, SGV merely implemented TMIs instructions to

withdraw De Raedt from the CECAP.
The NLRC found that SGV did not exercise control over De Raedts work. The
Sub-Consultancy Agreement between TMI and SGV clearly required De Raedt to
work closely with and under the direction and supervision of both the Team leader
and the Project Coordinator.
Hence, SGVs participation is to merely monitor her attendance, through time
records, for the payment of her retainer fee and to validate the time she expended
in the project with her written reports.
The following circumstances also indicated that no employment relationship
existed between the parties: (1) De Raedt was engaged on a contract basis; (2) the
letter-agreement between the parties clearly states that there is no employeremployee relationship between the parties and that De Raedt was at all times to be
considered an independent contractor; and (3) De Raedt was allowed to engage in
other employment during all the time she was connected with the project.
The dispositive portion of the 16 February 2000 Decision of the NLRC reads:
WHEREFORE, premises considered, the assailed decision of the Labor
Arbiter is REVERSED and SET ASIDE and the complaint is
DISMISSED for lack of jurisdiction.
SO ORDERED.[7]

The Ruling of the Court of Appeals

The Court of Appeals reversed the ruling of the NLRC and reinstated the decision
of the Labor Arbiter insofar as the latter found De Raedt as an employee of SGV.
The Court of Appeals found that based on the letter-agreement between the parties,
SGV engaged De Raedt for the project on a contract basis for 40 months over a
period of five years during which she was to work full time. She could not engage

in any other employment. In fact, she had to resign from her teaching job at the
University of the Philippines. She could not leave her place of assignment without
SGVs consent. She must maintain an accurate record of the time she spent on the
job, and prepare reports which may be required by her team leader and
SGV. Whether actual supervision of her work had turned out to be minimal or not,
SGV reserved the right to exercise it at any time. Further, SGV asserted its right to
terminate her services.[8]
The Court of Appeals found that De Raedt was removed from the project because
of personality differences, which is not one of the grounds for a valid dismissal of
an employee.[9]
The dispositive portion of the 7 October 2003 Decision of the Court of Appeals
reads:
IN VIEW OF THE FOREGOING, the assailed decision of the NLRC
dated February 16, 2000 is REVERSED, and a new one ENTERED
partially REINSTATING the Decision of Labor Arbiter Monroe
Tabing[a]n on July 14, 1999, by affirming paragraph (a) thereof, deleting
paragraph (b) and (c), and reducing the award of attorneys fees in
paragraph (d) to 5% of the principal award.
SO ORDERED.[10]

The Issue
The issue in this case is whether De Raedt was an employee of SGV. If so, whether
De Raedt was illegally dismissed by SGV.
The Ruling of the Court
The petition is meritorious.

The existence of an employer-employee relationship is ultimately

a question of fact. As a general rule, factual issues are beyond the province of this
Court. However, this rule admits of exceptions, one of which is where there are
conflicting findings of fact, such as in the present case. Consequently, this Court
shall scrutinize the records to ascertain the facts for itself.[11]
To determine the existence of an employer-employee relationship, case law has
consistently applied the four-fold test, 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 so-called control test is the most important indicator of
the presence or absence of an employer-employee relationship.[12]

A. Selection and Engagement of the Employee

De Raedt was contracted by SGV as part of the latters obligation under the SubConsultancy Agreement with TMI, which was in turn contracted by the DA to
provide the services required for the foreign-assisted CECAP project. De Raedt
was neither engaged by SGV as an ordinary employee, nor was she picked by SGV
from a pool of consultants already working for SGV. Hence, SGV engaged De
Raedts services precisely because SGV had an existing Sub-Consultancy
Agreement with TMI to provide such services.
The Labor Arbiter and the NLRC both agree that SGV had no discretion in the
selection of De Raedt for the position of Sociologist in the CECAP. The selection
was made by the TMI, upon recommendation of Gimenez of the DA, to be
approved by the DA and the Commission. The engagement of De Raedt was
merely coursed through SGV.
Moreover, SGVs first choice for the Sociologist position was Lorente. However,
Gimenez recommended De Raedt to SGV. De Raedts testimony proves that her
appointment was ultimately the DAs decision, and not SGVs, thus:
Q Madam Witness, how did you come to know the vacancy here in CECAP
project for a position of project Sociologist?

A I was contacted when I was in Honolulu. I was contacted by the firm

Sarmiento and Company who asked me if I would list myself for the
position of project sociologist for the CECAP project in 1987 when it
was discussed by the NGOs in the Cordillera and finally I was contacted
by the SGV. They asked me if I am interested in the position project
sociologist. I was also contacted by Mr. Gimenez to ask me if SGV had
contacted me regarding the position.
Q So among the informants who gave you an idea that the position of project
sociologist is the project director himself, is it not?
A He informed me that I have been considered by the Department of
Agriculture for the position of project sociologist.
Q Before you were considered for the position of (sic) the Department of
Agriculture, did you give them an application?
A No, sir.
Q Do you know who gave your name to them?
A Not sure, may be the Department of Agriculture or Sarmiento, because I was
asked by the consultancy firm Sarmiento if I would be willing to list with
their business consultants for the CECAP project and this was before the
bidding and Sarmiento did not make the bidding for the project.
Q Sarmiento is different from SGV is that correct?
A Yes, sir.[13] (Emphasis supplied)

B. Payment of Wages
The letter-agreement between the parties specifies the consideration for De Raedts
services as a retainer fee payable for every day of completed service in the
project. In addition to this, monthly subsistence and housing allowances and
medical insurance were to be given to De Raedt. The retainer fees and privileges
given to De Raedt are not commonly given to ordinary employees, who receive
basic monthly salaries and other benefits under labor laws.

The Court notes that the retainer fees paid by SGV to De Raedt ultimately came
from its client, TMI. De Raedt was aware that the source of the funds was the grant
from the Commission. By the terms of the Sub-Consultancy Agreement, TMI paid
SGV remuneration of the fixed unit rate component of the part services.
However, whatever amount SGV received from TMI did not necessarily entitle De
Raedt to the entire amount. In the parties letter-agreement, SGV made it clear that
payments made by TMI should not be construed as being due [De Raedt] since
these items are intended for the administration, overhead expenses, and other
related expenses of [SGV] in the development, management, and supervision of
[De Raedts] assignment.

C. Power of Dismissal
Under the letter-agreement between the parties, SGV may terminate De Raedts
services at anytime that the contract between the Department of Agriculture
Government of the Philippines and Travers Morgan International, Consulting
Engineers, Planners and Management Consultants is terminated for any cause
whatsoever.
De Raedt failed to show that SGV could terminate her services on grounds other
than the end of the contract between the DA as implementing agency of the
CECAP and TMI or the termination by TMI of the contract with SGV, such as
retrenchment to prevent losses as provided under labor laws.[14]
Further, under the parties agreement, should De Raedt decide to leave the project
for any reason whatsoever other than a reasonable cause beyond her control which
prevents her from performing the required services, De Raedt shall be liable for
liquidated damages for breach of contract, in an amount equivalent to the retainer
fee for a period of one month. This pre-termination with penalty clause in the
parties agreement clearly negates the existence of an employment relationship
between the parties. If De Raedt were indeed SGVs employee, she should have
been able to resign for whatever professional or personal reason at anytime, even
prior to the end of the contract between the DA and TMI or between TMI and SGV,
without incurring any liability for such resignation.

Besides, it was TMI, through Tull, which instructed SGV to disengage De Raedt
from the project. Terminating De Raedts services was beyond SGVs control, as
SGV had no choice but to comply with the directive of its client (TMI). Clearly, De
Raedts retention as a Sociologist in the CECAP project was dependent on TMIs
and DAs decisions. In his letter dated 14 June 1991 addressed to SGV, Tull wrote
the following:
Notwithstanding a number of staff on the project, all employed by the
Department of Agriculture, have confirmed that they have found it
difficult to work with Mrs de Raedt over the past few months which
supports the earlier advice from the Department of Agriculture.
In the circumstances I consider we have no alternative but to replace
Mrs de Raedt. Would you please make arrangement for her to be
withdrawn from the project by the end of June 1991.Payment of staff
fees and housing allowances under the project in respect of Mrs de Raedt
will be paid up to 30th June 1991.[15] (Emphasis supplied)

D. Power of Control
The letter-agreement between the parties required De Raedt to maintain an
accurate time record, notify SGV of delays in De Raedts schedule, secure a prior
clearance to leave place of assignment, and prepare reports. These requirements
hardly show that SGV exercises control over the means and methods in the
performance of De Raedts duties as a Sociologist of the CECAP. SGV was not
concerned with De Raedts ways of accomplishing her work as a
Sociologist. Rather, SGV naturally expected to be updated regularly of De Raedts
work progress, if any, on the project for which she was specifically engaged [16] to
ensure SGVs compliance with the terms and conditions of the Sub-Consultancy
Agreement with TMI. The services to be performed by her specified what she
needed to achieve but not on how she was to go about it.[17]
In sum, there existed no employer-employee relationship between the parties. De
Raedt is an independent contractor, who was engaged by SGV to render services to
SGVs client TMI, and ultimately to DA on the CECAP project, regarding matters

in the field of her special knowledge and training for a specific period of
time. Unlike an ordinary employee, De Raedt received retainer fees and benefits
such as housing and subsistence allowances and medical insurance. De Raedts
services could be terminated on the ground of end of contract between the DA and
TMI, and not on grounds under labor laws. Though the end of the contract between
the DA and TMI was not the ground for the withdrawal of De Raedt from the
CECAP, De Raedt was disengaged from the project upon the instruction of SGVs
client, TMI. Most important of all, SGV did not exercise control over the means
and methods by which De Raedt performed her duties as Sociologist. SGV did
impose rules on De Raedt, but these were necessary to ensure SGVs faithful
compliance with the terms and conditions of the Sub-Consultancy Agreement it
entered into with TMI.
WHEREFORE, the Court GRANTS the petition. The Court SETS ASIDE the 7
October 2003 Decision and 17 December 2003 Resolution of the Court of Appeals
in CA-G.R. SP No. 59916 and REINSTATES the 16 February 2000 Decision of
the National Labor Relations Commission.
SO ORDERED.
PCL SHIPPING PHILIPPINES,
INC. and U-MING MARINE
TRANSPORT CORPORATION,
Petitioners,

- versus -

G.R. No. 153031

Present:

PANGANIBAN, C.J.
YNARES-SANTIAGO,
(Working Chairperson)
AUSTRIA-MARTINEZ,
CALLEJO, SR. and
CHICO-NAZARIO, JJ.

NATIONAL LABOR
RELATIONS COMMISSION
Promulgated:
and STEVE RUSEL,
Respondents.
December 14, 2006
x------------------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court assailing the Decision[1] of the Court of Appeals (CA) dated December 18,
2001 in CA-G.R. SP No. 59976, which affirmed the Decision of the National
Labor Relations Commission (NLRC) dated March 22, 2000 in NLRC NCR CA
No. 018120-99; and the Resolution of the CA dated April 10, 2002, denying
petitioners motion for reconsideration.[2]
The facts of the case, as found by the CA, are as follows:
In April 1996, Rusel was employed as GP/AB seaman by
manning agency, PCL Shipping Philippines, Inc. (PCL Shipping) for and
in behalf of its foreign principal, U-Ming Marine Transport Corporation
(U-Ming Marine). Rusel thereby joined the vessel MV Cemtex General
(MV Cemtex) for the contract period of twelve (12) months with a basic
monthly salary of US$400.00, living allowance of US$140.00, fixed
overtime rate of US$120.00 per month, vacation leave with pay of
US$40.00 per month and special allowance of US$175.00.
On July 16, 1996, while Rusel was cleaning the vessels kitchen,
he slipped, and as a consequence thereof, he suffered a broken and/or
sprained ankle on his left foot. A request for medical examination was
flatly denied by the captain of the vessel. On August 13, 1996, feeling an
unbearable pain in his ankle, Rusel jumped off the vessel using a life
jacket and swam to shore. He was brought to a hospital where he was
confined for eight (8) days.
On August 22, 1996, a vessels agent fetched Rusel from the
hospital and was required to board a plane bound for the Philippines.
On September 26, 1996, Rusel filed a complaint for illegal
dismissal, non-payment of wages, overtime pay, claim for medical
benefits, sick leave pay and damages against PCL Shipping and U-Ming
Marine before the arbitration branch of the NLRC. In their answer, the

latter alleged that Rusel deserted his employment by jumping off the
vessel.
On July 21, 1998, the labor arbiter rendered his decision, the
dispositive portion of which reads as follows:
Wherefore, above premises duly considered we find the
respondent liable for unjust repatriation of the complainant.
Accordingly, the following award is hereby adjudged against the
respondent:
1. The amount of $2,625.00 or its peso equivalent at the time of
payment representing three (3) months salary of the complainant due to
his illegal dismissal.
2. The amount of $1,600.00 or its peso equivalent, representing
sick wage benefits.
3. The amount of $550.00 or its peso equivalent, representing
living allowance, overtime pay and special allowance for two (2) months.
4. The amount of $641.66 or its peso equivalent, representing
unpaid wages from August 11 to 22, 1996.
5. Attorneys fees equivalent to 10% of the total monetary award.
The rest of the claims are dismissed for lack of merit.
SO ORDERED.[3]

Aggrieved by the Decision of the Labor Arbiter, herein petitioners appealed

to the NLRC. In its Decision dated March 22, 2000, the NLRC affirmed the
findings of the Labor Arbiter but modified the appealed Decision, disposing as
follows:
WHEREFORE, premises considered, the assailed decision is as it
is hereby ordered MODIFIED in that the amount representing three
months salary of the complainant due to his illegal dismissal is reduced
to US$1,620.00. Further the award of sick wage benefit is deleted.
All other dispositions are AFFIRMED.
SO ORDERED.[4]

Petitioners filed a Motion for Reconsideration but the NLRC denied the
same in its Decision of May 3, 2000.[5]
Petitioners filed a petition for certiorari with the CA.[6] In its Decision
dated December 18, 2001, the CA dismissed the petition and affirmed the NLRC
Decision.[7]
Petitioners filed a Motion for Reconsideration but it was denied by the CA in its
Resolution dated April 10, 2002.[8]
Hence, the instant petition with the following assignment of errors:
I. The Court of Appeals erred in ruling that private respondent was
illegally dismissed from employment.
xxxx
II. Likewise, the Court of Appeals erred in not upholding
petitioners right to pre-terminate private respondents employment.
xxxx
III. The private respondent is not entitled to other money claims,
particularly as to the award of attorneys fees. [9]

As to their first assigned error, petitioners contend that the CA erred in

affirming the findings of the NLRC that Rusels act of jumping ship does not
establish any intent on his part to abandon his job and never return. Petitioners
argue that Rusels very act of jumping from the vessel and swimming to shore is
evidence of highest degree that he has no intention of returning to his
job. Petitioners further contend that if Rusel was indeed suffering from unbearable
and unmitigated pain, it is unlikely that he is able to swim two (2) nautical miles,
which is the distance between their ship and the shore, considering that he needed
to use his limbs in swimming. Petitioners further assert that it is error on the part of
the CA to disregard the entries contained in the logbook and in the Marine Note
Protest evidencing Rusels offense of desertion because while these pieces of
evidence were belatedly presented, the settled rule is that additional evidence may
be admitted on appeal in labor cases. Petitioners also contend that Rusels act of

desertion is a grave and serious offense and considering the nature and situs of
employment as well as the nationality of the employer, the twin requirements of
notice and hearing before an employee can be validly terminated may be dispensed
with.
As to their second assigned error, petitioners contend that assuming, for the
sake of argument, that Rusel is not guilty of desertion, they invoked the alternative
defense that the termination of his employment was validly made pursuant to
petitioners right to exercise their prerogative to pre-terminate such employment in
accordance with Section 19(C) of the Standard Terms and Conditions Governing
the Employment of Filipino Seafarers On-Board Ocean-Going Vessels, which
provision was incorporated in Rusels Contract of Employment with
petitioners. Petitioners assert that despite the fact that this issue was raised before
the CA, the appellate court failed to resolve the same.
Anent the last assigned error, petitioners argue that it is error on the part of
the CA to affirm the award of living allowance, overtime pay, vacation pay and
special allowance for two months because Rusel failed to submit substantial
evidence to prove that he is entitled to these awards. Petitioners further argue that
these money claims, particularly the claim for living allowance, should not be
granted because they partake of the nature of earned benefits for services rendered
by a seafarer. Petitioners also contend that the balance of Rusels wages from
August 11-22, 1996 should be applied for the payment of the costs of his
repatriation, considering that under Section 19(E) of the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers On-Board OceanGoing Vessels, when a seafarer is discharged for any just cause, the employer shall
have the right to recover the costs of his replacement and repatriation from the
seafarers wages and other earnings. Lastly, petitioners argue that the award of
attorneys fees should be deleted because there is nothing in the decision of the
Labor Arbiter or the NLRC which states the reason why attorneys fees are being
awarded.
In his Comment, private respondent contends that petitioners are raising
issues of fact which have already been resolved by the Labor Arbiter, NLRC and
the CA. Private respondent argues that, aside from the fact that the issues raised
were already decided by three tribunals against petitioners favor, it is a settled rule

that only questions of law may be raised in a petition for review

on certiorari under Rule 45 of the Rules of Court. While there are exceptions to
this rule, private respondent contends that the instant case does not fall under any
of these exceptions. Private respondent asserts that petitioners failed to substantiate
their claim that the former is guilty of desertion. Private respondent further
contends that the right to due process is available to local and overseas workers
alike, pursuant to the provisions of the Constitution on labor and equal protection
as well as the declared policy contained in the Labor Code. Private respondent
argues that petitioners act of invoking the provisions of Section 19(C) of the POEA
Contract as an alternative defense is misplaced and is inconsistent with their
primary defense that private respondent was dismissed on the ground of
desertion. As to the award of attorneys fees, private respondent contends that since
petitioners act compelled the former to incur expenses to protect his interest and
enforce his lawful claims, and because petitioners acted in gross and evident bad
faith in refusing to satisfy private respondents lawful claims, it is only proper that
attorneys fees be awarded in favor of the latter. Anent the other monetary awards,
private respondent argues that these awards are all premised on the findings of the
Labor Arbiter, NLRC and the CA that private respondents dismissal was improper
and illegal.
The Court finds the petition without merit.
Anent the first assigned error, it is a settled rule that under Rule 45 of the
Rules of Court, only questions of law may be raised in this Court. [10] Judicial
review by this Court does not extend to a re-evaluation of the sufficiency of the
evidence upon which the proper labor tribunal has based its determination. [11] Firm
is the doctrine that this Court is not a trier of facts, and this applies with greater
force in labor cases.[12] Factual issues may be considered and resolved only when
the findings of facts and conclusions of law of the Labor Arbiter are inconsistent
with those of the NLRC and the CA. [13] The reason for this is that the quasi-judicial
agencies, like the Arbitration Board and the NLRC, have acquired a unique
expertise because their jurisdiction are confined to specific matters. [14] In the
present case, the question of whether private respondent is guilty of desertion is
factual. The Labor Arbiter, NLRC and the CA are unanimous in their findings that
private respondent is not guilty of desertion and that he has been illegally

terminated from his employment. After a review of the records of the instant case,
this Court finds no cogent reason to depart from the findings of these tribunals.
Petitioners assert that the entries in the logbook of MV Cemtex
General[15] and in the Marine Note Protest[16] which they submitted to the NLRC
confirm the fact that private respondent abandoned the vessel in which he was
assigned. However, the genuineness of the Marine Note Protest as well as the
entries in the logbook are put in doubt because aside from the fact that they were
presented only during petitioners Motion for Reconsideration filed with the NLRC,
both the Marine Note Protest and the entry in the logbook which were prepared by
the officers of the vessel were neither notarized nor authenticated by the proper
authorities. Moreover, a reading of these entries simply shows that private
respondent was presumed to have deserted his post on the sole basis that he was
found missing while the MV Cemtex General was anchored at the port
of Takehara,Japan. Hence, without any corroborative evidence, these documents
cannot be used as bases for concluding that private respondent was guilty of
desertion.
Petitioners also question the findings and conclusion of the Labor Arbiter
and the NLRC that what caused private respondent in jumping overboard was the
unmitigated pain he was suffering which was compounded by the inattention of the
vessels captain to provide him with the necessary treatment inspite of the fact that
the ship was moored for about two weeks at the anchorage of Takehara, Japan; and,
that private respondents act was a desperate move to protect himself and to seek
relief for his physical suffering. Petitioners contend that the findings and
conclusions of the Labor Arbiter and the NLRC which were affirmed by the CA are
based on conjecture because there is no evidence to prove that, at the time he
jumped ship, private respondent was really suffering from an ankle injury.
It is true that no substantial evidence was presented to prove that the cause
of private respondents confinement in a hospital in Takehara, Japan was his ankle
injury. The Court may not rely on the letter marked as Annex B and attached to
private respondents Position Paper because it was unsigned and it was not
established who executed the same.[17] However, the result of the x-ray examination
conducted by the LLN Medical Services, Inc. on August 26, 1996, right after
private respondent was repatriated to thePhilippines, clearly showed that there is a

soft-tissue swelling around his ankle joint.[18] This evidence is consistent with
private respondents claim that he was then suffering from an ankle injury which
caused him to jump off the ship.
As to petitioners contention that private respondent could not have traversed
the distance between the ship and the shore if he was indeed suffering from
unbearable pain by reason of his ankle injury, suffice it to say that private
respondent is an able-bodied seaman and that with the full use of both his arms and
the help of a life jacket, was able to reach the shore.
As correctly defined by petitioners, desertion, in maritime law is:
The act by which a seaman deserts and abandons a ship or vessel,
in which he had engaged to perform a voyage, before the expiration of
his time, and without leave. By desertion, in maritime law, is meant, not
a mere unauthorized absence from the ship, without leave, but an
unauthorized absence from the ship with an intention not to return to
her service; or as it is often expressed, animo non revertendi, that is,
with an intention to desert.[19] (emphasis supplied)

Hence, for a seaman to be considered as guilty of desertion, it is essential that there

be evidence to prove that if he leaves the ship or vessel in which he had engaged to
perform a voyage, he has the clear intention of abandoning his duty and of not
returning to the ship or vessel. In the present case, however, petitioners failed to
present clear and convincing proof to show that when private respondent jumped
ship, he no longer had the intention of returning. The fact alone that he jumped off
the ship where he was stationed, swam to shore and sought medical assistance for
the injury he sustained is not a sufficient basis for petitioners to conclude that he
had the intention of deserting his post. Settled is the rule that in termination cases,
the burden of proof rests upon the employer to show that the dismissal is for a just
and valid cause.[20] The case of the employer must stand or fall on its own merits
and not on the weakness of the employees defense. [21] In the present case, since
petitioners failed to discharge their burden of proving that private respondent is
guilty of desertion, the Court finds no reason to depart from the conclusion of the
Labor Arbiter, NLRC and the CA that private respondents dismissal is illegal.

In their second assigned error, petitioners cite Section 19(C) of POEA

Memorandum Circular No. 055-96[22] known as the Revised Standard Employment
Terms and Conditions Governing the Employment of Filipino Seafarers On Board
Ocean-Going Vessels as their alternative basis in terminating the employment of
private respondent. Said Section provides as follows:
Section 19. REPATRIATION
xxxx
C. If the vessel arrives at a convenient port within a period of
three months before the expiration of his contract, the master/
employer may repatriate the seafarer from such port provided
that the seafarer shall be paid all his earned wages. In addition,
the seafarer shall also be paid his leave pay for the entire
contract period plus a termination pay equivalent to one (1)
month of his basic pay, provided, however, that this mode of
termination may only be exercised by the master/employer if
the original contract period of the seafarer is at least ten (10)
months; provided, further, that the conditions for this mode of
termination shall not apply to dismissal for cause.

The Court is not persuaded. POEA Memorandum Circular No. 055-96 took
effect on January 1, 1997 while the contract of employment entered into by and
between private respondent and petitioners was executed on April 10,
1996. Hence, it is wrong for petitioners to cite this particular Memorandum
because at the time of petitioners and private respondents execution of their
contract of employment Memorandum Circular No. 055-96 was not yet effective.
What was in effect at the time private respondents Contract of Employment
was executed was POEA Memorandum Circular No. 41, Series of 1989. It is
clearly provided under the second paragraph of private respondents Contract of
Employment that the terms and conditions provided under Memorandum Circular
No. 41, Series of 1989 shall be strictly and faithfully observed. Hence, it is
Memorandum Circular No. 41, Series of 1989 which governs private respondents
contract of employment.

Section H (6), Part I of Memorandum Circular No. 41, which has almost
identical provisions with Section 19 (C) of Memorandum Circular No. 055-96,
provides as follows:
SECTION H. TERMINATION OF EMPLOYMENT
xxxx
6. If the vessel arrives at a convenient port within a period of three
(3) months before the expiration of the Contract, the master/employer
may repatriate the seaman from such port provided that the seaman shall
be paid all his earned wages. In addition, the seaman shall also be paid
his leave pay for the entire contract period plus a termination pay
equivalent to one (1) month of his basic pay, provided, however, that this
mode of termination may only be exercised by the master/employer if
the original contact period of the seaman is at least ten (10) months;
provided, further, that the conditions for this mode of termination shall
not apply to dismissal for cause.

The Court agrees with private respondents contention that petitioners

arguments are misplaced. Petitioners may not use the above-quoted provision as
basis for terminating private respondents employment because it is incongruent
with their primary defense that the latters dismissal from employment was for
cause. Petitioners may not claim that they ended private respondents services
because he is guilty of desertion and at the same time argue that they exercised
their option to prematurely terminate his employment, even without cause, simply
because they have the right to do so under their contract. These grounds for
termination are inconsistent with each other such that the use of one necessarily
negates resort to the other. Besides, it appears from the records that petitioners
alternative defense was pleaded merely as an afterthought because it was only in
their appeal with the NLRC that they raised this defense. The only defense raised
by petitioners in their Answer with Counterclaim filed with the office of the Labor
Arbiter is that private respondent was dismissed from employment by reason of
desertion.[23] Under the Rules of Court,[24] which is applicable in a suppletory
character in labor cases before the Labor Arbiter or the NLRC pursuant to Section
3, Rule I of the New Rules of Procedure of the NLRC [25], defenses which are not
raised either in a motion to dismiss or in the answer are deemed waived.[26]

Granting, for the sake of argument, that petitioners may use Section H (6),
Part I of Memorandum Circular No. 41 or Section 19(C) of Memorandum Circular
No. 055-96 as basis for terminating private respondents employment, it is clear that
one of the conditions before any of these provisions becomes applicable is when
the vessel arrives at a convenient port within a period of three (3) months before
the expiration of the contract of employment. In the present case, private
respondents contract was executed on April 10, 1996 for a duration of twelve
months. He was deployed aboard MV Cemtex General on June 25, 1996 and
repatriated to the Philippines on August 22, 1996. Hence, it is clear that petitioners
did not meet this condition because private respondents termination was not within
a period of three months before the expiration of his contract of employment.
Moreover, the Court finds nothing in the records to show that petitioners
complied with the other conditions enumerated therein, such as the payment of all
of private respondents earned wages together with his leave pay for the entire
contract period as well as termination pay equivalent to his one month salary.
Petitioners admit that they did not inform private respondent in writing of
the charges against him and that they failed to conduct a formal investigation to
give him opportunity to air his side. However, petitioners contend that the twin
requirements of notice and hearing applies strictly only when the employment is
within the Philippines and that these need not be strictly observed in cases of
international maritime or overseas employment.
The Court does not agree. The provisions of the Constitution as well as the
Labor Code which afford protection to labor apply to Filipino employees whether
working within the Philippines or abroad. Moreover, the principle of lex loci
contractus (the law of the place where the contract is made) governs in this
jurisdiction.[27] In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent was
executed here in the Philippines with the approval of the Philippine Overseas
Employment Administration (POEA). Hence, the Labor Code together with its
implementing rules and regulations and other laws affecting labor apply in this
case.[28] Accordingly, as to the requirement of notice and hearing in the case of a
seafarer, the Court has already ruled in a number of cases that before a seaman can
be dismissed and discharged from the vessel, it is required that he be given a

written notice regarding the charges against him and that he be afforded a formal
investigation where he could defend himself personally or through a representative.
[29]
Hence, the employer should strictly comply with the twin requirements of
notice and hearing without regard to the nature and situs of employment or the
nationality of the employer. Petitioners failed to comply with these twin
requirements.
Petitioners also contend that the wages of private respondent from August
11-22, 1996 were applied to the costs of his repatriation. Petitioners argue that the
off-setting of the costs of his repatriation against his wages for the aforementioned
period is allowed under the provisions of Section 19(E) of Memorandum Circular
No. 055-96 which provides that when the seafarer is discharged for any just cause,
the employer shall have the right to recover the costs of his replacement and
repatriation from the seafarers wages and other earnings.
The Court does not agree. Section 19(E) of Memorandum Circular No. 05596 has its counterpart provision under Section H (2), Part II of Memorandum
Circular No. 41, to wit:
SECTION H. REPATRIATION
xxxx
2. When the seaman is discharged for disciplinary reasons, the
employer shall have the right to recover the costs of maintenance and
repatriation from the seamans balance of wages and other earnings.
xxxx

It is clear under the above-quoted provision that the employer shall have the right
to recover the cost of repatriation from the seamans wages and other earnings only
if the concerned seaman is validly discharged for disciplinary measures. In the
present case, since petitioners failed to prove that private respondent was validly
terminated from employment on the ground of desertion, it only follows that they
do not have the right to deduct the costs of private respondents repatriation from
his wages and other earnings.

Lastly, the Court is not persuaded by petitioners contention that the private
respondent is not entitled to his money claims representing his living allowance,
overtime pay, vacation pay and special allowance as well as attorneys fees because
he failed to present any proof to show that he is entitled to these awards.
However, the Court finds that the monetary award representing private
respondents three months salary as well as the award representing his living
allowance, overtime pay, vacation pay and special allowance should be modified.
The Court finds no basis in the NLRCs act of including private respondents
living allowance as part of the three months salary to which he is entitled under
Section 10 of Republic Act (RA) No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995. The pertinent provisions of the said
Act provides:
Sec. 10. Money Claims
xxxx
In case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest at
twelve percent (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.
xxxx

It is clear from the above-quoted provision that what is included in the computation
of the amount due to the overseas worker are only his salaries. Allowances are
excluded. In the present case, since private respondent received a basic monthly
salary of US$400.00, he is, therefore, entitled to receive a sum of US$1200.00,
representing three months of said salary.
As to the awards of living allowance, overtime pay, vacation pay and special
allowance, it is clearly provided under private respondents Contract of
Employment that he is entitled to these benefits as follows: living allowance of

US$140.00/month; vacation leave with pay equivalent to US$40.00/month;

overtime rate of US$120.00/month; and, special allowance of US$175.00/month.
[30]

With respect, however, to the award of overtime pay, the correct criterion in
determining whether or not sailors are entitled to overtime pay is not whether they
were on board and can not leave ship beyond the regular eight working hours a
day, but whether they actually rendered service in excess of said number of hours.
[31]
In the present case, the Court finds that private respondent is not entitled to
overtime pay because he failed to present any evidence to prove that he rendered
service in excess of the regular eight working hours a day.
On the basis of the foregoing, the remaining benefits to which the private
respondent is entitled is the living allowance of US$140.00/month, which was
removed in the computation of private respondents salary, special allowance of
US$175.00/month and vacation leave with pay amounting to US$40.00/month.
Since private respondent rendered service for two months these benefits should be
doubled, giving a total of US$710.00.
As to the award of attorneys fees, this Court ruled in Reyes v. Court of
Appeals,[32] as follows:
x x x [T]here are two commonly accepted concepts of attorney's
fees, the so-called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement with
the client. In its extraordinary concept, attorneys fees are deemed
indemnity for damages ordered by the court to be paid by the losing
party in a litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof
which pertains to actions for recovery of wages, and is payable not to the
lawyer but to the client, unless they have agreed that the award shall
pertain to the lawyer as additionalcompensation or as part thereof. The
extraordinary concept of attorneys fees is the one contemplated in Article
111 of the Labor Code, which provides:

Art. 111. Attorneys fees. (a) In cases of unlawful

withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of
wages recovered x x x
The afore-quoted Article 111 is an exception to the declared
policy of strict construction in the awarding of attorneys
fees. Although an express finding of facts and law is still necessary to
prove the merit of the award, there need not be any showing that the
employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were not
paid accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and
its implementing regulations, the employees welfare should be the
primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate spirit of
the law as provided in Article 4 of the Labor Code which states that [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, and Article 1702 of the Civil Code which
provides 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.[33] (Emphasis supplied)
In the present case, it is true that the Labor Arbiter and the NLRC failed to state the
reasons why attorneys fees are being awarded. However, it is clear that private
respondent was illegally terminated from his employment and that his wages and
other benefits were withheld from him without any valid and legal basis. As a
consequence, he is compelled to file an action for the recovery of his lawful wages
and other benefits and, in the process, incurred expenses. On these bases, the Court
finds that he is entitled to attorneys fees.

WHEREFORE, the petition is PARTLY GRANTED. The Court of

Appeals Decision dated December 18, 2001 and Resolution dated April 10,
2002 are AFFIRMEDwith MODIFICATION to the effect that the award of
US$1620.00 representing private respondents three months salary is reduced to
US$1200.00. The award of US$550.00 representing private respondents living
allowance, overtime pay, vacation pay and special allowance for two months is
deleted and in lieu thereof, an award of US$710.00 is granted representing private

respondents living allowance, special allowance and vacation leave with pay for
the same period.
No costs.

SO ORDERED.
BISIG MANGGAGAWA SA TRYCO
and/or FRANCISCO SIQUIG, as Union
President, JOSELITO LARIO,
VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY,
Petitioners,
- versus NATIONAL LABOR RELATIONS
COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C.
RIVERA,
Respondents.

G.R. No. 151309

Present:
PUNO, C.J.,*
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
October 15, 2008

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

This petition seeks a review of the Decision [1] of the Court of Appeals (CA)
dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the
finding of the National Labor Relations Commission (NLRC) that the petitioners
transfer to another workplace did not amount to a constructive dismissal and an
unfair labor practice.

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary
medicines and its principal office is located in Caloocan City. Petitioners Joselito
Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular
employees, occupying the positions of helper, shipment helper and factory
workers, respectively, assigned to the Production Department. They are members
of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of
the rank-and-file employees.
Tryco and the petitioners signed separate Memorand[a] of
Agreement[2] (MOA), providing for a compressed workweek schedule to be
implemented in the company effective May 20, 1996. The MOA was entered into
pursuant to Department of Labor and Employment Department Order (D.O.) No.
21, Series of 1990, Guidelines on the Implementation of Compressed
Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to
Friday, shall be considered as the regular working hours, and no overtime pay shall
be due and payable to the employee for work rendered during those hours. The
MOA specifically stated that the employee waives the right to claim overtime pay
for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the
regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall
be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of
Labor and Employment of the implementation of a compressed workweek in the
company.[3]
In January 1997, BMT and Tryco negotiated for the renewal of their
collective bargaining agreement (CBA) but failed to arrive at a new agreement.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau
of Animal Industry of the Department of Agriculture reminding it that its
production should be conducted in San Rafael, Bulacan, not in Caloocan City:

MR. WILFREDO C. RIVERA

President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug
and Product Manufacturer is addressed at San Rafael, Bulacan, and so,
therefore, your production should be done at the above mentioned
address only. Further, production of a drug includes propagation,
processing, compounding, finishing, filling, repacking, labeling,
advertising, storage, distribution or sale of the veterinary drug product.
In no instance, therefore, should any of the above be done at your
business office at 117 M. Ponce St., EDSA, Caloocan City.
Please be guided accordingly.
Thank you.
Very truly yours,
(sgd.)
EDNA ZENAIDA V. VILLACORTE, D.V.M.
Chief, Animal Feeds Standard Division[4]

Accordingly, Tryco issued a Memorandum[5] dated April 7, 1997 which

directed petitioner Aya-ay to report to the companys plant site in Bulacan. When
petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.
[6]
Subsequently, through a Memorandum[7] dated May 9, 1997, Tryco also directed
petitioners Egera, Lario and Barte to report to the companys plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan,
contending that it constitutes unfair labor practice. In protest, BMT declared a
strike on May 26, 1997.

In August 1997, petitioners filed their separate complaints [8] for illegal
dismissal, underpayment of wages, nonpayment of overtime pay and service
incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C.
Rivera. In their Position Paper,[9] petitioners alleged that the company acted in bad
faith during the CBA negotiations because it sent representatives without authority
to bind the company, and this was the reason why the negotiations failed. They
added that the management transferred petitioners Lario, Barte, Egera and Aya-ay
from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the
company to pay them their salaries from May 26 to 31, 1997, service incentive
leave, and overtime pay, and to implement Wage Order No. 4.
In their defense, respondents averred that the petitioners were not dismissed
but they refused to comply with the managements directive for them to report to
the companys plant in San Rafael, Bulacan. They denied the allegation that they
negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President
and Legal Counsel as the companys representatives to the CBA negotiations. They
claim that the failure to arrive at an agreement was due to the stubbornness of the
union panel.
Respondents further averred that, long before the start of the negotiations,
the company had already been planning to decongest the Caloocan office to
comply with the government policy to shift the concentration of manufacturing
activities from the metropolis to the countryside. The decision to transfer the
companys production activities to San Rafael, Bulacan was precipitated by the
letter-reminder of the Bureau of Animal Industry.
On February 27, 1998, the Labor Arbiter dismissed the case for lack of
merit. The Labor Arbiter held that the transfer of the petitioners would not
paralyze or render the union ineffective for the following reasons: (1) complainants
are not members of the negotiating panel; and (2) the transfer was made pursuant
to the directive of the Department of Agriculture.
[10]

The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not render work
from May 26 to 31, 1997; overtime pay is not due because of the compressed
workweek agreement between the union and management; and service incentive

leave pay cannot be claimed by the complainants because they are already
enjoying vacation leave with pay for at least five days. As for the claim of
noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue
should be left to the grievance machinery or voluntary arbitrator.
On October 29, 1999, the NLRC affirmed the Labor Arbiters Decision,
dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is
hereby AFFIRMED and complainants appeal therefrom DISMISSED for
lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino
Egera and Simplicio Aya-ay are directed to report to work at respondents
San Rafael Plant, Bulacan but without backwages. Respondents are
directed to accept the complainants back to work.
SO ORDERED.[11]

On December 22, 1999, the NLRC denied the petitioners motion for
reconsideration for lack of merit.[12]
Left with no recourse, petitioners filed a petition for certiorari with the CA.
On July 24, 2001, the CA dismissed the petition for certiorari and ruled that
the transfer order was a management prerogative not amounting to a constructive
dismissal or an unfair labor practice. The CA further sustained the enforceability of
the MOA, particularly the waiver of overtime pay in light of this Courts rulings
upholding a waiver of benefits in exchange of other valuable privileges. The
dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision
of the Labor Arbiter dated February 27, 1998 and the Decision and
Resolution
of
the
NLRC
promulgated
on October
29,
1999and December 22, 1999, respectively, in NLRC-NCR Case Nos. 0805715-97, 08-06115-97 and 08-05920-97, are AFFIRMED.
SO ORDERED.[13]

The CA denied the petitioners motion for reconsideration on December 20, 2001.
[14]

Dissatisfied, petitioners filed this petition for review raising the following issues:
-ATHE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING
THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER
AND THE COMMISSION THAT THERE WAS NO DISMISSAL,
MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL
PETITIONERS.
-BTHE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING
AND
CONCLUDING
THAT
PRIVATE
RESPONDENTS
COMMITTED ACTS OF UNFAIR LABOR PRACTICE.
-CTHE COURT OF APPEALS ERRED IN NOT FINDING AND
CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR
MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION
COSTS AND ATTORNEYS FEES.[15]

The petition has no merit.

We have no reason to deviate from the well-entrenched rule that findings of
fact of labor officials, who are deemed to have acquired expertise in matters within
their respective jurisdiction, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.[16] This is particularly
true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute
agreement.[17] In this case, the Labor Arbiter, the NLRC, and the CA uniformly
agreed that the petitioners were not constructively dismissed and that the transfer
orders did not amount to an unfair labor practice. But if only to disabuse the minds
of the petitioners who have persistently pursued this case on the mistaken belief

that the labor tribunals and the appellate court committed grievous errors, this
Court will go over the issues raised in this petition.
Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not
credible because it is not authenticated; it is only a ploy, solicited by respondents to
give them an excuse to effect a massive transfer of employees. They point out that
the Caloocan City office is still engaged in production activities until now and
respondents even hired new employees to replace them.
We do not agree.
We refuse to accept the petitioners wild and reckless imputation that the
Bureau of Animal Industry conspired with the respondents just to effect the transfer
of the petitioners. There is not an iota of proof to support this outlandish
claim. Absent any evidence, the allegation is not only highly irresponsible but is
grossly unfair to the government agency concerned. Even as this Court has given
litigants and counsel a relatively wide latitude to present arguments in support of
their cause, we will not tolerate outright misrepresentation or baseless
accusation. Let this be fair warning to counsel for the petitioners.
Furthermore, Trycos decision to transfer its production activities to San
Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the
Bureau of Animal Industry, was within the scope of its inherent right to control and
manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied.[18]
This prerogative extends to the managements right to regulate, according to
its own discretion and judgment, all aspects of employment, including the freedom
to transferand reassign employees according to the requirements of its business.
[19]
Managements prerogative of transferring and reassigning employees from one
area of operation to another in order to meet the requirements of the business is,
therefore, generally not constitutive of constructive dismissal.[20] Thus, the

consequent transfer of Trycos personnel, assigned to the Production Department

was well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.[21] However, the employer has the burden of proving that
the transfer of an employee is for valid and legitimate grounds. The employer must
show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits.[22]
Indisputably, in the instant case, the transfer orders do not entail a demotion
in rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would
cause them great inconvenience since they are all residents of Metro Manila and
they would incur additional expenses to travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal.[23] Objection to a transfer
that is grounded solely upon the personal inconvenience or hardship that will be
caused to the employee by reason of the transfer is not a valid reason to disobey an
order of transfer.[24]
Incidentally, petitioners cite Escobin v. NLRC[25] where the Court held that the
transfer of the employees therein was unreasonable. However, the distance of the
workplace to which the employees were being transferred can hardly compare to
that of the present case. In that case, the employees were being transferred from
Basilan to Manila; hence, the Court noted that the transfer would have entailed the
separation of the employees from their families who were residing in Basilan and
accrual of additional expenses for living accommodations in Manila. In contrast,
the distance from Caloocan to San Rafael, Bulacan is not considerably great so as
to compel petitioners to seek living accommodations in the area and prevent them
from commuting to Metro Manila daily to be with their families.

Petitioners, however, went further and argued that the transfer orders
amounted to unfair labor practice because it would paralyze and render the union
ineffective.
To begin with, we cannot see how the mere transfer of its members can
paralyze the union. The union was not deprived of the membership of the
petitioners whose work assignments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer
orders were motivated by an intention to interfere with the petitioners right to
organize. Unfair labor practice refers to acts that violate the workers right to
organize. With the exception of Article 248(f) of the Labor Code of the Philippines,
the prohibited acts are related to the workers right to self-organization and to the
observance of a CBA. Without that element, the acts, no matter how unfair, are not
unfair labor practices.[26]
Finally, we do not agree with the petitioners assertion that the MOA is not
enforceable as it is contrary to law. The MOA is enforceable and binding against
the petitioners. Where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration
for the quitclaim is credible and reasonable, the transaction must be recognized as
a valid and binding undertaking.[27]
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the
benefits that the employees will derive from the adoption of a compressed
workweek scheme, thus:
The compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others.
Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week;
savings on meal and snack expenses; longer weekends, or an additional
52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that
are the normal incidents of employment, such as commuting to and from

the workplace, travel time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under this scheme, the generally
observed workweek of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday without the
employer being obliged for pay overtime premium compensation for
work performed in excess of eight (8) hours on weekdays, in exchange
for the benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company

will help temper any inconvenience that will be caused the petitioners by their
transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of the employees in the implementation
of a compressed workweek scheme:
1.

The employees voluntarily agree to work more than eight (8)

hours a day the total in a week of which shall not exceed their
normal weekly hours of work prior to adoption of the compressed
workweek arrangement;

2.

There will not be any diminution whatsoever in the weekly or

monthly take-home pay and fringe benefits of the employees;

3.

If an employee is permitted or required to work in excess of his

normal weekly hours of work prior to the adoption of the
compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in
accordance with the provisions of the Labor Code or applicable
Collective Bargaining Agreement (CBA);

4.

Appropriate waivers with respect to overtime premium pay for

work performed in excess of eight (8) hours a day may be devised
by the parties to the agreement.

5.

The effectivity and implementation of the new working time

arrangement shall be by agreement of the parties.

PESALA v. NLRC,[28] cited by the petitioners, is not applicable to the present

case. In that case, an employment contract provided that the workday consists of
12 hours and the employee will be paid a fixed monthly salary rate that was above
the legal minimum wage. However, unlike the present MOA which specifically
states that the employee waives his right to claim overtime pay for work rendered
beyond eight hours, the employment contract in that case was silent on whether
overtime pay was included in the payment of the fixed monthly salary. This
necessitated the interpretation by the Court as to whether the fixed monthly rate
provided under the employment contract included overtime pay. The Court noted
that if the employee is paid only the minimum wage but with overtime pay, the
amount is still greater than the fixed monthly rate as provided in the employment
contract. It, therefore, held that overtime pay was not included in the agreed fixed
monthly rate.
Considering that the MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek, there is no room for
interpretation and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision
dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED.
SO ORDERED.
LILIA P. LABADAN
Petitioner,

G.R. No. 172295

Present:

- versus -

FOREST HILLS
ACADEMY/NAOMI
CABALUNA and PRESIDING
COMISSIONER SALIC B.

QUISUMBING, J., Chairperson,

CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
Promulgated:
December 23, 2008

DUMARPA,
COMMISSIONER PROCULO
T. SARMEN,
COMMISSIONER NOVITO C.
CAGAYAN,
Respondents.
x-------------------------------------------x

DECISION
CARPIO MORALES, J.:
Lilian L. Labadan (petitioner) was hired by private respondent Forest
Hills Mission Academy (Forest Hills) in July 1989 as an elementary school
teacher. From 1990 up to 2002, petitioner was registrar and secondary school
teacher.
On August 18, 2003, petitioner filed a complaint[1] against respondent Forest
Hills and its administrator respondent Naomi Cabaluna for illegal dismissal, nonpayment of overtime pay, holiday pay, allowances, 13th month pay, service incentive
leave, illegal deductions, and damages.
In her Position Paper,[2] petitioner alleged that she was allowed to go on leave
from Forest Hills, and albeit she had exceeded her approved leave period, its
extension was impliedly approved by the school principal because she received no
warning or reprimand and was in fact retained in the payroll up to 2002.[3]
Petitioner further alleged that since 1990, tithes to the Seventh Day Adventist
church have been illegally deducted from her salary; and she was not paid overtime
pay for overtime service, 13th month pay, five days service incentive leave pay, and
holiday pay; and that her SSS contributions have not been remitted.
Claiming that strained relations between her and Forest Hill have rendered
reinstatement not feasible, petitioner prayed for separation pay in lieu of
reinstatement.

In its Position Paper,[4] Forest Hills claimed as follows: In July 2001,

petitioner was permitted to go on leave for two weeks but did not return for work
after the expiration of the period. Despite petitioners undertaking to report soon, she
never did even until the end of School Year 2001-2002. It thus hired a temporary
employee to accomplish the needed reports. When she finally returned for work,
classes for the School Year 2002-2003 were already on-going.
To belie petitioners claim that she was dismissed, Forest Hills submitted a list
of faculty members and staff from School Year 1998-1999 up to School Year 2001
to 2002 which included her name.[5]
With regard to the charge for illegal deduction, Forest Hills claimed that
the Seventh Day Adventist Church requires its members to pay tithes equivalent to
10% of their salaries, and petitioner was hired on account of her being a member
thereof, and petitioner never questioned the deduction of the tithe from her salary.
With regard to the charge for non-payment of overtime pay, holiday pay, and
allowances, Forest Hills noted that petitioner proffered no evidence to support the
same.
The Labor Arbiter decided in favor of petitioner, disposing as follows:
WHEREFORE, judgment is hereby rendered:
1.

Finding respondents Forest

Hills Academy and/or
Cabaluna guilty of illegally dismissing the complainant;

Naomi

2.

Directing respondent to pay complainant Lilia P. Labadan the

total amount of P152,501.02 representing her monetary award x
x x.

Complainants other claim[s] are hereby dismissed for lack of merit

and/or failure to substantiate.
SO ORDERED.[6]

The National Labor Relations Commission (NLRC), finding the Labor

Arbiter to have misappreciated the facts of the case, reversed and set aside his
decision and dismissed petitioners complaint by Resolution of June 30, 2005.[7]
On petitioners Petition for Certiorari,[8] the Court of Appeals, by
Resolution[9] of December 15, 2005, dismissed the petition for deficient amount of
appellate docket fee, non-attachment of Affidavit of Service, absence of written
explanation why the petition was filed through registered mail instead of through
personal service, and non-attachment of copies of the Complaint and the Answer
filed before the Labor Arbiter. Petitioners Motion for Reconsideration having been
denied,[10] she filed the present Petition for Review on Certiorari, [11] faulting the
Court of Appeals
x x x IN DISMISSING THE PETITION ON THE GROUND
OF TECHNICALITIES[;]
x x x IN NOT DECIDING ON THE MERITS WHETHER
OR NOT HONORABLE COMMISSIONERS OF THE
5TH DIVISION HAVE COMMITTED AN ACT OF GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION:
A.

IN REVERSING THE FINDINGS OF THE

EXECUTIVE LABOR ARBITER THAT HEREIN
PETITIONER-COMPLAINANT
WAS
NOT
DISMISSED FROM HER WORK AS A TEACHER
and AT THE SAME TIME THE REGISTRAR;

B.

IN FINDING THAT BY A PROLONGED

ABSENCE OF ONE YEAR MORE OR LESS,
PETITIONER WAIVED HER 13TH MONTH PAY
AND SERVICE INCENTIVE LEAVES AS SHE
FAILED TO STATE SUCH CLAIMS IN HER
AFFIDAVIT THAT WAS ATTACHED [TO] HER
POSITION PAPER, and;

C.

THAT
THE
DECISION/RESOLUTION
RENDERED
BY
THE
HONORABLE
COMMISSIONERS OF THE 5TH DIVISION WAS
TAINTED
WITH
GRAVE
ABUSE
OF
DISCRETION AS IT WAS INCOMPLETE AND
UNLAWFUL[.][12] (Italics and emphasis in the original)

Non-payment of docket fee at the time of the filing of a petition does not
automatically call for its dismissal as long as the fee is paid within the applicable
prescriptive or reglementary period.[13] While petitioner paid the P30 deficient
amount of the docket fee on February 7, 2006,[14] it was beyond the 60-day period
for filing the petition for certiorari. Nevertheless, the Court, in the interest of
substantial justice, brushes aside this and the other technicalities cited by the Court
of Appeals in its Resolution of December 15, 2005[15] and, instead of remanding the
case to the appellate court, now hereby decides the case on the merits.
While in cases of illegal dismissal, the employer bears the burden of proving
that the dismissal is for a valid or authorized cause, the employee must first
establish by substantial evidence the fact of dismissal.[16]
The records do not show that petitioner was dismissed from the
service. They in fact show that despite petitioners absence from July 2001 to
March 2002 which, by her own admission, exceeded her approved leave, [17] she
was still considered a member of the Forest Hills faculty[18] which retained her in
its payroll.[19]
Petitioner argues, however, that she was constructively dismissed
when Forest Hills merged her class with another so much that when she reported
back to work, she has no more claims to hold and no more work to do.[20]
Petitioner, however, failed to refute Forest Hills claim that when she
expressed her intention to resume teaching, classes were already ongoing for
School Year 2002-2003. It bears noting that petitioner simultaneously held the
positions
of
secondary
school
teacher and registrar and, as the NLRC noted, she could have

resumed her work as registrar had she really wanted to continue working
with Forest Hills.[21]
Petitioners affidavit and those of her former colleagues, [22] which she
attached to her Position Paper, merely attested that she was dismissed from her job
without valid cause, but gave no particulars on when and how she was dismissed.
There being no substantial proof that petitioner was dismissed, she is not
entitled to separation pay or backwages.
Respecting petitioners claim for holiday pay, Forest Hills contends that
petitioner failed to prove that she actually worked during specific holidays. Article
94 of the Labor Code provides, however, that
(a)

Every worker shall be paid his regular daily wage

during regular holidays, except in retail and service
establishments regularly employing less than ten (10)
workers;

(b)

The employer may require an employee to work on any

holiday but such employee shall be paid a compensation
equivalent to twice his regular rate[.]

The provision that a worker is entitled to twice his regular rate if he is required to
work on a holiday implies that the provision entitling a worker to his regular rate on
holidays applies even if he does not work.
The petitioner is likewise entitled to service incentive leave under Article 95
of the Labor Code which provides that

(a)

Every employee who has rendered at least one year

of service shall be entitled to a yearly service
incentive leave of five days with pay.

(b)

This provision shall not apply to those who are

already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days
and those employed in establishments regularly
employing less than ten employees or in
establishment exempted from granting this benefit by
the Secretary of Labor after considering the viability
or financial condition of such establishment.

x x x x,

and to 13th month pay under Presidential Decree No. 851.[23]

As for petitioners claims for overtime pay, it must be denied, for other than
the uncorroborated affidavits of her colleagues, there is no concrete proof that she is
entitled thereto.[24] And so must her claim for allowances, no proof to her
entitlement thereto having been presented.
On the deduction of 10% tithe, Article 113 of the Labor Code instructs:
ART. 113. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees,
except:
(a)

In cases where the worker is insured with his consent

by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;

(b)

For union dues, in cases where the right of the worker

or his union to check-off has been recognized by the
employer or authorized in writing by the individual
worker concerned; and

(c)

In cases where the employer is authorized by law or

regulations issued by the Secretary of Labor,

as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor
Code reading:
SEC. 10. Deductions from the wages of the employees may be
made by the employer in any of the following cases:
(a)

When the deductions are authorized by law, including

deductions for the insurance premiums advanced by the
employer in behalf of the employee as well as union dues
where the right to check-off has been recognized by the
employer or authorized in writing by the individual
employee himself;

(b)

When the deductions are with the written authorization

of the employees for payment to a third person and the
employer agrees to do so, provided that the latter does not
receive any pecuniary benefit, directly or indirectly, from
the transaction. (Emphasis and underscoring supplied)

In the absence then of petitioners written conformity to the deduction of the 10%
tithe from her salary, the deduction made by Forest Hills was illegal.
Finally, on petitioners claim that Forest Hills did not remit her SSS
contributions, Villar v. National Labor Relations Commission[25] enlightens:
x x x [T]he burden of proving payment of monetary claims
rests on the employer. x x x
xxxx
The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents which will
show that overtime, differentials, service incentive leave and other
claims of workers have been paid are not in the possession of the

worker but in the custody and absolute control of the employer.

[26]
(Underscoring supplied)

Forest Hills having glossed over this claim, the same must be granted.
Finally, insofar as petitioner was compelled to litigate her money claims, an
award of attorneys fees equivalent to 10% of the final judgment award is in order.[27]
WHEREFORE, the Court of Appeals Resolution of December 15,
2005 is SET ASIDE. The petition is GRANTED insofar as petitioners claims for
illegal deductions, holiday pay, service incentive leave pay, 13 th month pay, and
non-remittance of SSS contributions are concerned. Respondents are
accordingly ORDERED to refund to petitioner the amount of the illegal deductions
from her salary; to pay her holiday pay, service incentive leave pay, and 13 th month
pay; to remit her contributions to the SSS; and to pay her attorneys fees equivalent
to 10% of the final judgment award. The case is accordingly REMANDED to the
Labor Arbiter for computation of the amount of such money claims.
SO ORDERED.
G.R. No. 210634, January 14, 2015
NORIEL R. MONTIERRO, Petitioner, v. RICKMERS MARINE AGENCY PHILS., INC., Respondent.
DECISION
SERENO,C.J.:
Before this Court is a Petition for Review on certiorari1 seeking to nullify the Decision dated 8 August
20132 and the Resolution dated 6 January 20143 issued by the Court of Appeals (CA) in CA-G.R. SP No.
126618.
Facts
On 26 February 2010, respondent Rickmers Marine Agency Phils., Inc. (Rickmers), on behalf of its foreign
principal, Global Management Limited, hired petitioner Noriel Montierro as Ordinary Seaman with a basic
monthly salary of USD420. He was assigned to work on board the vessel M/V CSAV Maresias.4
Sometime in May 2010, while on board the vessel and going down from a crane ladder, Montierro lost his
balance and twisted his legs, thus injuring his right knee. 5 Thereafter, on 31 May 2010, he was examined in
Livorno, Spain by Dr. Roberto Santini, who recommended surgical treatment at home and found him unfit for
duty.6 Thus, on 2 June 2010, Montierro was repatriated to the Philippines for further medical treatment. 7
On 4 June 2010, two days after his repatriation, Montierro reported to Dr. Natalio G. Alegre II, the companydesignated physician. He underwent a magnetic resonance imaging (MRI) scan of his right knee. The MRI

showed he had meniscal tear, posterior horn of the medical meniscus, and minimal joint fluid. Upon the
recommendation of Dr. Alegre, Montiero underwent arthroscopic partial medical meniscectomy of his right
knee on 29 July 2010 at St. Lukes Medical Center.8
On 20 August 2010, Montierro had his second check-up with Dr. Alegre, who noted that the formers surgical
wounds had healed, but that there was still pain and limitation of motion on his right knee on gaits and
squats. The doctor advised him to undergo rehabilitation medicine and continue physical therapy.9
On 3 September 2010, the 91st day of Montierros treatment, Dr. Alegre issued an interimdisability grade
of 10 for stretching leg of ligaments of a knee resulting in instability of the joint. He advised Montierro to
continue with the latters physical therapy and oral medications. 10
Montierro further underwent sessions of treatment and evaluation between 17 September 2010 and 28
December 2010.11
On 3 January 2011, the 213th day of Montierros treatment, Dr. Alegre issued a final assessment as
follows:
Subjective Complaints:
Cannot flex the knee to 100%
No swelling noted
Limited range of motion of right knee
chanroblesvirtuallawlibrary

Assessment:
Medial Meniscal Tear, Knee Right
S/P Arthroscopic Meniscectomy
Plan:
Disability Grade of 10 is given
based on section 32 of the POEA
contract. Lower Extremities #20,
stretching leg of the ligaments of
a knee resulting in instability
of the joint. x x x12
Meanwhile, on 3 December 2010, one month before Dr. Alegres issuance of the final disability grading,
Montierro filed with the labor arbiter a complaint for recovery of permanent disability compensation in the
amount of USD89,000, USD2,100 as sickness allowance, plus moral and exemplary damages and attorneys
fees.13 To support his claim for total permanent disability benefits, Montierro relied on a Medical Certificate
dated 3 December 2010 issued by his physician of choice, Dr. Manuel C. Jacinto, recommending total
permanent disability grading, and explaining the formers medical condition as follows:
Patients condition started at work when he accidentally fell from a ladder causing his (R) knee to be twisted.
Patients symptoms of pain and limited flexion of (R) knee persisted, thus he was assessed to be physically
unfit to go back to work.14
LA AND NLRC RULINGS
chanroblesvirtuallawlibrary

In a Decision dated 29 June 2011, the LA held that Montierro was entitled to permanent total disability
benefits under the Philippine Overseas Employment Agency Standard Employment Contract (POEA-SEC).
The LA relied on the 120-day rule introduced by the 2005 case Crystal Shipping, Inc. v. Natividad.15 The rule
equates the inability of the seafarer to perform work for more than 120 days to permanent total disability,
which entitles a seafarer to full disability benefits.16 The LA also awarded one-month sickness allowance and
attorneys fees.
On 26 October 2011, Rickmers elevated the case to the National Labor Relations Commission
(NLRC),17 which affirmed the Decision of the LA on 5 June 2012. Rickmers filed a Motion for Reconsideration,
which the NLRC denied.18 This denial prompted Rickmers to file a Rule 65 Petition with the CA. 19
CA Ruling
On 8 August 2013, the CA rendered a Decision partially granting the Petition. It affirmed the NLRC ruling
insofar as the latter awarded Montierro one-month sickness allowance. 20 The CA held, however, that he was
entitled merely to Grade 10 permanent partial disability benefits.21 It also dropped the award of attorneys
fees granted to him earlier.22

In its Decision downgrading the claim of Montierro to Grade 10 permanent partial disability benefits only,
the CA ruled that his disability could not be deemed total and permanent under the 240-day rule established
by the 2008 case Vergara v. Hammonia Maritime Services, Inc.23Vergara extends the period to 240 days
when, within the first 120-day period (reckoned from the first day of treatment), a final assessment cannot
be made because the seafarer requires further medical attention, provided a declaration has been made to
this effect.24
The CA pointed out that only 215 days had lapsed from the time of Montierros medical repatriation on 2
June 2010 until 3 January 2011, when the company-designated physician issued a Grade 10 final disability
assessment. It justified the extension of the period to 240 days on the ground that Dr. Alegre issued
an interim disability grade of 10 on 3 September 2010, the 91st day of Montierros treatment, which was
within the initial 120-day period.
Further, the CA upheld the jurisprudential rule that, in case of conflict, it is the recommendation issued by
the company-designated physician that prevails over the recommendation of the claimants physician of
choice.
On the deletion of the award of attorneys fees, the CA reasoned that there was no sufficient showing of bad
faith in Rickmers persistence in the case other than an erroneous conviction of the righteousness of its
cause based on the recommendation of the company-designated physician.
RULE 45 PETITION
Hence, Montierro filed a Rule 45 Petition with this Court. He contends in the main that he is entitled to full
disability benefits. To support this thesis, he raises two arguments.
First, Montierro insists that the 120-day rule laid down in the 2005 case Crystal Shipping, and not the 240day rule introduced by the 2008 case Vergara, applies to this case. Montierro cites the more recent
cases Wallem Maritime Services, Inc., v. Tanawan,25Maersk Filipinas Crewing, Inc. v.
Mesina,26 and Valenzona v. Fair Shipping Corp.,27 all of which applied the Crystal Shipping doctrine despite
the fact that they were promulgated after Vergara.
Second, he claims that the medical assessment of his personal physician, to the effect that the formers
disability is permanent and total, should be accorded more weight than that issued by the companydesignated physician.28
Montierro also raises in his petition the issue of attorneys fees, which he believes he is entitled to as he was
compelled to litigate.
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 follows:
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.
chanroble svirtuallawlibrary

In this case, Montierro filed his Complaint on 3 December 2010, which was after the promulgation
ofVergara on 6 October 2008. Hence, it is the 240-day rule that applies to this case, and not the 120-day

rule.
Montierro cannot rely on the cases that he cited, a survey of which reveals that all of them involved
Complaints filed before 6 October 2008. Wallem Maritime Services30 involved a Complaint for disability
benefits filed on 26 November 1998. In Maersk Filipinas Crewing,31 while the Decision did not mention the
date the Complaint was filed, the LAs Decision was rendered on 14 April 2008. Lastly, in Valenzona,32 the
Complaint was filed sometime before 31 January 2003. It thus comes as no surprise that the cases
Montierro banks on followed the 120-day rule.
Applying the 240-day rule to this case, we arrive at the same conclusion reached by the CA. Montierros
treatment by the company doctor began on 4 June 2010. It ended on 3 January 2011, when the company
doctor issued a Grade 10 final disability assessment. Counting the days from 4 June 2010 to 3 January
2011, the assessment by the company doctor was made on the 213th day, well within the 240-day period.
The extension of the period to 240 days is justified by the fact that Dr. Alegre issued an interim disability
grade of 10 on 3 September 2010, the 91st day of Montierros treatment, which was within the 120-day
period.
Thus, the CA correctly ruled that Montierros condition cannot be deemed a permanent total disability.
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 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
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
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.
Hence, for failure of Montierro to observe the procedure provided by the POEA-SEC, the assessment of the
company doctor should prevail.
Moreover, Rickmers exerted real efforts to provide Montierro with medical assistance. The companydesignated physician monitored Montierros case from beginning to end. Upon the formers recommendation,
Montierro even underwent arthroscopic partial medical meniscectomy of his right knee. The company-doctor
likewise gave him physical therapy. Lastly, he issued his certification on the basis of the medical records
available and the results obtained.
Further, a juxtaposition of the two conflicting assessments reveals that the certification of Montierros doctor
of choice pales in comparison with that of the company-designated physician. Fitting is the following
discussion of the CA:
To contest the company-designated physician's disability assessment of Grade 10, Montierro relied on the
total permanent disability assessment of his physician of choice. In contrast to his physician's
assessment embodied in a one-page medical certificate dated December 3, 2010 which did not
even indicate any test or procedure that may have been performed or conducted when he
examined and determined Montierro's disability, however, the company-designated physician's finding
is entitled to greater weight and respect because it was arrived at after Montierro was regularly examined in
chanroble svirtuallawlibrary

coordination with other doctors, prescribed with medications, and given physical therapy and rehabilitation
sessions from June 4, 2010 until January 3, 2011. In the face of these well-defined facts, We find it only
reasonable, if not logical, to give credence to the company physician's finding rather than that of Montierro's
physician of choice.
Having extensive personal knowledge of the seafarer's actual medical condition, and having closely,
meticulously and regularly monitored and treated his injury for an extended period, the company-designated
physician is certainly in a better position to give a more accurate evaluation of Montierro's health condition.
The disability grading given by him should therefore be given more weight than the assessment of
Montierro's physician of choice.37
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 of ones
cause.38 The rule, however, takes a turn when it comes to labor cases.
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
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.
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.
WHEREFORE, premises considered, the Petition is DENIED. The CA Decision dated 8 August 2013 and
Resolution dated 6 January 2014 are AFFIRMED in toto.
SO ORDERED.
Leonardo-De Castro, Bersamin, Perez, and Perlas-Bernabe, JJ., concur.