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Labor Cases Penned By Justice Del Castillo

18 OCT 2017 | SUBJECT | LABOR AND


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

Meatworld International, Inc. Vs. Dominique


A. Hechanova; G.R. No. 208053; October 18,
2017
DECISION

DEL CASTILLO, J.:

―In constructive dismissal cases, the employer is, concededly, charged with the burden of
proving that its conduct and action were for valid and legitimate grounds.‖[1]

Before the Court is a Petition for Review on Certiorari[2] filed under Rule 45 of the Rules of
Court assailing the September 12, 2012[3] and July 3, 2013[4] Resolutions of the Court of
Appeals (CA) in CA-G.R SP No. 125953.

Factual Antecedents

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


business of selling fresh meat under the brand name of ―Mrs. Garcia‘s Meats‖ in different
outlets located in different malls or markets,[5]hired respondent Dominique A. Hechanova as
a head butcher.[6] At the time of his termination; respondent was assigned at the outlet of
Robinsons Place Mall, Ermita, Manila (Robinsons Place Manila), with a salary of P10,600 a
month.[7]

On March 2, 2011, respondent filed a Complaint[8] for Illegal Dismissal with claim for
reinstatement and backwages against petitioner and/or Joyce Alcoreza (Alcoreza),[9] Vice-
President[10] of petitioner. Respondent alleged that on November 10-19, 2010, he was
suspended for violating the regulation of SM Hypermarket, Muntinlupa, prohibiting
employees of concessionaires from tasting food peddled by some promodizers; [11] that after
his suspension, he reported to the office of petitioner for his reassignment but he was
informed by the Employee Relation Supervisor Junel Romadia (Romadia), that there was no
available outlet yet;[12] that on December 9, 2010, respondent was assigned at Robinsons
Place Manila;[13] that on January 5, 2011, he was relieved from his assignment and was told
to report to the office on January 6, 2011 for his performance evaluation;[14] that when he
reported to the office on January 6, 2011, he was told to come back on January 10,
2011;[15] that on January 10, 2011, Romadia asked him to leave his cellphone number so she
could text him when to come back;[16] that on January 12, 2011, respondent via text message
asked Romadia when he could report for work;[17] that Romadia replied that he could report
for work anytime;[18] that on January 13, 2011, respondent reported to the office at around 1
PM but was scolded by Alcoreza for not arriving in the morning; [19] that respondent explained
to Alcoreza that he came in the afternoon because he knew the office personnel were very
busy in the morning;[20] that Alcoreza retorted, ―Magresign ka na lang or tanggalin ka
namin;‖[21] that respondent pleaded to her but she left without saying a word;[22] that Romadia
Labor Cases Penned By Justice Del Castillo

approached him and told him to wait for her text;[23] that on January 17, 2011, he decided to
ask the help of Mr. Raffy Tulfo (Tulfo) since he had not received any text message from
petitioner;[24] that Tulfo gave him a referral letter to the Department of Labor and Employment
(DOLE) – CAMANAVA;[25] that on the same day, he went to the DOLE-CAMANAVA and
filled-out a Single-Entry Approach (SENA) Form for illegal constructive dismissal alleging
that he was not given any work assignment and was being forced to resign;[26] and that the
case was forwarded to the National Labor Relations Commission (NLRC).[27]

In response, petitioner claimed that it did not dismiss respondent as he was the one who
failed to report for work.[28]Petitioner alleged that in April 2010, respondent was banned from
working at all Puregold outlets because a personnel of Puregold BF caught him urinating in
the storage room where fresh food items were kept;[29] that respondent was suspended from
November 18-25, 2010 for leaving his workplace without permission on November 5, 2010
and for being under time for the dates October 31 and November 1, 2010; [30] that respondent
was placed on preventive suspension on November 27-30, 2010 for eating food products or
sample items of another concessionaire in the cold room storage area;[31] that respondent
was banned from working at the SM Hypermarket Muntinlupa branch because of the
incident;[32] that respondent was temporarily assigned at that Robinsons Place Manila;[33] that
his assignment ended on January 5, 2011;[34] that respondent was told to report to the office
on January 6, 2011 for his new assignment but since he arrived late he was told by his
supervisor to return the following day as there was a long queue at the Human Resources
(HR) Department;[35] that since respondent failed to report on January 6, 2011, the vacancy
which he was supposed to fill was no longer available;[36] that on January 10, 2011,
respondent barged in at the HR Department and made a demand for his new
assignment;[37] that he was told to return in the morning of January 13, 2011; [38] that on said
date, he arrived late giving Romadia the impression that he was no longer interested to
work;[39] that on the same day, he received a Memorandum asking him to explain in writing
why no disciplinary action should be taken against him for failing to report to the HR
Department as scheduled;[40] that after the said date, he never reported back to work;[41] and
that on January 18, 2011, petitioner sent a Memorandum dated January 17, 2011, asking
respondent to submit a written explanation and to report to the HR Department on January
24, 2011 at 3:00 PM.[42]

Ruling of the Labor Arbiter

On January 10, 2012, the Labor Arbiter rendered a Decision[43] declaring respondent to have
been illegally dismissed. The Labor Arbiter gave no credence to petitioner‘s theory, that
respondent failed to return to work for fear of being investigated for his violations of company
rules and regulations, for lack of evidence.[44] The Labor Arbiter also found petitioner‘s
accusations against respondent to be untrue and without basis.[45] However, considering that
the work environment would no longer be healthy, the Labor Arbiter ordered the payment of
separation pay in lieu of reinstatement.[46] In the absence of any factual or legal basis, the
Labor Arbiter relieved Alcoreza of any liability.[47]Thus:

WHEREFORE, a decision is hereby rendered declaring [respondent] to have been illegally dismissed.
[Petitioner] Meatworld International is directed to pay complainant P116,600.00 as backwages and
P42,400.00 as separation pay. Other claims are dismissed.

SO ORDERED.[48]

Ruling of the National Labor Relations Commission


Labor Cases Penned By Justice Del Castillo

Petitioner appealed the case to the NLRC.

On March 30, 2012, the NLRC rendered a Decision,[49] affirming the findings of the Labor
Arbiter that respondent was illegally dismissed and thus entitled to backwages and
separation pay. The NLRC ruled that petitioner‘s allegation that it was respondent who
refused to report for work was belied by the latter‘s ―immediate action to seek help from
Raffy Tulfo.‖[50] As to the alleged infraction of respondent of urinating in the storage room, the
NLRC considered it as a fabricated infraction as no document was presented to support
this.[51] The NLRC even considered the two previous suspensions of respondent as proof that
petitioner was giving respondent a hard time.[52] It also gave credence to the statement of
respondent that he was told to resign by Alcoreza.[53] All these taken together led the NLRC
to conclude that respondent was illegally dismissed.

Petitioner moved for reconsideration but the NLRC denied the same in its June 15, 2012
Resolution.[54]

Ruling of the Court of Appeals

Unfazed, petitioner elevated the matter to the CA via a Petition for Certiorari[55] under Rule 65
of the Rules of Court.

On September 12, 2012, the CA dismissed the Petition due to the following infirmities:

1. there was no proper proof of service of the Petition to the adverse party and the agency
a quo. While petitioners filed the Affidavit of Service and incorporated registry
receipts, [petitioner] still failed to comply with the requirement on proper proof of
service. Post office receipt is not the required proof of service by registered mail.
Section 10, Rule 13 of the 1997 Rules of Civil Procedure specifically stated that
service by registered mail is complete upon actual receipt by the addressee, or after
five (5) days from the date he received the first notice of the postmaster, whichever is
earlier. Verily, registry receipts cannot be considered as sufficient proof of service;
they are merely evidence of mail matter by the post office to the addressee; and

2. there was no competent evidence regarding the identity of Jocelyn B. Alcoreza as the
alleged authorized representative of co-petitioner Meatworld International on the
attached Verification and Certification Against Non-Forum Shopping as required by
Section 12, Rule II of the 2004 Rules on Notarial Practice. Further, there was no board
resolution empowering Jocelyn B. Alcoreza to represent petitioner corporation in this
case. The Supreme Court was emphatic when it ruled that in the absence of authority
from the board of directors, no person[,] not even the officers[,] can bind the
corporation. It stressed that any suit filed on behalf of the corporation wanting the
required board resolution should be dismissed, since the power of the corporation to
sue and be sued in any court is lodged with the board of directors that exercises its
corporate powers. Thus, only individuals vested with authority by a valid board
resolution may sign the certificate of non-forum shopping in behalf of a corporation. In
addition, the Court has required that proof of said authority must be attached. Failure
to provide a certificate of non-forum shopping is sufficient ground to dismiss the
petition. Likewise, the petition is subject to dismissal if a certification was submitted
unaccompanied by proof of the signatory‘s authority.[56]
Labor Cases Penned By Justice Del Castillo

Petitioner sought reconsideration contending that it complied with the proof of service
requirement and that the Secretary‘s Certificate attached to the Petition is sufficient proof of
the authority of Alcoreza to file the said Petition.[57]

In its July 3, 2013 Resolution,[58] the CA conceded that petitioner complied with the proof of
service requirement, however, it maintained that petitioner failed to present the Board
Resolution and the competent evidence of identity of the affiant.

Hence, petitioner filed the instant Petition for Review on Certiorari, raising the following
errors:

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


OF IDENTITY AND BOARD RESOLUTION AUTHORIZING THE VICE
PRESIDENT OF PETITIONER COMPANY TO FILE THE PETITION IS
CONTRARY TO FACTS.

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


RESOLUTION ITSELF, AUTHORIZING THE PERSON ACTING IN ITS BEHALF
SHOULD BE APPENDED TO THE PETITION.

3. THE [CA] ERRED IN NOT RESOLVING THE CASE ON THE MERITS AND:1.
NOT DECLARING THAT RESPONDENT WAS NOT DISMISSED, MUCH LESS
ILLEGALLY DISMISSED BY THE PETITIONER COMPANY FROM
EMPLOYMENT; AND

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


SEPARATION PAY IN FAVOR OF RESPONDENT.[59]

Petitioner’s Arguments

Petitioner contends that the CA erred in insisting that a copy of the Board Resolution is
required to be attached to the Petition for Certiorari.[60] It claims that under prevailing
jurisprudence, a copy of the Secretary‘s Certificate, attesting that petitioner authorized
Alcoreza to file the said Petition for Certiorari suffices.[61] Moreover, contrary to the findings of
the CA, Alcoreza submitted competent proof of identity before the notary public. [62] In any
case, even if there were defects in the Petition for Certiorari, these were excusable, and
thus, the CA still should have resolved the case on the merits.[63]

As to the merits of the case, petitioner insists that it did not dismiss respondent from
employment.[64] Rather, it was respondent who failed to report for work because he
erroneously assumed that he was being terminated.[65]Petitioner likewise puts in question the
CA‘s reliance on respondent‘s act of seeking help from Tulfo as proof of dismissal.[66]

Respondent’s Arguments

Respondent, however, argues that the instant case has been rendered moot as the
judgment has been satisfied by the release of the appeal bond by the NLRC Cashier to the
respondent[67] In any case, respondent maintains that the CA did not err in dismissing the
Petition for Certiorari due to technicalities.[68] Respondent likewise asserts that the factual
findings of the Labor Arbiter and the NLRC are in accord with the facts and evidence on
record.[69]
Labor Cases Penned By Justice Del Castillo

Ruling

The Petition must fail.


There were no procedural defects in the Petition for Certiorari.

Under the Corporation Code, a corporation exercises its powers and transacts its business
through its board of directors or trustees.[70] Its corporate officers and agents, therefore,
cannot exercise any corporate power pertaining to the corporation without authority from the
board of directors.[71] Corollarily, in order for a person to represent a corporation in a suit, a
board resolution authorizing the former to represent the latter is necessary. In several
instances, however, the Court has considered a Secretary‘s Certificate sufficient proof of
authority for a person named in it to represent a corporation in a suit.[72]

In this case, no board resolution was attached to the Petition for Certiorari. However, in lieu
thereof, petitioner attached a Secretary‘s Certificate attesting that Alcoreza was duly
authorized by the Board of Directors to sign the necessary pleadings, verification, and
certificate of non-forum shopping on behalf of the corporation. This, under prevailing
jurisprudence, is sufficient proof of authority.

In addition, contrary to the CA‘s finding, Alcoreza presented ―competent evidence of identity‖
as she presented before the notary public her valid Philippine Passport.[73]

In view of the foregoing, the Court agrees with petitioner that there were no procedural
defects to warrant the dismissal of the Petition for Certiorari by the CA. However, while there
were no procedural defects, the Court finds that the instant petition is still dismissible on the
merits.

Respondent was illegally dismissed.

In illegal dismissal cases, the employer bears the burden of proving that the employee‘s
termination was for a valid or authorized cause.[74] This rule, however, presupposes that the
employee was dismissed from service.[75]

In this case, records show that in November 2010 respondent was suspended for one week
because of his undertime on October 31, 2010 and November 5, 2010 and his absence on
November 1, 2010. Immediately after his suspension, he was placed on preventive
suspension for three days for sampling food products. After his preventive suspension,
respondent reported to the office but was told that there was no available outlet. After more
than a week of making follow-ups, respondent was assigned at Robinsons Place Manila.
Less than a month later, petitioner told respondent to report to the office on January 6, 2011
as his assignment at Robinsons Place Manila was only temporary. Respondent reported to
the office on January 6, 10, and 13, 2011 but was told that there was no available outlet. On
January 13, 2011, the last time respondent went to the office of petitioner, he was scolded
by Alcoreza for arriving late and was told to resign, otherwise, he would be dismissed. All
these factual circumstances, taken together, led the NLRC to conclude that petitioner was
giving respondent a hard time in order to make his employment unbearable, and eventually,
force him to resign. Unfortunately, instead of resigning, respondent sought the help of Tulfo
who referred him to DOLE. With these findings, the NLRC sustained the ruling of the Labor
Arbiter that respondent was illegally dismissed.
Labor Cases Penned By Justice Del Castillo

Petitioner, however, insists that respondent was not dismissed from employment. Instead, it
was respondent who failed to report for work because he erroneously assumed that he was
being terminated.

After a careful review of the instant Petition, the Court finds that although there was no
actual dismissal, the failure of petitioner to assign respondent to a specific branch without
any justifiable reason constituted illegal constructive dismissal.

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


rendered impossible, unreasonable or unlikely.‖[76] Similarly, there is constructive dismissal
―when an act of clear discrimination, insensibility or disdain by an employer has become so
unbearable to the employee leaving him with no option but to forego with his continued
employment.‖[77] Simply put, it is a ―dismissal in disguise or an act amounting to dismissal but
made to appear as if it were not.‖[78]

In this case, petitioner admits that after relieving respondent from his assignment at
Robinsons Place Manila on January 5, 2011, it failed to assign him to a new branch.
However, to justify its failure, petitioner claims that there was no available post as the
vacancy which respondent was supposed to fill was no longer available since he failed to
report on January 6, 2011. Petitioner later clarified that respondent did report to the office on
January 6, 2011 but that he arrived late, and thus was not given the assignment Petitioner
also claims it was having a hard time finding a new branch as respondent was already
banned at SM Hypermarket Muntinlupa, Market Market, and all Puregold supermarkets.

The Court finds petitioner‘s justification unacceptable.

It bears stressing that ―[d]ue to the grim economic consequences to the employee, the
employer should bear the burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned.‖[79] Thus, in this case, it was incumbent
upon petitioner to prove that respondent was banned at SM Hypermarket Muntinlupa,
Market Market, and all Puregold supermarkets, and that there was no available branch for
respondent Unfortunately, petitioner failed to prove both. Except for a Memorandum from
SM Hypermarket stating that respondent was no longer allowed to be assigned at the
Muntinlupa branch, no other evidence was presented by petitioner to show the respondent
was also banned at Market Market and at all Puregold supermarkets and that all posts were
indeed taken. Petitioner could have easily asked its HR Department for a list of all its
branches together with the list of all its employees assigned thereat to prove its allegation
that there are no available posts for respondent. But it did not. Instead, it argued that
respondent‘s various infractions made it difficult for petitioner to assign respondent to a new
assignment. As evidence, petitioner submitted several memoranda it issued against
respondent. These, however, do not prove petitioner‘s allegation that there are no available
posts for respondent. If at all, it only shows that petitioner considered respondent an
undesirable employee due to his various infractions. Such infractions, however, are not
sufficient to prove that there are no available posts for respondent.

Moreover, contrary to the claim of petitioner, respondent‘s act of seeking help from Tulfo was
not the primary consideration of the NLRC in finding the existence of illegal dismissal. It was
only one of the many circumstances, which the NLRC took into consideration. Petitioner‘s
failure to assign respondent to an outlet without any justifiable reason, as well as the
apparent disdain of petitioner towards respondent as can be seen through the acts of
Alcoreza, the immediate response of respondent to seek help from Tulfo, and the
antecedent events, were all considered in determining the existence of illegal dismissal.
Labor Cases Penned By Justice Del Castillo

Accordingly, the Court finds no error on the part of the Labor Arbiter and the NLRC in ruling
that respondent was illegally dismissed, and thus entitled to backwages and separation pay.

In closing, while the Court recognizes that the management has the discretion and
prerogative to regulate all aspects of employment, which includes the transfer of employees,
work assignments, discipline, dismissal and recall of workers, the exercise of power is not
absolute as ―it must be exercised in good faith and with due regard to the rights of
labor.‖[80] More important, ―management prerogative may not be used as a subterfuge by the
employer to rid himself of an undesirable worker.‖[81]

WHEREFORE, the Petition is hereby DENIED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

02 OCT 2017 | JURISPRUDENCE | PONENTE | JUSTICE


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

Career Philippines Shipmanagement, Inc. and


Columbian Shipmanagement, Ltd. Vs.
Eduardo J. Godinez/Eduardo J. Godinez Vs.
Career Philippines Shipmanagement, Inc. and
Columbian Shipmanagement, Ltd.; G.R. No.
206826/G.R. No. 206828; October 2, 2017
DECISION

DEL CASTILLO, J.:

The Court cringes at the thought, generated by the experience in this proceeding and in past
cases, that in spite of all the laws passed and jurisprudence created to level the playing field
for the disadvantaged worker, his plight continues against employers who will stop at nothing
to avoid their obligations by taking advantage of the worker‘s weakness, ignorance, financial
hardship, other handicap, or the cunning of their lawyers.

Before us are consolidated Petitions for Review on Certiorari[1] assailing the May 22, 2012
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 105602, as well as its April 18,
2013 Resolution[3] denying the parties‘ respective Motions for Reconsideration.[4]

Factual Antecedents

Eduardo J. Godinez (Godinez) was hired by local manning agency Career Philippines
Shipmanagement, Inc. (Career), for its foreign principal Columbian Shipmanagement, Ltd.
(Columbian). He was assigned as Deck Cadet onboard the vessel ―M/V Norviken.‖ His nine-
month stint, covered by a Philippine Overseas Employment Administration (POEA) Standard
Employment Contract,[5] began on November 7, 2003.

Godinez was 20 years old at the time.

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


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

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


Labor Cases Penned By Justice Del Castillo

1. Act as look-out from 12:00 to 4:00 p.m. and 12:00 to 4:00 a.m. during navigation;

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

3. Assist in deck preventive maintenance;

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

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

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

On November 13, 2003, Godinez boarded ―M/V Norviken‖ and commenced his work.

On the evening of December 17, 2003, just before the start of his look-out duty at midnight,
Godinez failed to wake up despite attempts by the crew to rouse him from sleep. As a result,
his superior, Second Officer Antonio Dayo (Dayo) took his place and acted as look-out,
together with the outgoing look-out. For this, Dayo became strict with Godinez, requiring the
latter, as punishment, to clean toilets instead of performing his regular look-out duty; Dayo
became rude, always finding fault and humiliating, accusing, shouting, insulting, nagging,
and snapping at Godinez, who was also prevented from preparing his food for breakfast and
snacks.[8]

On December 24, 2003, a report[9] was prepared and sent by the vessel master via electronic
mail to Career, stating thus:

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

Early morning of 23 Dec. 2003, abt 0800 hrs. he inform[ed] Bosun that if Bosun need[ed] him just
call him in Hie crew smoke room where he [was] viewing tv.

At abt 1030 hrs. he came up to Master cabin to take the Bond store key and open it for he want[ed] to
take beer, fanta and cigarettes for he said he [was] very thirsty. But then I didn‘t give anything.
Instead, he ask[ed] chief officer [for] a packet of cigarettes when in fact for this month he got already
3 cartons.

At noon time while the crew [was] having lunch he [came] inside the messroom wearing short[s]
without [a] shirt and shout[ed] that (babasagin ko lahat ang mga mukha ninyo). Then he [ate] and
[kept] on transferring from one place to another (smoke room, crew mess, officer mess).

Before lunch he [came] up to 2/o and asked for his declared beer and cigarette. When 2/o asked him if
he had [a] problem he said no. When 2/O ask him if he had taste[d] marijuana and shabu before, he
admitted YES it taste[d] very good. He said he taste[d] marijuana during his high school days and
shabu during his college days.

After [the] crews[,] coffee break, at abt 1530 to 1745, he [was] on deck walking around with
sometimes a basketball ball on his hand sometimes mop handle and sometimes a floor mop itself. The
crew had to [stop] working when he pass[ed] by for they [were] afraid that he might hit them.
Labor Cases Penned By Justice Del Castillo

At dinner time he [came] down to crew messroom wearing white uniform with shoulder board
wearing short pants (sleeping short pants) and rubber shoes without socks. After dinner he join[ed] the
crew in [the] smoke room and [kept] on talking and laughing. Without any sense.

He [was] still under guard by one crew most of the time especially during night time until he [got]
inside his cabin and [slept]. But in the early evening he [brought] his pillow and blanket in [the]
crews[,] smoke room to sleep.

Yours truly,

Capt. Vicente A. Capero


Master

On December 25, 2003, another report[10] was sent via electronic mail by the vessel master to
Career, declaring as follows:

Subject: UPDATE OF DCD1 GODINEZ – CONDITION

xxxx

The condition now [was getting worse]. He [didn‘t] want to listen anymore to the officer on duty.

Today 25 Dec. 2003 at 0255 It second officer woke me up and told me that deck cadet GODINEZ
[was] in the focsle railings doing sight seeing again with binocular[s]. Upon arrival on the bridge I
switch[ed] on the foremast light and [saw] him [in the] same position as I mentioned] before. I
call[ed] him thru the compass deck external speaker or public address system to come back here in the
accommodation. As per second officer info he [came] up to the bridge at about 0235 and [took] the
binocular[s] and [brought] it down w[h]ere the escort [was] also following him. When he [didn‘t]
listen to his escort and to [the] second officer on duty, he [rang] me up for it also near to [sic] the
mark on chart as per my instruction to be [woken] up. At that time we [were] about to enter the TSS
in [the] Gulf of Suez w[h]ere mere [was] so [much] traffic. When he [came] up on the bridge I asked
him why he [did] that, he just answer[ed] that he want[ed] to see the light if it [was] a tug boat. So, I
told him just go down in the messroom or dayroom and he obey[ed]. I call[ed] another crew for
escort.

At 0400lt, 1AE called me up on bridge that Deck cadet [was] forcing to open engine room door coz
he want[ed] to see the engine. But then he didn‘t let him in.

At about 0445hrs it was noticed that he [was] walking on deck again. The escort inform[ed] the bridge
that he [didn‘t] want to sleep, he want[ed] to see the lights. Then I shout[ed] again in [the] public
address system to let him come back inside coz [it was] still too dark.

At 0608hrs he [was] again on deck walking/jogging with no shirty only short pants and slippers. He
had not been sleeping for Hie whole night as per escort report. Also third officer inform[ed] me that at
abt 2200hrs he [came] up also on the bridge with blanket and pillow. When ask by third officer just
say this is just my baby. At daytime he [was] always in the dayroom playing music and [on] full
volume [for] which galley boys are also complaining.

In this condition of him of which everyday is getting wors[e], I strongly oppose his presence on board.
I want him to be dis-embarked immediately on arrival. He is now resisting orders, he [doesn‘t] listen
Labor Cases Penned By Justice Del Castillo

to the officers and to his escort. This endanger[s] the safety of all crew on board and the vessel
especially during transit and maneuvering. All my patience is over now.

Yours truly,

Capt. V. A. Capero

Upon the vessel‘s arrival in Egypt on December 25, 2003, a physician was called on board
to assist Godinez, and he was brought to a local medical facility.

On January 10, 2004, Godinez was repatriated, and was referred to and confined at Sachly
International Health Partners, Inc. (Sachly), the company-designated medical facility, for
evaluation and treatment. The resulting Initial Medical Report[11] on Godinez‘s case, which
was unsigned, contains an admission made by the latter that when he was 15 years old, he
began to have episodes of insomnia and paranoia, for which he sought psychiatric
evaluation and management.

On January 13, 2004, Godinez was once more examined at Sachly, and the January 19,
2004 Medical Progress Report[12] issued by Sachly‘s Medical Coordinator Dr. Susannah Ong-
Salvador (Salvador) thereafter contained a recommendation that a psychological test be
done ―to [c]onsider bipolar disorder II‖, as it was noted that Godinez became ―excessively
talkative, with flight of ideas, and had erratic sleeping patterns [of only 1-2 hours,
hallucinations, and was verbally abusive towards his mother and suffered from uncontrolled
sleepiness].‖ He was admitted at the University of Santo Tomas Hospital on January 19,
2004.

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

On February 6, 2004, Salvador issued another report[13] which confirmed that Godinez was
suffering from bipolar disorder, which ―has a good prognosis with adequate treatment‖ but ―is
not an occupational related illness.‖

On February 13, 2004, Godinez was again examined at Sachly, and Salvador‘s Report[14] of
even date states that he ―is in euthymic mood at present‖ with continuation of scheduled oral
medication.

On March 12, 2004, an unsigned Medical Progress Report[15] on the findings of the
examination conducted on Godinez on even date was ostensibly issued by Sachly. It
contained findings that Godinez was ―asymptomatic and doing well with no recurrence of
depressive episodes;‖ that Godinez ―verbalized a feeling of wellness;‖ that his ―[v]ital signs
were stable;‖ that he was in a ―euthymic mood, and is able to sleep and eat well;‖ and finally,
that he was ―found to be functionally stable at present.‖

That very same day, or on March 12, 2004, Godinez was made to sign a prepared
form/document entitled ―Certificate of Fitness for Work‖[16] whose particulars were
mechanically filled out. Godinez signed this document as the declarant, and, interestingly,
Sachly‘s Medical Coordinator, Dr. Salvador, signed as witness. The document was likewise
notarized. It reads as follows:
Labor Cases Penned By Justice Del Castillo

I, Eduard Godinez, for myself and my heirs, do hereby release Columbia Shipmanagement Ltd. and
Career Phils. Shipmgt. Inc. of all actions, claims, demands, etc., in connection with being released on
this date as fit for duty.

In recognizing this Certificate of Fitness for Work, I hold the said Columbia Shipmanagement Ltd.
and its Agent Career Phils. Shipmgt. Inc. free from all liabilities as consequence thereof.

Finally, I hereby declare that this Certificate of Fitness for Work may be pleaded in bar or any
proceedings of the law that may be taken by any government agency, and I do promise to defend the
right of said Career Phils. Shipmgt. Inc. and Columbia Shipmanagement Ltd. in connection with this
Certificate of Fitness for Work.

Witness my hand this 12 day of March 2004 in the City of Manila, Philippines.

(signed)
EDUARD GODINEZ
Name of Vessel: M/V NORVIKEN
Nature of Illness or Injury: BIPOLAR MOOD
DISORDER, TYPE II, IMPROVED
Date of Ill/Inj.: 25 December 2003
(signed)
Witness: SUSANNAH O. SALVADOR MEDICAL COORDINATOR

Ako, EDUARD GODINEZ, ay nagsasaad na ang bahagi ng salaysay na ito ay along nabasa at ang
nasabi ay naipaliwanag sa akin sa salitang aking naiintindihan. Ito pa rin ay katunayan na ang aking
pagsangayon sa nasabi ay aking sarili at kusang kagustuhan, at hindi bunga ng anumang pangako,
pagkukunwari o pagpilit ng sinumang may kinalaman sa mga nasasaad na usapin.

Katunayan, aking nilagdaan ang pagpapahayag nitong ika-12 ng MARSO 2004 sa MANILA.

(signed)
EDUARD GODINEZ

(jurat and notarization)


All medical expenses incurred prior to Godinez‘s above certification were paid for by Career
and Columbian. Godinez also received his sickness allowance for the period beginning from
his repatriation up to March 12,2004.[17]

Godinez sought to be re-hired and re-engaged by Career, but he was denied. He sought to
be hired by other manning agents as well, but he was rejected just the same.[18]

On February 26, 2006, Godinez consulted an independent specialist, Dr. Randy Dellosa
(Dellosa), who diagnosed him to be suffering from bipolar disorder, per Dellosa‘s handwritten
Medical Certificate/Psychiatric Report dated February 27, 2006.[19] Godinez was declared
―unfit to work as a seaman,‖ placed on ―maintenance medication,‖ and advised to undergo
―regular counseling and psychotherapy‖ as he was ―prone to relapses due to emotional
triggers.‖
Labor Cases Penned By Justice Del Castillo

Godinez returned to the company-designated physician, Dr. Johnny K. Lokin (Lokin), who
provided regular treatment and medication at Godinez‘s personal expense.

Ruling of the Labor Arbiter

On March 7, 2006, Godinez filed a labor case with a claim for disability benefits, sickness
allowance, medical and hospital expenses, moral and exemplary damages, attorney‘s fees,
and other relief against Career, Columbian, and Verlou Carmelino (Carmelino), Career‘s
Operations Manager. The case was docketed as NLRC-NCR Case No. (M) 06-03-00768-00.

In his Position Paper[20] and Reply,[21] Godinez essentially argued that he should be paid
permanent total disability benefits for contracting bipolar disorder during his employment;
that such illness was work-related and aggravated by the harsh treatment he received from
Dayo; that there was no declaration of fitness to work as the March 12, 2004 Medical
Progress Report merely stated that he ―was found to be functionally stable at present,‖ which
did not amount to an assessment of his fitness for work; that his illness persisted and had
not been cured; that the Certification of Fitness for Work he signed was void as it was a
general waiver, and he was cajoled into signing it under the false hope that he would be re-
employed by Career, and for the reason that he could not make a competent finding or
declaration of his own state of health since he was not a doctor; that based on Dellosa‘s
findings, he was deemed unfit to work as a seaman, and thus entitled to disability benefits,
sickness allowance, and other benefits; and that he should be entitled to moral and
exemplary damages and attorney‘s fees for the treatment he received from his employers,
and for the latter‘s malice and bad faith in evading their liabilities. Thus, Godinez prayed that
Career, Columbian and Carmelino be held solidarity liable for the following:

1. To pay disability grading equivalent to Grade 1 of the POEA SEC and based on
Amosup ITF-TCC Agreement or US$60,000.00[;]

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

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

4. To pay moral damages in the amount of US$10,000 and exemplary damages in the
amount of US$10,000[;]

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

6. Other relief just and equitable under the premises, are also prayed for.[22]

In their joint Position Paper,[23] Career, Columbian, and Carmelino argued that Godinez
should have filed his case before the Voluntary Arbitrator as it involved a dispute regarding a
collective bargaining agreement and the interpretation of the POEA-Standard Employment
Contract; that his illness is not compensable and work-related, since bipolar disorder is
―chiefly rooted in gene defects‖ and in heredity; therefore, he could not have contracted
bipolar disorder during his employment on board Columbian‘s vessel, and his work did not
expose him to any risk of contracting the illness; that he was nonetheless declared fit to
work, and he did not dispute this, as he, in fact, executed a Certificate of Fitness for Work;
that Godinez‘s failure to declare in his pre-employment medical examination that he
previously suffered from insomnia and paranoia amounted to fraudulent concealment under
Section 20(E) of the POEA contract which states that ―a seafarer who knowingly conceals
and does not disclose past medical condition, disability and history in the pre-employment
Labor Cases Penned By Justice Del Castillo

medical examination constitutes fraudulent misrepresentation and shall disqualify him from
any compensation and benefits. This may also be a valid ground for termination of
employment and imposition of the appropriate administrative and legal sanctions;‖ that
Godinez has been paid his illness allowance; and that for lack of merit, Godinez is not
entitled to his claim of damages and attorney‘s fees. Thus, they prayed for dismissal of the
case.

In their joint Reply,[24] Career, Columbian, and Carmelino also argued that it was not possible
for Godinez to have been maltreated by Dayo during the period from December 17 to 25,
2003, since the latter was repatriated on November 29, 2003 due to chronic gastritis,
hyperlipidemia and hypercholesteremia; and that Dellosa‘s findings actually indicated that
Godinez was fit to work, although he was required to continue medication in order to avoid
relapse.

On May 16, 2007, Labor Arbiter Thelma M. Concepcion issued her Decision[25] declaring that
her office had jurisdiction over the case; that Godinez‘s bipolar disorder was work-connected
and thus compensable, pursuant to Section 20(B)(4) of the POEA Standard Employment
Contract; and that based on substantial evidence, the nature of Godinez‘s work and/or his
working conditions on board ―M/V Norviken,‖ as well as Dayo‘s harsh treatment, which
caused trauma and anxiety, increased the risk of contracting his illness.

The Labor Arbiter stated further that the defense that Dayo could not have maltreated
Godinez in December, 2003, since he was already medically repatriated as early as
November 29, 2003, could not hold because: a) there was no documentary or other
evidence to prove that Dayo was indeed repatriated on said date; b) on the contrary, the
documentary evidence submitted, a November 21, 2003 Medical Examination Report [26] on
Dayo‘s condition, did not contain an advice of repatriation, but instead a recommendation ―to
consult doctor for more detailed exams and further treatment at the patient‘s home country 3
months later;‖ c) an Initial Medical Report[27] dated February 3, 2004 issued by Sachly‘s
Salvador showed that Dayo was examined only on February 3, 2004, indicating that he
could not have been repatriated on November 29, 2003 but later, at a date closer to
February 3, 2004, as it would be illogical for him to have belatedly consulted a doctor given
the seriousness of the declared illnesses, chronic gastritis, hyperlipidemia and
hypercholesteremia, which caused his repatriation; and d) the said February 3, 2004 Initial
Medical Report is a forgery, considering that Salvador‘s signature affixed thereon is
―strikingly dissimilar‖ to her signature contained in the other medical reports she issued in
Godinez‘s case. The Labor Arbiter concluded that Career, Columbian, and Carmelino were
guilty of misrepresentation for submitting a forged document.

The Labor Arbiter held further that the ―psychological trauma and anxiety attacks as a result
of the maltreatment which complainant suffered under 2nd Officer Dayo has already
rendered Godinez permanently and totally disabled;‖[28] that the ―result of the x x x trauma
and anxiety attacks caused by 2nd Officer Dayo‘s harassment and maltreatment of Godinez
caused his permanent and total disability considering that the result of the first episode has
left Godinez a high risk to subsequent episodes of a mood disorder;‖[29] that Godinez‘s status
and his genetic history were not factors to be considered as he was still single and there was
no history of bipolar disorder in his family; that the claim that Godinez was already fit for
work, as opined by Sachly‘s doctors and certified in the March 12, 2004 Medical Progress
Report could not be considered as there was nothing in said report to suggest that Godinez
was fit for work; that the Certificate of Fitness for Work executed by Godinez was an
improper waiver, ―irregular and scandalous‖[30] especially when it was witnessed by Salvador,
and did not deserve evidentiary weight since there was nothing in the POEA contract
authorizing or requiring a seafarer to certify his own state of health.
Labor Cases Penned By Justice Del Castillo

On the defense that following Section 20(E) of the POEA contract, Godinez should be barred
from claiming benefits in view of his concealment of and failure to disclose during the PEME
that he consulted medically for insomnia and paranoia when he was 15 years old, the Labor
Arbiter held that Godinez‘s failure to disclose this fact was not intentional and did not amount
to intentional concealment; that the fact simply ―slipped his mind considering the passage of
time;‖[31] and that when he underwent the PEME, he was only 20 years old and could not
have known the consequences of the PEME except that it was a simple prerequisite to
employment.

Regarding monetary claims, the Labor Arbiter held that, having found permanent and total
disability, Godinez was entitled to US$60,000.00 as disability benefit; sickness allowance,
less what he already received; medical expenses; moral and exemplary damages since
malice and bad faith attended the denial of his claims and for presenting forged documentary
evidence; and attorney‘s fees. The Decision thus decreed:

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


Shipmanagement Ltd. and individual respondent Verlou R. Carmelino are hereby ordered jointly and
severally to pay complaint Eduard J. Godinez the following:

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

2. Sickness allowance amounting to US$475.00;

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

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


amount of US$5,000.00; and

5. Ten percent (10%) of the total judgment award for and as attorney‘s fees.

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

All other claims are hereby ordered dismissed for lack of merit.

SO ORDERED.[32]

Ruling of the National Labor Relations Commission

Career, Columbian, and Carmelino appealed before the National Labor Relations
Commission (NLRC), which docketed the case as OFW(M) 06-03-00768-00 (CA NO. 08-
000152-07).

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

Aggrieved by the adverse ruling, the respondents-appellants interposed the instant appeal premised on
serious errors, allegedly committed by the Labor Arbiter, such as:

1. In ruling that the Labor Arbiter has jurisdiction over the complaint a quo;
Labor Cases Penned By Justice Del Castillo

2. In awarding disability benefits to appellee;

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

4. In failing to consider that appellee‘s claims for medical expenses against appellants
have been fully paid;

5. In awarding moral and exemplary damages; and,

6. In holding individual appellant personally liable.

WE MODIFY.

xxxx

It must be stressed though that pursuant to Section 10 of R.A. No. 8042, entitled Migrant Workers and
Overseas Filipinos Act of 1995, ‗the Labor Arbiter of the NLRC shall have the original and exclusive
jurisdiction to hear and decide within ninety (90) calendar days after filing of the complaint, the
claims arising out of an employer-employee relationship involving Filipino workers for overseas
deployment x x x.‘

Similarly, under the 2005 Revised Rules of Procedure of the NLRC, particularly Section (G), Rule V,
thereof, explicitly provides that:

‗Section 1. Jurisdiction of Labor Arbiters. – Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide the following cases, including workers, whether agricultural or non-
agricultural;

xxxx

g) Money claims arising out of employer-employee relationship or by virtue of any law or contract,
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and
other forms of damages.‘

It is also observed that the respondents-appellants herein vigorously participated and argued their
defense during the proceedings below, hence, it is too late in the day to question the same on appeal.

Moreover, as between the provisions of a mere administrative order and the Republic Act and of the
2005 Revised Rules of Procedure of the NLRC, we are persuaded that the law should be accorded
with respect. In other words, R.A. 8042 that confers exclusive and original jurisdiction to the Labor
Arbiter and of the Commission, to hear and decided money claims arising out of an employer-
employee relationship of Filipino overseas workers should prevail.

As to the averment x x x that the award of disability benefits has no basis in law because complainant-
appellee has been declared fit to return to his duties, We are more inclined though to agree with the
Labor Arbiter‘s position that there is ‗nothing on record that would suggest that complainant is
already fit and may now go back to work‘ x x x. If indeed, the said allegation is to be accorded with
respect, how come that herein respondents-appellants did not welcome him back? Moreover, as
observed by the Labor Arbiter which we adopt as Ours,
Labor Cases Penned By Justice Del Castillo

‗Furthermore, we find irregular and scandalous the execution by Godinez of the ‗Certificate of Fitness
For Work‘ on March 12, 2004, specially so, when witnessed by the company-designated physician.
This certification do not deserve evidentiary value, as there is nothing in the POEA Standard
Employment Contract requiring the seafarer to certify as to his own health status. Neither can the said
certificate bar complainant to his claim for disability compensation. Jurisprudence is replete that
waiver and release cannot bar complainant from claiming what he is legally entitled to.‘ x x x

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


US$475.00, the respondents-appellants alleged that the same has been reimbursed to him x x x. A
closer examination of the alleged Annex ‗Q‘ of their Position Paper, however, would show that this
refers to a handwritten ‗Medical Certificate-Psychiatric Report‘ of a certain Dr. Randy Dellosa, which
does not show of any payment made to him x x x. The alleged Annex ‗Q-1‘ is also not among the
records. Hence, the said finding of the Labor Arbiter must be sustained.

The awards for moral and exemplary damages should, likewise, be granted because the instant case
falls under the instances when such award is due, considering that the respondents-appellants acted in
bad faith in refusing to comply with their obligation and such refusal is clearly tainted with oppression
to labor.

Attorney‘s fees is also justifiable because this is an action for recovery of unpaid monetary benefits
and complainant-appellee was forced to litigate and incur expenses to protect his rights and interests.

The ruling of the Labor Arbiter ‗holding individual appellant personally liable in this action‘, cannot
be sustained though. We agree with the respondents-appellants‘ position that there is really no basis,
in fact and in law, to make individual respondent-appellant liable both by way of official capacity as
officer and in his individual capacity. Worded differently, since the corporate employer has already
been specified in the case, his inclusion in the caption of the case is therefore immaterial.

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


MODIFICATION only, insofar as Our order for individual respondent-appellant to be deleted from
the dispositive portion.

SO ORDERED.[34]

Career and Columbian moved to reconsider, but in a July 31, 2008 Resolution,[35] the NLRC
held its ground.

Ruling of the Court of Appeals

Career and Columbian went up to the CA on certiorari. On May 22, 2012, the CA issued the
assailed Decision, decreeing as follows:

As gleaned from the above-cited issues, petitioners anchor this Petition on procedural and substantive
grounds. Anent the procedural matter, petitioners question the assumption of jurisdiction by the Labor
Arbiter in this case on the supposition mat the case should have been lodged with the Voluntary
Arbitrator, in accordance with Section 29 of POEA Standard Contract. As to substantive matters, on
the other hand, petitioners bewail the common decision of the Labor Arbiter and the NLRC to grant
disability benefits and other monetary awards to private respondent on the theory that their decisions
are bereft of factual basis and were done in utter disregard of evidence as well as applicable laws and
jurisprudence.
Labor Cases Penned By Justice Del Castillo

Resolving the issue of jurisdiction, We are of the considered view that petitioners cannot fault the
Labor Arbiter for taking cognizance of this case. Section 29 of the POEA Standard Contract is explicit
that the voluntary arbitrator or panel of arbitrators have jurisdiction only when the claim or dispute
arises from employment. In the instant case, the Labor Arbiter was correct that there was no longer an
employer-employee relationship existing between the parties when private respondent filed the
Complaint. Consequently, We agree with the Labor Arbiter that Section 31 of the POEA Standard
Contract, and not Section 29 thereof, should apply in this case. As said provision states –

‗SECTION 31. APPLICABLE LAW

Any unresolved dispute, claim or grievance arising out of or in connection with this Contract,
including the annexes thereof, shall be governed by the laws of the Republic of the Philippines,
international conventions, treaties and covenants where the Philippines is a signatory.

We also find it apt to point out that Section 10 of Republic Act No. 8042 (Migrant Workers
Act) clearly states that claims arising from contract entered into by Filipino workers for
overseas employment are cognizable by the labor arbiters of the NLRC –

xxxx

In view of the foregoing, We hold that the labor tribunals did not err in taking cognizance of
this case.

Prescinding, this Court, after thoroughly reading the entire records and weighing all the facts
and evidence on hand, found [sic] and so holds that petitioners failed in their duty to prove
that the NLRC committed grave abuse of discretion or had grossly misappreciated evidence
insofar as its affirmation of the Labor Arbiter‘s conclusion that private respondent was
entitled to disability benefits in the amount of Sixty Thousand US Dollars (US$60,000.00).

As the records bear out, the Labor Arbiter declared private respondent to be suffering from a
permanent and total disability because of the psychological trauma and anxiety attacks
which resulted from the maltreatment inflicted on him by Second Officer Dayo, private
respondent‘s immediate superior on board ‗MV Norviken‘. We see no reason to reverse this
finding as the same is duly supported by substantial evidence. Significantly, the Labor
Arbiter even emphasized that such ‗factual findings is supported by the medical opinion on
Psychosocial Factors, a risk factor as shown in Chapter 15, P. 543, Kaplan and Sadock‘s
Synopsis of Psychiatry, Eighth Edition x x x.‘

Notably, petitioners vehemently deny that private respondent‘s illness was compensable and
take serious exception on [sic] the common findings of the Labor Arbiter and the NLRC that
private respondent‘s working conditions on board the ‗M/V Norviken‘ aggravated his illness.

To be sure, this Court agrees that ‗[f]or disability to be compensable under Section 20(B) of
the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-
related; and (2) the work-related injury or illness must have existed during the term of the
seafarer’s employment contract. In other words, to be entitled to compensation and
benefits under this provision, it is not sufficient to establish that the seafarer‘s illness or injury
has rendered him permanently or partially disabled; it must also be shown that there is a
causal connection between the seafarer‘s illness or injury and the work for which he had
been contracted. The 2000 POEA-SEC defines ‗work-related injury‘ as ‗injury[ies] resulting in
disability or death arising out of and in the course of employment‘ and ‗work-related illness‘
Labor Cases Penned By Justice Del Castillo

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


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

Relative to the foregoing, it bears pointing out that this pertinent provision under the POEA
Standard Contract is interpreted to mean that it is the company-designated physician who is
entrusted with the task of assessing the seaman‘s disability, whether total or partial, due to
either injury or illness, during the term of the latter‘s employment. x x x

In light of the foregoing pertinent precepts, the question now is whether there is substantial
evidence to prove the existence of the above-stated elements.

Our assiduous assessment of the records leads Us to answer in the affirmative. Indeed, like
the Labor Arbiter and the NLRC, We too are convinced that private respondent was able to
prove by substantial evidence that his risk of contracting such illness was aggravated by his
working conditions on board petitioners‘ ‗MV Norviken‘, specially taking into consideration
the inhumane treatment he suffered from Second Officer Dayo which ultimately led private
respondent to snap. And as aptly pointed out by the Labor Arbiter, the degree of proof
required in this case is merely substantial evidence and a reasonable work-connection; not a
direct causal relation. ‗It is enough that the hypothesis on which the workmen‘s claim is
based is probable. Medical opinion to the contrary can be disregarded especially where
there is some [basis] in the facts for inferring a work connection. Probability, not certainty, is
the touchstone. x x x.‘ Furthermore, under the POEA Standard Contract, private respondent
is disputably presumed work-related [sic] and, therefore, it is incumbent for petitioners to
contradict it by their own substantial evidence. As the records would reveal, however,
petitioner miserably failed to discharge this burden since, as found by the Labor Arbiter, and
affirmed by the NLRC, the pieces of evidence, which petitioners presented were either of
dubious character or bereft of probative value.

On petitioners‘ stance that private respondent is, under Section 20(E) of the POEA Standard
Contract, barred from claiming disability benefit for his failure to disclose his previous bout
with insomnia and paranoia, suffice it to state that We fully concur with the labor tribunal that
this omission cannot just be taken against private respondent as to deprive him of disability
benefits considering that Section 20(E) requires that such information should have been
knowingly concealed. Considering that private respondent was only at a tender age of fifteen
(15) when it happened, it is indeed fair to conclude that he really had no intention of
deliberately withholding such information and that it merely slipped his mind when answering
his PEME.

Ail the foregoing considered, We hold that there is no basis for Us to annul and set aside the
findings of the Labor Arbiter, as affirmed by the NLRC, with respect to private respondent‘s
right to disability benefit, as no amount of grave abuse of discretion attended the same.

xxxx

With respect to the award of sickness allowance, Paragraph 3, Section 20(B) of the 2000
POEA Standard Employment Contract is categorical that ‗[u]pon sign-off from the vessel for
medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic
wage until he is declared fit to work or the degree of permanent disability has been assessed
by the company-designated physician but in no case shall this period exceed one hundred
twenty (120) days.‘
Labor Cases Penned By Justice Del Castillo

Based on this provision and given the finding that private respondent‘s illness was work-
related and had become total and permanent, We hold that the NLRC correctly awarded
sickness allowance equivalent to his four (4) months salary or the maximum period of one
hundred twenty (120) days.

xxxx

In the instant case, however. We found that the pieces of evidence submitted by private
respondent are not sufficient enough for him to successfully claim reimbursement of x x x
[P70,475.90]. To be sure, most of the documents submitted by private respondent are not
official receipts but are actually mere itemization of the medicines supposedly procured by
private respondent as well as the price of each medicine prescribed by his doctor.
‗Jurisprudence instructs that the award of actual damages must be duly substantiated by
receipts.‘ Verily, ‗[a] list of expenses cannot replace receipts when the latter should have
been issued as a matter of course in business transactions.‘ For this reason, the award for
reimbursement of medical expenses should be reduced appropriately. Based on this Court‘s
computation, private respondent should be entitled only to a reimbursement of x x x
[P16,647.85], as this is only the amount duly substantiated by receipts.

Coming now to the award of moral damages and exemplary damages, it is long settled that
‗[m]oral damages may be recovered only where the dismissal of the employee was tainted
by bad faith or fraud, or where it constituted an act oppressive to labor, and done in a
manner contrary to morals, good customs or public policy while exemplary damages are
recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner.

In the instant case, the records show that the awards are premised on the following findings
of the Labor Arbiter –

xxxx

Consequently, we hold respondents Career Phils. and Columbia and individual respondent Verlou
Carmelino guilty of ‗misrepresentation for having falsely claimed that 2nd Officer Dayo was no longer
on board M/V NORVIKEN at the time complainant was allegedly subjected to ‗verbal and
psychological harassment‘ x x x.

We are also led to believe that respondents submitted a fraudulent Medical Report x x x. Thus, we
find Hie signature of Dr. Susannah Ong-Salvador appearing on the Initial Medical Report relative to
the health status of 2nd Officer Dayo, a ‗forgery‘, which rendered the claim of 2nd Officer Dayo‘s
repatriation a mere afterthought.

x x x x.

Considering that the NLRC affirmed the grant of moral damages and exemplary damages
based on such findings of the Labor Arbiter and considering further that petitioners did not
shown [sic] any convincing proof to contradict such findings before this Court, as in fact they
did not make any effort to directly contest the said findings of the Labor Arbiter, We are wont
to likewise affirm private respondent‘s entitlement to moral damages and exemplary
damages in view of the express findings of bad faith and malice on the part of the petitioners
in denying private respondent‘s just claims.
Labor Cases Penned By Justice Del Castillo

However, while We affirm the Labor Arbiter‘s award of moral damages and exemplary
damages, We axe convinced that the amount of moral damages and the exemplary
damages awarded are far too excessive, if not unconscionable. As it is always stressed in
jurisprudence, ‗[m]oral damages are recoverable only if the defendant has acted fraudulently
or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard
of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad
faith, oppressive or abusive.‘ Similarly, x x x [e]xemplary [d]amages are imposed not to
enrich one party or impoverish another but to serve as a deterrent against or as a negative
incentive to curb socially deleterious actions. In line with prevailing jurisprudence, We hereby
reduce the moral damages and exemplary damages to the more equitable level of One
Thousand US Dollars (US$1,000.00) each.

Finally, regarding the award of attorney‘s fees to private respondent, We found the same to
be warranted based on the facts of this case and prevailing jurisprudence. As it is oft-said,
‗[t]he law allows the award of attorney‘s fees when exemplary damages are awarded, and
when the party to a suit was compelled to incur expenses to protect his interest.‘

In view of Our herein disquisition, We shall no longer delve into the merits of petitioners‘
prayer for issuance of a Temporary Restraining Order (TRO) for it is now moot and
academic.

WHEREFORE, premises considered, the instant Petition is DISMISSED. The assailed Decision and
Resolution of the NLRC are AFFIRMED with the following MODIFICATIONS –

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


Forty-Seven Pesos and 85/100 (P16,647.85);

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

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

In addition, the prayer for issuance of Temporary Restraining Order (TRO) is hereby DENIED for
being moot and academic. All other claims are likewise DISMISSED for lack of merit.

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

Godinez filed a Motion for Partial Reconsideration, questioning the reduction in the award of
medical expenses and moral and exemplary damages. In essence, he sought reinstatement
of the monetary awards contained in the NLRC Decision. On the other hand, Career and
Columbian filed a joint Motion for Reconsideration questioning the entire decision and
award, and reiterating all their arguments before the Labor Arbiter, NLRC, and in their
Petition for Certiorari.

On April 18, 2013, the CA issued the assailed Resolution denying the parties‘ respective
motions for reconsideration. Thus, the present petitions.

Issues

The following issues are raised by the parties in their respective Petitions:
By Career and Columbian as petitioners in G.R. No. 206826
Labor Cases Penned By Justice Del Castillo

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


ITS APPRECIATION OF THE FACTS AND EVIDENCE WHEN IT AFFIRMED THE AWARD
OF TOTAL AND PERMANENT DISABILITY BENEFITS, SICKNESS ALLOWANCE, AND
REIMBURSEMENT OF MEDICAL EXPENSES DESPITE THE FOLLOWING:

a.1 Malicious concealment of a past mental disorder is fraudulent misrepresentation. Under express
provisions of the governing POEA Contract, fraudulent misrepresentation of a past medical
condition disqualifies a seafarer from any contractual benefits and claims [sic].

a.2 Work-relation must be proved by substantial evidence. Convenient allegations cannot justify a
claim for disability benefits. In the present case, respondent‘s allegations that his mental
breakdown was due to the maltreatment of Second Officer Dayo is a falsity as the latter had
already been signed-off prior to the material period. Work-relation is therefore absent and the
claim is not compensable.

a.3 Notwithstanding the above, respondent was provided necessary treatment until he was declared
fit to work, a fact he himself confirmed and never disputed for almost two (2) years. Clearly
therefore, petitioners can no longer be rendered liable for respondent‘s subsequent mental
condition.

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


AFFIRMING THE AWARD OF DAMAGES AND ATTORNEY‘S FEES DESPITE ABSENCE OF
ANY FINDING OR DISCUSSION SHOWING BAD FAITH OR MALICE ON THE PART OF
PETITIONERS.[37]

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

THE LONE ISSUE BEING RAISED BY TFffi PETITIONER IN THIS CASE IS WHETHER THE
HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN MODIFYING
AND REDUCING THE AMOUNT OF DAMAGES.[38]

The Parties’ Respective Arguments

In G.R. No. 206826. In their Petition and Reply,[39] Career and Columbian insist that
Godinez‘s failure to disclose his past medical record amounts to fraudulent concealment
which disqualifies him from receiving the benefits and claims he seeks; that it was erroneous
for the CA to simply assume that this fact merely slipped Godinez‘s mind during the PEME;
that the PEME itself contained a certification, which Godinez read and signed, that any false
statement made therein shall disqualify him from any benefits and claims; that Godinez‘s
condition is not work-related; that Dayo‘s alleged maltreatment is not supported by any other
evidence, such as written statements of other crewmembers; that on the contrary, it has
been sufficiently shown that Dayo was no longer aboard the vessel during the period that
Godinez claims Dayo maltreated him; that it has been opined and certified by the company-
designated medical facility in a February 6, 2004 medical report that Godinez‘s illness is not
an occupational disease, but a mere symptom of genetic defects, developmental problems,
and psychological stresses; that even assuming that Godinez‘s misrepresentation is
excusable and his illness is work-related, he was nonetheless afforded full medical treatment
Labor Cases Penned By Justice Del Castillo

and was cured and declared fit for work by the company-designated medical facility in a
March 12, 2004 medical progress report; that Godinez himself declared that he was cured
and fit for work by way of his March 12, 2004 Certificate of Fitness for Work; and, that
Dellosa‘s February 27, 2006 Medical Certificate/Psychiatric Report actually declared that
Godinez was fit for work.

As for the other monetary awards, Career and Columbian argue that moral and exemplary
damages may not be awarded to Godinez, absent malice and bad faith on their part. On the
award of attorney‘s fees, they claim that this must be deleted as well, since they are not at
fault and did not conduct themselves in bad faith and with malice. Thus, they pray that the
assailed CA dispositions be reversed and set aside; that Godinez‘s labor case be ordered
dismissed; and that he be ordered to return the amount of P4,105,276.07 which was
advanced to him by virtue of a premature execution of the judgment award.

In his Comment[40] seeking denial of the Petition and reinstatement of the NLRC‘s April 30,
2008 Decision, Godinez reiterates that his illness is compensable as it is work-related; that
there is no fraudulent concealment on his part; that permanent and total disability has been
shown to exist and was caused and triggered by the harsh and cruel treatment he received
while aboard ―M/V Norviken,‖ as well as by conditions of work, such as ―confined living
quarters, motion of the ship, exposure to varied climatic conditions, lack of stability in hours
[of] work, noise and vibrations from engines and equipment, exposure to irritant substances,
inadequate nutrition, overheated surroundings and inadequate physical work combined with
monotony and mental stress resulting from larger and more automated vessels, x x x
seasickness x x x unsuitable [food] and water supplies on board, improper eating habits, and
intemperate behavior while ashore,‖[41] and psychosocial factors and stressors in the work
environment, such as ―role ambiguity, role conflicts, discrimination, supervisor-supervisee
conflicts, work overload, and work setting [which are] associated with greater susceptibility to
stress-related illness, tardiness, absenteeism, poor performance, depression, anxiety, and
other psychological distress;‖[42] that there was no categorical declaration by the company-
designated physician that he is cured and fit for work; that the certificate of fitness for work
he was made to execute is null and void as it was forced upon him at a time of financial and
emotional distress, and he was made to believe falsely that after its execution, he may once
more work for Career and Columbian; that his medical expenses should be reimbursed in
full; that while the CA did not err in affirming the award of moral and exemplary damages, it
was not correct in reducing them, considering the fraudulent and malicious manner in which
Career and Columbian conducted themselves in the proceedings, in trying to avoid liability
and deny medical assistance to him and sacrificing the welfare of their employees for the
sake of keeping and protecting their profits; and, that as a result of the cruel and inhuman
treatment he received at work, he is now condemned to a lifetime of maintenance
medication consisting of mood stabilizers and other medicines, under pain of relapse.

G.R. No. 206828. In his Petition and Reply,[43] Godinez essentially reproduces and reiterates
the issues and arguments contained in his Comment to the Petition in G.R. No. 206826.

In their Comment,[44] Career and Columbian essentially reproduce and replead the
allegations, arguments, and relief sought in their Petition in G.R. No. 206826, apart from
seeking the denial of the Petition in G.R. No. 206828. They, however, reiterate that in
dealing with Godinez, they were not motivated by bad faith, malice, or ill will; nor did they act
in a manner that is contrary to morals, good customs, or public policy.

Our Ruling
Labor Cases Penned By Justice Del Castillo

We find for Godinez.


Workers are not robots built simply for labor; nor are they machines that may be turned on or
off at will; not objects that are conveniently discarded when every ounce of efficiency and
utility has been squeezed out of them; not appliances that may be thrown away when they
conk out. They are thinking and feeling beings possessed of humanity and dignity, worthy of
compassion, understanding, and respect.

Defense of Fraudulent Concealment

It is claimed that Godinez concealed his past medical history when he failed to disclose
during the PEME that when he was 15, he suffered from insomnia and paranoia for which he
sought psychiatric evaluation and management. This is based on an unsigned document, an
Initial Medical Report, containing a supposed admission by Godinez that he was treated in
the past for insomnia and paranoia. However, this unsigned report cannot have any
evidentiary value, as it is self-serving and of dubious character. In Asuncion v. National
Labor Relations Commission,[45] the Court disregarded unsigned listings and computer
printouts presented in evidence by the employer to prove its employee‘s absenteeism and
tardiness. It was held therein that —

In the case at bar, mere is a paucity of evidence to establish the charges of absenteeism and tardiness.
We note that the employer company submitted mere handwritten listing and computer print-outs. The
handwritten listing was not signed by the one who made the same. As regards the print-outs, while the
listing was computer generated, the entries of time and other annotations were again handwritten and
unsigned.

We find that the handwritten listing and unsigned computer print-outs were unauthenticated and,
hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of that
nature should be rejected as evidence without any rational probative value even in
administrative proceedings. x x x (Emphasis supplied)

Thus, there could be no fraudulent concealment on Godinez‘s part.

Even if it is true that Godinez suffered from insomnia and paranoia and he failed to disclose
this fact, we do not believe that the omission was intentional and fraudulent. As the labor
tribunals and the CA correctly opined, the fact may have simply ―slipped his mind
considering the passage of time‖[46] since his bout with insomnia and paranoia occurred when
he was only 15 years old. Given his age, innocence, and lack of experience at the time he
was applying for work with Career, one is not quick to assume that Godinez was capable of
deception or prevarication; as a young boy breaking into the world and facing the prospect of
serious honest work for the first time in his life, it can be said that he innocently believed this
fact to be unimportant and irrelevant. In any event, Career and Columbian‘s defense is
grounded on Section 20(E) of the POEA contract which, to be applicable, requires that the
seafarer must knowingly conceal his past medical condition, disability, and history. This
cannot apply in Godinez‘s case. If he were a seasoned and experienced seafarer, this Court
would have viewed his failure to disclose in a different way.

Nature and Cause of Godinez’s Illness

On the other hand, the Court believes that Godinez was unjustifiably maltreated by his
superior, 2nd Officer Dayo, who, according to the former in his Position Paper below —
Labor Cases Penned By Justice Del Castillo

x x x suddenly became irritated and angry at the complainant x x x, ordered and forced complainant to
clean the toilets as punishment instead of performing his regular functions and duties on board as
watch on the bridge. Then, Second Officer Dayo became rude to him, always finding fault in him,
humiliating him or giving him conflicting orders such as cleaning all the toilets instead of performing
the look-out job which he regularly performed from 12:00 P.M. – 16:00 P.M. and 00:00 – 04:00 A.M.
In every instance when there is an opportunity to accuse him, Second Officer Dayo would snap at
him, nag him and shout to him in front of everyone while the poor complainant cadet was performing
his four-hour watch job. In other words, these harrowing experiences became regular. Such daily and
regular acts of harassment by the said Second Officer took its toll on the emotional and psychological
health of the complainant. He was traumatized and it had become so unbearable for him to continue
working.

Regularly, from 00:00 (Midnight) to 04:00 A.M., complainant was regularly not allowed to prepare
his food for breakfast and snacks. Because of this, he starved and he became weak. As a result, he
became mentally and physically weak during his regular four (4)[-]hour watch. Furthermore, having
experienced insults, verbal abused [sic], humiliation, pressures and stress during his three-day ordeal
with his indifferent supervisor Second Officer Dayo, complainant suffered trauma and anxiety attacks
during the period from December 21 to December 25, 2003 x x x.[47]

When Godinez applied for work with Career, he was an innocent boy of 20; his stint with
Career would be his very first employment as a seafarer onboard an ocean-going
vessel.[48] He was lacking in experience and knowledge, yet full of innocence, dreams,
idealism, positive expectations, enthusiasm, and optimism. All these were shattered by his
horrible experience onboard the ―M/V Norviken,‖ under the hands of Dayo, who
unnecessarily exposed the young, inexperienced, and innocent boy to a different reality, a
cruel one, and robbed him of the positive expectations and dreams he had coming to his
very first job as a seafarer. His uncalled for cruelty broke the heart and spirit of this fledgling
until he could no longer take it. The conditions of work, the elements, the environment, the
fear and loneliness, the strange surroundings, and the unnecessary cruelty and lack of
understanding and compassion of his immediate superior, the weight of all these was too
much for the young man to handle. Like a tender twig in a vicious storm, he snapped.

To complicate matters, Godinez was never given medical care onboard as soon as he
became ill. The December 24 and 25, 2003 reports of the vessel master, Capt. Vicente A.
Capero, sent to Career prove that even as Godinez was already exhibiting the symptoms of
a nervous breakdown, his superiors and the crew provided no medical intervention or
support. Instead, they ignored him as he wandered aimlessly half-naked around the ship;
simply watched him make a fool of himself in front of his peers; and allowed him to
precariously roam the ship even as it became evident that he was becoming a danger to
himself, the crew, and the ship. In short, he was treated like a stray dog, whose presence is
merely condoned. The vessel master‘s reaction was not reassuring either: instead of
exhibiting compassion and providing needed care, he could not wait to expel Godinez from
the ship, because the poor boy‘s strange behavior was starting to get on his nerves. We
quote him, thus:

In this condition of him which x x x is getting [worse everyday], I strongly oppose his presence on
board. I want him to be dis-embarked immediately on arrival. He is now resisting orders, he
[doesn‘t] listen to the officers and to his escort. This endanger[s] the safety of all crew on board and
the vessel especially during transit and maneuvering. All my patience is over now.[49] (Emphasis
supplied)

The confluence of all these, the inhumane treatment inflicted upon this green, fragile, and
innocent fledgling; the harsh environment and conditions of work he was exposed to for the
Labor Cases Penned By Justice Del Castillo

very first time in his young life; the indifference of his superiors despite realizing what was
happening to him; and the utter lack of a professional and medical response to the boy‘s
progressing medical condition, led to the complete breakdown of Godinez‘s body, mind, and
spirit.

The Court concludes that Godinez‘s grave illness was directly caused by the unprofessional
and inhumane treatment, as well as the physical, psychological, and mental abuse inflicted
upon him by his superiors, aggravated by the latter‘s failure and refusal to provide timely
medical and/or professional intervention, and their neglect and indifference to his condition
even as it was deteriorating before their very eyes.

The Court does not subscribe to the defense that Dayo could not have committed the acts
attributed to him as he was medically repatriated on November 29, 2003 due to chronic
gastritis, hyperlipidemia and hypercholesteremia. The only evidence presented to
substantiate his claimed repatriation consist of: 1) a November 21, 2003 Medical
Examination Report issued by a doctor in Japan,[50] and 2) an Initial Medical Report dated
February 3, 2004 issued by Sachly‘s Salvador.[51] However:

1. The November 21, 2003 Medical Examination Report contains a recommendation for
Dayo to consult a ―doctor for more detailed exams and further treatment at the patient‘s
home country 3 months later.‖[52] The second medical report coincides with the first, being
dated February 3, 2004, or nearly three months after November 21, 2003, meaning that
Dayo must have followed the Japanese doctor‘s advice and indeed consulted Sachly nearly
three months after he consulted with the latter. It can only be that before that time, February
3, 2004, Dayo remained onboard ―MTV Norviken‖.

2. If Dayo was truly repatriated on November 29, 2003, experience and logic dictate that he
should have, pursuant to the provisions of the standard POEA contract, submitted himself to
a post-employment medical examination by a company-designated physician within three
working days upon his return, because his failure to comply with such mandatory
examination shall result in the forfeiture of his benefits. Yet it appears that he only presented
himself for post-employment medical examination on February 3, 2004. Given that he was
then suffering from serious illnesses, chronic gastritis, hyperlipidemia and
hypercholesteremia, and his failure to timely submit himself for examination would result in
the forfeiture of his benefits, it cannot be believed that he consulted with Sachly only on
February 3, 2004.

3. An examination of Salvador‘s signature affixed on the February 3, 2004 medical report


would indeed lead Us to the conclusion that it is materially different from her customary
signature affixed on the five medical reports she issued in this case and on the Certificate of
Fitness for Work executed by Godinez, where she signed as witness.

The Court thus concludes that Dayo was not repatriated on November 29, 2003; he
remained as part of the ―M/V Norviken‖ crew, which leads us to the allegations of Godinez
that he was maltreated and harassed by Dayo, which, apart from being credible, necessarily
remain unrefuted by Career and Columbian on account of their insistence upon the sole
defense that Dayo was not on board during the time that Godinez claims he was maltreated.

In Cabuyoc v. Inter-Orient Navigation Shipmanagernent, Inc.,[53] the Court declared that work-
connected mental illnesses or disorders are compensable, thus:
Labor Cases Penned By Justice Del Castillo

As to the basic issue raised herein, the CA confined the resolution of the dispute to the enumerated list
of injuries under the category ‗HEAD‘ per Appendix 1 of the old POEA Standard Employment
Contract, and ruled that only those injuries that are ‗traumatic‘ shall be considered compensable. The
CA ratiocinated that ‗[B]ecause the enumeration of head injuries listed under the category
of HEAD includes only those mental conditions or illnesses caused by external or physical force,‘ it
follows that mental disorders which are not the direct consequence or effect of such external or
physical force were not intended by law to be compensable. And while the CA gives judicial
emphasis to the word ‗traumatic,‘ it did not bother to explain why petitioner‘s illness, classified as
schizophrenia, should not be considered ‗traumatic‘ and compensable. x x x

xxxx

As it were, Hie foregoing observation of tlie appellate court contradicts both the ruling of the Labor
Arbiter and the NLRC. In its decision, the labor arbiter states:

[Petitioner‘s] disability is total and permanent. He worked with respondent INC in another vessel to
finish his contract. Respondent INC was satisfied with [petitioner‘s] efficiency and hard work that
when the very first opportunity where a vacancy occur[red, petitioner] was immediately called to
[join] the vessel MV Olandia.

Barely two and a half months after joining MV Olandia, the misery and mental torture he suffered
totally disabled him. The supporting medical certification issued by a government physician/hospital
and by another expert in the field of psychiatry, respectively find him suffering from psychosis and
schizophrenia which under tlie OWWA impediment classification falls under Grade I-A (Annex C/
Complaint). Under the POEA Revised Standard Employment Contract, the employment of all Filipino
Seamen on board ocean-going vessel, particularly appendix 1-A, Schedule of Disability Allowances,
Impediment Grade 1, tlie disability allowance is maximum rate multiplied by 120%

The above findings of the Labor Arbiter were seconded by the NLRC in this wise:

Likewise bereft of scant consideration is Respondents‘ argument that psychosis or schizophrenia is


not compensable, claiming that such mental disorder does not result from traumatic head injury which
contemplates accidents involving physical or head contacts. There is nothing in the Standard
Terms and Conditions governing the Employment of Filipino Seafarers On-Board Ocean-Going
Vessels, particularly Section 30, thereof, that specifically states that traumatic head injury
contemplates accidents involving physical or head contacts. Notably, The New Britannica-
Webster Dictionary & Reference Guide, Copyright 1988 by Encyclopedia Britannica, Inc.
defines the word injure as „1: an act that damages or hurts: WRONG 2: hurt, damage, or loss
sustained.‟ Here, said dictionary does not specifically state that the hurt, damage, or loss
sustained should be physical in nature, hence, the same may involve mental or emotional hurt,
damage or loss sustained. Further, said dictionary defines the word trauma as „a: a bodily
injury caused by a physical force applied from without; b: a disordered psychic or behavioral
state resulting from stress or injury.‟ From the above definitions, it is patent that „traumatic
head injury‟ does not only involve physical damage but mental or emotional damage as
well. Respondents‘ argument that [petitioner‘s] co-seaman belied the claimed harassment is bereft of
merit. Suffice it to state that [petitioner‘s] illness occurred during tlie term of his employment contract
with them, hence, respondents are liable therefor.

The above findings of the NLRC are in recognition of the emotional turmoil that petitioner
experienced in the hands of the less compassionate German officers. This Court has ruled that
schizophrenia is compensable.In NFD International Manning Agents, Inc. v. NLRC,[54] the Court
went further by saying:
Labor Cases Penned By Justice Del Castillo

Strict rules of evidence, it must be remembered, are not applicable in claims for compensation and
disability benefits. Private respondent having substantially established the causative circumstances
leading to his permanent total disability to have transpired during his employment, we find the NLRC
to have acted in the exercise of its sound discretion in awarding permanent total disability benefits to
private respondent. Probability and not the ultimate degree of certainty is the test of proof in
compensation proceedings.

The findings of both the Labor Arbiter and the NLRC as well as the records of the case convince the
Court that petitioner‘s claim is substantiated by enough evidence to show that his disability is
permanent and total. First, mere is the medical findings of the Philippine General Hospital that
petitioner is down with psychosis; to consider paranoid disorder, making it extremely difficult for him
to return to shipboard action; and second, the findings of the Social Benefits Division of the Overseas
Workers Welfare Administration through its attending doctor Leonardo Bascar, that petitioner is
suffering from ‗schizophrenic form disorder.‘

Time and again, the Court has consistently ruled that disability should not be understood more on its
medical significance but on the loss of earning capacity. Permanent total disability means disablement
of an employee to earn wages in the same kind of work, or work of similar nature that she was trained
for or accustomed to perform, or any kind of work which a person of her mentality and attainment
could do. It does not mean absolute helplessness. In disability compensation, it is not the injury which
is compensated, but rather it is the incapacity to work resulting in the impairment of one‘s earning
capacity.

Lastly, it is right that petitioner be awarded moral and exemplary damages and attorney‘s fees. Article
2220 of the Civil Code provides:

Willful injury to property may be a legal ground for awarding moral damages if the court should find
that, under the circumstances, such damages are justly due. The same rule applies to breaches of
contract where the defendant acted fraudulently or in bad faith.

Here, petitioner‟s illness and disability were the direct results of the demands of his shipboard
employment contract and the harsh and inhumane treatment of the officers on board the
vessel Olandia. For no justifiable reason, respondents refused to pay their contractual obligations in
bad faith. Further, it cannot be gainsaid that petitioner‘s disability is not only physical but mental as
well because of the severe depression, mental torture, anguish, embarrassment, anger, sleepless nights
and anxiety that befell him. To protect his rights and interest, petitioner was constrained to institute
his complaint below and hire the services of an attorney. (Emphasis supplied)

Permanent and Total Disability, Benefits and Medical Expenses

The Court finds as well that Godinez suffered permanent total disability, as there has been
no definite medical assessment by the company-designated physician regarding his
condition – even up to now. ―The company-designated doctor is expected to arrive at a
definite assessment of the seafarer‘s fitness to work or. to determine [the degree of] his
disability within a period of 120 or 240 days from repatriation, [as the case may be. If after
the lapse of the 120/240-day period the seafarer remains incapacitated and the company-
designated physician has not yet declared him fit to work or determined his degree of
disability,] the seafarer is deemed totally and permanently disabled.‖[55]

The defense that Godinez was cured and became fit for work is founded on
an unsigned March 12, 2004 Medical Progress Report (Annex ―M‖ of Career and
Labor Cases Penned By Justice Del Castillo

Columbian‘s Position Paper[56]) stating that Godinez was ―asymptomatic and doing well with
no recurrence of depressive episodes;‖[57] that Godinez ―verbalized a feeling of
wellness;‖[58]that his ―[v]ital signs were stable;‖[59] that he was in a ―euthymic mood, and is able
to sleep and eat well;‖[60] and that he was ―found to be functionally stable at present.‖[61] Being
unsigned, it has no evidentiary value as well, just like the January 10, 2004 Initial Medical
Report containing Godinez‘s supposed admission to a past history of mental illness. Indeed,
even the Labor Arbiter must have noted that this January 10, 2004 medical report was
unsigned, as it was not considered in the comparison of Salvador‘s customary signature and
that appearing on the Initial Medical Report dated February 3, 2004 utilized by Career and
Columbian to prove Dayo‘s alleged repatriation on November 29, 2003.[62]

Neither can the Certificate of Fitness for Work executed by Godinez serve as proof of his
state of health. He is not a trained physician; his declaration is not competent and cannot
take the place of the company-designated physician‘s assessment required by law and the
POEA. contract. Nor can Salvador‘s signature as witness on the certificate validate the
document or be considered as substitute for the legally required medical assessment; quite
the contrary, it proves her unethical and unprofessional conduct. As the Medical Coordinator
of Sachly and the officer who customarily signs the medical reports issued in Godinez‘s
case, it was fundamentally improper for her not to have signed the Medical Progress Report
issued by her employer on March 12, 2004, and yet participate as witness in Godinez‘s
certificate, executed on that very same day to boot.

On the matter of medical expenses, this Court finds nothing irregular in the CA‘s finding that
the amount awarded must be reduced on account of failure to substantiate. An examination
of the evidence supports the view that some of the claimed expenses were not actually
supported by the necessary receipts. In the determination of actual damages, ―[c]redence
can be given only to claims which are duly supported by receipts.‖[63]

Fabricated Evidence and Underhanded Tactics

This Court notes mat Career, Columbian, and their counsel-of-record, have submitted
documents of dubious nature and content; inadmissible in evidence and oppressive to the
cause of labor; and condoned a licensed physician‘s unethical and unprofessional conduct.

For this case, they submitted no less than four (4) dubious and irregular pieces of
evidence. First of all, the January 10, 2004 unsigned Initial Medical Report where Godinez is
claimed to have admitted to a history of insomnia and paranoia. The second is the March
12, 2004 Medical Progress Report, also unsigned, which supposedly contains a physician‘s
certification that Godinez was cured or fit for work. The third is the March 12, 2004
Certificate of Fitness for Work, a. prepared blank form which Godinez merely filled up and
signed, which, given the surrounding circumstances, shows that it was prepared by them
and not by Godinez. And fourth is the falsified Initial Medical Report dated February 3, 2004
containing an express declaration that Dayo was medically repatriated on November 29,
2003.

The execution of the ―Certificate of Fitness for Work‖ is inherently absurd in light of the fact
that Godiiwz is not a doctor and also considering the legal requirement that only a licensed
physician may issue such certification. It is a ploy that aims to take advantage of the
worker‘s lack of sufficient legal knowledge and his desperate circumstances.

Indeed, the impression generated by the absence of Salvador‘s signature on the March 12,
2004 Medical Progress Report, and her consenting to sign as witness to Godinez‘s
Labor Cases Penned By Justice Del Castillo

Certificate of Fitness for Work instead, is that Salvador refused to certify that Godinez‘s
condition had been cured or had improved. But somehow she was prevailed upon to affix
her signature just the same, but only as witness to Godinez‘s Certificate of fitness for Work,
which must have been the final concession she was willing to make, but an unethical and
unprofessional one nonetheless. By what she did, she was hiding, as witness, under the
cloak of Godinez‘s own admission that he was already well, hoping and expecting that any
tribunal, including this Court, possibly gullible or unthinking, might be duped into believing
that her signature should lend credibility to Godinez‘s certification.

Thus, this Court warns against the continued use of underhanded tactics that undermine the
interests of labor, damages the integrity of the legal profession, mock the judicial process as
a whole, and insult the intelligence of this Court. In prosecuting a client‘s case, there are
multiple ways of securing victory, other than through fabrication, prevarication, and guile.

Evident Malice and Bad Faith

It has become evident, without need of further elaboration, that in dealing with Godinez and
in prosecuting their case, Career and Columbian acted in evident malice and bad faith thus
entitling Godinez to an award of moral and exemplary damages.

Not only was Godinez‘s illness caused directly by his employment, as a result of
unnecessary cruelty on the part of the officers aboard Columbian‘s ship; there was also
failure and refusal to properly and professionally address his condition until it became worse;
and lack of compassion and understanding on the part of the ship‘s officers in failing to
consider that Godinez was an innocent young man who was on his very first assignment
onboard an ocean-going vessel, and in treating him inhumanely even as it became evident
that he was already gravely afflicted. The manner in which Godinez was dealt with in these
proceedings evinces a perverse attempt to evade liability by fabricating evidence and
utilizing objectionable and oppressive means and schemes to secure victory. It constitutes
an affront, not only to this Court, but to all honest workingmen earning a living through hard
work and risking their lives for their families.

WHEREFORE, the Court resolves to DENY the Petitions in G.R. No. 206826 and G.R. No.
206828. The May 22, 2012 Decision of the Court of Appeals in CA-G.R. SP No. 105602
is AFFIRMED WITH MODIFICATION, in that INTEREST is hereby imposed upon the total
monetary award at the rate of six percent (6%) per annum from the date of finality of this
judgment until full satisfaction.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

27 SEP 2017 | JURISPRUDENCE | PONENTE | JUSTICE


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

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


Services Phils, Inc. Vs. Shirley G. De Chavez;
G.R. No. 198225; September 27, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[2] assails the January 31, 2011 Decision[3] and the
August 8, 2011 Resolution[4]of the Court of Appeals (CA) in CA-GR SP No. 112898. The CA
granted the Petition for Certiorari filed therewith and reversed and set aside the December
16, 2009 Decision[5] of the National Labor Relations Commission (NLRC) in NLRC LAC OFW
(M) 09-000540-09, which affirmed the July 18, 2009 Decision[6] of the Labor Arbiter (LA)
dismissing the complaint for payment of death benefits in NLRC-NCR OFW (M) 12-17395-08
for lack of merit.

Factual Antecedents

On August 23, 2005, petitioners hired Ryan Pableo De Chavez[7] (Ryan) as chief cook on
board the oil tanker vessel Haruna Express for period of nine months.[8] However, on
February 26, 2006, Ryan was found dead inside his cabin bathroom hanging by the shower
cord and covered with blood.[9] Thus, Ryan‘s surviving spouse, Shirley De Chavez (Shirley),
filed complaint[10] for death benefits.

In her Position Paper,[11] Reply,[12] and Rejoinder,[13] Shirley alleged that Ryan did not commit
suicide considering that Ryan even submitted himself to medical check up at hospital in
Ulsan, Korea day prior to his death; that during their telephone conversation two days before
his alleged suicide, Ryan informed her that the vessel would be discharging crude oil in
Batangas and that they might see each other; that no suicide note was found; that Ryan died
during the effectivity of his contract and while on board the vessel, hence, his heirs are
entitled to death benefits; that petitioners did not clarify how Ryan could have committed
suicide; that the presumption of regularity in the performance of duties is not accorded to
foreign nationals, such as the Ulsan police authorities; that no evidence was adduced that
the Ulsan Maritime Police indeed conducted an investigation into Ryan‘s death; that the
imputation that Ryan took his own life because he was pressured by his mother to obtain a
loan for new house flies in the face of the fact that Ryan was recently married and about to
start family, that he had acquired new house and that he wag recently promoted as chief
cook; and, that the pictures taken when Ryan was found dead which tended to show that he
was murdered was not at all explained in the Medical Certificate of Death issued by the
Ulsan City Hospital of Korea.

On the other hand, petitioners claimed in their Position Paper,[14] Reply,[15] and
Rejoinder[16] that Shirley is not entitled to death benefits under the Philippine Overseas
Labor Cases Penned By Justice Del Castillo

Employment Administration-Standard Employment Contract (POEASEC) because the


Medical Certif1cate of Death the written statements of the Chief Mate, the Ship Master, and
Messman Benjamin Melendres (Messman Melendres), and the investigation report prepared
by International Inspection and Testing Corporation (INTECO), uniformly found Ryan‘s
cause of death as suicide; that the Personnel Manager of Thome Ship Management Pte.
Ltd. (Thome Ltd.) submitted an Investigation Report indicating that the possible reason for
the suicide was Ryan‘s loss of direction or overwhelming despair after his mother virtually
pushed him to take huge loan to purchase house; that the Ulsan Maritime police who
investigated the incident did not notice any foul play; that Messman Melendres, who was the
first person to break into Ryan‘s locked room, likewise observed that there was nothing in
Ryan‘s cabin to suggest that there had been fight or struggle; that the examination of Ryan‘s
corpse revealed no signs of trauma; and, that Shirley could not testify on how Ryan died
because she was not on board the vessel when the incident transpired.

Ruling of the Labor Arbiter

In Decision dated July 18, 2009,[17] the LA dismissed the complaint on the ground that the
evidence convincingly showed that Ryan‘s death was authored by Ryan himself, viz.:

A careful perusal of [INTECO‘s Investigation Report] and [the] medical certificate reveals that the
direct cause of [Ryan‘s death,] based on the autopsy findings of the Ulsan City Hospital, showed that
the cause of death x x x was ‗excessive bleeding from [Ryan‘s] cut wrist apparently by scissors‘,
[even] the Medical Certificate of Death issued by the Ulsan City Hospital certified that the cause of
death of the deceased was by ‗Hanging, strangulation and suffocation‘.[18]

Ruling of the National Labor Relations Commission

In its Resolution dated September 30, 2009,[19] the NLRC initially dismissed Shirley‘s appeal
for failure to submit certificate of non-forum shopping. However, on reconsideration the
NLRC granted and reinstated her appeal.

On December 16, 2009,[20] the NLRC rendered its Decision denying Shirley‘s appeal and
affirming the LA‘s ruling that petitioners succeeded in proving that Ryan died at his own
hands, thus:

A careful and thorough reading of the appeal would show that the same is based more on assumptions
and speculations rather than on facts. The fact that [Ryan] has x x x a new wife, [a] new home and
recently was promoted as Chief Cook does not mean that he could not have committed suicide
anymore [sic]. The fact that the medical certificate and the result of the autopsy appears to be
contradictory to each other on the causes of death as detailed by [Shirley] does not mean that [Ryan]
was murdered and did not commit suicide. And the fact that the comfort room has not been built for
possible self suspension does not mean that [Ryan] was murdered.[21]

Ruling of the Court of Appeals

Shirley instituted before the appellate court Petition for Certiorari,[22] contending that
petitioners had not presented substantial evidence to support the conclusion that Ryan
indeed committed suicide and insisting that his death was compensable.
Labor Cases Penned By Justice Del Castillo

In its assailed January 31, 2011 Decision,[23] the CA reversed the NLRC and disposed as
follows:

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The assailed Decision, dated
December 16, 2009, and Resolution, dated September 30, 2009, in NLRC LAC OFW (M) 09 000540-
09 (NLRC-NCR OFW (M) 12-17395-08) are hereby ANNULLED and SET ASIDE. The records of
this case are remanded to the National Labor Relations Commission tor the computation of the death
benefits to be awarded to [respondent] Shirley De Chavez in behalf of [her] deceased husband Ryan
Pableo De Chavez.

SO ORDERED.[24]

The CA found no sufficient evidence that Ryan took his own life, hence it declared Shirley
entitled to death benefits. The CA held that the cause of Ryan‘s death as stated in the
Medical Certificate of Death issued by the Ulsan City Hospital was different from that set
forth in the INTECO Report. It stressed that there was nothing in the records to show that
INTECO had the authority to investigate into Ryan‘s death and to issue official findings at the
conclusion of its investigation. We quote pertinent portions from the CA‘s disquisition:

A perusal of the record of this case shows that the basis of the ruling of the Labor Arbiter and [the]
NLRC was Medical Certificate of Death, prepared by certain Dr. Sung Yeoul Hung of the Ulsan City
Hospital, and an Investigation Report of the International Inspections and Testing Corp. However, an
examination x x x of the aforesaid evidence fails to conclusively convince the Court that the death of
the [Shirley‘s] husband was due to his own hand.

First, the findings under the said Medical Certificate and the said Investigation Report appear to be
contradictory with one another. Under the Medical Certificate the cause of death [was] hanging by
strangulation, thus:

‗Cause of death

1. Direct Cause of Death.

INTENTIONAL SELF-HARM BY [HANGING], STRANGULATION AND SUFFOCATION

2. Intermedicate Predisposing Cause of Death.

3. Predisposing Cause of Death.

BLOOD LOSS‘ (emphasis supplied)

However, Under the Investigation Report the cause of death was found to be due to excessive
bleeding from the cuts from the seafarer‘s wrist, thus:

‗Autopsy on the Corpse of [Ryan] Investigation by Ulsan Maritime Police:

The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital x x x [witnessed by]
all parties concerned including us Mr. Leow Ai Hin, Senior Shipping Executive of Thome Ship
Management Pte. Ltd., Singapore x x x and x x x the cause of death of [Ryan] was excessive bleeding
Labor Cases Penned By Justice Del Castillo

from the cut wrist of [Ryan] apparently by scissors. The Ulsan Maritime Police requested handwritten
statements of all remaining crews of ―HARUNA EXPRESS‖ in the evening hours of Feb. 27th which
were prepared submitted to the Police in the morning hours of Feb. 28 and then ―HARUNA
EXPRESS‖ sailed off Ulsan Port at 12:30 hrs. of Feb. 28th. (Emphasis supplied)

Second, who is this ‗International Inspection and Testing Corporation‘ that performed the autopsy and
prepared the Investigation Report? Is this corporation trained to perform an autopsy? More
importantly, are its findings officially recognized? The Court has scoured the record and it cou1d not
see one iota of description, aside [from the fact] that it is ‗foreign corporation‘, that would tend to lend
credence to itself as an investigtive body and to its findings. As it is, the said investigation report
woefully pales in comparison as to what real autopsy report should look like. An autopsy report
should give an accurate account of the various marks found on the body such as ligature marks, cuts,
the precise locations thereof, and other tell-tale signs that would lead an investigator to conclusively
conclude as to the cause of death but the so[-]called investigation report only gives vague account at
best.

Third, why was there no official autopsy done on the body of the deceased seafarer by the Ulsan
Maritime Police? And if there ever was an autopsy done by the Ulsan Maritime Police, where is the
autopsy report of the police? The Court would think that the shipping company, understandably
interested in avoiding paying any compensation, would prefer an autopsy done by the police rather
than private corporation. After all, the findings of the police are accorded respect and regularity by the
courts but, curiously enough in this case, the shipping company decided to have the body examined
instead by private corporation whose credentials to perform an autopsy have not even been verified.[25]

In its August 8, 2011 Resolution,[26] the CA likewise denied petitioners‘ motion for
reconsideration.

Hence, the instant Petition raising the following issue:

The Honorable Court of Appeals committed serious error of law in awarding [to Shirley] death
compensation benefits under Section 20 (A) of the POEA contract despite undisputed evidence which
clearly show that the seafarer died by his own hand. The award is not unjustified [sic] under the facts
and evidence of the case, the same is likewise plainly contrary to Section 20 (D) of the governing
POEA contract.[27]

Petitioners’Arguments

In their Petition,[28] Reply,[29] and Memorandum,[30] petitioners contend that under the governing
POEA-SEC, seafarer‘s death during the term of his contract is not automatically
compensable particularly if the same was due to his willful act; that the LA‘s findings of fact,
which were upheld by the NLRC, should not have been disregarded by the CA because
Shirley herself, whose duty was to establish her entitlement to the death benefits, has utterly
failed to adduce any evidence to substantiate her bare allegation that Ryan was not
responsible for his own death; that apart from her absolutely empty and hollow claim, Shirley
presented no proof that Ryan was victim of foul play; that the purported contradictory
information about the cause of Ryan‘s death, whether he chose to hang himself or slash his
wrist with scissors, did not negate the fact that his death was self-inflicted; that the Medical
Certificate of Death[31] prepared by Dr. Sung Yeoul Hung of the Ulsan City Hospital, which
listed ―Intentional Self Harm by [Hanging], Strangulation and Suffocation‖ as the direct cause
of death, and the INTECO‘s Report[32] which declared Ryan‘s death as ―suicide,‖ effectively
meant the same thing; that although no official autopsy report was issued by the Ulsan
Maritime Police, the latter allowed the vessel to sail on February 28, 2006 only after they had
Labor Cases Penned By Justice Del Castillo

verified and were satisfied that there was no foul play in Ryan‘s death; that Lapid v. National
Labor Relations Commission[33] is not applicable because the coroner‘s report therein was
incomplete, whereas the Medical Certificate of Death of the Ulsan City Hospital and INTECO
Report, gave detailed account that Ryan was found hanging by rope or cord while sitting on
the toilet bowl with his wrist slashed and pair of scissors nearby; that incumbent upon the
Supreme Court to resolve this case because the CA‘s findings are not only diametrically
opposed to the findings of both the LA and the. NLRC, but the CA‘s findings are grounded
entirely on speculation, surmises or conjectures; that it was Shirley‘s duty to prove by
substantial evidence her entitlement to death benefits; that the CA erred ill not giving
credence to INTECO‘s. Report as well as the Medical.Certificate of Death issued by the
Ulsan City Hospital; and that they have proven by substantial evidence that Ryan‘s death
was self-inflicted, thus Shirley is not entitled to death compensation benefits pursuant
Section 20(D) of the governing POEA-SEC.

Respondent Arguments

Shirley counters that re-assessment of the propriety of the award of death compensation
benefits involves an examination of the evidence, which is not proper in Rule 45 petition; that
petitioners failed to prove that Ryan committed suicide; that INTECO‘s Report has no
credence at all; that Ryan‘s death should not be presumed to be self-inflicted and that
compensability attaches by the mere fact that Ryan died in the course of his employment;
that there was no indication that Ryan contemplated to commit suicide; that ―if doubt exists
between the evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter;‖[34] and, that the burden of proof that an employee‘s death
is noncompensable always lies with his employer.

Issue

Is the CA correct in ruling that the NLRC committed grave abuse of discretion in
denying Shirley‘s claim for death benefits?
Our Ruling

The Petition is meritorious.


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

Section 20(A) and (D) of the 2000 POEA-SEC provide that:

SECTION 20. COMPENSATION AND BENEFITS

A COMPENSATION AND BENEFITS FOR DEATH


Labor Cases Penned By Justice Del Castillo

1. In case of work-related death of the seafarer, during the term of his contract the employer shall pay
his beneficiaries the Philippine currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) x x x at the exchange rate prevailing during the time of payment.

xxxx

D. No compensation and benefits shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act or intentional breach of his duties,
provided however, that the employer can prove that such injury, incapacity, disability or death is
directly attributable to the seafarer.

Given the evidence on record, we hold that Ryan‘s death was due to his own deliberate act
and deed. Indeed the Medical Certificate of Death prepared by Dr. Sung Yeoul Hung of the
Ulsan City Hospital, who, it is presumed, must have examined Ryan‘s cadaver, and the
INTECO‘s Report which contained information involving the self-same death, must be
deemed as substantial evidence of that fact. We are satisfied that the material facts set forth
in the Decisions of both the LA and the NLRC constitute substantial evidence that Ryan took
his own life, that he died by his own hands. ―That [the seafarer‘s] death was result of his
willful act is matter of defense. Thus, petitioners [as employers] have the burden to prove
this circumstance by substantial evidence‖[38] which is the quantum of proof in labor cases.

In Wallem Maritime Services, Inc. v. Pedrajas,[39] this Court held that the seafarer‘s heirs
were not entitled to any benefits since the employers were able to substantially prove that
the seafarer who was found hanging on the vessel‘s upper deck with rope tied to his neck
had committed suicide. The employers therein presented the forensic report of the Medical
Examiner appointed by the Italian Court from the Public Prosecutor‘s Office of Livomo, Italy
which pointed out in detail that there were no other injuries in the seafarer‘s body and
confirmed the deceased himself ―tied the rope to the metal pipe‖[40] based on the evaluation
of ―the crime scene, the rope used for hanging, type of knot, temperature and position of the
body when found.‖[41] Furthermore, two suicide notes written by the seafarer addressed to his
wife and to the vessel‘s crew were also offered as evidence. Similarly, in Unicol
Management Services, Inc. v. Malipot,[42] this Court found substantial evidence that the true
cause of the seafarer‘s death was suicidal asphyxia due to hanging in the vessel‘s store
room. These findings were based on the employers‘ submission of the Medico Legal Report
issued by the Ministry of Justice of the United Arab Emirates (UAE) and the Death Certificate
issued by the UAE Ministry of Health together with the Investigation Report, log book
extracts, and Master‘s Report. The conclusion in said Medico Legal Report that the seafarer
committed suicide drew support from an external examination of the cadaver which showed
that the deep lacerated groove around the deceased‘s neck was vital, recent, and result of
hanging with rope and that there were no other recent injuries.

To belabor point, the resolution of whether herein petitioners have shown that Ryan
committed suicide is based essentially on the examination of two pertinent documents.

The first document is the Ulsan City Hospital‘s Medical Certificate of Death [43] which was
signed by one Dr. Sung Yeoul Hung with License No. 25028. It reads:

xxxx

• Date and Time of Death: Date 26th FEB. 2006


Labor Cases Penned By Justice Del Castillo

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


• Place of Death: B-DECK, HIS BATHROOM, THE BOARD, HARUNA EXPRESS

ON THE SEA 15km FROM ULSAN


• Cause of death

1. Direct Cause of Death.

INTENTIONAL SELF-HARM BY [HANGING], STRANGULATION AND SUFFOCATION

2. Intermedicate Predisposing Cause of Death.

3. Predisposing Cause of Death.

BLOOD LOSS

THE ABOVE STATEMENT IS TRUE TO BEST OF MY KNOWLEDGE[44]

The second document is the INTECO Report[45] signed by one ―S.M. Han, Rep. Director.‖ It
pertinently stated:

I) General Information:

xxxx

b) Upon completion of the load in work, ―HARUNA EXPRESS‖ sailed off Onsan Port at 06:35 hrs.
of Feb. 26th bound for Nagoya. However, ―HARUNA EXPRESS‖ deviated returned to Ulsan Port due
to the death of Chief Cook, [Ryan], x x x and sailed off Ulsan Port at 12:30 hrs. of Feb. 28th after
completion of the investigation by Ulsan Maritime Police.

xxxx

IV) Circumstance/Cause of Accident:

Upon interviewing the Master, Chief Engineer, Third Officer Mess Boy and also upon reviewing the
statements of crews, our finding were as follows:

17:30 hrs. of Feb. 25th: Chief Cook instructed the mess boy x x x to bring provisions from the reefer
for the breakfast of the next day and to cook the breakfast of Feb. 26th for the crew.

xxxx

08:45 hrs. of Feb. 26th:


x x x [T]he mess boy went up the Chief Cook‘s cabin to inform that he would leave the galley x x x
he called the Chief Cook before opening the cabin door, but no response, and therefore, he opened the
cabin door, but there was no Chief Cook in his cabin, and the bathroom door was closed and very
quiet. The mess boy knocked [at] the bathroom door calling the Chief Cook‘s name, but no response,
Labor Cases Penned By Justice Del Castillo

and the mess boy tried to open the bathroom door, but it was locked, and so, the mess boy opened the
bathroom door using his (messboy‘s) key. Upon opening the bathroom door, considerable blood was
found on the floor, and part of the Chief Cook‘s feet was seen with the shower curtain partly closed.

09:00 hrs. of Feb. 26th:


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

09:01 hrs. of Feb. 26th:


Alerted all crews including the Master Chief Engineer x x x after removing the shower hose from the
Chief Cook‘s neck, first aid care was performed on him, and his left wrist was found cut about 5cm
long about 1cm max. deep, and pair of sharp scissors was found in the bathroom x x x oxygen
resuscitation heart pressuring were performed x x x. However, the Chief Cook was almost in dead
condition with his tongue hung out and the breathing stopped.

09:05 hrs. of Feb. 26th: x x x the ship‘s course altered back to Ulsan.

xxxx

11:35 hrs. of Feb. 26th: Transferred the Chief Cook to Coast Guard Vessel ―POLICE 307‖.

xxxx

12:10 hrs. of Feb. 26th: Chief Cook was taken to City Hospital in Ulsan.

13:25 hrs. 13:50 hrs of Feb. 26th.


The Chief Cook was examined under the witness of the ships‘ agent the Ulsan Maritime Police, and
the result was that the Chief Cook x x x was dead x x x 03:00 hrs. of Feb. 26th.

V) Autopsy on the Corpse of [Ryan] Investigation by Ulsan Maritime Police:

The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital under the witness of
all parties concerned including us Mr. Leow Ai Hin, Senior Shipping Executive of Thome Ship
Management Pte Ltd., Singapore from 18:00 hrs. to 19:00 hrs. of Feb. 27th, and as result of the
autopsy, the cause of death of [Ryan] was excessive bleeding from the cut ―Wrist of [Ryan]
apparently by scissors. The Ulsan Maritime Police requested the hand-written statements of all
remaining crews of ―HARUNA EXPRESS‖ in the evening hours of Feb. 27th, which were prepared
submitted to the Police in the morning hours of Feb. 28th, and then ―HARUNA EXPRESS‖ sailed off
Ulsan Port at 12:30 hrs. of Feb. 28th.

VI) Cause of Death of Mr. Dechavez:

Based on x x x all [information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.[46]

Indeed, it is settled that:


Labor Cases Penned By Justice Del Castillo

In labor cases, [this Court‘s review power] under Rule 45 of the Rules of Court involves the
determination of the legal correctness of the CA Decision. This means that [this] Court must ascertain
whether the CA [had] properly determined the presence or absence of grave abuse of discretion in the
NLRC Decision. Simply put, ‗in testing for legal correctness, [this] Court views the CA Decision in
the same context that the [Rule 65] petition for certiorari it [adjudicated] was presented‘ to [that
court]. It entails limited review of the acts of the NLRC, [viz.,] whether [the NLRC] committed errors
of jurisdiction. It does not cover the issue of whether the NLRC committed any error of judgment,
unless there is showing that its findings and conclusions were arbitrarily arrived at or were not based
on substantial evidence;[47]

In the present case, both the LA and the NLRC ruled that Shirley‘s claim for death benefits
was without basis since. Ryan committed suicide as principally established by the Medical
Certificate of Death issued by Dr. Sung Yeoul Hung of the Ulsan City Hospital, who attested
that the direct cause of Ryan‘s death was ―Intentional Self-Harm by [Hanging], Strangulation
and Suffocation.‖[48] Both the LA and the NLRC also adverted to the Report prepared by the
INTECO which stated that .

The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital under the witness of
all parties concerned including us Mr. Leow Ai Hin, Senior Shipping Executive of Thome Ship
Management Pte Ltd., Singapore from 18:00 hours to 19:00 hours of February 27th, and as result of the
autopsy, the cause of death of [Ryan] was excessive bleeding from the cut wrist of [Ryan], apparently
by scissors. The Ulsan Maritime Police requested the handwritten statements of all remaining crews
of ‗Haruna Express‘ in the evening of February 27, which were prepared submitted to the police in the
morning hours of February 28th, and then ‗Haruna Express‘ sailed off Ulsan Port at 12:30 of February
28.

xxxx

Based on x x x all [information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.[49]

Elaborating on the foregoing, Leow Ai Hin, Marine Personnel Manager of the Thome Ltd.,
stated in Attachment No. 4:

xxxx

LATE C/COOK DECHAVEZ‘S FAMILY HAS BEEN NOTIFIED AND INFORMED OF HIS
DEATH. ON INVESTIGATION WITH THE FAMILY FOR POSSIBLE REASON OF HIS
INTENDED SUICIDE, WE UNDERSTAND THAT THE MOTHER HAD ACTUALLY WANTED
HIM TO TAKE LOAN FOR HOUSE INVESTMENT. THIS WAS SUPPORTED BY HIS WIFE,
WE BELIEVE THAT X X X THIS BIG INVESTMENT AMOUNT HAS PUT VERY HEAVY
[RESPONSIBILITY] ON HIM THAT HE MAY HAVE LOST HIS DIRECTION AND PURSUE
THE DEATH SOLUTION. BESIDES HE WAS JUST PROMOTED TO CHIEF COOK [IN] THIS
CONTRACT AFTER SERVING CONTRACTS BEFORE WITH US AS MESSMAN.

WE DO NOT SUSPECT ANY FOUL PLAY ON BOARD AS HE IS VERY WELL LIKED BY ALL
CREWMEMBERS AND HAS NO DISPUTE OR ENEMIES WITH ANYONE ON BOARD. THE
CREW STATEMENT GIVEN TO THE POLICE YESTERDAY CAN TESTIFY TO HIS STATUS
[ON BOARD].[50]
Labor Cases Penned By Justice Del Castillo

We believe that the above-mentioned pieces of documentary evidence upon which both the
LA and the NLRC erected their conclusions that Ryan‘s death was directly attributable to his
own deliberate act and will, in other words, suicide, constitute substantial evidence that Ryan
was the author of his own death. In the absence, as in this case, of incontrovertible proof to
the contrary, it must be presumed that the persons who prepared these documents acted in
good faith to attest to the facts they saw or had personal knowledge of, even as it should
also be presumed that these documents likewise spoke the truth. Indeed the facts and
circumstances mentioned in said documents pointing to the fact that Ryan‘s death was
suicide, are spread all over the entire records of the case, indicating purposeful and
deliberate intent to bring out the core reality that Ryan was the author of his own death.
What is more, the sum of such facts and circumstances had been recognized, appreciated
and adopted by both the LA and the NLRC and was made the underpinning of the most
critical and crucial basis of their Decisions which they rendered in the regular performance of
their duties.

By contrast, the question may be asked: What was the basis of the CA in granting the
petition for the extraordinary writ of certiorari instituted before it by Shirley? According to the
CA, the findings of the Medical Certificate of Death prepared by Dr. Sung Yeoul Hung of the
Ulsan City Hospital which mentioned the direct cause of Ryan‘s death as Intentional Self-
Harm by Hanging, Strangulation and Suffocation, are at war with the cause of death
mentioned in the INTECO Report, which described ―the cause of death of [Ryan as]
excessive bleeding from the cut wrist of [Ryan] apparently by scissors‖. [51] If there is any
difference between the two documents with respect to Ryan‘s suicidal death, it is difference
with hardly any distinction. In point of fact, however, the CA appeared to have overlooked
that the INTECO Report stressed the cause of death of Ryan thus: ―Based on [all the
foregoing information] available as reported herein, the cause of death of [Ryan] was
concluded to be suicide.‖[52] It is evident that the appellate tribunal had engaged in petty
nitpicking in pitting the findings made in the two documents. This is so because death by
intentional self-harm as stated in the Medical Certificate of Death prepared by Dr. Sung
Yeoul Hung of the Ulsan City Hospital is the necessary equivalent of suicide mentioned in
the INTECO Report.

The CA also asked the rhetorical question:

[W]ho is this ‗International Inspection and Testing Corporation‘ that performed the autopsy and
prepared the Investigation Report? Is this corporation trained to perform an autopsy? More
importantly, are its findings officially recognized? The Court has scoured the record and it could not
see one iota of description, aside [from the fact] that [it] is ‗foreign corporation‘ that would tend to
lend credence to itself as an investigative body and to its findings.[53]

Such rhetorical question by the CA need not merit clear-cut answer if only because it is
rhetorical question. It suffices to say, however, that both the LA and the NLRC took notice of
the INTECO Report and both agencies were well in their right and power to do so. It is horn-
book law that quasi-judicial agencies like the LA and the NLRC are not bound by the
technical rules of evidence that are observed by the regular courts of justice. [54] Thus,
in Wallem Maritime Services, Inc. v. Pedrajas,[55] this Court had occasion to observe:

Apparent from the foregoing, the report of the Italian Medical Examiner, which stated that Hernani
committed suicide is more categorical and definite than the uncertain findings of the PNP Crime
Laboratory and the NBI that homicide cannot be totally ruled out. Excerpts from the PNP and NBI
reports would disclose that both agencies were unsure if homicide or suicide was the underlying cause
of Hernani‘s death. Hence, the Court agrees with the findings of the LA and his judgment to give
Labor Cases Penned By Justice Del Castillo

weight and credence to the evidence submitted by the petitioners proving that Hernani committed
suicide.[56]

The CA also asked another rhetorical question:

Third, why was there no official autopsy done on the body of the deceased seafarer by the Ulsan
Maritime Police? And if there ever was an autopsy done by the Ulsan Maritime Police, where is the
autopsy report of the police? The Court would think the shipping company, understandably interested
in avoiding paying any compensation, would prefer an autopsy done by the police rather than private
corporation. After all, the findings of the police are accorded respect and regularity by the courts, but
curiously enough in this case, the shipping company decided to have the body examined by private
corporation whose credentials to perform an autopsy have not even been verified.[57]

This observation is of no consequence in this matter. For in point of fact, the INTECO‘s
Report categorically stated that the Ulsan Maritime Police were present when the cadaver of
Ryan was being autopsied at the Ulsan Hospital. Moreover, it noted that the Ulsan Maritime
Police had requested handwritten statements of all remaining crews of the Haruna Express
in the evening February 27, 2006 which were prepared and submitted to the police in the
morning of February 28, 2006 after which the Haruna Express sailed off Ulsan Port at 12:30
of February 28, 2006.

What is more, it is not for the CA to substitute its own discretion for the discretion of the LA
and the NLRC relative to labor relations cases that are within these agencies‘ peculiar
expertise and jurisdiction. The CA apparently overlooked that the case instituted before it is
petition for certiorari under Rule 65 of the Rules of Court which addresses nothing more than
the question of grave abuse of discretion amounting to lack or excess of jurisdiction. And, to
repeat, we find nothing in the Decisions of both the LA and the NLRC that approximates
grave abuse of discretion amounting to lack or excess of jurisdiction. The reason is that the
Decisions of both the LA and the NLRC are grounded on substantial evidence which
stemmed from the aforestated documentary evidence that were presented by the petitioners
before the LA and the NLRC.

Almost on all fours with this case is our holding in Unicol Management Services, Inc. v.
Malipot:[58]

Normally, the Supreme Court is not trier of facts. However, since the findings of the CA and the
NLRC were conflicting, it is incumbent upon this Court to wade through the records to find out if
there was enough basis for the CA‘s reversal of the NLRC decision.

In this case, the CA ruled out the commission by seaman Glicerio of suicide on the ground that the
evidence presented by petitioners, such as the Medico-Legal Report and Death Certificate, did not
state the circumstances regarding the cause of seaman Glicerio‘s death. Also, the CA held that the
Investigation Report, log book extracts, and Master‘s Report were submitted for the first time on
appeal to the NLRC, and thus, should not have been admitted by the NLRC.

First, this Court would like to underline the fact that the NLRC may receive evidence submitted for
the first time on appeal on the ground that it may ascertain facts objectively and speedily without
regard to technicalities of law in the interest of substantial justice.

In Sasan, Sr. v. National Labor Relations Commission 4th Division, We held that our jurisprudence is
replete with cases allowing the NLRC to admit evidence, not presented before the Labor Arbiter, and
Labor Cases Penned By Justice Del Castillo

submitted to the NLRC for the first time on appeal. The submission of additional evidence before the
NLRC is not prohibited by its New Rules of Procedure considering that rules of evidence prevailing
in courts of law or equity are not controlling in labor cases. The NLRC and Labor Arbiters are
directed to use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law and procedure all in the interest of substantial
justice. In keeping with this directive, it has been held that the NLRC may consider evidence, such as
documents and affidavits, submitted by the parties for the first time on appeal.

Moreover, among the powers of the Commission as provided in Section 218 of the Labor Code is that
the Commission may issue subpoenas requiring the attendance and testimony of witnesses or the
production of such books, papers, contracts, records, statement of accounts, agreements, and others. In
addition, the Commission may, among other things, conduct investigation for the determination of a
question, matter or controversy within its jurisdiction, proceed to hear and determine the disputes in
the absence of any party thereto who has been summoned or served with notice to appear, conduct its
proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer
technical matters or accounts to an expert and to accept his report as evidence after hearing of the
parties upon due notice. From the foregoing, it can be inferred that the NLRC can receive evidence on
cases appealed before the Commission, otherwise, its factual conclusions would not have been given
great respect, much weight, and relevance when an adverse party assails the decision of the
NLRC viapetition for certiorari under Rule 65 of the Rules of Court before the CA and then to this
Court via petition for review under Rule 45.

Accordingly, if we take into consideration the Investigation Report, log book extracts and Master‘s
Report submitted by petitioners, the same all strongly point out that seaman Glicerio died because he
committed suicide.

Contrary to the findings of the CA, it appears that the Investigation Report submitted by Inchcape
Shipping Services completely detailed the events that happened prior to seaman Glicerio‘s death, i.e.,
from the last person who corresponded with him when he was still alive, the circumstances leading to
the day he was discovered dead, to the person who discovered him dead. Based on the investigation, it
appears that seaman Glicerio was cheerful during the first two months. However, he, thereafter, kept
to himself after telling people that his family is facing problems in the Philippines and that he .already
informed petitioners to look for his replacement.

The result of the above investigations is even bolstered by the Medical Report issued by Dr. Sajeed
Aboobaker who diagnosed sean1an Glicerio with musculoskeletal pain and emotional trauma due to
family problems, when the latter complained of chest pains and palpitations on December 10, 2008.

Second, both the Medico-Legal Report and Death certificate indicate that the actual cause of death of
seaman Glicerio is ‗suicidal asphyxia due to hanging.‘

The Medico-Legal Report issued by the United Arab Emirates, Ministry of Justice states:

Medico-Legal Report on Case No. 2/2009/Casualties


In accordance with the letter of the Director of Fujairah Public Prosecution dated 09.07.2006 to carry
out the external examination on the remains of Mr. Glicerio Ramirez [M]alipot, Filipino national, to
show the reason of death and how death occurred, I, Prof. Dr. Osman Abdul Hameed Awad. medico-
legal senior consultant in Fujairah, hereby certify that I carried out the external examination on the
aforementioned body on 15.01.2009 at Fujairah Hospital Postmortem. also reviewed the minutes of
investigations. Moreover, I hereby decide the following:
Labor Cases Penned By Justice Del Castillo

A) External Examination:

The body is for man aging about 56 years, in saprophytic state because of being in the refrigerator
along with blood precipitation in the upper and lower limbs. I noticed deep lacerated groove
transverse in the front of the neck and [the upper] level of the thyroid gristle with em width, going up
and to the two sides of the neck and disappears beneath the ear along with the emergence of the
tongue outside the.mouth. did not notice any recent injuries in the body.

B) Opinion:

Based on the above, I decide the following:

1) Based on the external examination of the body of the aforementioned deceased deep lacerated
groove round the neck. It (sic) vital and recent. It occurs as result of pressure and hanging with
an elastic body such as rope x x x

2) The death is due to suicidal Asphyxia due to hanging.

3) The time of death synchronizes with the given date.

From the foregoing, it can be inferred that there was no foul play regarding seaman Glicerio‘s suicide
considering that an external examination of his body shows no violence or resistance or any external
injuries. In fact, the post-mortem examination conclusively established that the true cause of death
was suicidal asphyxia due to hanging.

All told, taking the Medico-Legal Report and the Death Certificate, together with the Investigation
Report, log book extracts, and Master‘s Report, we find that petitioners were able to substantially
prove that seaman Glicerio‘s death was attributable to his deliberate act of killing himself by
committing suicide.

With that settled, we now resolve the issue of whether respondent is entitled to death compensation
benefits under the POEA-Standard Employment Contract.

Section 20 of the POEA ―Standard Terms and Conditions Governing the Overseas Employment of
Filipino Seafarers On-Board Ocean-Going Ships,‖ provides:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

xxxx

B. COMPENSATION AND BENEFITS FOR DEATH


Labor Cases Penned By Justice Del Castillo

1. In case of work-related death of the seafarer, during the term of his contract, the
employer shall pay his beneficiaries the Philippine currency equivalent to the
amount of Fifty Thousand US dollars (US$50,000) and an additional amount of
Seven Thousand US dollars (US$7,000) to each child under the age of twenty-
one (21) but not exceeding four (4) children, at the exchange rate prevailing
during the time of payment

xxxx

D No compensation and benefits shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act or intentional breach of his
duties, provided, however, that the employer can prove that such injury, incapacity, disability or
death is directly attributable to the seafarer.

Clearly, the employer is liable to pay the heirs of the deceased seafarer for death benefits once it is
established that he died during the effectivity of his employment contract. However, the employer
may be exempt from liability if it can successfully prove that the seaman‘s death was caused by an
injury directly attributable to his deliberate or willful act. Thus, since petitioners were able to
substantially prove that seaman Glicerio‘s death is directly attributable to his deliberate act of hanging
himself, his death, therefore, is not compensable and his heirs not entitled to any compensation or
benefits.

Finally, although this Court commiserates with the respondent, absent substantial evidence from
which reasonable basis for the grant of benefits prayed for can be drawn, we are left with no choice
but to deny her petition, lest an injustice be caused to the employer. While it is true that labor
contracts are impressed with public interest and the provisions of the POEA Employment Contract
must be construed logically and liberally in favor of Filipino seamen in the pursuit of their
employment onboard ocean-going vessels, still the rule is that justice is in every case for the
deserving, to be dispensed with in the light of established facts, the applicable law, and existing
jurisprudence.

WHEREFORE, the Petition is GRANTED. The challenged January 31, 2011 Decision and
August 8, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 112898
are ANNULLED and SET ASIDE, and the December 16, 2009 Decision of the National
Labor Relations Commission in NLRC LAC OFW (M) 09-000540-09 is hereby REINSTATED
and AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

14 AUG 2017 | JURISPRUDENCE | PONENTE | JUSTICE


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

North Sea Marine Services Corporation, Ms.


Rosalinda Cerdina and/or Carnival Cruise
Lines Vs. Santiago S. Enriquez; G.R. No.
201806; August 14, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the January 20, 2012 Decision[2] and May 8,
2012 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 117050, which dismissed
the Petition for Certiorari filed therewith and thus affirmed the June 25, 2010 Decision[4] and
September 20, 2010 Resolution[5] of the National Labor Relation Commission (NLRC)
ordering petitioners North Sea Marine Services Corporation, Ms. Rosalinda Cerdina, and
Carnival Cruise Lines (collectively petitioners) to pay respondent Santiago S. Enriquez
(respondent) US$80,000.00 as permanent disability benefit, US$576.00 as balance for
sickness wages, and 10% thereof as attorney‘s fees.

Antecedent Facts

On February 27, 2008, petitioner North Sea Marine Services Corporation, for and on behalf
of its foreign principal, petitioner Carnival Cruise Lines, entered into a Contract of
Employment[6] with respondent for a period of six months which commenced on April 27,
2008, as Assistant Plumber for the vessel MS Carnival Triumph.

On September 2, 2008, while in the performance of his duties, respondent experienced nape
pains that radiated to his upper back. The ship doctor diagnosed him to be suffering from
mechanical back pains and prescribed him with medicines.[7] However, due to the worsening
of his back pains, he was medically repatriated on October 5, 2008.

Upon arrival in Manila on October 7, 2008, respondent was immediately referred to the
company-designated physician, Dr. John Rabago (Dr. Rabago), at the Cardinal Santos
Medical Center. An orthopedic specialist recommended Magnetic Resonance Imaging (MRI)
of respondent‘s cervical spine, which test revealed that he was suffering from Cervical
Spondylosis with Thickening of the Posterior Longitudinal Ligament from C2-3 to C5-6; Mild
Disc Bulging from C3- 4 to T2-E; and Superimposed Left Paracentral Disc Protrusion at C5-
6.[8] During his confinement at the Cardinal Santos Medical Center from October 28, 2008 to
October 30, 2008, respondent underwent Anterior Disectomy, Spinal fusion C5-C6 Ciliac
Bone Graft, and Anterior Plating.[9] After his discharge from the hospital, respondent
continuously reported to the orthopedic surgeon for medical treatment and evaluation. On
November 28, 2008, he was referred to a physiatrist to undergo physical therapy. [10]
Labor Cases Penned By Justice Del Castillo

In a Medical Report[11] dated December 17, 2008, Dr. Rabago declared respondent fit to
resume sea duties, with the conformity of both the orthopedic surgeon and the physiatrist.
Respondent thereafter signed a Certificate of Fitness to Work,[12] releasing petitioners from
all liabilities.

On February 25, 2009, respondent consulted an independent orthopedic surgeon, Dr.


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

February 25, 2009


To whom it may concern

This is to certify that SANTIAGO S. ENRIQUEZ, 45 years old, male, has been seen & examined by
the undersigned as outpatient. History reviewed and patient‘s physical examination reveal limitation
of neck motion associated with tenderness on posterior aspect of the neck. He also has numbness of
the (R) shoulder with muscle spasm. The (L) pelvic/iliac bone graft down is tender associated with
numbness.

Considering all these findings, it would be impossible for him to work as seaman-plumber. Disability
grade of three (3) is recommended.[13]

Proceedings before the Labor Arbiter (LA)

On March 4, 2009, respondent filed a Complaint[14] with the NLRC seeking to recover
permanent disability compensation in the amount of US$80,000.00 under the International
Transport Workers‘ Federation Cruise Ship Collective Bargaining Agreement (ITF Cruise
Ship CBA),[15] balance of sick wages for two months, moral and exemplary damages, and
attorney‘s fees. Respondent claimed that despite the lapse of 120 days and medical
attention given to him by the company-designated physician, his condition did not improve,
as attested by the medical findings of his own physician Dr. Garduce.

Petitioners, on the other hand, disclaimed respondent‘s entitlement to any disability benefit
since he was declared fit to work by Dr. Rabago, as attested by both the orthopedic surgeon
and physiatrist. Petitioners asserted that the fit-to work assessment of the company-
designated physician deserved utmost credibility because it was rendered after extensive
monitoring and treatment of respondent‘s condition by a team of specialists, and it contained
a detailed explanation of the progress in respondent‘s condition. Petitioners also asserted
that there was no proof that respondent‘s employment was covered by a CBA or that his
injury was caused by an accident as to fall under the CBA provisions. Moreover, petitioners
insisted that respondent had executed a Certificate of Fitness to Work, releasing petitioners
from any obligation in relation to his employment.

In a Decision[16] dated September 29, 2009, the Labor Arbiter denied respondent‘s claim for
disability benefits. The Labor Arbiter found credence in Dr. Rabago‘s fit to work assessment,
which was buttressed by the findings of the specialists, was arrived at after careful and
accurate evaluation of respondent‘s condition, and well-substantiated by the medical
records.

The Labor Arbiter disregarded the ITF Cruise Ship Model CBA presented by respondent for
lack of proof that petitioners were parties to such agreement. Further, there was no evidence
Labor Cases Penned By Justice Del Castillo

that respondent‘s illness resulted from an accident. The dispositive portion of the Decision
read:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the Complaint for lack
of merit.

However, in the interest of justice, this Arbitration Branch awards complainant US$3,000.00 as
financial assistance.

All other claims are likewise denied for want of any basis.

SO ORDERED.[17]

Records show that only respondent appealed from the Decision of the Labor Arbiter.
Petitioners did not appeal but instead filed an Opposition to Complainant‘s Request for
Payment of Financial Assistance.[18]

Proceedings before the National Labor Relations Commission

In a Decision[19] dated June 25, 2010, the NLRC found respondent‘s appeal meritorious. The
NLRC gave more weight to the medical certificate of Dr. Garduce which declared respondent
unfit to resume sea duties since petitioners never redeployed him for work despite the
company-designated physician‘s assessment of fitness to resume sea duties. The NLRC
ruled that permanent and total disability did not mean a state of absolute helplessness but
mere inability to perform usual tasks. The NLRC also held that the Certificate of Fitness is
akin to a release or quitclaim, which did not constitute a bar for respondent to demand what
was legally due him.

The NLRC found that respondent‘s injury was caused by an accident when his spinal column
cracked while lifting some heavy pipes; it thus awarded him total and permanent disability
benefits under the ITF Cruise Ship CBA. The dispositive portion of the Decision read:

WHEREFORE, premises considered, the assailed Decision rendered by Labor Arbiter Aliman D.
Mangandog dated September 29, 2009 is hereby REVERSED and SET ASIDE and a NEW ONE
ENTERED holding respondents liable to pay jointly and severally, complainant‘s claim for permanent
disability benefits in the sum of US$80,000.00 and US$576.00 as balance for sickness wages, plus
attorney‘s fees in the sum equivalent to 10% of the total judgment award.

SO ORDERED. [20]

Petitioners filed a motion for reconsideration on the grounds that the NLRC erred in granting
disability benefits under the alleged CBA and in awarding attorney‘s fees in the absence of a
finding of bad faith. This motion was, however, denied by the NLRC in a Resolution [21] dated
September 20, 2010.

Proceedings before the Court of Appeals

Petitioners filed a Petition for Certiorari with Application for the Issuance of a Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction to enjoin the enforcement and
Labor Cases Penned By Justice Del Castillo

execution of the NLRC judgment. In a Resolution[22] dated March 2, 2011, the CA denied
petitioners‘ prayer for a TRO.

The CA, in a Decision[23] dated January 20, 2012, dismissed petitioners‘ Petition
for Certiorari for lack of merit. The CA held that while it is the company designated physician
who is tasked under the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA-SEC) to assess the condition of the seafarer, his medical
report is not binding and may be disputed by a contrary opinion of another physician. The
CA went on to affirm the NLRC‘s reliance on the medical assessment of Dr. Garduce as it
was based not merely on respondent‘s physical examination but also after considering the
medical findings of Dr. Rabago.

Petitioners sought reconsideration of this Decision but was denied by the CA in its
Resolution[24] dated May 8, 2012.

Issues
Hence, petitioners filed the instant Petition, arguing that:

1. The Court of Appeals committed a serious error in law in affirming the award of
US$80,000.00 under the CBA. Respondent‘s employment has no overriding CBA.

2. The Court of Appeals committed serious error in holding that Respondent is entitled to
disability benefits. Respondent was declared FIT TO WORK by the company-
designated physician. The findings of the company-designated physician should be
given weight in accordance with the rulings of this Honorable Court in the cases
of Coastal Safeway Marine Services, Inc. v. Esguerra, G.R. No. 185352, 10 August
2011 and Allen Santiago vs. Pacbasin Shipmanagement, Inc. and/or Majestic Carriers,
Inc., G.R. No. 194677, 18 April 2012.

3. The Court of Appeals committed a serious error in law in ruling that respondent is
entitled to attorney‘s fees. The denial of private respondent‘s claims were based on
legal grounds and made in good faith.[25]

Petitioners maintain that the CA committed serious error in awarding respondent full
disability benefits despite the timely fit to work assessment of Dr. Rabago, which was
rendered after extensive treatment of respondent‘s condition, vis-a-vis the baseless opinion
and medical findings of Dr. Garduce that was rendered only after a single consultation.
Besides, probative weight should be given to the company-designated physician‘s
assessment as there was no third doctor appointed to properly dispute the same. Moreover,
the Certificate of Fitness to Work signed by respondent corroborated the fit to work
assessment of Dr. Rabago; therefore, respondent lacked any basis in claiming disability
benefits.

Petitioners also argue that there was no sufficient evidence to entitle respondent to disability
benefits in the amount of US$80,000.00 under an alleged CBA. The CBA presented was
merely a model CBA which was unsigned and unauthenticated. There was likewise no
concrete proof to support respondent‘s claim that his condition resulted from an accident as
to entitle him to claim benefits under the CBA‘s provisions.

Our Ruling
We find merit in the Petition.
Labor Cases Penned By Justice Del Castillo

No proof was presented to show that


respondent’s employment was covered
by the CBA.

We find that respondent failed to adequately prove that he was entitled to the benefits of an
alleged CBA he had presented. The ITF Cruise Ship Model Agreement For Catering
Personnel April 2003[26] presented by respondent bore no specific details as regards the
parties covered thereby, the effectivity or duration thereof, or even the signatures of
contracting parties. Records are bereft of evidence showing that respondent‘s employment
was covered by the supposed CBA or that petitioners had entered into any collective
bargaining agreement with any union in which respondent was a member.

There was likewise no evidence that an accident happened that caused respondent‘s injury.
There was no report in the crew illness log[27] dated September 2, 2008 that an accident
happened on board the vessel which resulted in respondent‘s back pain. It is basic that
respondent has the duty to prove his own assertions. And his failure to discharge the burden
of proving that he was covered by the CBA militates against his entitlement to any of its
benefits. As such, the NLRC and the CA had no basis in awarding respondent disability
benefits under the supposed CBA.

Respondent‘s entitlement to disability benefits is therefore governed by the POEA-SEC and


relevant labor laws which are deemed written in the contract of employment with petitioners.

Dr. Rabago’s fit to work assessment


prevails. Respondent is not entitled to
total and permanent disability benefits.

Section 20 B (3) of the POEA-SEC provides:

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

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return except when he is
physically incapacitated to do so, in which case, a written notice to the agency within the same period
is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed
jointly between the employer and the seafarer. The third doctor‘s decision shall be final and binding
on both parties.

It is clearly provided in the POEA-SEC that in order to claim disability benefits, it is the
company-designated physician who must proclaim that the seafarer suffered a permanent
disability, whether total or partial, due to either injury or illness, during the term of his
employment. If the doctor appointed by the seafarer makes a finding contrary to that of the
assessment of the company-designated physician, a third doctor may be agreed jointly
between the employer and seafarer whose decision shall be binding on both of them.
In Vergara v. Hammonia Maritime Services, Inc.,[28] the Court pronounced that while a
Labor Cases Penned By Justice Del Castillo

seafarer has the right to seek a second and even a third opinion, the final determination of
whose decision must prevail must be done in accordance with this agreed procedure. The
Court went on to emphasize that failure to observe this will make the company-designated
physician‘s assessment final and binding.

Upon repatriation on October 5, 2008, respondent‘s condition was medically evaluated and
treated by the company-designated physicians. Respondent was subjected to continuous
medical examination by Dr. Rabago, underwent surgery under the care of an orthopedic
specialist, and received physical therapy from a physiatrist. On December 17, 2008, Dr.
Rabago, the orthopedic surgeon, and the physiatrist assessed respondent fit to resume sea
duties. On February 25, 2009, respondent sought an independent opinion from Dr. Garduce
who assessed him to be unfit for sea duties. However, respondent did not refer these
conflicting assessments to a third doctor in accordance with the mandated procedure. In
fine, the company-designated physician‘s assessment was not effectively disputed; hence,
the Court has no option but to declare Dr. Rabago‘s fit to work declaration as final and
binding.

In any event, the Court finds Dr. Rabago‘s assessment to be credible considering his close
monitoring and extensive treatment of respondent‘s condition. His fit to work assessment
was supported by the findings of the orthopedic surgeon and physiatrist who both opined,
after making a thorough evaluation of respondent‘s condition, that respondent was already
physically fit to resume work without any restrictions. The extensive medical attention and
treatment given to respondent starting from his repatriation on October 5, 2008 until
December 17, 2008 were clearly supported by medical reports. In Dr. Rabago‘s initial
medical report[29] dated October 10, 2008, respondent was referred to an orthopedic
specialist for proper treatment and procedure. In a subsequent medical report [30] dated
November 7, 2008, respondent was evaluated after surgery and found to be recovering well
although complaining of some discomfort and pain which are common during post surgery.
Respondent was then referred to a physiatrist for rehabilitation. In a medical report[31] dated
December 12, 2008 significant improvement in respondent‘s condition was noted after a
series of physical therapy and rehabilitation. These medical reports confirmed that
respondent had already recovered from his injury after treatment by the specialists. On the
other hand, Dr. Garduce rendered a medical opinion after a singular examination of
respondent. His pronouncement of respondent‘s unfitness to resume sea duties and partial
disability impediment of Grade 3 was unsupported by adequate explanation as to how his
recommendations were arrived at.

Besides, Dr. Rabago‘s fit to work assessment was supported by the Certificate of Fitness to
Work signed by respondent. It bears to emphasize that respondent immediately caused the
execution of this waiver or release in favor of petitioners instead of disputing the fit to work
declaration of Dr. Rabago. We have held that not all waivers: and quitclaims are invalid as
against public policy.[32] Absent any evidence that any of the vices of consent is present, this
document executed by respondent constitutes a binding agreement and a valid waiver in
favor of petitioners.[33]

In fine, we find Dr. Rabago‘s fit to work assessment a reliable diagnosis of respondent‘s
condition and should prevail over Dr. Garduce‘s appraisal of respondent‘s disability. Dr.
Rabago‘s timely assessment, rendered within 120 days from respondent‘s repatriation,
which was not properly disputed in accordance with an agreed procedure, is considered final
and binding. The CA erred in awarding respondent his claim for permanent disability
benefits.
Labor Cases Penned By Justice Del Castillo

While the provisions of the POEA-SEC are liberally construed in favor of the well-being of
Filipino seafarers, the law nonetheless authorizes neither oppression nor self-destruction of
the employer. In any event, we sustain the Labor Arbiter‘s award of US$3,000.00 as financial
assistance in the interest of equity and compassionate justice. Besides, the same was not
properly assailed by the petitioners via an appeal to the NLRC. As such, the same had
attained finality and could no longer be questioned by petitioners.

WHEREFORE, the Petition is GRANTED. The January 20, 2012 Decision and May 8, 2012
Resolution of the Court of Appeals in CA-G.R. SP No. 117050 are REVERSED and SET
ASIDE. The September 29, 2009 Decision of Labor Arbiter Aliman D. Mangandog in NLRC-
NCR Case No. (M) NCR-03-03817-09 dismissing respondent‘s claim for disability benefits
and awarding US$3,000.00 as financial assistance is REINSTATED and AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

31 JUL 2017 | JURISPRUDENCE | PONENTE | JUSTICE


MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND EMPLOYMENT | UNFAIR
LABOR PRACTICE

United Polyresins, Inc., Ernesto Uy Soon, Jr.


and/or Julito Uy Soon Vs. Marcelino Pinuela;
G.R. No. 209555; July 31, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the December 11, 2012 Decision[2] and
October 10, 2013 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 115402
which set aside the June 11, 2011 Decision[4]of the National Labor Relations Commission
(NLRC) in NLRC-LAC Case No. 06- 001577-09.

Factual Antecedents

Petitioner United Polyresins, Inc. (UPI) is a registered domestic corporation doing business
in San Pedro, Laguna, while petitioners Ernesto Uy Soon, Jr. and Julito Uy Soon are its
corporate officers.

Respondent Marcelino Pinuela was employed by UPI in 1987. He became a member of the
labor union, Polyresins Rank and File Association (PORFA), and was elected President
thereof in May, 2005 and slated to serve until the end of 2007.

The collective bargaining agreement (CBA) then existing between UPI and PORFA provided
that:

Section 3. The Company shall grant to the Union the amount of Three Hundred Thousand Pesos
(P300,000.00) free of interest as the union‘s capital for establishing a cooperative to meet the needs of
its members. Said loan shall fall due and become payable at the same date that this Bargaining
Agreement expires, to wit – December 31, 2007. In the event of non-payment, all officers and
members will be personally accountable. In case of additional funds, they can make a written request
[addressed] to the President of the company.[5]

The CBA likewise contained a union security clause which provided that employees who
cease to be PORFA members in good standing by reason of resignation or expulsion shall
not be retained in the employ of UPI.

Upon his assumption as union President, respondent wrote the former union President,
Geoffrey Cielo (Cielo), to turn over the records, papers, documents and financial statements
of the union. Cielo surrendered the union‘s bank account documents, among others, which
indicated that the union had an available P78,723.60 cash balance. Cielo likewise submitted
Labor Cases Penned By Justice Del Castillo

a Financial Report indicating that the union had P208,623.60 in cash and P159,500.00 in
receivables.

Finding that the bank documents and Cielo‘s report did not match, and Cielo unable to
explain the discrepancies, the union‘s Executive Committee, which was headed by
respondent, resolved to hire a certified public accountant to conduct an audit of the union‘s
finances. In a December 1, 2005 report, the accountant concluded that the union‘s finances,
income, and disbursements for the years 2003 and 2004 were not properly documented,
recorded, and reported. He recommended that the union officers ―take a seminar on basic
bookkeeping and accounting;‖[6] that the union adopt and/or install the necessary accounting
and internal control systems; that the union prepare the proper financial statements; and that
the officers take corrective measures in financial management as an integral part of sound
management.[7]

Meanwhile, during respondent‘s term as PORFA President, it appeared that UPI


automatically deducted from the respective salaries of PORFA members amounts
representing union membership dues and loan payments. These amounts, which totalled
P2,402,533.43, were then regularly turned over by UPI to PORFA in the form of fifty eight
(58) crossed checks, made payable to PORFA.[8] These amounts were then deposited and
credited to PORFA‘s account.[9]

On December 8, 2007, or several days before the P300,000.00 loan by UPI to PORFA
became due, petitioners, respondent, and the other union officers met to discuss the
proposed new CBA. Thereat, petitioners told respondent that until the P300,000.00 is
returned, the former shall not discuss the proposed CBA. Respondent explained that the
union did not have the finances and had only P78,723.60, which was the original amount
turned over by Cielo to respondent when the latter assumed office as union President.
Petitioners then told respondent and the other union officers that if the amount is not
returned, the same will be deducted from the salaries of the union members.[10]

On January 7, 2008, respondent filed a complaint before the National Conciliation and
Mediation Board (NCMB), claiming that petitioners refused to bargain collectively. During the
scheduled conferences before the NCMB, petitioners raised the issue of non-payment of the
P300,000.00 owing to UPI and insisted on its payment; they also threatened to deduct the
amount of P1,500.00 from the respective salaries of the union members.[11]

Because of the recurring threat of failed CBA negotiations and salary deductions as means
of recovering the P300,000.00 loaned to the union, union members began to demand the
holding of a special election of union officers. They likewise accused respondent and the
other union officers of mismanagement, unduly hanging on to their positions, and lack of
accountability.[12]

Thus, in March 2008, special elections were held, and a new union President and set of
officers were elected.[13]

On March 29, 2008, the union‘s new set of officers conducted an investigation into the fact
that the union had little or no funds remaining in its bank account. Respondent attended the
investigation, and admitted that the union had no more funds as they were ―utilized in the
prosecution of cases during his incumbency.‖[14] He likewise failed to make a formal turnover
of documents to the new President. Respondent was required to surrender union documents
in his possession on the next scheduled meeting.[15]
Labor Cases Penned By Justice Del Castillo

On April 8, 2008, another inquiry was held where respondent was present. The investigation
centered on respondent‘s continued failure to account for the union‘s bank accounts,
documents, and deposits made during his incumbency, and his failure to formally turn over
union‘s papers to the new officers. After the meeting, respondent and the new officers
proceeded to the bank, where they discovered that the PORFA account had already been
closed.[16]

On April 10, 2008, the new set of union officers issued a Resolution[17] expelling respondent
from PORFA for being guilty of the following violations:

1. No annual financial statement.

2. No listings or ledger of union member‘s [sic] emergency loans.

3. Unposted cheques on the Union‘s passbook collected from union members [sic]
monthly dues.

4. Our union checking account at Security Bank were [sic] Zero balance/closed
account.

5. No receipts/cash disbursement presented for the union operational [sic] expenses.

6. Unable to return the P300,000.00 lent by the management free of interest. (Art.
XXVII, Section 3 of our CBA).

7. Unable to explain and present documents to support where the agency fees and
union dues collected from legitimate union members were used.[18]

The officers held that these violations constituted an infringement of the union‘s Constitution,
particularly Article XV, Section 1, paragraphs (e) and (f) thereof, which specifically prohibit
the misappropriation of union funds and property and give ground for the impeachment and
recall of union officers.[19]

In an April 11, 2008 letter[20] to petitioners, PORFA communicated respondent‘s expulsion


from the union.

On April 14, 2008, petitioners issued a letter of termination[21] to respondent, to take effect
immediately.

Ruling of the Labor Arbiter

Respondent filed a complaint against petitioners before the Labor Arbiter for illegal
dismissal, with monetary claims and damages, which was docketed as NLRC Case No.
RAB-IV-08-27303-08-L. He claimed that his dismissal was effected in bad faith and without
due process and was thus illegal. Petitioners countered that respondent‘s dismissal is valid
under the union security clause of the CBA; that his failure to return the P300,000.00 loan to
the union due to mismanagement/misappropriation constitutes just cause for his expulsion
from the union, as well as dismissal from employment; that he was accorded substantive
and procedural due process; that the herein individual petitioners may not be held liable for
respondent‘s claims; and that accordingly, the case should be dismissed.
Labor Cases Penned By Justice Del Castillo

On April 20, 2009, the Labor Arbiter issued a Decision[22] dismissing respondent‘s complaint
on the finding that respondent was not illegally terminated, thus:

While complainant, as then Union President, denies any misappropriation of union funds, it is
undisputed that he failed to account for the missing union funds and to return the P300,000.00 which
the respondent company had lent for the union‘s assistance upon the expiration of the CBA dated
December 31, 2007.

More importantly, in the investigation conducted by the newly elected officers of the union, it was
uncovered that union funds were in fact personally used by the former officers of PORFA which
includes complainant.

Thus, the union passed a resolution expelling complainant from the PORFA union and the
corresponding letter was sent to the respondent company informing the latter of complainant‘s
expulsion coupled with a recommendation that complainant be terminated from employment pursuant
to the union security clause of the CBA.

Given the foregoing, we rule that complainant was validly dismissed since the respondent company
merely did its obligation under the CBA by terminating the services of complainant who ceased to be
a member in good standing of the PORFA union by reason of expulsion.

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant


complaint for lack of merit.

SO ORDERED.[23]

Ruling of the National Labor Relations Commission

Respondent appealed before the NLRC, which initially overturned the Labor Arbiter in a
December 8, 2009 Decision,[24] which decreed as follows:

WHEREFORE, the assailed Decision is hereby SET ASIDE and a NEW one is entered declaring the
complainant-appellant‘s dismissal to be illegal. Respondents Union [sic] and respondent company are
hereby declared jointly and severally liable to pay complainant his full backwages from the date he
was dismissed until date instant [sic] and to pay his separation pay equivalent to one month salary per
year of service computed as follows:

BACKWAGES
04/14/08 – 10/14/09
P396 x 26 days x 18 mos.
P10,296.00 x 18 days = P185,328.00

SEPARATION PAY
P396.00 x 26 x 22yrs.
P10,296 x 22yrs. = P226,512.00
Labor Cases Penned By Justice Del Castillo

13th Month Pay


P185,328.00 / 12 = P15,444.00

Grand Total P427,284.00

SO ORDERED.[25]

However, on motion for reconsideration, the NLRC issued its June 11, 2011 Decision, which
held as follows:

What cannot escape from [sic] our attention and consideration are the following: (1) there was an
obligation x x x to return the amount of P300,000.00 to the respondent upon termination of the CBA
on December 31, 2007, (2) complainant, as the President of the Union at the time the loan was due
and demandable, failed to account for said funds, and under the same provision, was to be held
personally accountable, (3) Pinuela actually participated x x x in the whole process of determining
accountability over the union funds, (4) denied knowledge over and receipt of the missing funds,
despite his being among those charged with its custody and safe-keep, as the Union President.

It is also to be noted that the complainant as union president, could not explain nor comment on the
fact that their union‘s bank account is already a closed account. Even if We assume and in fact
complainant admitted that he had custody of P78,723.60 as union funds as of June 3, 2005, still he
could not account the whereabouts of the said money. As a signatory to the said account, complainant
cannot be considered as entirely faultless since he was grossly negligent in the custody of the funds.
There is substantial basis in complainant‘s dismissal thus, the award of backwages and 13th month pay
should be deleted. However, even if We find complainant‘s dismissal to be valid, there is equally no
evidence showing that he pocketed the missing funds of the union. In this regard since he had
rendered a considerable number of years in the service (21 years) complainant may be awarded
separation pay at the rate of 1/2 month salary for every year of service (396 x 13 x 21 years) from the
inception of his employment till his dismissal in the interest of justice and compassion since his
infraction did not involve serious misconduct.

Further, We also hold that while complainant‘s dismissal was valid pursuant to the enforcement of the
Union Security Clause, respondents however did not comply with the requisite procedural due
process. As held in the case of Agabon vs. NLRC, x x x the Supreme Court held that where the
dismissal is for a cause recognized by the prevailing jurisprudence, the absence of the statutory due
process should not nullify the dismissal or render it illegal x x x. Accordingly, for violating
complainant‘s statutory rights, respondents should indemnify him the amount of P30,000.00 as
nominal damages in addition to his separation pay.

WHEREFORE, premises considered, respondents-appellees‘ Motion for Reconsideration is


GRANTED, a new Decision is rendered finding complainant‘s dismissal as valid. Respondents-
appellees are however ordered to pay complainant the amounts of P108,108.00 and P30,000.00 as
separation pay and nominal damages.

All other claims whether monetary or otherwise are hereby DISMISSED.

SO ORDERED.[26]
Labor Cases Penned By Justice Del Castillo

Ruling of the Court of Appeals

In a Petition for Certiorari[27] before the CA and docketed as CA-G.R. SP No. 115402,
respondent sought to reverse the above NLRC Decision and reinstate its December 8, 2009
Decision, arguing that the Commission gravely erred in concluding that he was personally
accountable for the missing funds, the closing of PORFA‘s bank account, and that he was
grossly negligent in the custody of the union funds. In their Comment,[28] petitioners
countered that respondent‘s dismissal was attended by due process; that he is guilty of the
infractions for which he was dismissed; and that his guilt had been proved by substantial
evidence.

On December 11, 2012, the CA issued the assailed Decision containing the following
pronouncement:

Petitioner insists that he is innocent of the charges against him made by the PORFA (the union),
particularly the embezzlement of the union funds. He vehemently denied misappropriation of the
same and that the PORFA Union officers conspired with the Respondents in removing him as a
member in good standing of the said union and his subsequent dismissal as employee pursuant to the
CBA‘s union security clause.

Respondents on the other hand, denied the Petitioner‘s allegation of conspiracy and that in fact, there
was a series of conferences conducted jointly by the management and the union on the matter of lost
union funds and that the Petitioner was made aware of the charges against him before he was
terminated. They claim that the management participated in the investigations and that it was shown
that even if the Petitioner as president of the union did not misappropriate the funds nevertheless he
committed omission/gross negligence for which reason he was expelled therefrom. The Respondents
also claim that Petitioner was accorded procedural due process during the investigations.

It is basic in labor jurisprudence that the burden of proof rests upon management to show that the
dismissal of its worker was based on a just cause. When an employer exercises its power to terminate
an employee by enforcing the union security clause, it needs to determine and prove the following: (1)
the union security clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union
to expel the employee from the union.

The dispute before Us does not raise any issue with respect to the first two requisites; the issue being
whether there was sufficient evidence to support Petitioner‘s expulsion from PORFA. In arriving at
any conclusion thereto, the Petitioner must first be accorded due process of law. x x x

xxxx

On both questions of whether there exist[s] sufficient evidence to support Petitioner‘s expulsion from
the union (substantive due process), and whether Petitioner was properly informed of the accusation
against him and his dismissal from employment (procedural due process), We answer in the negative.

An examination of the submitted evidence before the Labor Arbiter show [sic] that the same are not
enough to prove the alleged charges of misappropriation against the Petitioner and neither was he
properly informed thereof.

xxxx
Labor Cases Penned By Justice Del Castillo

On the other hand, the Petitioner have [sic] shown adequate explanation about the funds of the union
that came to his possession. The Memorandum of Ramon M. Martinez, a Certified Public Accountant,
show [sic] that he made an audit of the funds of the union during the previous administration and that
the actual funds the union had was merely P34,344.25 when Petitioner took over. This amount was
not even shown to have been misappropriated by the Petitioner.

Compounding this want of substantive evidence is the lack of procedural due process that Petitioner
was entitled to. As [has] been previously discussed, the Petitioner was not given the proper first
notice. Thereafter, despite such lack of first notice, on the mere letter of the union that he was
expelled therefrom because of alleged causes, the Petitioner was dismissed from employment by the
Respondents in the termination letter dated 14 April 2008 on the sole basis of union security clause.
Such action cannot be countenanced. In the same Inguillo case, the Supreme Court also ruled:

‗Thus, as held in that case, ‗the right of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the company or his own Union
is not wiped away by a Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards his
rights but also from his own Union, the leadership of which could yield to the temptation of swift and
arbitrary expulsion from membership and mere dismissal from his job.‘

In sum, the NLRC gravely abused its discretion in reconsidering its earlier Decision which is more in
accord with the evidence on record.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated 11 June 2010[29] is
hereby SET ASIDE. The Decision dated 8 December 2009 is REINSTATED with the
MODIFICATION that the backwages shall be recomputed from the date of Petitioner‘s dismissal to
the finality of this Decision.

SO ORDERED.[30] (Citations omitted)

Petitioners filed a Motion for Reconsideration,[31] which was denied by the CA in its October
10, 2013 Resolution. Hence, the instant Petition.

Issues

In a June 22, 2015 Resolution,[32] the Court resolved to give due course to the Petition, which
contains the following assignment of errors:

I. THE APPELLATE COURT ERRED IN RULING THAT THE CHARGES OF


MISAPPROPRIATION AGAINST THE RESPONDENT WERE INSUFFICIENT
(SUBSTANTIVE DUE PROCESS)
II. THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT WAS
NOT PROPERLY INFORMED OF THE CHARGES AGAINST HIM (PROCEDURAL
DUE PROCESS).
III. THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT IS
ENTITLED TO SEPARATION PAY, BACKWAGES FROM DISMISSAL TO THE
FINALITY OF ITS DECISION, AND 13TH MONTH PAY.[33]

Petitioners’ Arguments
Labor Cases Penned By Justice Del Castillo

Praying that the assailed CA dispositions be set aside and that respondent‘s case be
dismissed instead, petitioners maintain in their Petition and Reply[34] that substantive and
procedural due process were observed in respondent‘s case; that respondent was apprised
of the charges against him and given the opportunity to refute them; that the evidence points
to the conclusion that he misappropriated the union‘s funds and was unable to explain the
dissipation thereof; that for what he has done, respondent violated Article XV, Section 1,
paragraphs (e) and (f) of the union‘s Constitution; that respondent‘s dismissal on the basis of
the union security clause in the CBA was thus valid, based on substantial proof, and in
accord with the pronouncement in Cariño v. National Labor Relations Commission,[35] where
the dismissal of an employee was upheld on the basis of the union security and expulsion
clauses contained in the CBA; and that since his dismissal is valid, then he is not entitled to
his monetary claims.

Respondent’s Arguments

In his Comment,[36] respondent maintains that the CA did not err in finding that the evidence
against him was insufficient; that the CA was correct in ruling that his right to procedural due
process was violated when he was not properly informed of the charges against him; and
that for these reasons, he was illegally dismissed and thus entitled to his monetary claims.

Our Ruling

The Court denies the Petition.

Respondent‘s expulsion from PORFA is grounded on Article XV, Section 1, paragraphs (e)
and (f) of the union‘s Constitution, which provides:

ARTICLE-XV
IMPEACHMENT AND RECALL

Section 1. Any of the following shall be ground for the impeachment or recall of the union officers.

a. Committing or causing the commission directly or indirectly of acts against the interest and
welfare of the union;

b. Malicious attack against the union, its officers or against a fellow union officer or member;

c. Failure to comply with the obligation to turn over and return to union treasurer within three (3)
days unexpanded [sic] sum of money received from the money funds to answer for an authorized
union purpose;

d. Gross misconduct unbecoming of a union officer;

e Misappropriation of union funds and property. This is without prejudice to the filing of an
appropriate criminal or civil action against the responsible officer/(s) by any interested
Labor Cases Penned By Justice Del Castillo

party;

f. Willful violation of any provision of the constitution or rules, regulations, measures,


resolution(s) and decision of the union.[37] (Emphasis supplied)

However, these provisions refer to impeachment and recall of union officers, and not
expulsion from union membership. This is made clear by Section 2(e) of the same Article
XV, which provides that ―(t)he union officers impeached shall ‗IPSO FACTO‘ to [sic] be
considered resigned or ousted from office and shall no longer be elected nor appointed to
any position in the union.‖ In short, any officer found guilty of violating these provisions shall
simply be removed, impeached or recalled, from office, but not expelled or stripped of union
membership.

It was therefore error on the part of PORFA and petitioners to terminate respondent‘s
employment based on Article XV, Section 1, paragraphs (e) and (f) of the union‘s
Constitution. Such a ground does not constitute just cause for termination.

A review of the PORFA Constitution itself reveals that the only provision authorizing removal
from the union is found in Article X, Section 6, that is, on the ground of failure to pay union
dues, special assessments, fines, and other mandatory charges.[38] On the other hand,
grounds for disqualification from membership may be found in Article IV, which states that-

Section 3. The following are not eligible neither [sic] for membership nor to election or appointment
to any position in the union:

1. Subversive or persons who profess subversive ideas.

2. Persons who have been convicted of crime involving moral turpitude.

3. Persons who are not employees of the company.[39]

These provisions do not apply in respondent‘s case. Although he was eventually charged
with estafa,[40] a crime involving moral turpitude,[41] still, he has not been convicted of the
crime. For this reason, he may not be disqualified as union member.

Thus, for what he is charged with, respondent may not be penalized with expulsion from the
union, since this is not authorized and provided for under PORFA‘s Constitution.

Contrary to petitioners‘ claim, Cariño v. National Labor Relations Commission is not


applicable here. In that case, the employee was terminated on the basis
of existing suspension and expulsion provisions contained in the CBA and rules on
discipline found in the union‘s Constitution. There are no such provisions in PORFA‘s
Constitution; neither has it been shown that there are similar stipulations in the parties‘ CBA.

The matter of respondent‘s alleged failure to return petitioners‘ P300,000.00 which was lent
to PORFA is immaterial as well. It may not be used as a ground to terminate respondent‘s
employment; under the Labor Code, such a contribution by petitioners to PORFA is illegal
and constitutes unfair labor practice.
Labor Cases Penned By Justice Del Castillo

ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit
any of the following unfair labor practice:

xxxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any
labor organization, including the giving of financial or other support to it or its organizers or
supporters;[42] (Emphasis supplied)

This could be an opportune time for the union to consider amending its Constitution in order
to provide for specific rules on the discipline of its members, not just its officers. After all, it is
given the right under the Labor Code, ―to prescribe its own rules with respect to the
acquisition or retention of membership.‖[43] But it may not insist on expelling respondent from
PORFA and assist in his dismissal from UPI without just cause, since it is an unfair labor
practice for a labor organization to ―cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or to terminate an employee on any
ground other than the usual terms and conditions under which membership or continuation
of membership is made available to other members.‖[44]

On account of the foregoing disquisition, the other issues raised by the parties need not be
discussed.

WHEREFORE, for the foregoing reasons, the Petition is hereby DENIED. The December 11,
2012 Decision and October 10, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
115402 are AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

26 JUL 2017 | JURISPRUDENCE | PONENTE | JUSTICE


MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND
EMPLOYMENT | TERMINATION BY EMPLOYER

Vigel Dave Japos Vs. First Agrarian Reform


Multi-Purpose Cooperative (FARMCOOP)
and/or Crislino Bagares; G.R. No. 208000;
July 26, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari (With Supplemental Allegations In Support Of The
Application To Litigate As An Indigent)[1] assails the July 29, 2011 Decision[2] of the Court of
Appeals (CA) in CA-G.R. SP No. 03319-MIN which reversed and set aside the August 27,
2009 and October 15, 2009 Resolutions[3] of the National Labor Relations Commission
(NLRC) in NLRC Case No. MAC-09-010462-08, and the CA‘s subsequent September 18,
2012 Resolution[4] denying herein petitioner‘s Motion for Reconsideration.[5]

Factual Antecedents

Respondent First Agrarian Reform Multi-Purpose Cooperative (FARMCOOP) is a registered


domestic cooperative doing business in Kisolon, Sumilao, Bukidnon as a banana contract
grower for DOLE Philippines, Inc. Respondent Crislino Bagares is FARMCOOP‘s
chairman/executive officer.

Petitioner Virgel Dave Japos was employed by FARMCOOP in 2001 as gardener. Under
FARMCOOP‘s Personnel Policies and Procedures,[6] it is provided that:

11. Absences

In order not to disrupt the operations due to absences, prior authorization or permission from the
immediate superior must be secured. A Personnel Leave Authority (PLA) form must be properly
filled up/[sic]approved to be submitted to the Personnel Section. The immediate superior shall have
the discretion to allow or [disapprove] leave applications depending on the work/activity schedules at
the particular time. However, leave of absence for any personal reason may be granted up to a
maximum of 20 days only for every year, subject to our disciplinary action policies.

xxxx

14. Attendance and Punctuality


Labor Cases Penned By Justice Del Castillo

The Cooperative expects all its members and non-members to be in their work place regularly and at
the time designated in the schedule.

Note: AWOL[7] RULE

An employee/worker is subject to disciplinary action if he/she incures [sic] the following


COMMULATIVE [sic] ABSENCES:

xxx

1st Offense -Written Warning

2nd Offense – 1 to 7 days suspension (Notice shall be prepared by Personnel)

3rd Offense – 8 to 15 days suspension (Notice shall be prepared by Personnel)

4th Offense – DISMISSAL

xxxx

1. ATTENDANCE

1. UNAUTHORIZED LEAVE OF ABSENCE

An employee who wants to be absent from work must seek previous approval from his/her supervisor
by applying for leave using the prescribed [form] for application for leave.

An employee/worker is subject to discharge if he/she incurs six (6) or more absences without
permission within one employment year.

FIRST INFRACTION – suspension 1 to 7 days


SECOND INFRACTION- suspension 8 to 15 days
THIRD INFRACTION – dismissal

Note: AWOP[8] RULE

An employee is subject to disciplinary action if he/she incurs the following CONSECUTIVE


ABSENCES:

xxx

First three (3) days – Written Warning

4th day – 1 to 7 days suspension (Notice shall be prepared by Personnel)


Labor Cases Penned By Justice Del Castillo

5th day – 8 to 15 days suspension (Notice shall be prepared by Personnel)

6th day – DISMISSAL[9]

During his stint with FARMCOOP, petitioner incurred the following absences:[10]

1. May 2-15, 2003 – which is covered by a Medical Certificate dated May 16, 2003;

2. December 18-27, 2003 – for which no doctor‘s certificate was submitted;

3. January 26, 2005 – absence without permission, for which petitioner was issued a
Written Warning dated January 28, 2005;

4. February 28, 2005 – absence without permission, for which petitioner was issued a
2nd Written Warning dated March 2, 2005;

5. May 24, 2005- absence without permission, for which petitioner was issued a Last
Warning dated June 9, 2005; and

6. June 22-28, 2005 – absence without permission, but which is supposedly covered
by a Medical Certificate[11]issued on July 7, 2005 by a certain Dr. Carolyn R. Cruz
(Dr. Cruz), Medical Officer IV of the Philhealth Center, certifying that petitioner was
diagnosed and given treatment for respiratory tract infection, although the
document did not indicate the period during which petitioner was ill, diagnosed, or
had undergone treatment.

With regard to his June 22-28, 2005 absences, petitioner received on June 28, 2005 an
inter-office memorandum[12]giving him until July 4, 2005 to explain the same in writing. On
June 30, 2005, he personally submitted his signed written explanation[13] of even date, which
states, in part:

SIR, MADAM,

SORRY, I WAS NOT ABLE TO REPORT ON JUNE 22, 2005 UNTIL NOW BECAUSE I‘M
SUFFERING ENFLUENZA [sic]. I‘M SORRY IF I DIDN‘T REPORT TO THE OFFICE FOR
FILLING [sic] LEAVE.

HOPING FOR YOUR KIND CONSIDERATION OF THIS MATTER.[14]

On July 5, 2005, petitioner reported back to work, but he was not admitted by FARMCOOP
as he did not present a medical certificate. It was only on July 7, 2005 that petitioner was
able to secure Dr. Cruz‘s Medical Certificate and submit the same to his employer. Also, on
July 5, 2005, FARMCOOP issued a Notice of Termination[15] informing petitioner that effective
July 6, 2005, his employment would be terminated.

On July 8, 2005, petitioner submitted a Personnel Leave Authority Application Form[16] of


even date, which was not acted upon by FARMCOOP as petitioner was already considered
dismissed as of July 6, 2005. In said application, petitioner sought approval of his
leave/absence from June 22 to July 7, 2005.
Labor Cases Penned By Justice Del Castillo

Ruling of the Labor Arbiter

On February 6, 2008, petitioner filed a complaint against respondents before the Labor
Arbiter for illegal dismissal, separation pay, underpayment of salaries, and other monetary
claims, which was docketed as NLRC Case No. RAB 10-02-00116-2008. He claimed that his
dismissal was effected without due process and, thus, illegal.

On July 21, 2008, the Labor Arbiter issued a Decision[17] finding that petitioner was legally
terminated for the unauthorized June 22-28, 2005 absences. He ruled that petitioner was
dismissed for cause; that petitioner‘s past infractions, his unauthorized January 26, February
28, and May 24, 2005 absences for which written warnings were issued against him, were
justifiably considered by FARMCOOP in arriving at the decision to dismiss petitioner; that
procedural due process was observed by respondents; and that petitioner failed to prove
that he is entitled to monetary claims, except for wage differential. Thus, the Labor Arbiter
ruled:

WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the respondent FCI-
FARM Coop., Inc. [sic] to pay the complainant in the sum of P8,739.00 representing wage differential
plus 10% of the total award in the sum of P873.90 representing attorney‘s fees.

SO ORDERED.[18]

Ruling of the National Labor Relations Commission Petitioner appealed before the
NLRC which overturned the Labor Arbiter. In its August 27, 2009 Resolution in NLRC Case
No. MAC-09- 010462-08, it ruled as follows:

The complainant being able to present a Personnel Leave Authority and a Medical Certificate for his
absences on June 22 to July 5, 2005, his termination from employment cannot be said to be justified.
While the Labor Arbiter is correct in citing and we quote:

‗Generally, absences, once authorized or with prior approval of the employer, irrespective of length
thereof, may not be invoked as ground for termination of employment. Consequently, dismissal of an
employee due to his prolonged absence with leave by reason of illness duly established by the
presentation of a medical certificate, is not justified x x x. however [sic], unauthorized absences or
those incurred without official leave, constitute gross and habitual neglect in the performance of work
x x x.‘

We cannot sustain his conclusion that ‗complainant was dismissed for a valid cause and after
observance of due process.‘ The Labor Arbiter should have followed the doctrine laid down in the
case of Oriental Mindoro Electric Cooperative, Inc. v. NLRC and not that of Cando v.
NLRC considering that a Personnel Leave Authority and a Medical Certificate was [sic] submitted by
the complainant. The prolonged absence of complainant cannot be construed as abandonment of work
when said absences was [sic] due to a justifiable reason.

The fact that, in complainant‘s July 7, 2005 medical certificate, he was diagnosed to have ―acute
respiratory tract infection‖ while in his letter of explanation dated June 30, 2005, complainant
mentioned ―influenza‖ should not militate against him. Complainant is not a medical practitioner as to
be in a position to know how to diagnose his illness. The date of medical certificate, July 7, 2005, is
likewise of no serious concern since it merely refers to the date when said medical certificate was
executed and not to the date complainant was ill.
Labor Cases Penned By Justice Del Castillo

In fine, we find the complainant‘s dismissal illegal.

WHEREFORE, premises considered, the appealed Decision is hereby REVERSED and VACATED,
except as regards the award of wage differentials, and a new one is entered declaring the dismissal of
complainant as ILLEGAL. Consequently, respondent is hereby ordered to forthwith reinstate
complainant to his former or equivalent position without loss of seniority rights and other privileges
and to pay his full backwages, inclusive of allowances and to his other benefits or its [sic] monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.

The respondent is likewise ordered to pay complainant‘s attorney‘s fees equivalent to ten (10%)
percent of the total awards herein granted.

The Regional Arbitration Branch is hereby directed to cause the computation of the awards granted in
this Resolution.

The award of wage differentials granted in the appealed decision stays.

SO ORDERED.[19] (Citations omitted)

Respondents moved to reconsider,[20] but the NLRC stood its ground.

Ruling of the Court of Appeals

In a Petition for Certiorari[21] filed with the CA and docketed as CAG.R. SP No. 03319-MIN,
respondents sought to reverse the above dispositions of the NLRC and reinstate the Labor
Arbiter‘s July 21, 2008 Decision, arguing that the NLRC committed grave abuse of discretion
ruling that petitioner was illegally dismissed and was entitled to his money claims; that the
NLRC wrongly appreciated the evidence and the facts; that the medical certificate submitted
by petitioner, which stated that petitioner was diagnosed and treated for respiratory tract
infection, could not be given credence because it conflicted with petitioner‘s own claim that
he was sick with influenza; that petitioner‘s supposed illness was an obvious fabrication to
cover up for his unauthorized absences; that the medical certificate was of doubtful veracity;
and that overall, petitioner‘s case was not covered by substantial evidence.

Petitioner submitted his Comment,[22] wherein he argued that the NLRC committed no error;
that it would be absurd under FARMCOOP‘s rules and policies to require an employee to
submit a Personnel Leave Authority prior to contracting illness when it could not be known or
planned precisely when he might get sick; that his past infractions could not be used to
justify the penalty of dismissal since he was penalized therefor with mere warnings, thus, the
penalty for the latest infraction should have been mere suspension only and not dismissal;
and that the penalty of dismissal was not commensurate to his infraction, which did not
involve moral turpitude nor gross misconduct.

On July 29, 2011, the CA issued the assailed Decision containing the following
pronouncement:

We find the dismissal of private respondent Japos valid.


Labor Cases Penned By Justice Del Castillo

For an employee‘s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the
employee must be afforded due process.

In the case at bench, records indubitably show that Japos incurred several absences without authority
or permission from his immediate supervisor even before he was terminated from service in violation
of FARMCoop‘s policy. Records likewise show that FARMCoop was quite lenient and considerate to
Japos as he was not penalized for his previous unauthorized absences despite its policy providing for
the suspension and dismissal of its employee in case of infraction thereto. In fact, before he was
terminated and despite his unauthorized absences he was only served with written warnings instead of
immediate suspension. FARMCoop‘s policy further provides that if an employee incurs six (6) or
more absences without permission within one (1) employment year, the employee could be validly
dismissed from employment. In the year 2005, and prior to his dismissal, he already incurred three (3)
unauthorized absences where he was served with three (3) written warnings with a warning that
should he incur further unauthorized absences, the same would be dealt with seriously. Nonetheless,
despite said warning, he was again absent for more than six (6) consecutive days from June 22, 2005
until he reported back to work on July 5, 2005 allegedly for being sick with influenza without any
medical certificate to substantiate the same. It was only on July 7, 2005 when he submitted a medical
certificate dated on even date certifying that he was examined and found to have acute respiratory
tract infection.

It should be emphasized however, that the said medical certificate did not indicate the period within
which he was examined by the physician and the period he was to rest due to his illness. It fails to
refer to the specific period of his absences. It should likewise be emphasized that in the absence of
evidence indicating that he was indeed sick before the date stated in the medical certificate, his
alleged sickness/illness ought not be considered as an excuse for his excessive absences without leave.
In the case of Filflex Industrial & Manufacturing Corp. vs. NLRC, the Supreme Court ruled that if the
medical certificate fails to refer to the specific period of the employee‘s absence, then such absences
are not supported by competent proof and hence, unjustified.

Corollarily, under Article 282(b) of the Labor Code, gross and habitual neglect of duty by the
employee of his duties is a just cause for the termination of the latter‘s employment. Settled is the rule
that an employee‘s habitual absenteeism without leave, which violated company rules and regulation,
is sufficient to justify termination from the service. In the case of R.B. Michael Press vs. Galit, it was
ruled that habitual tardiness and/or absenteeism is a form of neglect of duty as the same exhibit the
employee‘s deportment towards work and is therefore inimical to the general productivity and
business of the employer. This is especially true when the tardiness and/or absenteeism occurred
frequently and repeatedly within an extensive period of time. In the instant case, Japos failed to refute
and controvert the fact of his habitual absenteeism. Instead, he admitted his absences though he tried
to justify the same by belatedly submitting a medical certificate. Unfortunately, said medical
certificate did not help his case.

Moreover, it should be noted that Japos‘ previous infractions, past and present absences considered,
can be used collectively by petitioner as a ground for his dismissal. As held in a case, ‗[P]revious
infractions may be used as justification for an employee‘s dismissal from work in connection with a
subsequent similar offense.‘

Furthermore, in the case of Valiao vs. Court of Appeals, the Supreme Court ratiocinated that:

xxxx

x x x Petitioner‘s repeated acts of absences without leave and his frequent tardiness reflect his
indifferent attitude to and lack of motivation in his work. More importantly, his repeated and habitual
Labor Cases Penned By Justice Del Castillo

infractions, committed despite several warnings, constitute gross misconduct unexpected from an
employee of petitioner‘s stature. This Court has held that habitual absenteeism without leave
constitute gross negligence and is sufficient to justify termination of an employee.‘

Thus, private respondent Japos was validly dismissed for a cause.

Anent the requirement of due process, we find that Japos was afforded the same. Law and
jurisprudence require an employer to furnish the employee two written notices before termination of
his employment may be ordered. The first notice must inform him of the particular acts or omissions
for which his dismissal is sought; the second, of the employer‘s decision to dismiss the employee after
he has been given the opportunity to be heard and defend himself.

In the case at bench, records show that the first notice requirement was complied with by FARMCoop
when prior to his termination, an interoffice memorandum was sent to him asking him to explain in
writing why he was absent. It should be noted however that this notice was sent to Japos after he was
already warned three (3) times in writing that a similar offense in the future would be dealt with
severely. On July 30, 2005 he submitted his written explanation but FARMCoop found it implausible
and without basis as he failed to substantiate his allegation that he was sick.

Corollarily, the second notice requirement was again complied with when FARMCoop sent another
notice to Japos informing him of his termination. Consequently, private respondent and his father sent
a letter to FARMCoop‘s BOD questioning private respondent‘s termination. In a letter dated August
8, 2005 the BOD explained to Japos why he was terminated. Hence, we hold that such notices sent to
Japos and the opportunity to thereafter assailed [sic] his termination before the FARMCoop‘s BOD
satisfy the due process requirement.

It should be stressed that the essence of due process lies simply in an opportunity to be heard, and not
that an actual hearing should always and indispensably be held. Even if no hearing or conference was
conducted, the requirement of due process had been met since private respondent was accorded a
chance to explain his side of the controversy.

Finally, notice and hearing in termination cases does [sic] not connote full adversarial proceedings as
elucidated in numerous cases decide [sic] by the Supreme Court. In a case, it was held that due
process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one‘s side or an opportunity to seek a reconsideration of the action or ruling
complained of. A formal or trial-type hearing is not at all times and in all instances essential, as the
due process requirements are satisfied where the parties are afforded fair and reasonable opportunity
to explain their side of the controversy at hand. What is frowned upon is the absolute lack of notice
and hearing.

Thus, in this case, private respondent Japos was given ample opportunity to be heard, and his
dismissal was based on valid grounds.

WHEREFORE, premises considered, the petition is GRANTED. The assailed Resolutions dated
August 27, 2009 and October 15, 2009 of the National Labor Relations Commission are hereby
REVERSED and SET ASIDE. The Decision dated July 21, 2008 of the Labor Arbiter is
REINSTATED.

SO ORDERED.[23] (Citations and emphases omitted)


Labor Cases Penned By Justice Del Castillo

Petitioner filed his Motion for Reconsideration, which was denied by the CA in its September
18, 2012 Resolution. Hence, the instant Petition.

In a July 15, 2013 Resolution,[24] this Court granted petitioner‘s application to litigate as an
indigent. And in June 15, 2015 Resolution,[25] the Court resolved to give due course to the
Petition.

Issues

Petitioner claims that:

FIRST

THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING AND SETTING ASIDE THE
RESOLUTIONS OF THE NATIONAL LABOR RELATIONS COMMISSION AS THE
DISMISSAL OF THE PETITIONER WAS ILLEGAL FOR FAILURE OF THE RESPONDENT TO
ESTABLISH JUST CAUSE.

SECOND

GRANTING, ARGUENDO, THAT THE PETITIONER WAS LIABLE IN SOME RESPECT, THE
COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING THE APPLICATION OF THE
PENALTY OF DISMISSAL AS A LESS GRAVE PENALTY WOULD HAVE BEEN MORE
APPROPRIATE UNDER THE CIRCUMSTANCES.[26]

Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and the NLRC dispositions be
reinstated instead, petitioner maintains in his Petition and Reply[27] that the CA should not
have disregarded Dr. Cruz‘s July 7, 2005 Medical Certificate; that the CA‘s reliance on Filfex
Industrial & Manufacturing Corporation v. National Labor Relations Commission[28] is
misplaced because the declaration therein, to the effect that if the medical certificate fails to
refer to the specific period of the employee‘s absence, then such absence is not supported
by competent proof, is mere obiter dicta, and thus not persuasive; that throughout the
proceedings, respondents did not dispute the fact that he was ill during the period covering
June 22-28, 2005; that there is no valid cause to fire him, as he was able to prove his illness
through the documentary evidence he submitted; and that even assuming that he was liable
for his absences, the dismissal was not the proper penalty, but rather suspension instead.

Respondent’s Arguments

In their joint Comment,[29] respondents maintain that the Petition raises factual issues which
are not the proper subject of a current remedy sought; that, as correctly held by the CA, the
medical certificate in issue is not credible evidence that may be considered to justify
petitioner‘s June 22-28, 2005 absences; and that petitioner‘s plea for a lesser penalty is
unavailing, considering that in the past, he was treated with considerable leniency, yet in
spite of this, he continues to flout the cooperative‘s policies and regulations.

Our Ruling
Labor Cases Penned By Justice Del Castillo

The Court denies the Petition.

First off, it must be noted that there is no issue relative to the observance of procedural due
process; while it has been raised during the proceedings below, it was not made an issue in
the present Petition. Petitioner merely questions the propriety of his dismissal on the ground
of excessive unauthorized absences; he argues that his June 22-28, 2005 absences are
excusable as they are justified by his illness, which in turn was duly proved by substantial
evidence. On the other hand, respondents contend that petitioner‘s illness is fabricated, as is
the documentary evidence presented to support it.

The evidence shows that prior to his June 22-28, 2005 absences, petitioner already incurred
several unauthorized absences for 2005, specifically on January 26, February 28, and May
24, 2005, for which written warnings were issued against him. While FARMCOOP opted not
to penalize petitioner with suspension for the February 28 and May 24 absences, as
mandated under the AWOL and AWOP Rules of FARMCOOP‘s Personnel Policies and
Procedures, this does not take away the fact that these prior absences are nonetheless
infractions – three in all, to be exact. This being the case, petitioner‘s June 22-28, 2005
absences become significant because if it is found to be unauthorized and thus inexcusable;
it would constitute a fourth infraction which merits the penalty of dismissal under the AWOL
Rule, as well as an infraction that merits dismissal under the AWOP Rule, for being an
unauthorized absence of at least six consecutive days.

The Court agrees with the CA‘s pronouncement that Dr. Cruz‘s July 7, 2005 Medical
Certificate does not constitute reliable proof of petitioner‘s claimed illness during the period
June 22-28, 2005. The said document states, as follows:

MEDICAL CERTIFICATE

TO WHOM IT MAY CONCERN:

THIS IS TO CERTIFY that I, the undersigned, personally saw and examined Virgilio Japos, 22 y/o, of LF,
Impasugong, Bukidnon and I found him to have acute respiratory tract infection. He was given medication.

THIS CERTIFICATION is issued this 7th day of July 2005 at Impasugong, Bukidnon.

(signed)
CAROLYN R. CRUZ, MD
Medical Officer IV[30]

The certificate does not indicate the period during which petitioner was taken ill. It does not
show when he consulted with and was diagnosed by Dr. Cruz. And it does not specify when
and how petitioner underwent treatment, and for how long. Without these relevant pieces of
information, it cannot be reliably concluded that indeed, petitioner was taken ill on June 22-
28, 2005. All that can be assumed from a reading of the document is that on July 7, 2005,
Dr. Cruz issued a certification that she treated petitioner for a respiratory tract infection. She
might have done so in 1995, or maybe even earlier, but not necessarily on June 22-28,
2005. The document is open to interpretation in every manner, in which case this Court
cannot be sufficiently convinced that petitioner became ill and was treated specifically on
June 22-28, 2005.
Labor Cases Penned By Justice Del Castillo

One may argue that in the interest of justice and in order to uphold the rights of labor, this
Court must simply accept the medical certificate as proof that indeed, petitioner became ill
and required rest and treatment during the questioned period. But this cannot be done
without lowering the standards required for the presentation of proof in courts of justice and
even in administrative bodies such as the labor tribunals. We cannot dignify the July 7, 2005
Medical Certificate simply because it is too broad and sweeping that it borders on
prevarication and forgery; it goes against the basic common sense, logic, experience, and
precision required and expected of every trained physician who, apart from saving human
lives on a daily basis, must issue such important document with full realization that they are
to be utilized in key proceedings. To put it more bluntly, evidence, to be believed, must be
credible in itself. ―We have no test of the truth of human testimony, except its conformity to
our knowledge, observation and experience. Whatever is repugnant to these belongs to the
miraculous and is outside judicial cognizance.‖[31]

With the finding that Dr. Cruz‘s certification is of doubtful veracity, petitioner‘s claim of illness
is left with no leg to stand on. Besides, the Court notes that while petitioner claims to have
been ill until June 28, 2005, still he reported for work only on July 5, 2005, thus making him
absent for several more days. Knowing, by his receipt on June 28, 2005 of an interoffice
memorandum giving him until July 4, 2005 to explain his absence since June 22, that he was
already on the verge of being fired from work for his unexplained and prolonged absence, he
could have made an effort to report back to work on June 29, 2005 if only to show good faith,
sincerity, and concern for his employer, if not contrition for not timely informing the latter of
his illness so that substitute workers may be obtained in his stead. But he did not. His
actions betray an utter lack of concern for his work which, needless to say, is fundamentally
inimical to his employer‘s interest.

The Court thus concludes that petitioner‘s June 22 to July 5, 2005 absences are
unauthorized and inexcusable. Consequently, under FARMCOOP policy, petitioner is
deemed to have committed a fourth infraction, which merits the penalty of dismissal under
the AWOL Rule, as well as an infraction that merits dismissal under the AWOP Rule, for
being an unauthorized absence of at least six consecutive days without prior notice.

Next, there is no truth to petitioner‘s claim that respondents did not dispute his claim of
illness. On the contrary, they precisely contend that such claim is a lie, and that the medical
certificate submitted to corroborate it was manufactured.

Finally, petitioner‘s contention that, if at all, he should be penalized only with suspension,
considering that he was not punished for his January 26, February 28, and May 24, 2005
unauthorized absences. Quite the contrary, he was penalized with written warnings for these
infractions. The fact that he was not suspended is of no moment; FARMCOOP management
merely exercised its prerogative to choose which penalty to impose upon him. Respondents‘
explanation that they took care not to impose severe penalties upon petitioner out of respect
for his father, who was a founding member of the cooperative, is well taken. Nonetheless, as
elsewhere stated herein, while FARMCOOP opted not to penalize petitioner with suspension
for his February 28 (second infraction) and May 24 (third infraction) absences as mandated
under the AWOL and AWOP Rules of FARMCOOP‘s Personnel Policies and Procedures,
these prior absences remain to be infractions that may be considered in treating his
unauthorized June 22 to July 5, 2005 absences as his fourth infraction.

WHEREFORE, the Petition is DENIED. The July 29, 2011 Decision and September 18, 2012
Resolution of the Court of Appeals in CA G.R. SP No. 03319-MIN are AFFIRMED in toto.
SO ORDERED.
Labor Cases Penned By Justice Del Castillo

25 APR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Dutch Movers, Inc., Cesar Lee and Yolanda


Lee Vs. Edilberto Lequin, et al.; G.R. No.
210032; April 25, 2017
DECISION

DEL CASTILLO, J.:

Before the Court is a Petition for Review on Certiorari assailing the July 1, 2013 Decision[3] of
the Court of Appeals in CA-G.R. SP No. 113774. The CA reversed and set aside the
October 29, 2009[4] and January 29, 2010[5]Resolutions of the National Labor Relations
Commission (NLRC), which in turn reversed and set aside the Order[6]dated September 4,
2009 of Labor Arbiter Lilia S. Savari (LA Savari).

Also challenged is the November 13, 2013 CA Resolution.[7] which denied the Motion for
Reconsideration on the assailed Decision.

Factual Antecedents

This case is an offshoot of the illegal dismissal Complaint[8] filed by Edilberto Lequin (Lequin),
Christopher Salvador, Reynaldo Singsing, and Raffy Mascardo (respondents) against Dutch
Movers, Inc. (DMI), and/or spouses Cesar Lee and Yolanda Lee (petitioners), its alleged
President/Owner, and Manager respectively.

In their Amended Complaint and Position Paper,[9] respondents stated that DMI, a domestic
corporation engaged in hauling liquefied petroleum gas, employed Lequin as truck driver and
the rest of respondents as helpers; on December 28, 2004, Cesar Lee, through the
Supervisor Nazario Furio, informed them that DMI would cease its hauling operation for no
reason; as such, they requested DMI to issue a formal notice regarding the matter but to no
avail. Later, upon respondents‘ request, the DOLE NCR[10] issued a certification[11] revealing
that DMI did not file any notice of business closure. Thus, respondents argued that they
were illegally dismissed as their termination was without cause and only on the pretext of
closure.

On October 28, 2005, LA Aliman D. Mangandog dismissed[12] the case for lack of cause of
action.

On November 23, 2007, the NLRC reversed and set aside the LA Decision. It ruled that
respondents were illegally dismissed because DMI simply placed them on standby, and no
longer provide them with work. The dispositive portion of the NLRC Decision[13] reads:
Labor Cases Penned By Justice Del Castillo

WHEREFORE, the Decision dated October 28, 2005 is hereby REVERSED and SET ASIDE and a
new judgment is hereby rendered ordering respondent Dutch Movers, Inc. to reinstate complainants to
their former positions without loss of seniority rights and other privileges. Respondent corporation is
also hereby ordered to pay complainants their full backwages from the time they were illegally
dismissed up to the date of their actual reinstatement and ten (10%) percent of the monetary award as
for attorney‘s fees.

SO ORDERED.[14]

The NLRC Decision became final and executory on December 30, 2007.[15] And, on February
14, 2008, the NLRC issued an Entry of Judgment[16] on the case.

Consequently, respondents filed a Motion for Writ of Execution.[17] Later, they submitted a
Reiterating Motion for Writ of Execution with Updated Computation of Full
Backwages.[18] Pending resolution of these motions, respondents filed a Manifestation and
Motion to Implead[19] stating that upon investigation, they discovered that DMI no longer
operates. They, nonetheless, insisted that petitioners – who managed and operated DMI,
and consistently represented to respondents that they were the owners of DMI – continue to
work at Toyota Alabang, which they (petitioners) also own and operate. They further averred
that the Articles of Incorporation (AOI) of DMI ironically did not include petitioners as its
directors or officers; and those named directors and officers were persons unknown to them.
They likewise claimed that per inquiry with the SEC[20] and the DOLE, they learned that DMI
did not tile any notice of business closure; and the creation and operation of DMI was
attended with fraud making it convenient for petitioners to evade their legal obligations to
them.

Given these developments, respondents prayed that petitioners, and the officers named in
DMI‘s AOI, which included Edgar N. Smith and Millicent C. Smith (spouses Smith), be
impleaded, and be held solidarity liable with DMI in paying the judgment awards.

In their Opposition to Motion to Implead,[21] spouses Smith alleged that as part of their
services as lawyers, they lent their names to petitioners to assist them in incorporating DMI.
Allegedly, after such undertaking, spouses Smith promptly transferred their supposed rights
in DMI in favor of petitioners.

Spouses Smith stressed that they never participated in the management and operations of
DMI, and they were not its stockholders, directors, officers or managers at the time
respondents were terminated. They further insisted that they were not afforded due process
as they were not impleaded from the inception of the illegal dismissal case; and hence, thy
cannot be held liable for the liabilities of DMI.

On April 1, 2009, LA Savari issued an Order[22] holding petitioners liable for the judgment
awards. LA Savari decreed that petitioners represented themselves to respondents as the
owners of DMI; and were the ones who managed the same. She further noted that
petitioners were afforded due process as they were impleaded from the beginning of this
case.

Later, respondents filed anew a Reiterating Motion for Writ of Execution and Approve[d)
Updated Computation of Full Backwages.[23]

On July 31, 2009, LA Savari issued a Writ of Execution, the pertinent portion of which reads:
Labor Cases Penned By Justice Del Castillo

NOW THEREFORE, you [Deputy Sheriff] are commanded to proceed to respondents DUTCH
MOVERS and/or CESAR LEE and YOLANDA LEE with address at c/o Toyota Alabang, Alabang
Zapote Road, Las Piñas City or wherever they may be found within the jurisdiction of the Republic of
the Philippines and collect from said respondents the amount of THREE MILLION EIGHT
HUNDRED EIGHTEEN THOUSAND ONE HUNDRED EIGHTY SIX PESOS & 66/100
(Php3,818,186.66) representing Complainants‘ awards plus 10%, Attorney‘s fees in the amount of
THREE HUNDRED EIGHTY ONE THOUSAND EIGHT HUNDRED EIGHTEEN PESOS &
66/100 (Php381,818.66) and execution fee in the amount of FORTY THOUSAND FIVE HUNDRED
PESOS (Php40,500.00) or a total of FOUR MILLION TWO HUNDRED FORTY THOUSAND
FIVE HUNDRED FIVE PESOS & 32/100 (Php4,240,505.32) x x x[24]

Petitioners moved[25] to quash the Writ of Execution contending that the April 1, 2009 LA
Order was void because the LA has no jurisdiction to modify the final and executory NLRC
Decision and the same cannot anymore be altered or modified since there was no finding of
bad faith against them.

Ruling of the Labor Arbiter

On September 4, 2009, LA Savari denied petitioners‘ Motion to Quash because it did not
contain any ground that must be set forth in such motion.

Thus, petitioners appealed to the NLRC.

Ruling of the National Labor Relations Commission

On October 29, 2009, the NLRC quashed the Writ of Execution insofar as it held petitioners
liable to pay the judgment awards. The decretal portion of the NLRC Resolution reads:

WHEREFORE, in view of the foregoing, the assailed Order dated September 4, 2009 denying
respondents‘ Motion to Quash Writ is hereby REVERSED and SET ASIDE. The Writ of Execution
dated July 13,[26] 2009 is hereby QUASHED insofar as it holds individual respondents Cesar Lee and
Yolanda Lee liable for the judgment award against the complainants.

Let the entire record of the case be forwarded to the Labor Arbiter of origin for appropriate
proceedings.

SO ORDERED.[27]

The NLRC ruled that the Writ of Execution should only pertain to DMI since petitioners were
not held liable to pay the awards under the final and executory NLRC Decision. It added that
petitioners could not be sued personally for the acts of DMI because the latter had a
separate and distinct personality from the persons comprising it; and, there was no showing
that petitioners were stockholders or officers of DMI; or even granting that they were, they
were not shown to have acted in bad faith against respondents.

On January 29, 2010, the NLRC denied respondents‘ Motion for Reconsideration.

Undaunted, respondents filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion against the NLRC in quashing the Writ of Execution insofar as it held petitioners
liable to pay the judgment awards.
Labor Cases Penned By Justice Del Castillo

Ruling of the Court of Appeals

On July 1, 2013, the CA reversed and set aside the NLRC Resolutions, and accordingly
affirmed the Writ of Execution impleading petitioners as party-respondents liable to answer
for the judgment awards.

The CA ratiocinated that as a rule, once a judgment becomes final and executory, it cannot
anymore be altered or modified; however, an exception to this rule is when there is a
supervening event, which renders the execution of judgment unjust or impossible. It added
that petitioners were afforded due process as they were impleaded from the beginning of the
case; and, respondents identified petitioners as the persons who hired them, and were the
ones behind DMI. It also noted that such participation of petitioners was confirmed by DIVII‘s
two incorporators who attested that they lent their names to petitioners to assist the latter in
incorporating DMI; and, after their undertaking, these individuals relinquished their purported
interests in DMI in favor of petitioners.

On November 13, 2013, the CA denied the Motion for Reconsideration on the assailed
Decision.

Thus, petitioners filed this Petition raising the following grounds:

THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN RULING


THAT RESPONDENTS SHOULD BE LIABLE FOR THE JUDGMENT AWARD TO
RESPONDENTS BASED ON THE FOLLOWING:

THE VALDERAMA VS. NLRC AND DAVID VS. CA ARE NOT APPLICABLE IN THE
INSTANT CASE.

II

THERE IS NO LEGAL BASIS TO PIERCE THE VEIL OF CORPORATE FICTION OF DUTCH


MOVERS, INC.[28]

Petitioners argue that the circumstances in Valderrama v. National Labor Relations


Commission[29] differ with those of the instant case. They explain that in Valderrama, the LA
therein granted a motion for clarification. In this case, however, the LA made petitioners
liable through a mere manifestation and motion to implead filed by respondents. They further
stated that in Valderrama, the body of the decision pointed out the liability of the individual
respondents therein while here, there was no mention in the November 23, 2007 NLRC
Decision regarding petitioners‘ liability. As such they posit that they cannot be held liable
under said NLRC Decision.

In addition, petitioners claim that there is no basis to pierce the veil of corporate fiction
because DMI had a separate and distinct personality from the officers comprising it. They
also insist that there was no showing that the termination of respondents was attended by
bad faith.
Labor Cases Penned By Justice Del Castillo

In fine, petitioners argue that despite the allegation that they operated and managed the
affairs of DMI, they cannot be held accountable for its liability in the absence of any showing
of bad faith on their part.

Respondents, on their end, counter that petitioners were identified as the ones who owned
and managed DMI and therefore, they should be held liable to pay the judgment awards.
They also stress that petitioners were consistently impleaded since the filing of the complaint
and thus, they were given the opportunity to be heard.

Issue

Whether petitioners are personally liable to pay the judgment awards in favor of
respondents

Our Ruling

The Court denies the Petition.

To begin with, the Court is not a trier of facts and only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. This rule, nevertheless, allows certain
exceptions, which include such instance where the factual findings of the CA are contrary to
those of the lower court or tribunal. Considering the divergent factual findings of the CA and
the NLRC in this case, the Court deems it necessary to examine, review and evaluate anew
the evidence on record.[30]

Moreover, after a thorough review of the records, the Court finds that contrary to petitioners‘
claim, Valderrama v. National Labor Relations Commission,[31] and David v. Court of
Appeals[32] are applicable here. In said cases, the Court held that the principle of immutability
of judgment, or the rule that once a judgment has become final and executory, the same can
no longer be altered or modified and the court‘s duty is only to order its execution, is not
absolute. One of its exceptions is when there is a supervening event occurring after the
judgment becomes final and executory, which renders the decision unenforceable.[33]

To note, a supervening event refers to facts that transpired after a judgment has become
final and executory, or to new situation that developed after the same attained finality.
Supervening events include matters that the parties were unaware of before or during trial as
they were not yet existing during that time.[34]

In Valderrama, the supervening event was the closure of Commodex, the company therein,
after the decision became final and executory, and without any showing that it filed any
proceeding for bankruptcy. The Court held that therein petitioner, the owner of Commodex,
was personally liable for the judgment awards because she controlled the company.

Similarly, supervening events transpired in this case after the NLRC Decision became final
and executory, which rendered its execution impossible and unjust. Like in Valderrama,
during the execution stage, DMI ceased its operation, and the same did not file any formal
notice regarding it. Added to this, in their Opposition to the Motion to Implead, spouses
Labor Cases Penned By Justice Del Castillo

Smith revealed that they only lent their names to petitioners, and they were included as
incorporators just to assist the latter in forming DMI; after such undertaking, spouses Smith
immediately transferred their rights in DMI to petitioners, which proved that petitioners were
the ones in control of DMI, and used the same in furthering their business interests.

In considering the foregoing events, the Court is not unmindful of the basic tenet that a
corporation has a separate and distinct personality from its stockholders, and from other
corporations it may be connected with. However, such personality may be disregarded, or
the veil of corporate fiction may be pierced attaching personal liability against responsible
person if the corporation‘s personality ―is used to defeat public convenience, justify wrong,
protect fraud or defend crime, or is used as a device to defeat the labor laws x x x.‖ [35] By
responsible person, we refer to an individual or entity responsible for, and who acted in bad
faith in committing illegal dismissal or in violation of the Labor Code; or one who actively
participated in the management of the corporation. Also, piercing the veil of corporate fiction
is allowed where a corporation is a mere alter ego or a conduit of a person, or another
corporation.[36]

Here, the veil of corporate fiction must be pierced and accordingly, petitioners should be held
personally liable for judgment awards because the peculiarity of the situation shows that they
controlled DMI; they actively participated in its operation such that DMI existed not as a
separate entity but only as business conduit of petitioners. As will be shown be shown
below, petitioners controlled DMI by making it appear to have no mind of its own, [37] and used
DMI as shield in evading legal liabilities, including payment of the judgment awards in favor
of respondents.[38]

First, petitioners and DMI jointly filed their Position Paper,[39] Reply,[40] and Rejoinder[41] in
contesting respondents‘ illegal dismissal. Perplexingly, petitioners argued that they were not
part of DMI and were not privy to its dealings;[42]yet, petitioners, along with DMI, collectively
raised arguments on the illegal dismissal case against them.

Stated differently, petitioners denied having any participation in the management and
operation of DMI; however, they were aware of and disclosed the circumstances surrounding
respondents‘ employment, and propounded arguments refuting that respondents were
illegally dismissed.

To note, petitioners revealed the annual compensation of respondents and their length of
service; they also set up the defense that respondents were merely project employees, and
were not terminated but that DMI‘s contract with its client was discontinued resulting in the
absence of hauling projects for respondents.

If only to prove that they were not part of DMI, petitioners could have revealed who operated
it, and from whom they derived the information embodied in their pleadings. Such failure to
reveal thus gives the Court reasons to give credence to respondents‘ firm stand that
petitioners are no strangers to DMI, and that they were the ones who managed and operated
it.

Second, the declarations made by spouses Smith further bolster that petitioners and no
other controlled DMI, to wit:

Complainants [herein respondents] in their own motion admit that they never saw [spouses Smith] at
the office of [DMI], and do not know them at all. This is because [spouses Smith‘s] services as
Labor Cases Penned By Justice Del Castillo

lawyers had long been dispensed by the Spouses Lee and had no hand whatsoever in the management
of the company. The Smiths, as counsel of the spouses at [that] time, [lent] their names as
incorporators to facilitate the [incorporation of DMI.] Respondent Edgard Smith was then counsel of
Toyota Alabang and acts as its corporate secretary and as favor to his former client and employer,
Respondent Cesar Lee, agreed to help incorporate [DMI] and even asked his wife Respondent,
Millicent Smith, to act as incorporator also [to] complete the required 5 man incorporators. After the
incorporation they assigned and transferred all their purported participation in the company to the
Respondents Spouses Cesar and Yolanda Lee, who acted as managers and are the real owners of the
corporation. Even at the time complainant[s were] fired from [their] employment respondents Spouses
Smith had already given up their shares. The failure to an1end the Articles of Incorporation of [DMI],
and to apply for closure is the fault of the new board, if any was constituted subsequently, and not of
Respondents Smiths. Whatever fraud committed was not committed by the Respondents Smiths,
hence they could not be made solidarily liable with Respondent Corporation or with the spouses Lee.
If bad faith or fraud did attend the termination of complainant[s], respondents Smiths would know
nothing of it because they had ceased any connection with [DMI] even prior to such time. And they
had at the inception of the corporation never exercised management prerogatives in the selection,
hiring, and firing of employees of [DMI].[43]

Spouses Smith categorically identified petitioners as the owners and managers of DMI. In
their Motion to Quash, however, petitioners neither denied the allegation of spouses Smith
nor adduced evidence to establish that they were not the owners and managers of DMI.
They simply insisted that they could not be held personally liable because of the immutability
of the final and executory NLRC Decision, and of the separate and distinct personality of
DMI.

Furthermore, the assailed CA Decision heavily relied on the declarations of spouses Smith
but still petitioners did not address the matters raised by spouses Smith in the instant
Petition with the Court.

Indeed, despite sufficient opportunity to clarify matters and/or to refute them, petitioners
simply brushed aside the allegations of spouses Smith that petitioners owned and managed
DMI. Petitioners just maintain that they did not act in bad faith; that the NLRC Decision is
final and executory; and that DMI has a distinct and separate personality. Hence, for failure
to address, clarify, or deny the declarations of spouses Smith, the Court finds respondents‘
position that petitioners owned, and operated DMI with merit.

Third, piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution, provided
that such persons deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or resorted to fraud, bad faith, or malice in evading their obligation. [44]

In this case, petitioners were impleaded from the inception of this case. They had ample
opportunity to debunk the claim that they illegally dismissed respondents, and that they
should be held personally liable for having controlled DMI and actively participated in its
management, and for having used it to evade legal obligations to respondents.

While it is true that one‘s control does not by itself result in the disregard of corporate fiction;
however, considering the irregularity in the incorporation of DMI, then there is sufficient basis
to hold that such corporation was used for an illegal purpose, including evasion of legal
duties to its employees, and as such, the piercing of the corporate veil is warranted. The act
of hiding behind the cloak of corporate fiction will not be allowed in such situation where it is
Labor Cases Penned By Justice Del Castillo

used to evade one‘s obligations, which ―equitable piercing doctrine was formulated to
address and prevent.‖[45]

Clearly, petitioners should be held liable for the judgment awards as they resorted to such
scheme to countermand labor laws by causing the incorporation of DMI but without any
indication that they were part thereof. While such device to defeat labor laws may be
deemed ingenious and imaginative, the Court will not hesitate to draw the line, and protect
the right of workers to security of tenure, including ensuring that they will receive the benefits
they deserve when they fall victims of illegal dismissal.[46]

Finally, it appearing that respondents‘ reinstatement is no longer feasible by reason of the


closure of DMI, then separation pay should be awarded to respondents instead.[47]

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

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

17 APR 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Herma Shipyard, Inc. and Mr. Herminio


Esguerra Vs. Danilo Oliveros, et al.; G.R. No.
208936; April 17, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the Decision[2] dated May 30, 2013 of the Court
of Appeals (CA) in CA-G.R. SP No. 118068 that reversed the Decisions of the National
Labor Relations Commission (NLRC) and the Labor Arbiter and declared that Danilo
Oliveros, Jojit Besa, Arnel Sabal, Camilo Oliveros, Robert Nario, Frederick Catig, Ricardo
Ontalan, Ruben Delgado, Segundo Labosta, Exequiel Oliveria, Oscar Tirol and Romeo
Trinidad (respondents) are regular employees of petitioner Herma Shipyard, Inc. (Herma
Shipyard).

Factual Antecedents

Herma Shipyard a domestic corporation engaged in the business of shipbuilding and repair.
The respondents were its employees occupying various positions such as welder, leadman,
pipe fitter, laborer, helper, etc.

On June 17, 2009, the respondents filed before the Regional Arbitration Branch III, San
Fernando City, Pampanga a Complaint[3] for illegal dismissal, regularization, and non-
payment of service incentive leave pay with prayer for the payment of full backwages and
attorney‘s fees against petitioners. Respondents alleged that they are Herma Shipyard‘s
regular employees who have been continuously performing tasks usually necessary and
desirable in its business. On various dates, however, petitioners dismissed them from
employment.

Respondents further alleged that as a condition to their continuous and uninterrupted


employment, petitioners made them sign employment contracts for a fixed period ranging
from one to four months to make it appear that they were project-based employees. Per
respondents, petitioners resorted to this scheme to defeat their right to security of tenure, but
in truth there was never a time when they ceased working for Herma Shipyard due to
expiration of project-based employment contracts. In fact, if they were indeed project
employees, petitioners should have reported to the Department of Labor and Employment
(DOLE) the completion of such project. But petitioners have never submitted such report to
the DOLE.

For their defense, petitioners argued that respondents were its project-based employees in
its shipbuilding projects and that the specific project for which they were hired had already
been completed. In support thereof, Herma Shipyard presented contracts of employment,
Labor Cases Penned By Justice Del Castillo

some of which are written in the vernacular and denominated as Kasunduang Paglilingkod
(Pang-Proyektong Kawani).[4]

Ruling of the Labor Arbiter

On May 24, 2010the Labor Arbiter rendered a Decision[5] dismissing respondents‘ Complaint.
The Labor Arbiter held that respondents were project based employees whose services
were validly terminated upon the completion of the specific work for which they were
individually hired. The dispositive portion of the Labor Arbiter‘s Decision reads:

WHEREFORE, premises considered, let the instant complaint be, as it is hereby ORDERED
dismissed for lack of merit.

All the money claims as well as moral and exemplary damages and attorney‘s fees raised by the
complainants in their complaint are likewise DENIED for lack of merit.

SO ORDERED.[6]

Respondents thus appealed to the NLRC.

Ruling of the National Labor Relations Commission

On September 7, 2010, the NLRC rendered its Decision[7] denying respondents‘ appeal and
affirming in toto the Decision of the Labor Arbiter. It sustained the finding of the Labor Arbiter
that based on their employment contracts, respondents were project-based employees hired
to do a particular project for a specific period of time.

Respondents moved tor reconsideration but the NLRC denied their Motion for
Reconsideration[8] in its November 11, 2010 Resolution.[9]

Unfazed, respondents filed a Petition for Certiorari[10] before the CA imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the labor tribunals in
finding that they were project-based employees and in not awarding them service incentive
leaves. Respondents contended that the labor tribunals grievously erred in relying on the
project employment contracts which were tor a uniform duration of one month. They argued
that if it were true that they were project-based employees, the duration of their employment
should have coincided with the completion of the project for which they were hired and not
for a uniform period of one month.

Ruling of the Court of Appeals

On May 30, 2013, the CA rendered its assailed Decision[11] granting respondents‘ Petition
for Certiorari and setting aside the labor tribunals‘ Decisions. It held that even if the contracts
of employment indicated that respondents were hired as project-based workers, their
employment status have become regular since: they were performing tasks that are
necessary, desirable, and vital to the operation of petitioners‘ business; petitioners failed to
present proof that respondents were hired for a specit1c period or that their employment was
coterminous with a specific project; it is not clear from the contracts of employment
presented that the completion or termination of the project or undertaking was already
determined at the time petitioners engaged the services of respondents; respondents were
Labor Cases Penned By Justice Del Castillo

made to work not only in one project but also in different projects and were assigned to
different departments of Herma Shipyard; respondents were repeatedly and successively
rehired as employees of Herma Shipyard; except with regard to respondents‘ last
employment, petitioners failed to present proof that they reported to the nearest public
employment office the termination of respondents‘ previous employment or every time a
project or a phase thereof had been completed; and, petitioners failed to file as many reports
of termination as there were shipbuilding and repair projects actually completed. The CA
concluded that the project employment contracts were indeed used as a device to
circumvent respondents‘ right to security of tenure. The fallo of the assailed CA Decision
reads:

WHEREFORE, the instant petition for certiorari is GRANTED. The assailed decision and resolution
of the respondent National Labor Relations Commission are REVERSED and SET ASIDE, and a new
judgment is hereby rendered holding petitioners as regular employees and declaring their dismissal as
illegal. Accordingly, private respondents are hereby ordered to REINSTATE petitioners to their
former employment. Should reinstatement be not possible due to strained relations, private
respondents are ordered to pay petitioners their separation pay equivalent to one-month pay or one-
half-month pay for very year of service, whichever is higher, with full backwages computed from the
time of dissmissal up to the finality of the decision. For this purpose, the case is hereby REMANDED
to the respondent NLRC for the computation of the amounts due petitioners.

SO ORDERED.[12]

Petitioners moved for reconsideration. In a Resolution[13] dated August 30, 2013, however,
the CA denied their Motion for Reconsideration.[14]

Hence, this Petition for Review on Certiorari assailing the May 30, 20l3 Decision and August
30, 2013 Resolution of the CA, Petitioners anchor their Petition on the following arguments:

PREVAILING JURISPRUDENCE DICTATES THAT RESPONDENTS ARE NOT REGULAR


EMPLOYEES OF PETITIONER [HERMA SHIPYARD]. THEY ARE PROJECT EMPLOYEES
WHOSE TERMS OF EMPLOYMENT WERE VALIDLY TERMINATED UPON THE
EXPIRATION OF THE TERM OF THEIR PROJECT EMPLOYMENT CONTACTS.

THE ASSAILED DECISION AND ASSAILED RESOLUTION RULED ON ISSUES WHICH


WERE NEITHER DISPUTED IN RESPONDENTS‘ PETITION FOR CERTIORARI NOR RAISED
IN THE DECISION OF THE HONORABLE [NLRC].

AS BORNE BY THE PROJECT EMPLOYMENT CONTRACTS OF RESPONDENTS AND


TERMINATION REPORTS SUBMITTED TO THE DEPARTMENT OF LABOR AND
EMPLOYMENT, RESPONDENTS ARE UNDOUBTEDLY PROJECT EMPLOYEES OF
PETITIONER [HERMA SHIPYARD].
Labor Cases Penned By Justice Del Castillo

THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT RESPONDENTS‘


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

BY VIRTUE OF THE DOCTRINE OF SEPARATE JURIDICAL PERSONALITY, PETITIONER


ESGUERRA SHOULD NOT BE HELD LIABLE IN THE INSTANT LABOR COMPLAINT

THE HONORABLE COURT OF APPEALS FAILED TO GIVE WEIGHT AND RESPECT TO


THE FACTUAL FINDINGS OF THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION AND THE HONORABLE LABOR ARBITER.

THE HONORABLE COURT OF APPEALS DID NOT ACQUIRE JURISDICTION OVER THE
INSTANT CASE AS THE HONORABLE NLRC‘S DECISION AND RESOLUTION ALREADY
BECAME EXECUTORY CONSIDERING THAT RESPONDENTS‘ PETITION FOR
CERTIORARI WAS FILED BEYOND THE REGLEMENTARY PERIOD PRESCRIBED BY THE
RULES.[15]

Petitioners contend, among others, that necessity and desirability of respondents‘ services in
Herma Shipyard‘s business are not the only factors to be considered in determining the
nature of respondents‘ employment. They assert that the CA should have also taken into
consideration the contracts of employment signed by the respondents apprising them of the
fact that their services were engaged for a particular project only and that their employment
was coterminous therewith. The authenticity and genuineness of said contracts, according to
petitioners, were never disputed by the respondents during the pendency of the case before
the labor tribunals. It was only in their Comment[16] to the instant Petition that respondents
disavow said contracts of employment for allegedly being fictitious.

Petitioners aver that the CA also erred in ruling that the duration of respondents‘
employment depends upon a progress accomplishment as paragraph 10 of the employment
contract readily shows that the same is dependent upon the completion of the project
indicated therein.

With regard to the repeated rehiring of the respondents, petitioners insist that the same will
not result in respondents becoming regular employees because length of service does not
determine employment status. What is controlling of project-based employment is whether
the employment has been fixed for a specific project or undertaking, its completion having
been determined and made known to the employees at the time of their engagement. Thus,
regardless of the number of projects for which respondents had been repeatedly hired, they
remained project-based employees because their engagements were limited to a particular
Labor Cases Penned By Justice Del Castillo

project only. Petitioners emphasize that Herma Shipyard merely accepts contracts for
shipbuilding and for repair of vessels. It is not engaged in the continuous production of
vessels for sale which would necessitate the hiring of a large number of permanent
employees.

Respondents, for their part, deny having worked for a specific project or undertaking. They
insist that the employment contracts presented by petitioners purportedly showing that they
were project-based employees are fictitious designed to circumvent the law. In any case,
said contracts are not valid project employment contracts because the completion of the
project had not been determined therein or at the time of their engagement. In fact, the
duration of their contracts with Herma Shipyard may be extended as needed for the
completion of various projects and not for a definite duration. And even assuming that they
were previously hired as project employees, their employment ceased to be coterminous
with a specific project and became a regular after they were repeatedly rehired by the
petitioners for various projects.

Our Ruling

The Petition is impressed with merit.

At the outset, the issue of whether petitioners were project-based employees is a question of
fact that, generally, cannot be passed and ruled upon by this Court in a petition for review
on certiorari filed under Rule 45 of the Rules of Court. It is settled that the jurisdiction of this
Court in a Rule 45 petition is generally limited to reviewing errors of law. Nevertheless, in
view of the opposing views of the tribunals below, this Court shall take cognizance of and
resolve the factual issues involved in this case.[17]

Who are project-based employees?

A project employee under Article 280 (now Article 294)[18] of the Labor Code, as amended, is
one whose employment has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the engagement of the employee.
Thus:

Art, 280. Regular and Casual Employment. – The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed
to be regular where the employee has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.

x x x x (Emphasis supplied)

The services of project-based employees are co-terminous with the project and may be
terminated upon the end or completion of the project or a phase thereof for which they were
hired.[19] The principal test in determining whether particular employees were engaged as
project-based employees, as distinguished from regular employees, is whether they were
assigned to carry out a specific project or undertaking, the duration and scope of which was
specified at, and made known to them, at the time of their engagement.[20] It is crucial that the
employees were informed of their status as project employees at the time of hiring and that
Labor Cases Penned By Justice Del Castillo

the period of their employment must be knowingly and voluntarily agreed upon by the
parties, without any force, duress, or improper pressure being brought to bear upon the
employees or any other circumstances vitiating their consent.[21]

Respondents knowingly and voluntarily entered into and signed the project-based
employment contracts.

The records of this case reveal that for each and every project respondents were hired, they
were adequately informed of their employment status as project-based employees at least at
the time they signed their employment contract They were fully apprised of the nature and
scope of their work whenever they affixed their signature to their employment contract. Their
contracts of employment (mostly written in the vernacular) provide in no uncertain terms that
they were hired as project based employees whose services are coterminous with the
completion of the specific task indicated therein. All their contracts of employment state
clearly the date of the commencement of the specific task and the expected completion date
thereof. They also contain a provision expressly stating that respondents‘ employment shall
end upon the arrival of the target completion date or upon the completion of such project.
Except for the underlined portions, the contracts of employment read:

KASUNDUAN NG PAGLILINGKOD
(PANG-PROYEKTONG KAWANI)

ALAMIN NG LAHAT NA:

HERMA SHIPYARD, INC., isang Korporasyon na itinatag at nananatili sa ilalim ng batas ng


Pilipinas at may tanggapan sa Herma Industrial Complex, Mariveles, Bataan na kinakatawan
[ni] EDUARDO S. CARANCIO ay makikilala bilang KUMPANYA;

OLIVEROS, CAMILO IBAÑEZ, sapat ang gulang, Pilipino, may asawa/walang asawa na tubong
_______, nainirahan sa BASECO Country Aqwawan, Mariveles, Bataan dito ay makikilala bilang
PANG-PROYEKTONG KAWANI;

NAGSASAYSAY NA:

NA, ang Kumpanya ay nangangailangan ng paglilingkod ng isang Ship Fitter Class A sa panandaliang
panahon at bilang pang suporta sa paggawa at pagsasaayos ng proyekto para sa MT Masinop.

NA, ang PANG-PROYEKTONG KAWANI ay nagpapahayag ng kanyang kakayahan at kagustuhang


isagawa ang proyektong iniaalok ng KUMPANYA at handing tuparin ang nasabing Gawain sa
KUMPANYA sa ilaalim ng sumusunod na kondisyon;

Bilang pagkilala sa maga nasabing batayan, ang mga kinauukulang partido ay nagkakasundo at
nagtatakda ng mga sumusunod:

1) Ang KUMPANYA ay pumapayag na bayaran ang serbisyo ng PANG-PROYEKTONG KAWANI


bilang isang Ship Fitter Class A sa nasabing proyekto simula 4/1/2009 hanggang 4/30/2009
o sa sandaling matapos ang nasabing gawain o anumang bahagi nito kung saan siya ay
inupahan o kung saan ang kanyang serbisyo ay kailangan at ang PANG-PROYEKTONG
Labor Cases Penned By Justice Del Castillo

KAWANI ay sumasang-ayon. Ang mga gawaing nabanggit sa kasunduang ito ay hindi


pangkaraniwang ginagawa ng KUMPANYA kundi para lamang sa itinakdang panahon o
hanggang matapos ang nasabing proyekto;

2) Ang KUMPANYA ay may karapatan na pawalang bisa o kanselahin ang kasunduang ito
anomang oras kung mapatutunayan na ang PANG-PROYEKTONG KAWANI ay walang
kakayahan na gawin ang naturang gawain kung saan siya ay inupahan nang naaayon sa
pamantayan o sa kagustuhan ng KUMPANYA o sa anumang dahilan na naaayon sa batas,
kasama na rito ang paglabag ng PANG PROYEKTONG KAWANI sa mga alituntunin ng
KUMPANYA;

3) Ang PANG-PROYEKTONG KAWANI ay sumasang-ayon na gampanan ang mga gawaing ito para
sa KUMPANYA buong katapatan at husay;

4) Ang PANG-PROYEKTONG KAWANI ay magtratrabaho ng walong (8) oras sa bawat araw ng


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

5) Lahat ng kaalaman o impormasyon na maaaring mabatid ng PANGPROYEKTONG KAWANI


habang siya ay may kaugnayan sa KUMPANYA ay iingatan niya at hindi maaaring gamitin,
ipasipi o ipaalam sa kaninuman ng walang kaukulang pahintulot lalo na kung ito ay maaaring
makapinsala sa KUMPANYA;

6) Ang PANG-PROYEKTONG KAWANI ay nangangako na ibibigay ang kanyang panahon at buong


kakayahan para sa kapakanan ng KUMPANYA, tutugon sa lahat ng alituntunin ng KUMPANYA,
susunod sa utos ng mga namumuno na naaayon sa batas, at tatanggapin ang pananagutan sa
lahat ng kanyang mga galaw na maaaring makapinsala o makasakit sa kapwa kawani at sa ari-
arian ng KUMPANYA, ganun din ang kapakanan at ari-arian ng ibang tao;

7) Nababatid at nauunawaan ng bawat partido sa kasunduang ito na ang PANG-PROYEKTO


KAWANI ay hindi maituturing na pampirmihan or “regular” na kawani ano man at gaano
man katagal ang kanyang paglingkod sa Kumpanya. Sa ganitong kadahilanan, ang PANG-
PROYEKTO KAWANI ay hindi tatanggap ng karaniwang benepisyo na ipinagkakaloob sa
pampirmihan o “regular” na kawani; katulad ng bonuses, medical insurance, at retirement
Labor Cases Penned By Justice Del Castillo

benefits, maliban sa ilang benepisyo na pinagkakaloob ng batas.

8) Sa pagtupad ng mga nasabing gawa, nalalaman at inaasahan ng PANG-PROYEKTONG KAWANI


ang ilang kaakibat na peligro sa maayos na pagganap ng naturang rnga gawa. Alam ng PANG-
PROYEKTONG KAWANI na ang KUMPANYA ay walang kinalaman sa bagay na ito at hindi dapat
panagutin ukol dito;

9) Ang lahat ng mga nakasaad at nasusulat na mga kondisyon sa kasunduang ito ay nauunawaan
at naiintindihan ng PANG-PROYEKTONG KAWANI;

10) Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring
kailanganin para sa matagumpay na pagtatapos ng mga gawa o proyektong pinagkasunduan;

BILANG SAKSI sa kasundang ito, ang mga partido ay lumagda ngayong ika-1 ng Abril 2009 sa
Mariveles, Bataan, Pilipinas;[22] (Emphases supplied)

There is no indication that respondents were coerced into signing their employment
contracts or that they affixed their signature thereto against their will. While they claim that
they signed the said contracts in order to securee continuous employment, they have not,
however, presented sufficient evidence to support the same other than their bare allegations.
It is settled that ―[c]ontracts for project employment are valid under the law.‖[23] Thus,
in Jamias v. National Labor Relations Commission,[24] this Court upheld the project
employment contracts which were knowingly and voluntarily signed by the employees for
want of proof that the employers employed force, intimidation, or fraudulently manipulated
them into signing the same. Similarly in this case, by voluntarily entering into the
aforementioned project employment contracts, respondents are deemed to have understood
that their employment is coterminous with the particular project indicated therein. They
cannot expect to be employed continuously beyond the completion of such project because
a project employment terminates as soon as it is completed.

Performance by project-based employees of tasks necessary and desirable to the


usual business operation of the employer will not automatically result in their
regularization.

ln disregarding the project employment contracts and ruling that respondents are regular
employees, the CA took into consideration that respondents were performing tasks
necessary and desirable to the business operation of Herma Shipyard and that they were
repeatedly hired. Thus:

[I]t is significant to note that even if the contract of employment indicates that [respondents] were
hired a project workers, they are still considered regular employees on the ground that as welder, ship
fitter, pipe fitter, expediter and helper, [respondents‘] services are all necessary, desirable and vital to
the operation of the ship building and repair business of [petitioners]. A confirmation of the necessity
and desirability of their services is the fact that [respondents] were continually and successively
Labor Cases Penned By Justice Del Castillo

assigned to the different projects of private respondents even after the completion of a particular
project to which they were previously assigned. On this score, it cannot be denied that petitioners
were regular employees.[25]

It is settled, however, that project-based employees may or may not be performing tasks
usually necessary or desirable in the usual business or trade of the employer. The fact that
the job is usually necessary or desirable in the business operation of the employer does not
automatically imply regular employment; neither does it impair the validity of the project
employment contract stipulating fixed duration of employment.[26] As this Court held in ALU-
TUCP v. National Labor Relations Commission:[27]

In the realm of business and industry, we note that ‗project‘ could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refr to a particular job or
undertaking that is within the regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this first
type of project is a particulr construction job or project of a construction company. A construction
company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-
five storey hotel in Makati; a residential condominium building in Baguio City; amd a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects,
the scope and duration of which has been determined and made known to the employees at the time of
employment, are properly treated as ‗project employees,‘ and their services may be lawfully
terminated at completion of the project.

The term ‗project‘ could also refer to, secondly, particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times.[28]

Here, a meticulous examination of the contracts of employment reveals that while the tasks
assignd to the respondents were indeed necessary and desirable in the usual business of
Herma Shipyard, the same were distinct, separate, and identifiable from the other projects or
contract services. Below is the summary of respondents‘ employment contracts indicating
the positions they held, the specific projects for which they were hired, and the duration or
expected completion thereof:

Names Positions Projects Durations

1. Ricardo J. Pipe Fitter MT Masinop 03/18/09-03/31/09[29]


Ontolan Pipe Fitter 12mb_phase 3 09/15/08-12/20/08[30]
Pipe Fitter 12mb/Petrotrade 6 05/29/08-08/31/08[31]
Pipe Fitter Alcem Calaca 04/29/08-completion[32]
Pipe Fitter Hull 0102-phase 6 12/17/07-03/03/08[33]
Pipe Fitter Hull 0103 & Hull 0104-phase 1 09/11/07-12/11/07[34]

2. Robert T. Welder 6G MT Masinop 03/18/09-03/31/09[35]


Welder 6G 12mb/Matikas/Red Dragon 06/02/08-07/31/08[36]
Labor Cases Penned By Justice Del Castillo

Nario Welder 6GWelder 22mb/12mb/Galapagos/Petrotrade 03/04/08-


6G 7/Ma Oliva/Solid 06/05/08[37]10/18/07-
Sun/Hagonoy/Banga Uno/Bigaa 12/18/07[38]
Hull 0102-phase 5

3. Oscar J. Tirol Pipe Fitter Class B Red Dragon (installation of lube oil, 01/16/09-02/15/09[39]
diesel oil, air compressed line,
06/27/08-completion[40]
Pipe Fitter freshwater cooling, lavatory, sea 02/08/08[41]-02/08/08[42]
———– water pipe line)
MT Magino/MV Diana
Petrotrade 7/Solid Gold

4. Exequiel R. Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[43]


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

5. Arnel S. Leadman MT Masinop 03/18/09-03/31/09[49]


Sabal Leadman 12mb-phase 3 09/15/08[50]-12/20/08[51]
Leadman 12mb/Petrotrade 6 05/29/08-08/31/08[52]
LeadmanLeadman 22mb/12mb/Galapagos/Petrotrade 03/04/08-
Leadman 7/Ma Oliva/Solid 06/05/08[53]12/01/2007[54]-
Pipe Fitter Sun/Hagonoy/Banga Uno/Bigaa 3/03/08[55]
———- Hull 0102-phase 6 9/11/07-11/30/07[56]
Pipe Fitter Hull 0102-phase 5 6/13/07-09/04/07[57]
Pipe Fitter Hull 0102-phase 4 01/15/07-03/30/07[58]
Pipe Fitter Hull 0102-phase 2 01/08/07-completion[59]
Pipe Fitter Hull 0102 05/17/06-completion[60]
Pipe Fitter Petro Trade 8/EUN HEE 06/02/05[61]-06/25/05[62]
Pipe Fitter MT Angat 12/08/04-completion[63]
M/T Pandi 11/08/04-completion[64]
M/T Makisig 08/12/04[65]-09/13/04[66]
Petro Trade – 7

6. Segundo Q. ABS Welder 6G MT Masinop


13/18/09-03/31/09[67]
Labosta, Jr. ABS Welder 6G 12mb-phase 3
09/26/08-12/20/08[68]
ABS Welder 6G Petrotrade 6/12 mb
08/01/08-10/31/08[69]
ABS Welder 6G Cagayan de Oro/Petrotrade
16/01/08-07/31/08[70]
6/Plaridel
Labor Cases Penned By Justice Del Castillo

7. Jojit A. Besa Leadman – ABS MT Masinop 03/18/09-03/31/09[71]


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

8. Camilo I. Ship Fitter MT Masinop 04/01/09-04/30/09[86]


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

9. Romeo I. Helper Modernization project – painting of 01/24/07-01/28/07[94]


Trinidad prod’n bldg. and overhead crane
Laborer 09/10/07-12/10/07[95]
Pin Jiq assembly, building table
construction, painting of ex-oxygen
Laborer 04/23/07-05/31/07[96]
bldg, frabrication of slipway railings
Ground level of main entrance
Electrician/Laborer 12/04/06-completion[97]
road & CHB wall plastering/repair
of warehouse no 1 for conversion
to training bldg.
Construction of launchway and
perimeter fence
Labor Cases Penned By Justice Del Castillo

10. Ruben F. Leadman Red Dragon (water tight door 01/16/09-12/15/09[98]


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

11. Danilo I. Welder 3G & 4G MT Hagonoy/MT Masinop/MT


04/01/09-04/15/09[109]
Oliveros Welder 3G & 4G Matikas
03/20/09-03/31/09[110]
Welder 3G & 4G Hagonoy
09/25/08-12/20/08[111]
Welder 12mb-phase 3
07/01/08-09/30/08[112]
Welder 3G & 4G 12mb/Petrotrade 6
12/08/07-03/08/08[113]
Welder Hull 0102-phase 6
09/10/07-12/10/07[114]
Welder Hull 0102-phase 5
12/19/06-completion[115]
Hull 0102

12. Frederick Pipe Fitter Class C MT Masinop 02/06/09-02/28/09[116]


C. Catig Pipe Fitter Class C 12mb 01/08/09-01/31/09[117]
Helper 12mb-phase 3 19/15/08-completion[118]
Helper 12mb/Petrotrade 6 05/29/08-08/31/08[119]
Helper Hull 0102-phase 6 01/02/08-03/31/08[120]
Helper Hull 0102, Hull 0103, Hull 0104 10/01/07-12/31/07[121]
Helper Hull 0103 phase 1 07/25/07-09/31/07[122]

As shown aboverespondents were hired for various projects which are distinct, separate,
and identifiable from each other. The CA thus erred in immediately concluding that since
respondents were performing tasks necessary, desirable, and vital to Herma Shipyard‘s
business operation, they are regular employees.

Repeated rehiring of project employees to different projects does not ipso facto make
them regular employees.

―[T]he repeated and successive rehiring [of respondents as project-based employees] does
not [also], by and of itself, qualify them as regular employees. Case law states that length of
service (through rehiring) is not the controlling detenninant of the employment tenure [of
project-based employees but, as earlier mentioned], whether the employment has been fixed
for a specific project or undertaking, with its completion having been determined at the time
of [their] engagement.‖[123] Stated otherwise, the rule that employees initially hired on a
tempormy basis may become permanent employees by reason of their length of service is
not applicable to project-based employees. Our ruling in Villa v. National Labor Relations
Commission[124] is instructive on the matter, viz.:
Labor Cases Penned By Justice Del Castillo

Thus, the fact that petitioners worked for NSC under different project employment contracts for
several years cannot be made a basis to consider them as regular employees, for they remain project
employees regardless of the number of projects in which they have worked. Length of service is not
the controlling determinant of the employment tenure of a project employee. In the case of Mercado
Sr. v. NLRC, this court ruled that the proviso in the second paragraph of Article 280, providing that
an employee who has served for at least one year, shall be considered a regular employee, relates only
to casual employees and not to project employees.

The rationale for the inapplicability of this rule to project-based employees was discussed
in Dacles v. Millenium Erectors Corporation,[125] to wit:

x x x While generally, length of service provides a fair yardstick for determining when an employee
initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization, this standard will not be fair, if applied to the construction industry because
construction firms cannot guarantee work and funding for its payrolls beyond the life of each project
as they have no control over the decisions ard resources of project proponents or owners. Thus, once
the project is completed it would be unjust to require the employer to maintain these employees in
their payroll since this would be tantamount to making the employee a privileged retainer who
collects payment from his employer for work not done, and amounts to labor coddling at the expense
of management.[126]

Indeed, if we consider the nature of Herma Shipyard‘s business, it is clear that Herma
Shipyard only hires workers when it has existing contracts for shipbuilding and repair. It is
not engaged in the business of building vessels for sale which would require it to
continuously construct vessels for its inventory and consequently hire a number of
pemmnent employees. In Sandoval Shipyards, Inc. v. National Labor Relations
Commission[127] where therein petitioner was engaged in a similar kind of business, this Court
opined that:

It is significant to note that the corporation does not construct vessels for sale or otherwise which will
demand continuous productions of ships and will need permanent or regular workers. It merely
accepts contracts for shipbuilding or for repair of vessels from the third parties and, only, on occasion
when it has work contract of this nature that it hires workers to do the job which, needless to say, lasts
only for less than a year or longer.[128]

The completion of their work or project automatically terminates their employment, in which case, the
employer is, under the law, only obliged to render a report on the termination of the employment.

Hence, Herma Shipyard should be allowed ―to reduce [its] work force into a number suited
for the remaining work to be done upon the completion or proximate accomplishment of
[each particular] project.‖[129] As for respondents, since they were assigned to a project or a
phase thereof which begins and ends at determined or determinable times, their services
were lawfully terminated upon the completion of such project or phase thereof.[130]

Moreover, our examination of the records revealed other circumstances that convince us
that respondents were and remained project-based employees, albeit repeatedly rehired.
Contrary to their claim, respondents‘ employment were neither continuous and uninterrupted
nor for a uniform period of one month; they were intermittent with varying durations, as well
as gaps ranging from a few days to several weeks or months. These gaps coincide with the
completion of a particular project and the start of a new specific and distinct project for which
they were individually rehired. And for each completed project, petitioners submitted the
required Establishment Employment Records to the DOLE which is a clear indicator of
Labor Cases Penned By Justice Del Castillo

project employment.[131] The records also show that respondents‘ employment had never
been extended beyond the completion of each project or phase thereof for which they had
been engaged.

The project employment contract is not subject to a condition.

The CA likewise erred in holding that paragraph 10 of the employment contract allowing the
extension of respondents‘ employment violates the second requisite of project employment
that the completion or termination of such project or undertaking be determined at the time of
engagement of the employee. It reads:

10 Ang kasunduang ito ay maaaring palawigin ng mas mahabang panahon na maaaring


kailanganin para sa matagumpay na pagtatapos ng mga gawa o proyektong
pinagkasunduan;[132]

To our mind, paragraph 10 is in harmony with the agreement of the parties that respondents‘
employment is coterminous with the particular project stated in their contract. It was placed
therein to ensure the successful completion of the specific work for which respondents were
hired. Thus, in case of delay or where said work is not finished within the estimated date of
completion, respondents‘ period of emplqyrnent can be extended until it is completed. In
which casethe duration and nature of their employment remains the same as previously
determined in the project employment contract; it is still coterminous with the particular
project for which they were fully apprised of at the time of their engagement.

As to the requirement that the completion or termination of the specific project or undertaking
or which respondents were hired should be determined at the time of their engagement, we
rule and so hold that it is enough that Herma Shipyard gave the approximate or target
completion date in the project employment contract. Given the nature of its business and the
scope of its projects which take months or even years to finish, we cannot expect Herma
Shipyard to give a definite and exact completion date. It can only approximate or estimate
the completion date. What is important is that the respondents were apprised at the time of
their engagement that their employment is coterminous with the specific project and that
should their employment be extended by virtue of paragraph 10 the purpose of the extension
is only to complete the same specific project, and not to keep them employed even after the
completion thereof. Put differently, paragraph 10 does not allow the partis to extend the
period of respondents‘ employment after the completion of the specific project for which they
were hired. Their employment can only be extended if that particular project, to which their
employment depends, remains unfinished.

In sum, the CA erred in disregarding the project employment contracts and in concluding
that respondents have become regular employees because they were performing tasks
necessary and desirable to the business of Herma Shipyard and were repeatedly rehired.
The Labor Arbiter and the NLRC, which have expertise in their specific and specialized
jurisdiction, did not err, much less commit grave abuse of discretion in holding that
respondents were project-based employees. Their uniform conclusion is supported by
substantial evidence and should, therefore, be accorded not only respect, but even finality.

WHEREFORE, the instant Petition for Review on Certiorari is GRANTED. The assailed
Decision dated May 30, 2013 of the Court of Appeals in CA-G.R. SP No. 118068
is REVERSED and SET ASIDE. The May 24, 2010 Decision of the Labor Arbiter dismissing
Labor Cases Penned By Justice Del Castillo

respondents‘ Complaint and affirmed by the National Labor Relations Commission in its
Decision dated September 7, 2010 is REINSTATED and AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

15 MAR 2017 | SUBJECT | LABOR AND


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

Ernesto Brown Vs. Marswin Marketing, Inc.


and Sany Tan; G.R. No. 206891; March 15,
2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the January 18, 2013 Decision[2] of the Court of
Appeals (CA) in CA-GR. SP No. 124098. The CA annulled and set aside the December 19,
2011[3] and January 31, 2012[4] Resolutions of the National Labor Relations Commission
(NLRC), which affirmed the June 30, 2011 Decision[5] of the Labor Arbiter (LA) declaring
illegal the dismissal from work of Ernesto Brown (Brown). Likewise assailed is the April 23,
2013 CA Resolution[6]denying Brown‘s Motion for Reconsideration.

Factual Antecedents

On June 7, 2010, Brown filed a Complaint[7] for illegal dismissal, nonpayment of salary and
13th month pay as well as claim for moral and exemplary damages and attorney‘s fees
against Marswin Marketing, Inc. (Marswin) and Sany Tan (Tan), its owner and President. He
prayed for reinstatement with full backwages and payment of his other monetary claims.

In his Position Paper,[8] Brown alleged that on October 5, 2009, Marswin employed, him as
building maintenance/ electrician with, a salary of P500.00 per day; he was assigned at
Marswin‘s warehouse in Valenzuela, and was tasked to maintain its sanitation and make
necessary electrical repairs thereon.

Brown further averred that on May 28,2010, he reported, at the Main Office of Marswin, and
was told that it was already his last day of work. Allegedly, he was made to sign a document
that he did not understand; and, thereafter, he was no longer admitted back to work. Thus,
he Insisted that he was terminated without due process of law.

For their part, Marswin/Tan argued in their Position Paper[9] and Comment[10] that on October
4, 2009, Marswin, a domestic corporation engaged in wholesale trade of construction
materials, employed Brown as electrician; during his eight-month stay, Marswin received
negative reports anent Brown‘s work ethics, competence, and efficiency. On May 28, 2010,
they summoned him at its Main Office to purportedly discuss the complaints of the
Warehouse Manager and the Warehouse Supervisor; during the meeting, they informed
.Brown of the following charges against him:

1. x x x [Disobedience to instructions given by the Electrical Engineer and Contractor


during the time [of] the renovation of the staff room at the Valenzuela warehouse;
Labor Cases Penned By Justice Del Castillo

making himself scarce and worse not responding to calls for errands regarding
electrical connections at the warehouse;

2. Exposing the office to possible criminal liability for installing a jumper at the
Valenzuela warehouse without being told to [make such installation];

3. Not performing his job well as electrician, thus, resulting to additional expenses to the
company, when it could have been avoided had he been following x x x orders given
to him;

4. Unreasonable refusal to perform his assigned tasks despite being repeatedly ordered to
do so x x x.[11]

Marswin/Tan stated that during the meeting, Brown excused himself purportedly to get in
touch with his wife; however, he never returned and no longer reported for work.

According to Marswin/Tan, Brown‘s work as electrician did not involve an activity usually
necessary or desirable in the usual business of Marswin; thus, he was not its regular
employee. They also contended that during the May 28, 2010 meeting, Bernadette S.
Azucena (Azucena), its Accounting Supervisor and Human Resource Head, only
admonished Brown but he left the meeting and no longer returned to work. They attached in
their Position Paper the Sinumpaang Salaysay[12] executed by Azucena stating the alleged
complaints she received against Brown, and the events that transpired during the May 28,
2010 meeting, to wit:

xxxx

11. x x x [Si] Ernesto Brown ay aking pinatawag sa main office noong Mayo 28, 2010
para kausapin dahil sa mga nasabing reklamo sa kanyang pagtatrabaho; noong aking
binanggit sa kanya [ang] mga nasabing reklamo ay wala man lang siyang kaimik imik;
sinabi ko sa kanya na kung ipagpapatuloy [nya] ang maling pagtrabaho at hindi
pagsunod sa mga pinagagawa sa kanya ay walang magagawa ang opisina kundi
tanggalin na siya; nanatili siyang walang imik at nagsabi siya na tatawag siya sa
kanyang asawa at umalis sya; hindi na siya bumalik noon at hindi na pumasok
magmula noon at nakatanggap na nga lang kami ng reklamo [mula] sa tanggapa[n] ng
Labor Arbiter. x x x.

12. Hindi totoo ang kanyang reklamo na siya ay dinismis; may legal na kadahilanan na
para siya ay dismisin pero hindi pa siya dinismis noong Mayo 28, 2010; siya mismo
ang hindi na bumalik sa tanggapan x x x[13]

Ruling of the Labor Arbiter

On June 30, 2011, the LA rendered a Decision declaring Brown‘s dismissal illegal, the
decretal portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring complainant Ernesto


Brown to have been illegally dismissed from work.

Respondents are directed to reinstate complainant Brown to his former position without loss of
seniority rights and to notify this Office of their compliance thereto within ten (10) days from receipt
Labor Cases Penned By Justice Del Castillo

of this Decision. Further respondent Marswin Marketing, Inc. is hereby directed to pay complainant
Brown‘s backwages computed from the time he was illegally dismissed from work until his actual
reinstatement pursuant to Article 279 of the Labor Code and to pay his 13th month pay computed as
follows:

a) backwages – P188,335,98

b) 13thmonth
– P 5,308.33
pay

All other claims are dismissed for lack of merit.

SO ORDERED.[14]

The LA held that Brown was a regular employee of Marswin because Marswin/Tan
confirmed hiring him on October 4, 2009; they paid him salary; they had the power to control
bis conduct, especially on how he should do his work; and, they had the power to dismiss
him.

In ruling that Brown was illegally dismissed, the LA noted that the alleged complaints against
Brown were embodied in Azucena‘s affidavit yet no actual complaints or reports against him
were adduced in evidence. The LA was also unconvinced that Brown left Marswin‘s
premises and abandoned his work considering that he filed this illegal dismissal case; and
his employer failed to notify‘ him to report back to work.

Ruling of the National Labor Relations Commission

On appeal,[15] the NLRC, through its Resolution dated December 19, 2011, affirmed the LA
Decision.

The NLRC held that the purported complaints against Brown were only gathered by Azucena
from the reports she supposedly received from the Warehouse Manager and Supervisor;
thus, her affidavit was hearsay and of poor evidentiary value. It ratiocinated that
Marswin/Tan did not give Brown the opportunity to confront his accusers, and did not
observe due process in terminating him. it also declared that there was no showing that
Brown abandoned his work as Marswin/Tan did not cite him for his alleged refusal to return
to work.

On January 31, 2012, the NLRC denied the Motion for Reconsideration filed by
Marswin/Tan.

Ruling of ike Court of Appeals

Undaunted, Marswin/Tan filed a Petition for Certiorari with the CA argumg that the NLRC
committed grave abase of discretion amounting to lack or excess of jurisdiction hi affirming
the LA Decision.
Labor Cases Penned By Justice Del Castillo

On January 18, 2013, the CA annulled and set aside the NLRC Resolutions. It entered a
new judgment declaring that Brown was legally dismissed, and therefore not entitled to
backwages and 13th month pay.

According to the CA, aside from his allegation that he was unceremoniously terminated,
Brown presented no evidence supporting such claim. It also held that there was no showing
that Brown was prevented from returning or was deprived of work. It likewise gave weight to
the affidavit of Azucena, which asserted that during the May 28, 2010 meeting, Brown was
not dismissed but was only informed of the complaints against him.

In sum, the CA decreed that this case did not involve the dismissal of an employee on the
ground of abandonment, there being no evidence proving that Brown was actually
dismissed.

In its Resolution dated April 23, 2013, the CA denied the Motion for Reconsideration filed by
Brown.

Issue

Aggrieved, Brown filed this Petition raising the sole issue as follows:
WHETHER THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE
NLRC3S RESOLUTIONS AFFIRMING THE LABOR ARBITER‟S DECISION THAT THE
PETITIONER ERNESTO BROWN WAS ILLEGALLY DISMISSED BY THE PRIVATE
RESPONDENTS.[16]

Brown contends that Marswin failed to discharge its burden to prove that he committed
abandonment. He argues that the fact that he challenges his dismissal disproves that he
abandoned his employment. He also stresses that the reliance of the CA on Azucena‘s
affidavit is unwarranted as no actual complaints as regards his supposed infractions were
adduced in evidence. He posits that the bare allegations of Azucena are hearsay, and are
not proof that he committed any infraction.

Marswin/Tan, on their end, counter that the Court should not give due course to this Petition
because it raises factual issues which are not within the ambit of a petition under Rule 45 of
the Rules of Court.

Our Ruling

The Court grants the Petition.


As a rule, the Court, is not a trier of facts and only questions of law may be raised in a
petition under Rule 45 of the Rules of Court. A departure from this rule is nevertheless
allowed where the factual findings of the CA are contrary to those of the lower courts or
tribunals. In this case, the findings of the CA vary with those of the NLRC and LA. As such,
the Court deems it necessary to review the records and determine which findings and
conclusion truly conform with the evidence .adduced by the parties.[17]

Moreover, in dismissal cases, the employer bears the burden of proving that the employee
was not terminated, qr if dismissed, that the dismissal was legal. Resultantly, the failure of
fee employer to discharge such burden would mean that the dismissal is unjustified and
thus, illegal.[18] The employer cannot simply discharge such burden by its plain assertion that
it did not dismiss the employee; and it is highly absurd if the employer will escape liability by
Labor Cases Penned By Justice Del Castillo

its mere claim that the employee abandoned his or her work. In fine, where there is no clear
and valid cause for termination, the law treats it as a case of illegal dismissal.[19]

Thus, in order for the employer to discharge its burden to prove that the employee
committed abandonment, which constitutes neglect of duty, and is a just cause for dismissal,
the employer must prove that the employee 1) failed to report for work or had been absent
without valid reason; and 2) had a clear intention to discontinue his or her employment. The
second requirement must be manifested by overt acts and is more determinative in
concluding that the employee is guilty of abandonment. This is because abandonment is a
matter of intention and cannot be lightly presumed from indefinite acts.[20]

Here, Brown contends that on May 28, 2010, his employer informed him that it was already
his last day of work; and, thereafter, he was no longer admitted back to work. On the other
hand, Marswin/Tan confirmed having summoned Brown on May 28, 2010 but they denied
that he was dismissed, but that he left the meeting and since then never returned for work.

Nonetheless, apart from the allegation of abandonment, Marswin/Tan presented no


evidence proving that Brown felled to return without justifiable reasons and had clear
intentions to discontinue his work.

In fact, in her affidavit, Azucena did not specify any overt act on the part of Brown showing
that he intended to cease working for Marswin. At the same time, Azucena did not establish
feat Marswin, on its end, exerted effort to convince Brown to return for work, if only to show
that Marswin did not dismiss him and it was Brown who actually refused to return to
work.[21] And neither did Marswin send any notice to Brown to warn him that his supposed
failure to report would be deemed as abandonment of work.[22] Clearly from the foregoing,
Marswin failed to discharge the burden of proving that Brown abandoned his work.

In addition, on June 7, 2010, or just ten days after Brown‘s last day at work (May 28, 2010),
he already filed an illegal dismissal suit against his employer, Such filing conveys his desire
to return, and strengthens his assertion that he did not abandon his work. To add, in his
Complaint, Brown prayed for reinstatement, which further bolsters his intention to continue
working for Marswin, and. negates abandonment.[23] Indeed, the immediate filing of an illegal
dismissal case especially so when it includes a prayer for reinstatement is totally contrary to
the charge of abandonment.[24]

Furthermore, Marswin/Tan presented the affidavit of Azucena, their Accounting Supervisor


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

5. Na tumanggap ako ng mga reklamo sa aming Warehouse Manager at Warehouse


Supervisor ng aming bodega sa Valenzuela na [si] Ernesto Brown ay madalas na
maraming dahilan kapag ito ay pinapapunta sa Valenzuela para maggawa; x x x

6. Na noong buwan ng Enero hanggang Marso ng taong ito (2010) ay ginawa ang opisina
ng staff sa bodega sa Valenzuela at bilang elek[t]risyan ay inatasan siyang gawin ang
‗electrical wireline‘ doon; Na nakarating [sa amin] ang sumbong nina Electrical
Labor Cases Penned By Justice Del Castillo

Engineer at Contraktor x x x na si Ernesto Brown ay hindi sumusunod sa mga


pinauutos nila at madalas na makagalitan dahil doon;

7. Na noong nawalan ng electric power ang bodega sa Valenzuela dahil sa electric


shortage ay pinatingnan ito sa kanya, ngunit sa halip na ayusin ng tarna ang problems,
sa electrical wireline ay nilagyan niya ito ng ‗jumper‘ at ito ay nakita ng taga Meralco
x x x;

8. Nito lang buwan ng Abril 2010 ay gumawa na naman ng kapalpakan si Ernesto Brown
dito naman sa main office sa Binondo; iyong electronic lock ng front door ng office sa
third floor x x x ay nagmalfunction at nasira; ang nasabing electronic lock ay covered
pa ng warranty x x x; [n]ang suriin ang nasabing electronic lock ay nalaman nami[n]
na may nakialam sa loob ng lock kung kaya hindi ito nakober ng warranty at nagbayad
ang kumpanya ng halagang P6,000.0[0] a pagsasaayos nito; x x x

9. x x x [Nang] ipatawag nami[n] ang security guard ay doon lang namin nalaman na
pinakialaman pala ni Ernesto Brown ang loob ng nasabing electronic lock samantalang
hindi naman ito pinagagawa sa kanya;

10. Na noong ipasuri ang electrical wireline sa bodega ng Valenzuela, nakita ang sala-
salabat o ‗spaghetti type‘ na wiring nito; ilan[g] beses iniutos sa kanya na ayusin at
iwasto [ang] nasabing wiring pero hindi nya ito ginagawa x x x;

11. Dahil dito si Ernesto Brown ay aldng pinatawag sa main office noong Mayo 28, 2010
para kausapin dahil sa mga nasabing reklamo sa kanyang pagtatrabaho x x x[.][26]

Given all these, there is clearly no showing that Brown committed abandonment instead,
evidence proved that he was illegally dismissed from work.

Thus, as properly found by the LA and affirmed by the NLR.C, by reason of his illegal
termination, Brown is entitled to reinstatement without loss of seniority rights, and to full
backwages, which include allowances and other benefits or their monetary equivalent, from
the time his compensation was withheld until his actual reinstatement.[27]

At the same time, Brown is entitled to attorney‘s fees of 10% of the total monetary award, as
he was compelled to litigate to protect his rights and interest The legal interest of 6% per
annum shall also be imposed on the total monetary awards from the finality of this Decision
until fully paid.[28]

WHEREFORE, the Petition is GRANTED. The January 18, 2013 Decision and April 23,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124098 are REVERSED and
SET ASIDE.

Accordingly, the June 30, 2011 Decision of the Labor Arbiter, as affirmed by the December
19, 2011 Resolution of fee National Labor Relations Commission, is REINSTATED and
AFFIRMED with MODIFICATIONS in that Ernesto Brown is also entitled to receive
attorney‘s fees of 10% of the total monetary awards. The legal interest of 6% per
annum shall be imposed on the monetary grants from the date of finality of this Decision until
fully paid.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

30 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Jack C. Valencia Vs. Classique Vinyl Products


Corporation, et al.; G.R. No. 206390; January
30, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the December 5, 2012 Decision[1] and March
18, 2013 Resolution[2] of the Court of Appeals (CA) in CA G.R. SP No. 120999, which
respectively denied the Petition for Certiorari filed therewith by petitioner Jack C. Valencia
(Valencia) and the motion for reconsideration thereto.

Factual Antecedents

On March 24, 2010, Valencia filed with the Labor Arbiter a Complaint[3] for Underpayment of
Salary and Overtime Pay; Non-Payment of Holiday Pay, Service Incentive Leave Pay,
13th Month Pay; Regularization; Moral and Exemplary Damages; and, Attorney‘s Fees
against respondents Classique Vinyl Products Corporation (Classique Vinyl) and its owner
Johnny Chang (Chang) and/or respondent Cantingas Manpower Services (CMS). When
Valencia, however, asked permission from Chang to attend the hearing in connection with
the said complaint on April 17, 2010, the latter allegedly scolded him and told him not to
report for work anymore. Hence, Valencia amended his complaint to include illegal
dismissal.[4]

In his Sinumpaang Salaysay,[5] Valencia alleged that he applied for work with Classique Vinyl
but was told by the latter‘s personnel office to proceed to CMS, a local manpower agency,
and therein submit the requirements for employment. Upon submission thereof, CMS made
him sign a contract of employment[6] but no copy of the same was given to him. He then
proceeded to Classique Vinyl for interview and thereafter started working for the company in
June 2005 as felitizer operator. Valencia claimed that he worked 12 hours a day from
Monday to Saturday and was receiving P187.52 for the first eight hours and an overtime pay
of P117.20 for the next four hours or beyond the then minimum wage mandated by law. Five
months later, he was made to serve as extruder operator but without the corresponding
increase in salary. He was neither paid his holiday pay, service incentive leave pay, and
13th month pay. Worse, premiums for Philhealth and Pag-IBIG Fund were not paid and his
monthly deductions for Social Security System (SSS) premiums were not properly remitted.
He was also being deducted the amounts of P100.00 and 60.00 a week for Cash Bond and
Agency Fee, respectively. Valencia averred that his salary was paid on a weekly basis but
his pay slips neither bore the name of Classique Vinyl nor of CMS; that all the machineries
that he was using/operating in connection with his work were all owned by Classique Vinyl;
and, that his work was regularly supervised by Classique Vinyl. He further averred that he
Labor Cases Penned By Justice Del Castillo

worked for Classique Vinyl for four years until his dismissal. Hence, by operation of law, he
had already attained the status of a regular employee of his true employer, Classique Vinyl,
since according to him, Civ1S is a mere labor only contractor. Valencia, therefore, argued
that Classique Vinyl should be held guilty of illegal dismissal for failing to comply with the
twin-notice requirement when it dismissed him from the service and be made to pay for his
monetary claims.

Classique Vinyl, for its part, denied having hired Valencia and instead pointed to CMS as the
one who actually selected, engaged, and contracted out Valencia‘s services. It averred that
CMS would only deploy Valencia to Classique Vinyl whenever there was an urgent specific
task or temporary work and these occasions took place sometime in the years 2005, 2007,
2009 and 2010. It stressed that Valencia‘s deployment to Classique Vinyl was intermittent
and limited to three to four months only in each specific year. Classique Vinyl further
contended that Valencia‘s performance was exclusively and directly supervised by CMS and
that his wages and other benefits were also paid by the said agency. It likewise denied
dismissing Valencia from work and instead averred that on April 16, 2010, while deployed
with Classique Vinyl, Valencia went on a prolonged absence from work for reasons only
known to him. In sum, Classique Vinyl asserted that there was no employer-employee
relationship between it and Valencia, hence, it could not have illegally dismissed the latter
nor can it be held liable for Valencia‘s monetary claims. Even assuming that Valencia is
entitled to monetary benefits, Classique Vinyl averred that it cannot be made to pay the
same since it is an establishment regularly employing less than 10 workers. As such, it is
exempted from paying the prescribed wage orders in its area and other benefits under the
Labor Code. At any rate, Classique Vinyl insisted that Valencia‘s true employer was CMS,
the latter being an independent contractor as shown by the fact that it was duly incorporated
and registered not only with the Securities and Exchange Commission but also with the
Department of Labor and Employment; and, that it has substantial capital or investment in
connection with the work performed and services rendered by its employees to clients.

CMS, on the other hand, denied any employer-employee relationship between it and
Valencia. It contended that after it deployed Valencia to Classique Vinyl, it was already the
latter which exercised full control and supervision over him. Also, Valencia‘s wages were
paid by Classique Vinyl only that it was CMS which physically handed the same to Valencia.

Ruling of the Labor Arbiter

On September 13, 2010, the Labor Arbiter issued a Decision,[7] the pertinent portions of
which read:

Is [Valencia] a regular employee of respondent [Classique Vinyl]?

The Certificate of Business Name Registration issued by the Department of Trade and Industry dated
17 August 2007 and the Renewal of PRPA License No. M-08-03-269 for the period 29 August 2008
to 28 August 2010 issued by the Regional Director of the National Capital Region of the Department
of Labor and Employment [on the] 1st day of September 2008 are pieces of evidence to prove that
respondent [CMS] is a legitimate Private Recruitment and Placement Agency.

Pursuant to its business objective, respondent CMS entered into several Employment Contracts with
complainant Valencia as Contractual Employee for deployment to respondent [Classique Vinyl], the
last of which was signed by [Valencia] on 06 February 2010.
Labor Cases Penned By Justice Del Castillo

The foregoing Employment Contract for a definite period supports respondent [Classique Vinyl‘s]
assertion that [Valencia] was not hired continuously but intermittently ranging from 3 months to 4
months for the years 2005, 2007, 2009 and 2010. Notably, no controverting evidence was offered to
dispute respondent [Classiquc Vinyl‘s] assertion.

Obviously, [Valencia] was deployed by CMS to [Classique Vinyl] for a fixed period.

In Pangilinan v. General Milling Corporation, G.R. No. 149329, July 12, 2004, the Supreme Court
ruled that it does not necessarily follow that where the duties of the employee consist of activities
usually necessary or desirable in the usual business of the employer, the parties are forbidden from
agreeing on a period of time for the performance of such activities. There is thus nothing essentially
contradictory between a definite period of employment and the nature of the employee‘s duties.

Thus, even if respondent [Classique Vinyl] exercises full control and supervision over the activities
performed by [Valencia], the latter‘s employment cannot be considered as regular.

Likewise, even if [Valencia] is considered the regular employee of respondent CMS, the complaint
for illegal dismissal cannot prosper as [the] employment was not terminated by respondent CMS.

On the other hand, there is no substantial evidence to support [Valencia‘s] view that he was actually
dismissed from his employment by respondent [Classique Vinyl]. After all, it is elementary that he
who makes an affirmative allegation has the burden of proof. On this score, [Valencia] failed to
establish that he was actually dismissed from his job by respondent [Classique Vinyl], aside from his
bare allegation.

With regard to underpayment of salary, respondent CMS admitted that it received from respondent
[Classique Vinyl] the salary for [Valencia‘s] deployment. Respondent CMS never contested that the
amount received was sufficient for the payment of [Valencia‘s] salary.

Furthermore, respondent [Classique Vinyl] cannot be obliged to pay [Valencia‘s] overtime pay,
holiday pay, service incentive leave and 13th month pay as well as the alleged illegal deduction on the
following grounds:

a) [Valencia] is not a rank-and-file employee of [Classique Vinyl];

b) No proof was offered to establish that [Valencia] actually rendered overtime services;

c) [Valencia had] not [worked] continuously or even intermittently for [one whole] (1) year[-]period
during the specific year of his deployment with respondent [Classique Vinyl] to be entitled to service
incentive leave pay.

d) [Valencia] failed to offer substantia1 evidence to prove that respondent [Classique Vinyl] illegally
deducted fiom his salary the alleged agency and cash bond.

Moreover, as against respondent CMS[,] the record is bereft of factual basis for the exact computation
of [Valencia‘s] money claims as it has remained uncontroverted that [Valencia] was not deployed
continuously neither with respondent [Classique Vinyl] and/or to such other clientele.
Labor Cases Penned By Justice Del Castillo

WHEREFORE, premises considered, judgment is hereby rendered [d]ismissing the above-entitled


case fur lack of merit and/or factual basis.

SO ORDERED.[8]

Ruling of the National Labor Relations Commission

Valencia promptly appealed to the National Labor Relations Commission (NLRC). Applying
the four-fold test, the NLRC, however, declared CMS as Valencia‘s employer in its
Resolution[9] dated April 14, 2011, viz.:

In Order to determine the existence of an employer-employee relationship, the following yardstick


had been consistently applied: (1) the selection and engagement; (2) payment of wages; (3) power of
dismissal and; (4) the power to control the employee[‗]s conduct.

In this case, [Valencia] admitted that he applied for work with respondent [CMS] x x x. Upon the
acceptance of his application, he was made to sign an employment contract x x x. [Valencia] also
admitted that he received his wages from respondent [CMS] x x x. As a matter of tact, respondent
[CMS] argued that [Valencia] was given a non-cash wage in the approximate amount of Php3,000.00
x x x.

Notably, it is explicitly stated in the employment contract of [Valencia] that he is required to observe
all the rules and regulations of the company as well as [the] lawful instructions of the management
during his employment. That failure to do so would cause the termination of his employment contract.
The pertinent provision of the contract reads:

2. The employee shall observe all the rules and regulations of the company during the period of
employment and [the] lawful instructions of the management or its representatives. Failure to do so
or if performance is below company standards, management [has] the right to immediately cancel
this contract. x x x

The fact that [Valencia] was subjected to such restriction is an evident exercise of the power of
control over [Valencia].

The power of control of respondent [CMS] over Valencia was further bolstered by the declaration of
the former that they will not take against [Valencia] his numerous tardiness and absences at work
and[;] his nonobservance of the company rules. The statement of [CMS] reads:

Needless to say that [Valencia] in the course of his employment has incurred many infractions like
tardiness and absences, non-observance of company rules, but respondent [CMS], in reiteration will
not take this up as leverage against [Valencia]. x x x

Though [Valencia] worked in the premises of Classique Vinyl x x x and that the [equipment] he used
in the performance of his work was provided by the latter, the same is not sufficient to establish
employer-employee relationship between [Valencia] and Classique Vinyl x x x in view of the
foregoing circumstances earlier reflected. Besides, as articulated by jurisprudence, the power of
control does not require actual exercise of the power but the power to wield that power x x x.

With the foregoing chain of events, it is evident that [Valencia] is an employee of respondent [CMS].
Labor Cases Penned By Justice Del Castillo

x x x x[10]

Accordingly, the NLRC held that there is no basis for Valencia to hold Classique Vinyl liable
for his alleged illegal dismissal as well as for his money claims. Hence, the NLRC dismissed
Valencia‘s appeal and affirmed the decision of the Labor Arbiter.

Valencia‘s motion for reconsideration thereto was likewise denied for lack of merit in the
Resolution[11] dated June 8, 2011.

Ruling of the Court of Appeals

When Valencia sought recourse from the CA, the said court rendered a Decision[12] dated
December 5, 2012 denying his Petition for Certiorari and affirming the ruling of the NLRC.

Valencia‘s motion for reconsideration was likewise denied in a Resolution[13] dated March 18,
2013.

Hence, this Petition tor Review on Certiorari imputing upon the CA the following errors:

WITH DUE RESPECT, IT IS A SERIOUS ERROR WHICH CONSITITUTE[S] GRAVE ABUSE


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

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS[‗] DECISION AND


RESOLUTION ARE CONTRARY TO LAW AND WELL-SETTLED RULE.[14]

Valencia points out that the CA, in ruling that he was an employee of CMS, relied heavily on
the employment contract which the latter caused him to sign. He argues, however, that the
said contract deserves scant consideration since aside from being improperly filled up (there
were many portions without entries), the same was not notarized, Valencia likewise stresses
that the burden of proving that CMS is a legitimate job contractor lies with respondents.
Here, neither Classique Vinyl nor CMS was able to present proof that the latter has
substantial capital to do business as to be considered a legitimate independent contractor.
Hence, CMS is presumed to be a mere labor-only contractor and Classique Vinyl, as CMS‘
principal, was Valencia‘s true employer. As to his alleged dismissal, Valencia argues that
respondents failed to establish just or authorized cause, thus, his dismissal was illegal Anent
his monetary claims, Valencia invokes the principle that he who pleads payment has the
burden of proving it. Since respondents failed to present even a single piece of evidence that
he has been paid his labor standards benefits, he believes that he is entitled to recover them
from respondents who must be held jointly and severally liable tor the same. Further,
Valencia contends that respondents should be assessed moral and exemplary damages for
circumventing pertinent labor laws by preventing him from attaining regular employment
status. Lastly, for having been compelled to engage the services of counsel, Valencia claims
that he is likewise entitled to attorney‘s fees.

For their part, respondents Classique Vinyl and Chang point out that the issues raised by
Valencia involve questions of fact which are not within the ambit of a petition for review
on certiorari. Besides, findings of facts of the labor tribunals when affirmed by the CA are
Labor Cases Penned By Justice Del Castillo

generally binding on this Court. At any rate, the said respondents reiterate the arguments
they raised before the labor tribunals and the CA.

With respect to respondent CMS, the Court dispensed with the filing of its comment [15] when
the resolution requiring it to file one was returned to the Court unserved[16] and after Valencia
informed the Court that per Certification[17] of the Office of the Treasurer of Valenzuela City
where CMS‘s office was located, the latter had already closed down its business on March
21, 2012.

Our Ruling

There is no merit in the Petition.

The core issue here is whether there exists an employer-employee relationship between
Classique Vinyl and Valencia. Needless to state, it is from the said determination that the
other issues raised, i.e., whether Valencia was illegally dismissed by Classique Vinyl and
whether the latter is liable for his monetary claims, hinge. However, as correctly pointed out
by Classique Vinyl, ―[t]he issue of whether or not an employer-employee relationship existed
between [Valencia] and [Classique Vinyl] is essentially a question of fact.‖[18] ―The Court is not
a trier of facts find will not review the factual findings of the lower tribunals as these are
generally binding and conclusive.‖[19] While there are recognized exceptions,[20] none of them
applies in this case.

Even if otherwise, the Court is not inclined to depart from the uniform findings of the Labor
Arbiter, the NLRC and the CA.

―It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial
proceedings, ‗the quantum of proof necessary is substantial evidence, or such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.‘ ‗The burden of proof rests upon the party who asserts the affirmative of an
issue‘.‖[21] Since it is Valencia here who is claiming to be an employee of Classique Vinyl, it is
thus incumbent upon him to proffer evidence to prove the existence of employer-employee
relationship between them. He ―needs to show by substantial evidence that he was indeed
an employee of the company against which he claims illegal dismissal.‖[22] Corollary, the
burden to prove the element of an employer employee relationship, viz.: (l) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the power of control, lies upon Valencia.

Indeed, there is no hard and fast rule designed to establish the aforementioned elements of
employer-employee relationship.[23] ―Any competent and relevant evidence to prove the
relationship may be admitted.‖[24] In this case however, Valencia failed to present competent
evidence, documentary or otherwise, to support his claimed employer employee relationship
between him and Classique Vinyl. All he advanced were mere tactual assertions
unsupported by proof.

In fact, most of Valencia‘s allegations even militate against his claim that Classique Vinyl
was his true employer. For one, Valencia stated in his Sinumpaang Salaysay that his
application was actually received and processed by CMS which required him to submit the
necessary requirements for employment. Upon submission thereof, it was CMS that caused
him to sign an employment contract, which upon perusal, is actually a contract between him
and CMS. It was only after he was engaged as a contractual employee of CMS that he was
Labor Cases Penned By Justice Del Castillo

deployed to Classique Vinyl. Clearly, Valencia‘s selection and engagement was undertaken
by CMS and conversely, this negates the existence of such element insofar as Classique
Vinyl is concerned. It bears to state, in addition, that as opposed to Valencia‘s argument, the
lack of notarization of the said employment contract did not adversely affect its veracity and
effectiveness since significantly, Valencia does not deny having signed the same.[25] The CA,
therefore, did not err in relying on the said employment contract in its determination of the
merits of this case. For another, Valencia himself acknowledged that the pay slips[26] he
submitted do not bear the name of Classique Vinyl. While the Court in Vinoya v. National
Labor Relations Commission[27] took judicial notice of the practice of employer to course
through the purported contractor the act of paying wages to evade liabilities under the Labor
Code, hence, the non-appearance of employer‘s name in the pay slip, the Court is not
inclined to rule that such is the case here. This is considering that although CMS claimed in
its supplemental Position Paper/Comment that the money it used to pay Valencia‘s wages
came from Classique Vinyl,[28] the same is a mere allegation without proof. Moreover, such
allegation is inconsistent with CMS‘s earlier assertion in its Position Paper [29] that Valencia
received from it non-cash wages in an approximate amount of P3,000.00. A clear showing of
the element of payment of wages by Classique Vinyl is therefore absent.

Aside from the afore-mentioned inconsistent allegations of Valencia, his claim that his work
was supervised by Classique Vinyl does not hold water. Again, the Court finds the same as
a self-serving assertion unworthy of credence. On the other hand, the employment contract
which Valencia signed with CMS categorically states that the latter possessed not only the
power of control but also of dismissal over him, viz.:

xxxx

2. That the employee shall observe all rules and regulations of the company during the period of
employment and [the] lawful instructions of the management or its representatives. Failure to do so or
if performance is below company standards, management [has] the right to immediately cancel this
contract.

x x x x[30]

Clearly, therefore, no error can be attributed on the part of the labor tribunals and the CA in
ruling out the existence of employer-employee relationship between Valencia and Classique
Vinyl.

Further, the Court finds untenable Valencia‘s argument that neither Classique Vinyl nor CMS
was able to present proof that the latter is a legitimate independent contractor and therefore
unable to rebut the presumption that a contractor is presumed to be a labor-only contractor.
―Generally, the presumption is that the contractor is a labor-only [contractor] unless such
contractor overcomes the burden of proving that it has the substantial capital, investment,
tools and the like.‖[31] Here, to prove that CMS was a legitimate contractor, Classique Vinyl
presented the former‘s Certificate of Registration[32] with the Department of Trade and
Industry and, License[33] as private recruitment and placement agency from the Department
of Labor and Employment. Indeed, these documents are not conclusive evidence of the
status of CMS as a contractor. However, such fact of registration of CMS prevented the legal
presumption of it being a mere labor-only contractor from arising.[34] In any event, it must be
stressed that ―in labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter is
responsible to the employees of the labor-only contractor as if such employees had been
Labor Cases Penned By Justice Del Castillo

directly employed by the principal employer. The principal employer therefore becomes
solidarity liable with the labor-only contractor for all the rightful claims of the
employees.‖[35] The facts of this case, however, failed to establish that there is any
circumvention of labor laws as to call for the creation by the statute of an employer-
employee relationship between Classique Vinyl and Valencia. In fact, even as against CMS,
Valencia‘s money claims has been debunked by the labor tribunals and the CA. Again, the
Court is not inclined to disturb the same.

In view of the above disquisition, the Court finds no necessity to dwell on the issue of
whether Valencia was illegally dismissed by Classique Vinyl and whether the latter is liable
for Valencia‘s money claims.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed December 5,
2012 Decision and March 18, 2013 Resolution of the Court of Appeals in CA-G.R. SP No.
120999 are AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

23 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | CERTIFICATION


ELECTION | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Asian Institute of Management Vs. Asian


Institute of Management Faculty Association;
G.R. No. 207971; January 23, 2017
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the January 8, 2013 Decision[2] of the Court of
Appeals (CA) which dismissed the Petition for Certiorari[3] in CA-G.R. SP No. 114122, and its
subsequent June 27, 2013 Resolution[4] denying herein petitioner‘s Motion for
Reconsideration.[5]

Factual Antecedents

Petitioner Asian Institute of Management (AIM) is a duly registered non stock, non-profit
educational institution. Respondent Asian Institute of Management Faculty Association
(AFA) is a labor organization composed of members of the AIM faculty, duly registered
Certificate of Registration No. NCR-UR-12-4076-2004.

On May 16, 2007, respondent Hied a petition for certification election[6] seeking to
represent a bargaining unit in AIM consisting of forty (40) faculty members. The case
was docketed as DOLE Case No. NCR-OD-M-0705-007. Petitioner opposed the petition,
claiming that respondent‘s members are neither rank-and-file nor supervisory, but rather,
managerial employees.[7]

On July 11, 2007, petitioner filed a petition for cancellation of respondent’s certificate of
registration[8] – docketed as DOLE Case No. NCR-OD-0707-001-LRD – on the grounds of
misrepresentation in registration and that respondent is composed of managerial employees
who are prohibited from organizing as a union.

On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-007 issued an
Order[9] denying the petition for certification election on the ground that AIM‘s faculty
members are managerial employees. This Order was appealed by respondent before the
Secretary of the Department of Labor and Employment (DOLE),[10] who reversed the same
via a February 20, 2009 Decision[11] and May 4, 2009 Resolution,[12] decreeing thus:

WHEREFORE, the appeal filed by the Asian Institute of Management Faculty Association (AIMFA)
is GRANTED. The Order dated 30 August 2007 of DOLE-NCR Mediator-Arbiter Michael T. Parado
is hereby REVERSED and SET ASIDE.
Labor Cases Penned By Justice Del Castillo

Accordingly, let the entire records of the case be remanded to DOLE-NCR for the conduct of a
certification election among the faculty members of the Asian Institute of Management (AIM), with
the following choices:

1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION (AIMFA); and

2. No Union.

SO ORDERED.[13]

Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order[14] dated February 16,


2009 was issued by DOLE-NCR Regional Director Raymundo G. Agravante granting AIM‘s
petition for cancellation of respondent‘s certificate of registration and ordering its delisting
from the roster of legitimate labor organizations. This Order was appealed by respondent
before the Bureau of Labor Relations[15] (BLR), which, in a December 29, 2009
Decision,[16] reversed the same and ordered respondent‘s retention in the roster of legitimate
labor organizations. The BLR held that the grounds relied upon in the petition for
cancellation are not among the grounds authorized under Article 239 of the Labor
Code,[17] and that respondent‘s members are not managerial employees. Petitioner moved to
reconsider, but was rebuffed in a March 18, 2010 Resolution.[18]

CA-G.R.SP No. 109487 and G.R. No. 197089

Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE Secretary‘s
February 20, 2009 Decision and May 4, 2009 Resolution relative to DOLE Case No. NCR-
OD-M-0705-007, or respondent‘s petition for certification election. Docketed as CA G.R. SP
No. 109487, the petition is based on the arguments that 1) the bargaining unit within AIM
sought to be represented is composed of managerial employees who are not eligible to join,
assist, or form any labor organization, and 2) respondent is not a legitimate labor
organization that may conduct a certification election.

On October 22, 2010, the CA rendered its Decision[19] containing the following
pronouncement:

AIM insists that the members of its tenure-track faculty are managerial employees, and therefore,
ineligible to join, assist or form a labor organization. It ascribes grave abuse of discretion on
SOLE[20] for its rash conclusion that the members of said tenure-track faculty are not managerial
employees solely because the faculty‘s actions are still subject to evaluation, review or final approval
by the board of trustees (―BOT‖). AIM argues that the BOT does not manage the day-to-day affairs,
nor the making and implementing of policies of the Institute, as such functions are vested with the
tenure-track faculty.

We agree.

Article 212(m) of the Labor Code defines managerial employees as:

‗ART. 212. Definitions. – x x x

(m) ‗Managerial employee‗ is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
Labor Cases Penned By Justice Del Castillo

assign or discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not falling
within any of the above definitions are considered rank-and-file employees for purposes of this Book.‘

There are, therefore, two (2) kinds of managerial employees under Art. 212(m) of the Labor Code.
Those who ‗lay down x x x management policies‘, such as the Board of Trustees, and those who
‗execute management policies and/or hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees‘.

xxxx

On its face, the SOLE‘s opinion is already erroneous because in claiming that the ‗test of
supervisory‘ or ‗managerial status‘ depends on whether a person possesses authority to act in the
interest of his employer in the matter specified in Article 212(m) of the Labor Code and Section
1(m) of its Implementing Rules, he obviously was referring to the old definition of a managerial
employee. Such is evident in his use of ‗supervisory or managerial status‘, and reference to ‗Section
1(m) of its Implementing Rules‘. For presently, as aforequoted in Article 212(m) of the Labor Code
and as amended by Republic Act 6715 which took effect on March 21, 1989, a managerial
employee is already different from a supervisory employee. x x x

xxxx

In further opining that a managerial employee is one whose ‗authority is not merely routinary or
clerical in nature but requires the use of independent judgment‗, a description which fits now
a supervisory employee under Section 1(t), Rule I, Book V of the Omnibus Rules Implementing the
Labor Code, it then follows that the SOLE was not aware of the change in the law and thus gravely
abused its discretion amounting to lack of jurisdiction in concluding that AIM‘s ‗tenure-track‗
faculty are notmanagerial employees.

SOLE further committed grave abuse of discretion when it concluded that said tenure-track faculty
members are not managerial employees on the basis of a ‗footnote‘ in AIM‘s Policy Manual, which
provides that ‗the policy[-]making authority of the faculty members is merely
recommendatory in nature considering that the faculty standards they formulate are still subject to
evaluation, review or final approval by the [AIM]‟s Board of Trustees‗. x x x

xxxx

Clearly, AIM‘s tenure-track faculty do not merely recommend faculty standards. They ‗determine all
faculty standards‗, and are thus managerial employees. The standards‘ being subjected to the
approval of the Board of Trustees would not make AIM‘s tenure-track faculty non-managerial
because as earlier mentioned, managerial employees are now of two categories: (1) those who ‗lay
down policies‘, such as the members of the Board of Trustees, and those who ‗execute management
policies (etc.)‘, such as AIM‘s tenure-track faculty.

xxxx

It was also grave abuse of discretion on the part of the SOLE when he opined that AIM‘s tenure-track
faculty members are not managerial employees, relying on an impression that they were subjected to
rigid observance of regular hours of work as professors. x x x
Labor Cases Penned By Justice Del Castillo

xxxx

More importantly, it behooves the SOLE to deny AFA‟s appeal in light of the February 16, 2009
Order of Regional Director Agravante delisting AFA from the roster of legitimate labor
organizations. For, only legitimate labor organizations are given the right to be certified as sole
and exclusive bargaining gent in an establishment.

xxxx

Here, the SOLE committed grave abuse of discretion by giving due course to AFA‘s petition for
certification election, despite the fact that: (1) AFA‘s members are managerial employees; and (2)
AFA is not a legitimate labor organization. These facts rendered AFA ineligible, and without any
right to file a petition for certification election, the object of which is to determine the sole and
exclusive bargaining representative of qualified AIM employees.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated February 20, 2009
and Resolution dated May 4, 2009 are hereby REVERSED and SET ASIDE. The Order dated
August 30, 2007 of Mediator-Arbiter Parado is hereby REINSTATED.

SO ORDERED.[21] (Emphasis in the original)

Respondent sought reconsideration, but was denied. It thus instituted a Petition for Review
on Certiorari before this Court on July 4, 2011. The Petition, docketed as G.R. No. 197089,
remains pending to date.

The Assailed Ruling of the Court of Appeals

Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM‘s petition


for cancellation of respondent‘s certificate of registration, petitioner filed on May 24, 2010 a
Petition for Certiorari[22] before the CA, questioning the BLR‘s December 29, 2009 decision
and March 18, 2010 resolution. The petition, docketed as CA-G.R. SP No. 114122, alleged
that the BLR committed grave abuse of discretion in granting respondent‘s appeal and
affirming its certificate of registration notwithstanding that its members are managerial
employees who may not join, assist, or form a labor union or organization.

On January 8, 2013, the CA rendered the assailed Decision, stating as follows:

The petition lacks merit

xxxx

It is therefore incumbent upon the Institute to prove that the BLR committed grave abuse of discretion
in issuing the questioned Decision. Towards this end, AIM must lay the basis by showing that

Article 239. Grounds for cancellation of union registration. The following may constitute grounds for
cancellation of union registration:
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(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members
who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of
the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

Article 238 of the Labor Code provides that the enumeration of the grounds for cancellation of union
registration, is exclusive; in other words, no other grounds for cancellation is acceptable, except for
the three (3) grounds stated in Article 239. The scope of the grounds for cancellation has been
explained –

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with the
election of officers, the minutes of the election of officers, the list of voters, or failure to submit these
doctm1ents together with the list of the newly elected-appointed officers and their postal addresses to
the BLR.

The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent‘s
certificate of registration. The cancellation of a union‘s registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds tor
cancellation of union registration under the Labor Code, the nature of the fraud and misrepresentation
must be grave and compelling enough to vitiate the consent of a majority of union members.[23]

In this regard, it has also been held that:

Another factor which militates against the veracity of the allegations in the Sinumpaang Petisyon is
the lack of particularities on how, when and where respondent union perpetrated the alleged fraud on
each member. Such details are crucial for, in the proceedings for cancellation of union registration on
the ground of fraud or misrepresentation, what needs to be established is that the specific act or
omission of the union deprived the complaining employees-members of their right to choose.[24]

A cursory reading of the Petition shows that AIM did NOT allege any specific act of fraud or
misrepresentation committed by AFA. What is clear is that the Institute seeks the cancellation of the
registration of AFA based on Article 245 of the Labor Code on the ineligibility of managerial
employees to form or join labor unions. Unfortunately for the petitioner, even assuming that there is a
violation of Article 245, such violation will not result in the cancellation of the certificate of
registration of a labor organization.

It should be stressed that a Decision had already been issued by the DOLE in the Certification
Election case; and the Decision ordered the conduct of a certification election an1ong the faculty
members of the Institute, basing its directive on the finding that the members of AFA were not
managerial employees and are therefore eligible to form, assist and join a labor union. As a matter of
fact, the certification election had already been held on October 16, 2009, albeit the results have not
yet been resolved as inclusion/exclusion proceedings are still pending before the DOLE. The remedy
available to the Institute is not the instant Petition, but to question the status of the individual union
Labor Cases Penned By Justice Del Castillo

members of the AFA in the inclusion/exclusion proceedings pursuant to Article 245-A of the Labor
Code, which reads:

Article 245-A. Effect of inclusion as members of employees outside the bargaining unit. – The
inclusion as union members of employees outside the bargaining unit shall not be a ground for the
cancellation of the registration of the union. Said employees are automatically deemed removed from
the list of membership of said union.

Petitioner insists that Article 245-A is not applicable to this case as all AFA members are managerial
employees. We are not persuaded.

The determination of whether any or all of the members of AFA should be considered as managerial
employees is better left to the DOLE because,

It has also been established that in the determination of whether or not certain employees arc
managerial employees, this Court accords due respect and therefore sustains the findings of fact made
by quasi-judicial agencies which are supported by substantial evidence considering their expertise in
their respective fields.[25]

From the discussion, it is manifestly clear that the petitioner failed to prove that the BLR committed
grave abuse of discretion; consequently, the Petition must fail.

WHEREFORE, the Petition is hereby DENIED. The Decision and Resolution of public respondent
Bureau of Labor Relations in BLR-A-C-19-3-6-09 (NCR-OD-0707-001) are hereby AFFIRMED.

SO ORDERED.[26] (Emphasis in the original)

Petitioner filed its Motion for Reconsideration, which was denied by the CA via its June 27,
2013 Resolution. Hence, the instant Petition.

In a November 10, 2014 Resolution,[27] the Court resolved to give due course to the Petition.

Issue

Petitioner claims that the CA seriously erred in affirming the dispositions of the BLR and thus
validating the respondent‘s certificate of registration notwithstanding the fact that its
members are all managerial employees who are disqualified from joining, assisting, or
forming a labor organization.

Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and that the DOLE-NCR Regional
Director‘s February 16, 2009 Order granting AIM‘s petition for cancellation of respondent‘s
certificate of registration and ordering its delisting from the roster of legitimate labor
organizations be reinstated instead, petitioner maintains in its Petition and Reply[28] that
respondent‘s members are all managerial employees; that the CA erred in declaring that
even if respondent‘s members are all managerial employees, this alone is not a ground for
cancellation of its certificate of registration; that precisely, the finding in DOLE Case No.
NCR-OD-M-0705-007, which the CA affirmed in CA-G.R. SP No. 109487, is that
Labor Cases Penned By Justice Del Castillo

respondent‘s members are managerial employees; that respondent‘s declaration that its
members are eligible to join, assist, or form a labor organization is an act of
misrepresentation, given the finding in CA-G.R. SP No. 109487 that they are managerial
employees; and that the grounds for cancellation of union registration enumerated in Article
239 of the Labor Code are not exclusive.

Respondent’s Arguments

In its Comment,[29] respondent maintains that the CA was right to treat petition rs case for
cancellation of its union registration with circumspection; that petitioner‘s ground tor tiling the
petition for cancellation is not recognized under Article 239; that petitioner‘s accusation of
misrepresentation is unsubstantiated, and is being raised for the first time at this stage; that
its members are not managerial employees; and that petitioner‘s opposition to respondent‘s
attempts at self-organization constitutes harassment, oppression, and violates the latter‘s
rights under the Labor Code and the Constitution.

Our Ruling

In Holy Child Catholic School v. Hon. Sto, Tomas,[30] this Court declared that ―[i]n case of
alleged inclusion of disqualified employees in a union, the proper procedure for an employer
like petitioner is to directly file a petition for cancellation of the union‘s certificate of
registration due to misrepresentation, false statement or fraud under the circumstances
enumerated in Article 239 of the Labor Code, as amended.‖

On the basis of the ruling in the above-cited case, it can be said that petitioner was correct in
filing a petition tor cancellation of respondent‘s certificate of registration. Petitioner‘s sole
ground for seeking cancellation of respondent‘s certificate of registration – that its members
are managerial employees and for this reason, its registration is thus a patent nullity for
being an absolute vio1ation of Article 245 of the Labor Code which declares that managerial
employees are ineligible to join any labor organization – is, in a sense, an accusation that
respondent is guilty of misrepresentation for registering under the claim that its members are
not managerial employees.

However, the issue of whether respondent‘s members are managerial employees is still
pending resolution by way of petition for review on certiorari in G.R. No. 197089, which is the
culmination of all proceedings in DOLE Case No. NCR-OD-M-0705-007 – where the issue
relative to the nature of respondent‘s membership was first raised by petitioner itself and is
there fiercely contested.

The resolution of this issue cannot be pre-empted; until it is determined with finality in G.R.
No. 197089, the petition for cancellation of respondent‘s certificate of registration on the
grounds alleged by petitioner cannot be resolved. As a matter of courtesy and in order to
avoid conflicting decisions, We must await the resolution of the petition in G.R. No. 197089.

x x x if a particular point or question is in issue in the second action, and the judgment will depend on
the determination of that particular point or question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that same point or question was in issue and
adjudicated in1he first suit. x x x Identity of cause of action is not required, but merely identity of
issues.[31] (Citation omitted)
Labor Cases Penned By Justice Del Castillo

WHEREFORE, considering that the outcome of this case depends on the resolution of the
issue relative to the nature of respondent‘s membership pending in G.R. No. 197089, this
case is ordered CONSOLIDATED with G.R. No. 197089.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

18 JAN 2017 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Rutcher T. Dagasdas Vs. Grand Placement and


General Services Corporation; G.R. No.
205727; January 18, 2017
DECISION

DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the September 26, 2012
Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 115396, which annulled and set
aside the March 29, 20102 and June 2, 20103 Resolutions of the National Labor Relations
Commission (NLRC) in NLRC LAC OFW-L-02-000071-10, and concomitantly reinstated the
November 27, 2009 Decision4 of the Labor Arbiter (LA) dismissing the Complaint for lack of
merit.

Also challenged is the January 28, 2013 Resolution5 denying the Motion for Reconsideration
filed by Rutcher T. Dagasdas (Dagasdas ).

Factual Antecedents

Grand Placement and General Services Corp. (GPGS) is a licensed

recruitment or placement agency in the Philippines while Saudi Aramco (Aramco) is its
counterpart in Saudi Arabia. On the other hand, Industrial & Management Technology
Methods Co. Ltd. (ITM) is the principal of GPGS, a company existing in Saudi Arabia. 6

In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas as Network
Technician. He was to be deployed in Saudi Arabia under a one-year contract7 with a
monthly salary of Saudi Riyal (SR) 5,112.00. Before leaving the Philippines, Dagasdas
underwent skill training8 and pre-departure orientation as Network Technician.9Nonetheless,
his Job Offer10 indicated that he was accepted by Aramco and ITM for the position of ―Supt.‖

Dagasdas contended that although his position under his contract was as a Network
Technician, he actually applied for and was engaged as a Civil Engineer considering that his
transcript of records, 11 diploma 12 as well as his curriculum vitae 13 showed that he had a
degree in Civil Engineering, and his work experiences were all related to this field.
Purportedly9 the position of Network Technician was only for the purpose of securing a visa
for Saudi Arabia because ITM could not support visa application for Civil Engineers. 14

On February 8, 2008, Dagasdas arrived in Saudi Arabia.15 Thereafter, he signed with ITM a
new employment contract16 which stipulated that the latter contracted him as
Superintendent or in any capacity within the scope of his abilities with salary of SR5,112.00
Labor Cases Penned By Justice Del Castillo

and allowance of SR2,045.00 per month. Under this contract, Dagasdas shall be placed
under a three-month probationary period; and, this new contract shall cancel all contracts
prior to its date from any source.

On February 11, 2008, Dagasdas reported at ITM‘s worksite in Khurais, Saudi


Arabia. 17 There, he was allegedly given tasks suited for a Mechanical Engineer, which
were foreign to the job he applied for and to his work experience. Seeing that he would not
be able to perform well in his work, Dagasdas raised his conce1n to his Supervisor in the
Mechanical Engineering Department. Consequently, he was transferred to the Civil
Engineering Department, was temporarily given a position as Civil Construction Engineer,
and was issued anidentification card good for one month. Dagasdas averred that on March
9, 2008, he was directed to exit the worksite but Rashid H. Siddiqui (Siddiqui), the Site
Coordinator Manager, advised him to remain in the premises, and promised to secure him
the position he applied for. However, before Dagasdas‘ case was investigated, Siddiqui had
severed his employment with ITM. 18

In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office.19 Later, 11M
gave him a termination notice20 indicating that his last day of work was on April 30, 2008,
and he was dismissed pursuant to clause 17.4.3 of his contract, which provided that ITM
reserved the right to terminate any employee within the three-month probationary period
without need of any notice to the employee.21

Before his repatriation, Dagasdas signed a Statement of Quitclaim22 with Final


Settlement23 stating that ITM paid him all the salaries and benefits for his services from
February 11, 2008 to April 30, 2008 in the total amow1t of SR7,156.80, and ITM was
relieved from all financial obligations due to Dagasdas.

On June 24, 2008, Dagasdas returned to the Philippines.24 Thereafter, he filed an illegal
dismissal case against GPGS, ITM, and Aramco.

Dagasdas accused GPGS, ITM, and Aramco of misrepresentation, which resulted in the
mismatch in the work assigned to him. He contended that such claim was supported by
exchanges of electronic mail (e-mail) establishing that GPGS, ITM, and Aramco were aware
of the job mismatch that had befallen him. 25 He also argued that although he was engaged
as a project employee, he was still entitled to security of tenure for the duration of his
contract. He maintained that GPGS, ITM, and Aramco merely invented ―imaginary cause/s‖
to terminate him. Thus, he claimed that he was dismissed without cause and due process of
law.26

GPGS, ITM, and Aramco countered that Dagasdas was legally dismissed. They explained
that Dagasdas was aware that he was employed as Network Technician but he could not
perform his work in accordance with the standards of his employer. They added that
Dagasdas was informed of his poor performance, and he conformed to his termination as
evidenced by his quitclaim. 27 They also stressed that Dagasdas was only a probationary
employee since he worked for ITM for less than three months.28

Ruling of the Labor Arbiter

On November 27, 2009, the LA dismissed the case for lack of merit. The LA pointed out that
when Dagasdas signed his new employment contract in Saudi Arabia, he accepted its
stipulations, including the fact that he had to undergo probationary status. She declared that
Labor Cases Penned By Justice Del Castillo

this new contract was more advantageous for Dagasdas as his position was upgraded to
that of a Superintendent, and he was likewise given an allowance of SR 2,045.00 aside from
his salary of SR 5,112.00 per month. According to the LA, for being more favorable, this new
contract was not prohibited by law. She also decreed that Dagasdas fell short of the
expected work performance; as such, his employer dismissed him as part of its management
prerogative.

Consequently, Dagasdas appealed to the NLRC.

Ruling of the National Labor Relations Commission

On March 29, 2010, the NLRC issued a Resolution finding Dagasdas‘ dismissal illegal. The
decretal portion of the NLRC Resolution reads:

WHEREFORE, the decision appealed from is hereby REVERSED, and the respondent[s] are hereby
ordered to pay the complainant the salaries corresponding to the unexpired portion of his contract
amounting to SR 46,008 (SR 5112 x 9 months, or from May 1, 2008 to January 31, 2009), plus ten
percent (10%) thereof as attorney‘s foes. The respondents are jointly and severally liable for the
judgment awards, which are payable in Philippine currency converted on the basis of the exchange
rate prevailing at the time of actual payment.

SO ORDERED.29

The NLRC stated that Dagasdas, who was a Civil Engineering graduate, was ―recruited on
paper‖ by GPGS as Network Technician but the real understanding between the parties was
to hire him as Superintendent. It held that GPGS erroneously recruited Dagasdas, and failed
to inform him that he was hired as a ―Mechanical Superintendent‖ meant for a Mechanical
Engineer. It declared that while ITM has the prerogative to continue the employment of
individuals only if they were qualified, Dagasdas‘ dismissal amounted to illegal termination
since the mismatch between his qualifications and the job given him was no fault of his.

The NLRC added that Dagasdas should not be made to suffer the consequences of the
miscommunication between GPGS and ITM considering that the government obligates
employment agencies recruiting Filipinos for overseas work to ―select only medically and
technically qualified recruits.‖30

On June 2, 2010, the NLRC denied the Motion for Reconsideration of its Resolution dated
March 29, 2010.

Undeterred, GPGS filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion on the part of the NLRC in ruling that Dagasdas was illegally dismissed.

Ruling of the Court of Appeals

On September 26, 2012, the CA set aside the NLRC Resolutions and reinstated the LA
Decision dismissing the case for lack of merit.

The CA could not accede to the conclusion that the real agreement between the parties was
to employ Dagasdas as Superintendent. It stressed that Dagasdas left the Philippines
pursuant to his employment contract indicating that he was to work as a Network Technician;
Labor Cases Penned By Justice Del Castillo

when he arrived in Saudi Arabia and signed a new contract for the position of a
Superintendent, the agreement was with no participation of GPGS, and said new contract
was only between Dagasdas and ITM. It emphasized that after commencing work as
Superintendent, Dagasdas realized that he could not perform his tasks, and ―[s]eemingly, it
was [Dagasdas] himself who voluntarily withdrew from his assigned work for lack of
competence.‖31 It faulted the NLRC for falling to consider that Dagasdas backed out as
Superintendent on the excuse that the same required the skills of a Mechanical Engineer.

In holding that Dagasdas‘ dismissal was legal, the CA gave credence to Dagasdas‘
Statement of Quitclaim and Final Settlement. It ruled that for having voluntarily accepted
money from his employer, Dagasdas accepted his termination and released his employer
from future financial obligations arising from his past employment with it.

On January 28, 2013, the CA denied Dagasdas‘ Motion for Reconsideration.

Hence, Dagasdas filed this Petition raising these grounds:

[1] THE HONORABLE COURT OF APPEALS COMMITIED A REVERSIBLE ERROR WHEN


IT REVERSED THE FACTUAL FINDINGS OF THE NATIONAL LABOR RELATION‘S
COMMISSION.32

[2] THE HONORABLE COURT OF APPEALS PATENTLY ERRED WITH ITS FINDINGS
THAT THE CONTRACT SIGNED BY DAGASDAS IN ALKHOBAR IS MORE
ADVANTAGEOUS TO THE LATTER AND THAT IT WAS [H]IS PERSONAL ACT OR
DECISION [TO SIGN] THE SAME.33

[3] THE HONORABLE COURT OF APPEALS ALSO GRAVELY ERRED IN FAULTING THE
NLRC FOR ITS FAILURE TO INVALIDATE OR DISCUSS THE FINAL SETTLEMENT AND
STATEMENT OF QUITCLAIM SIGNED BY [DAGASDAS].34

Dagasdas reiterates that he was only recruited ―on paper‖ as a Network Technician but the
real agreement between him and his employer was to engage him as Superintendent in t‘1e
field of Civil Engineering, he being a Civil Engineering graduate with vast experience in said
field. He stresses that he was terminated because of a ―discipline mismatch‖ as his employer
actually needed a Mechanical (Engineer) Superintendent, not a Civil Engineer.

In addition, Dagasdas insists that he did not voluntarily back out from his work. If not for the
discipline mismatch, he could have performed his job as was expected of him. He also
denies that the new employment contract he signed while in Saudi Arabia was more
advantageous to him since the basic salary and allowance stipulated therein are just the
same with that in his Job Offer. He argues that the new contract was even disadvantageous
because it was inserted therein that he still had to undergo probationary status for three
months.

Finally, Dagasdas contends that the new contract he signed while in Saudi Arabia was void
because it was not approved by the Philippine Overseas Employment Administration
Labor Cases Penned By Justice Del Castillo

(POEA). He also claims that CA should have closely examined his quitclaim because he
only signed it to afford his plane ticket for his repatriation.

On the other hand, GPGS maintains that Dagasdas was fully aware that he applied for and
was accepted as Network Technician. It also stresses that it was Dagasdas himself who
decided to accept from ITM a new job offer when he arrived in Saudi Arabia. It further
declares that Dagasdas‘ quitclaim is valid as there is no showing that he was compelled to
sign it.

Issue

Was Dagasdas validly dismissed from work?

Our Ruling

The Petition is with merit.

As a rule, only questions of law may be raised in a petition under Rule 45 of the Rules of
Court. However, this rule allows certain exceptions, including a situation where the findings
of fact of the courts or tribunals below are conflicting.35 In this case, the CA and the NLRC
arrived at divergent factual findings anent Dagasdas‘ termination. As such, the Court deems
it necessary to re-examine these findings and detemline whether the CA has sufficient basis
to annul the NLRC Decision, and set aside its finding that Dagasdas was illegally dismissed
from work.

Moreover, it is well-settled that employers have the prerogative to impose standards on the
work quantity and quality of their employees and provide measures to ensure compliance
therewith. Non-compliance with work standards may thus be a valid cause for dismissing an
employee. Nonetheless, to ensure that employers will not abuse their prerogatives, the same
is tempered by security of tenure whereby the employees are guaranteed substantive and
procedural due process before they are dismissed from work. 36

Security of tenure remains even if employees, particularly the overseas Filipino workers
(OFW), work in a different jurisdiction. Since the employment contracts of OFWs are
perfected in the Philippines, and following the principle of lex loci contractus (the law of the
place where the contract is made), these contracts are governed by our laws, primarily the
Labor Code of the Philippines and its implementing rules and regulations.37 At the same
time, our laws generally apply even to employment contracts of OFWs as our Constitution
explicitly provides that the State shall afford full protection to labor, whether local or
overseas.38 Thus, even if a Filipino is employed abroad, he or she is entitled to security of
tenure, among other constitutional rights.39

In this case, prior to his deployment and while still in the Philippines, Dagasdas was made to
sign a POEA-approved contract with GPGS, on behalf of ITM; and, upon arrival in Saudi
Arabia, ITM made him sign a new employment contract. Nonetheless, this new contract,
which was used as basis for dismissing Dagasdas, is void.

First, Dagasdas‘ new contract is in clear violation of his right to security of tenure.
Labor Cases Penned By Justice Del Castillo

Under the Labor Code of the Philippines the following are the just causes for dismissing an
employee:

ARTICLE 297. [282] Termination by Employer. – An employer may terminate an employment for
any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing.40

However, per the notice of termination given to Dagasdas, ITM terminated him for violating
clause 17.4.3 of his new contract, viz.:

17.4 The Company reserves the right to terminate this agreement without serving any notice to the
Consultant in the following cases:

xxxx

17.4.3 If the Consultant is terminated by company or its client within the probation period of 3
months.41

Based on the foregoing, there is no clear justification for the dismissal of Dagasdas other
than the exercise of ITM‘s right to terminate him within the probationary period. While our
Civil Code recognizes that parties may stipulate in their contracts such terms and conditions
as they may deem convenient, these terms and conditions must not be contrary to law,
morals, good customs, public order or policy.42 The above-cited clause is contrary to law
because as discussed, our Constitution guarantees that employees, local or overseas, are
entitled to security of tenure. To allow employers to reserve a right to terminate employees
without cause is violative of this guarantee of security of tenure.

Moreover, even assuming that Dagasdas was still a probationary employee when he was
terminated, his dismissal must still be with a valid cause. As regards a probationary
employee, his or her dismissal may be allowed only if there is just cause or such reason to
conclude that the employee fails to qualify as regular employee pursuant to reasonable
standards made known to the employee at the time of engagement.43

Here, ITM failed to prove that it informed Dagasdas of any predetermined

standards from which his work will be gauged.44 In the contract he signed while still in the
Philippines, Dagsadas was employed as Network Technician; on the other hand, his new
Labor Cases Penned By Justice Del Castillo

contract indicated that he was employed as Superintendent. However, no job description –


or such duties and responsibilities attached to either position – was adduced in evidence. It
thus means that the job for which Dagasdas was hired was not definite from the beginning.

Indeed, Dagasdas was not sufficiently informed of the work standards for which his
performance will be measured. Even his position based on the job title given him was not
fully explained by his employer. Simply put, ITM failed to show that it set and communicated
work standards for Dagasdas to follow, and on which his efficiency (or the lack thereof) may
be determined.

Second, the new contract was not shown to have been processed through the POEA. Under
our Labor Code, employers hiring OFWs may only do so through entities authorized by the
Secretary of the Department of Labor and Employment.45 Unless the employment contract
of an OFW is processed through the POEA, the same does not bind the concerned OFW
because if the contract is not reviewed by the POEA, certainly the State has no means of
determining the suitability of foreign laws to our overseas workers. 46

This new contract also breached Dagasdas‘ original contract as it was entered into even
before the expiration of the original contract approved by the POEA. Therefore, it cannot
supersede the original contract; its terms and conditions, including reserving in favor of the
employer the right to terminate an employee without notice during the probationary period,
are void.47

Third, under this new contract, Dagasdas was not afforded procedural due process when he
was dismissed from work.

As cited above, a valid dismissal requires substantive and procedural due process. As
regards the latter, the employer must give the concerned employee at least two notices
before his or her termination. Specifically, the employer must inform the employee of the
cause or causes for his or her termination, and thereafter, the employer‘s decision to dismiss
him. Aside from the notice requirement, the employee must be accorded the opportunity to
be heard.48

Here, no prior notice of purported infraction, and such opportunity to explain on any
accusation against him was given to Dagasdas. He was simply given a notice of termination.
In fact, it appears that ITM intended not to comply with the twin notice requirement. As
above-quoted, under the new contract, ITM reserved in its favor the right to terminate the
contract without serving any notice to Dagasdas in specified cases, which included such
situation where the employer decides to dismiss the employee within the probationary
period. Without doubt, ITM violated the due process requirement in dismissing an employee.

Lastly, while it is shown that Dagasdas executed a waiver in favor of his employer, the same
does not preclude him from filing this suit.

Generally, the employee‘s waiver or quitclaim cannot prevent the employee from demanding
benefits to which he or she is entitled, and from filing an illegal dismissal case. This is
because waiver or quitclaim is looked upon with disfavor, and is frowned upon for being
contrary to public policy. Unless it can be established that the person executing the waiver
voluntarily did so, with full understanding of its contents, and with reasonable and credible
consideration, the same is not a valid and binding undertaking. Moreover, the burden to
prove that the waiver or quitclaim was voluntarily executed is with the employer.49
Labor Cases Penned By Justice Del Castillo

In this case, however, neither did GPGS nor its principal, ITM, successfully discharged its
burden. GPGS and/or ITM failed to show that Dagasdas indeed voluntarily waived his claims
against the employer.

Indeed, even if Dagasdas signed a quitclaim, it does not necessarily follow that he freely and
voluntarily agreed to waive all his claims against his employer. Besides, there was no
reasonable consideration stipulated in said quitclaim considering that it only determined the
actual payment due to Dagasdas from February 11, 2008 to April 30, 2008. Verily, this
quitclaim, under the semblance of a final settlement, cannot absolve GPGS nor ITM from
liability arising from the employment contract of Dagasdas.50

All told, the dismissal of Dagasdas was without any valid cause and due process of law.
Hence, the NLRC properly ruled that Dagasdas was illegally dismissed. Evidently, it was an
error on the part of the CA to hold that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when the NLRC ruled for Dagasdas.

WHEREFORE, the Petition is GRANTED. The Decision dated September 26, 2012 and
Resolution dated January 28, 2013 of the Court of Appeals in CA-G.R. SP No. 115396
are REVERSED and SET ASIDE. Accordingly, the March 29, 2010 and June 2, 2010
Resolutions of the National Labor Relations Commission in NLRC LAC OFW-L-02-000071-
10 are REINSTATED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

16 JAN 2017 | SUBJECT | LABOR AND


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

Turks Shawarma Company/Gem Zeñarosa Vs.


Feliciano Z. Pajaron and Larry A. Carbonilla;
G.R. No. 207156; January 16, 2017
DECISION

DEL CASTILLO, J.:

The liberal interpretation of the rules applies only to justifiable causes and meritorious
circumstances.

By this Petition for Review on Certiorari,[1] petitioner Turks Shawarma Company and its
owner, petitioner Gem Zeñarosa (Zeñarosa), assail the May 8, 2013 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 121956, which affirmed the Orders dated March 18,
2011[3] and September 29, 2011[4] of the National Labor Relations Commission (NLRC)
dismissing their appeal on the ground of non-perfection for failure to post the required bond.

Factual Antecedents

Petitioners hired Feliciano Z. Pajaron (Pajaron) in May 2007 as service crew and Larry A.
Carbonilla (Carbonilla) in April 2007 as head crew. On April 15, 2010, Pajaron and
Carbonilla filed their respective Complaints[5] for constructive and actual illegal dismissal,
non-payment of overtime pay, holiday pay, holiday premium, rest day premium, service
incentive leave pay and 13th month pay against petitioners. Both Complaints were
consolidated.

Pajaron alleged that on April 9, 2010, Zeñarosa asked him to sign a piece of paper [6] stating
that he was receiving the correct amount of wages and that he had no claims whatsoever
from petitioners. Disagreeing to the truthfulness of the statements, Pajaron refused to sign
the paper prompting Zeñarosa to fire him from work. Carbonilla, on the other hand, alleged
that sometime in June 2008, he had an altercation with his supervisor Conchita Marcillana
(Marcillana) while at work. When the incident was brought to the attention of Zeñarosa, he
was immediately dismissed from service. He was also asked by Zeñarosa to sign a piece of
paper acknowledging his debt amounting to P7,000.00.

Both Pajaron and Carbonilla claimed that there was no just or authorized cause for their
dismissal and that petitioners also failed to comply with the requirements of due process. As
such, they prayed for separation pay in lieu of reinstatement due to strained relations with
petitioners and backwages as well as nominal, moral and exemplary damages. Petitioners
also claimed for non payment of just wages, overtime pay, holiday pay, holiday premium,
service incentive leave pay and 13th month pay.
Labor Cases Penned By Justice Del Castillo

Petitioners denied having dismissed Pajaron and Carbonilla; they averred that they actually
abandoned their work. They alleged that Pajaron would habitually absent himself from work
for an unreasonable length of time without notice; and while they rehired him several times
whenever he returned, they refused to rehire him this time after he abandoned work in April
2009. As for Carbonilla, he was reprimanded and admonished several times for misbehavior
and disobedience of lawful orders and was advised that he could freely leave his work if he
could not follow instructions. Unfortunately, he left his work without any reason and without
settling his unpaid obligation in the an1ount of P78,900.00, which compelled them to file a
criminal case[7] for estafa against him. In addition, criminal complaints[8] tor slander were filed
against both Pajaron and Carbonilla for uttering defamatory words that allegedly
compromised Zeñarosa‘s reputation as a businessman. Petitioners, thus, insisted that their
refusal to rehire Pajaron and Carbonilla was for valid causes and did not amount to dismissal
from employment. Finally, petitioners claimed that Pajaron and Carbonilla failed to
substantiate their claims that they were not paid labor standards benefits.

Proceedings before the Labor Arbiter

In a Decision[9] dated December 102010, the Labor Arbiter found credible Pajaron and
Carbonilla‘s version and held them constructively and illegally dismissed by petitioners. The
Labor Arbiter found it suspicious for petitioners to file criminal cases against Pajaron and
Carbonilla only after the complaints for illegal dismissal had been filed. Pajaron and
Carbonilla were thus awarded the sum of P148,753.61 and P49,182.66, respectively,
representing backwages, separation pay in lieu of reinstatement, holiday pay, service
incentive leave pay and 13th month pay, The dispositive portion of the Labor Arbiter‘s
Decision reads:

WHEREFORE, in light of the foregoing, judgment is hereby rendered declaring respondent TURKS
SHAWARMA COMPANY, [liable] to pay complainants as follows:

I. FELICIANO Z. PAJARON, JR.

1. Limited backwages computed from April 9, 2010 up to the date of this Decision, in the
amount of SIXTY EIGHT THOUSAND NINE HUNDRED NINETY EIGHT PESOS
& 74/100 (Php68,998.74)

2. Separation pay, in lieu of reinstatement equivalent to one month‘s salary for every year
of service computed from May 1, 2007 up to the date of this decision, in the amount of
THIRTY ONE THOUS[A]ND FIVE HUNDRED TWELVE PESOS (Php31,512.00);

3. Holiday pay, in the amount of TWELVE THOUSAND SIX HUNDRED EIGHTY


ONE PESOS (Php12,681.00);

4. Service incentive leave pay, in the amount of FIVE THOUSAND FOUR HUNDRED
THREE PESOS & 46/100 (Php5,403.46); and

5. Thirteenth month pay, in the amount of THIRTY THOUSAND ONE HUNDRED


FIFTY EIGHT PESOS & 41/100 (Php30,158.41).

II. LARRY A. CARBONILLA


Labor Cases Penned By Justice Del Castillo

1. Separation pay, in lieu of reinstatement equivalent to one month‘s salary for every year
of service computed from April 1, 2007 up to the date of this decision, in the amount
of FORTY TWO THOUSAND AND SIXTEEN PESOS (Php42,016.00);

2. Holiday pay, in the amount of TWO THOUSAND PESOS (Php2,000.00);

3. Service incentive leave pay, in the amount of EIGHT HUNDRED THIRTY THREE
PESOS & 33/100 (Php833.33); and

4. Thirteenth month pay, in the amount of FOUR THOUSAND THREE HUNDRED


THIRTY THREE PESOS & 33/100 (Php4,333.33).

Other claims herein sought and prayed for are hereby denied for lack of legal and factual bases.

SO ORDERED.[10]

Proceedings before the National Labor Relations Commission

Due to alleged non-availability of counsel, Zeñarosa himself filed a Notice of Appeal with
Memorandum and Motion to Reduce Bond[11] with the NLRC. Along with this, Zeñarosa
posted a partial cash bond in the amount of P15,000.00,[12] maintaining that he cannot afford
to post the full amount of the award since he is a mere backyard micro-entrepreneur. He
begged the NLRC to reduce the bond.

The NLRC, in an Order[13] dated March 18, 2011, denied the motion to reduce bond. It ruled
that financial difficulties may not be invoked as a valid ground to reduce bond; at any rate, it
was not even substantiated by proof. Moreover, the partial bond in the amount of
P15,000.00 is not reasonable in relation to the award which totalled to P197,936.27.
Petitioners‘ appeal was thus dismissed by the NLRC for non-perfection.

On April 7, 2011, petitioners, through a new counsel, filed a Motion for Reconsideration (with
plea to give due course to the appeal)[14] averring that the outright dismissal of their appeal
was harsh and oppressive considering that they had substantially complied with the Rules
through the posting of a partial bond and their willingness to post additional bond if
necessary. Moreover, their motion to reduce bond was meritorious since payment of the full
amount of the award will greatly affect the company‘s operations; besides the appeal was
filed by Zeñarosa without the assistance of a counsel. Petitioners thus implored for a more
liberal application of the Rules and prayed that their appeal be given due course. Along with
this motion for reconsideration, petitioners tendered the sum of P207,435.53 representing
the deficiency of the appeal bond.[15]

In an Order[16] dated September 29, 2011, the NLRC denied the Motion for Reconsideration,
reiterating that the grounds for the reduction of the appeal bond are not meritorious and that
the partial bond posted is not reasonable. The NLRC further held that the posting of the
remaining balance on April 7, 2011 or three months and eight days from receipt of the Labor
Arbiter‘s Decision on December 30, 2010 cannot be allowed, otherwise, it will be tantamount
to extending the period to appeal which is limited only to 10 days from receipt of the assailed
Decision.

Proceedings before the Court of Appeals


Labor Cases Penned By Justice Del Castillo

Petitioners filed a Petition for Certiorari with application for Writ of Preliminary Injunction and
Temporary Restraining Order[17] with the CA. They insisted that the NLRC gravely abused its
discretion in dismissing the appeal for failure to post the required appeal bond.

On May 8, 2013, the CA rendered a Decision[18] dismissing the Petition for Certiorari. It held
that the NLRC did not commit any grave abuse of discretion in dismissing petitioners‘ appeal
for non-perfection because petitioners failed to comply with the requisites in filing a motion to
reduce bond, namely, the presence of a meritorious ground and the posting of a reasonable
amount of bond. The CA stated that financial difficulties is not enough justification to
dispense with the mandatory posting of a bond inasmuch as there is an option of posting a
surety bond from a reputable bonding company duly accredited by the NLRC, which,
unfortunately, petitioners failed to do. The CA noted that the lack of assistance of a counsel
is not an excuse because petitioners ought to know the Rules in filing an appeal; moreover,
ignorance of the law does not excuse them from compliance therewith.

Hence, this present Petition.

Issue

Petitioners insist that the CA erred in affirming the NLRC‘s dismissal of their appeal
for the following reasons: first, there was substantial compliance with the Rules on
perfection of appeal; second, the surrounding facts and circumstances constitute
meritorious grounds to reduce the appeal bond; third, they exhibited willingness and
good faith by posting a partial bond during the reglementary period; and lastly, a
liberal interpretation of the requirement of an appeal bond would serve the desired
objective of resolving controversies on the merits. Petitioners claim that there is a
necessity to resolve the merits of their appeal since the Labor Arbiter‘s Decision
declaring Pajaron and Carbonilla illegally terminated from employment was not
based on substantial evidence.
Our Ruling

The Petition has no merit.


The Court has time and again held that ―[t]he right to appeal is neither a natural right nor is it
a component of due process. It is a mere statutory privilege, and may be exercised only in
the manner and in accordance with the provisions of the law.‖[19] ―The party who seeks to
avail of the same must comply with the requirements of the rules. Failing to do so the right to
appeal is lost.‖[20]

Article 223 of the Labor Code, which sets forth the rules on appeal from the Labor Arbiter‘s
monetary award, provides:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
Labor Cases Penned By Justice Del Castillo

(c) If made purely on questions of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage
or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.

x x x x. (Emphasis supplied)

Meanwhile, Sections 4 and 6 of Rule VI of the 2005 Revised Rules of Procedure of the
NLRC, which were in effect when petitioners filed their appeal, provide:

Section 4. Requisites for perfection of appeal. – (a) The Appeal shall be: 1) filed within the
reglementary period as provided in Section 1 of this Rule; 2) verified by the appellant himself in
accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a
memorandum of appeal which shall state the grounds relied upon and the arguments in support
thereof, the relief prayed for, and with a statement of the date the appellant received the appealed
decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied
by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in
Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other
parties.

b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.

xxxx

Section 6. Bond. – In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which
shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award,
exclusive of damages and attorney‘s fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds, and upon the posting of
a bond in a reasonable amount. The mere filing of a motion to reduce bond without complying with
the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal.

―It is clear from both the Labor Code and the NLRC Rules of Procedure that there is
legislative and administrative intent to strictly apply the appeal bond requirement, and the
Court should give utmost regard to this intention.‖ [21]The posting of cash or surety bond is
therefore mandatory and jurisdictional; failure to comply with this requirement renders the
decision of the Labor Arbiter final and executory.[22] This indispensable requisite for the
perfection of an appeal ―is to assure the workers that if they finally prevail in the case[,] the
monetary award will be given to them upon the dismissal of the employer‘s appeal [and] is
further meant to discourage employers from using the appeal to delay or evade payment of
their obligations to the employees.‖[23]
Labor Cases Penned By Justice Del Castillo

However, the Court, in special and justified circumstances, has relaxed the requirement of
posting a supersedeas bond for the perfection of an appeal on technical considerations to
give way to equity and justice.[24] Thus, under Section 6 of Rule VI of the 2005 NLRC Revised
Rules of Procedure, the reduction of the appeal bond is allowed, subject to the following
conditions: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2)
a reasonable amount in relation to the monetary award is posted by the appellant.
Compliance with these two conditions will stop the running of the period to perfect an appeal.

In the case at bar, petitioners filed a Motion to Reduce Bond together with their Notice of
Appeal and posted a cash bond ofP15,000.00 within the 10-day reglementary period to
appeal. The CA correctly found that the NLRC did not commit grave abuse of discretion in
denying petitioners‘ motion to reduce bond as such motion was not predicated on
meritorious and reasonable grounds and the amount tendered is not reasonable in relation
to the award. The NLRC correctly held that the supposed ground cited in the motion is not
well-taken tor there was no evidence to prove Zeñarosa‘s claim that the payment of the full
amount of the award would greatly affect his business due to financial setbacks. Besides,
―the law does not require outright payment of the total monetary award; [the appellant has
the option to post either a cash or surety bond. In the latter case, appellant must pay only a]
moderate and reasonable sum for the premium to ensure that the award will be eventually
paid should the appeal fail.‖[25]Moreover, the absence of counsel is not a valid excuse for
non-compliance with the rules. As aptly observed by the CA, Zeñarosa cannot feign
ignorance of the law considering that he was able to post a partial bond and ask for a
reduction of the appeal bond. At any rate, petitioners did not advance any reason for the
alleged absence of counsel except that they were simply abandoned. Neither did petitioners
explain why they failed to procure a new counsel to properly assist them in filing the appeal.
Moreover, the partial bond posted was not reasonable. In the case of McBurnie v.
Ganzon,[26] the Court has set a provisional percentage of 10% of the monetary award
(exclusive of damages and attorney‘s fees) as reasonable amount of bond that an appellant
should post pending resolution by the NLRC of a motion for a bond‘s reduction. Only after
the posting of this required percentage shall an appellant‘s period to perfect an appeal be
suspended. Applying this parameter, the P15,000.00 partial bond posted by petitioners is not
considered reasonable in relation to the total monetary award of P197,936.27.

Petitioners, nevertheless, rely on a number of cases wherein the Court allowed the
relaxation of the stringent requirement of the rule. In Nicol v. Footjoy Industrial
Corporation,[27] the Court reversed the NLRC‘s denial of the appellant‘s motion to reduce
bond upon finding adequate evidence to justify the reduction. In Rada v. National Labor
Relations Commission[28] and Blancaflor v. National Labor Relations Commission,[29] the
NLRC allowed the late payment of the bond because the appealed Decision of the Labor
Arbiter did not state the exact amount to be awarded, hence there could be no basis for
determining the amount of the bond to be filed. It was only after the amount of superseades
bond was specified by the NLRC that the appellants filed the bond. In YBL (Your Bus Line)
v. National Labor Relations Commission,[30] the Court was propelled to relax the requirements
relating to appeal bonds as there were valid issues raised in the appeal. In Dr. Postigo v.
Philippine Tuberculosis Society, Inc.,[31] the respondent therein deferred the posting of the
bond and instead filed a motion to reduce bond on the ground that the Labor Arbiter‘s
computation of the award is erroneous which circumstance justified the relaxation of the
appeal bond requirement. In all of these cases, though, there were meritorious grounds that
warranted the reduction of the appeal bond, which, as discussed, is lacking in the case at
bench.

Petitioners, furthermore, claim that the NLRC‘s outright dismissal of their appeal was harsh
and oppressive since they should still be given opportunity to complete the required bond
Labor Cases Penned By Justice Del Castillo

upon the filing of their motion for reconsideration. Thus, they insist that their immediate
posting of the deficiency when they filed a motion for reconsideration constituted substantial
compliance with the Rules.

The contention is untenable.

The NLRC exercises full discretion in resolving a motion for the reduction of bond[32] in
accordance with the standards of meritorious grounds and reasonable amount. The
―reduction of the bond is not a matter of right on the part of the movant [but] lies within the
sound discretion of the NLRC x x x.‖[33]

In order to give full effect to the provisions on motion to reduce bond, the appellant must be allowed
to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an appeal.
If the NLRC grants the motion and rules that there is indeed meritorious ground and that the amount
of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, the
appellant may still file a motion tor reconsideration as provided under Section 15, Rule VII of the
Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the appeal is perfected. If the
NLRC denies the motion. then the decision of the Labor Arbiter becomes final and executory.[34]

The rulings in Garcia v. KJ Commercial[35] and Mendoza v. HMS Credit Corporation[36] cannot
dissuade this Court from relaxing the rules. In Garcia, the NLRC initially denied the appeal of
respondent therein due to the absence of meritorious grounds in its motion to reduce bond
and unreasonable amount of partial bond posted. However, upon the posting of the full
amount of bond when respondent filed its motion for reconsideration, the NLRC granted the
motion for reconsideration on the ground of substantial compliance with the rules after
considering the merits of the appeal. Likewise, in Mendoza, the NLRC initially denied
respondents‘ Motion to Reduce Appeal Bond with a partial bond. Respondents thereafter
promptly complied with the NLRC‘s directive to post the differential amount between the
judgment award and the sum previously tendered by them. The Court held that the appeal
was filed timely on account of respondents‘ substantial compliance with the requirements on
appeal bond. In both Garcia and Mendoza, however, the NLRC took into consideration the
substantial merits of the appealed cases in giving due course to the appeals. It, in fact,
reversed the Labor Arbiters‘ rulings in both cases. In contrast, petitioners in the case at
bench have no meritorious appeal as would convince this Court to liberally apply the rule.

Stated otherwise, petitioners‘ case will still fail on its merits even if we are to allow their
appeal to be given due course. After scrupulously examining the contrasting positions and
arguments of the parties, we find that the Labor Arbiter‘s Decision declaring Pajaron and
Carbonilla illegally dismissed was supported by substantial evidence. While petitioners
vehemently argue that Pajaron and Carbonilla abandoned their work, the records are devoid
of evidence to show that there was intent on their part to forego their employment. In fact,
petitioners adamantly admitted that they refused to rehire Pajaron and Carbonilla despite
persistent requests to admit them to work. Hence, petitioners essentially admitted the fact of
dismissal. However, except tor their empty and general allegations that the dismissal was for
just causes, petitioners did not proffer any evidence to support their claim of misconduct or
misbehavior on the part of Pajaron and Carbonilla. ―In termination cases, the burden of proof
rests on the employer to show that the dismissal is for a Just cause.‖[37] For lack of any clear,
valid, and just cause in terminating Pajaron and Carbonilla‘s employment, petitioners are
indubitably guilty of illegal dismissal.
Labor Cases Penned By Justice Del Castillo

All told, we find no error on the part of the CA in ruling that the NLRC did not gravely abused
its discretion in dismissing petitioners‘ appeal for non-perfection due to non compliance with
the requisites of filing a motion to reduce bond.

[T]he merit of [petitioners‘] case does not warrant the liberal application of the x x x rules x x x.
While it is true that litigation is not a game of technicalities and that rules of procedure shall not be
strictly enforced at the cost of substantial justice, it must be emphasized that procedural rules should
not likewise be belittled or dismissed simply because their non-observance might result in prejudice to
a party‘s substantial rights. Like all rules, they are required to be followed, except only for the most
persuasive of reasons.[38]

WHEREFORE, the Petition is DENIED. The May 8, 2013 Decision of the Court of Appeals in
CA-G.R SP No. 121956 is AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

23 NOV 2016 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Interadent Zahntechnik Philippines, Inc., et al.


Vs. Rebecca Simbillo; G.R. No. 207315;
November 23, 2016
DECISION

DEL CASTILLO, J.:

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

Antecedent Facts

Simbillo worked at Interadent as a rank-and-file employee from May 2, 2004 up to March


2006. In April 2008, she was rehired by Interadent as Accounting Manager. On April 16,
2010, she was promoted to the position of Finance and Accounting Manager. She was also
Interadent‘s Treasurer upon being elected by the Board of Directors on March 31, 2010.

On July 23, 2010, Interadent sought a company-wide implementation of the following


security measures: body frisking and bag/personal items inspection of all employees upon
ingress and egress of office, disconnection of all USB ports and prohibition of cellular phone
usage.[7] The immediate implementation of these security procedures was brought about by
an alleged leakage of security information uncovered by Interadent‘s external auditors.

On July 28, 2010, upon the directive of Bantegui, all network and internet connections in
Interadent‘s Accounting Department were removed and disabled. Simbillo‘s electronic mail
(email) account was likewise suspended.[8]

On July 29, 2010, petitioners served Simbillo a Memorandum[9] (Notice to Explain) requiring
her to submit a written explanation and to attend an administrative hearing on August 2,
2010, regarding a message she posted on her Facebook account ―referring to company
concerns with the Bureau of Internal Revenue (BIR) and insulting statements against a co-
worker.‖ In the Notice to Explain, Simbillo was reminded that as Treasurer, as well as
Finance and Accounting Manager, he should observe the highest degree of confidentiality in
handling sensitive information. She was preventively suspended for seven days effective
July 29, 2010 to August 6, 2010.
Labor Cases Penned By Justice Del Castillo

On the following day, Simbillo, through counsel, wrote a reply-letter[10] arguing that she was
already constructively dismissed even prior to her receipt of the Notice to Explain
considering the discriminatory acts committed by petitioners starting July 23, 2010 when
certain security procedures were directed exclusively and solely against her. Simbillo
claimed that the Notice to Explain was defective and was only used to disguise the intent to
dismiss her; hence there was no need for her to submit an answer or attend the hearing.
Simbillo further asserted that she committed no violation of any rule or law relative to the
message she posted on her personal and private Facebook account that would justify any
disciplinary action.

In a letter[11] dated August 6, 2010, petitioners extended Simbillo‘s suspension up to August


25, 2010 in view of her failure to submit a written explanation and to attend the scheduled
hearing. In a reply-letter[12] dated August 9, 2010, Simbillo reiterated her claim of constructive
dismissal and that there was no need for her to answer and attend the hearing.

On August 9, 2010, Simbillo filed with the Labor Arbiter a Complaint[13] for constructive illegal
dismissal, non-payment of service incentive leave pay, 13th month pay, illegal suspension,
claims for moral and exemplary damages and attorney‘s fees against petitioners.

On August 24, 2010, petitioners issued a Second Notice[14] informing Simbillo of her
termination from service effective August 25, 2010 on the ground of loss of trust and
confidence. Petitioners found Simbillo to have disclosed sensitive and confidential
information when she posted on her Facebook account on July 15, 2010, the following:

Sana maisip din nila na ang kompanya kailangan ng mga taong di tulad nila, nagtatrabaho at di puro
#$,*% ang pinaggagagawa, na kapag super demotivated na yung tao nayun baka iwan narin nya ang
kawawang kumpanya na pinagpepyestahan ng mga b_i_r_. Wala na ngang credibility wala pang
conscience, portraying so respectable and so religious pa. Hay naku talaga, nakakasuka, puro nalang
animus lucrandi ang laman ng isip.[15]

Parties’ Respective Positions

Simbillo asserted that her dismissal was without just cause or compliance with procedural
due process since the alleged loss of trust and confidence was based on self-serving
allegations and mere speculation. She averred that the Facebook entry cannot support the
charge of breach of trust since it did not mention Interadent or any of its personnel. She
maintained that the message actually pertained to a friend‘s predicament in another
company. She explained that the term ―ng mga b_i_r_‖ in the Facebook message was short
for ―bwitre‖ and certainly did not refer to the BIR. She claimed that the sentiments that she
expressed did not refer to herself or her work. She denied having been penalized for a past
infraction which involved disclosure of confidential information.

Petitioners, for their part, denied Simbillo‘s claim of constructive dismissal for absence of
proof. They asserted that the security measures were implemented company-wide without
favoring or discriminating against anyone.

Moreover, Simbillo was terminated for a valid and just cause and with compliance with
procedural due process. As a managerial and confidential employee of Interadent, the
highest degree of professionalism and confidentiality was expected of Simbillo and the
presence of the basis for the loss of the trust and confidence reposed upon her has
warranted her dismissal. Petitioners posited that Simbillo‘s Facebook message implying that
Labor Cases Penned By Justice Del Castillo

the BIR is ―feasting on‖ the company was derogatory because it compromised the
company‘s reputation, making it vulnerable to ridicule and suspicion particularly in its
dealings with government agencies. Such act violated the company‘s Code of Conduct as
well as the Code of Ethics for Professional Accountants. Furthermore, Simbillo‘s second
infraction of divulging sensitive and confidential financial information has merited the penalty
of termination.

Petitioners maintained that they observed due process by serving Simbillo both the Notice to
Explain and the Second Notice of Termination. Simbillo was afforded the opportunity to
answer but instead waived her chance to do so by opting not to submit an answer and
attend the hearing.

Ruling of the Labor Arbiter

In a Decision[16] dated October 29, 2010, the Labor Arbiter ruled that Simbillo was not
constructively dismissed because she failed to prove her claim of discrimination. The
security measures were implemented as part of management prerogative to preserve the
integrity of Interadent‘s network system and encompassed all employees as gleaned from a
poster[17] Simbillo herself submitted. The Labor Arbiter sustained Simbillo‘s preventive
suspension since her continued presence during investigation posed an imminent threat to
the company‘s confidential information and records.

The Labor Arbiter also ruled that Simbillo was validly dismissed. He held that there was no
need for an actual leakage of confidential information for Simbillo to be held accountable; her
mere laxity and carelessness in posting a statement on her Facebook account that exposed
the company to ridicule already rendered her unworthy of the trust and confidence reposed
on her. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, we uphold the legality of the dismissal of complainant No


pronouncement as to costs.[18]

Ruling of the National Labor Relations Commission

In a Resolution[19] dated March 24, 2011, the NLRC affirmed the ruling of the Labor Arbiter
that Simbillo was not constructively dismissed but was validly dismissed for loss of trust and
confidence. The NLRC held that the Facebook entry was ―indeed alarming‖ as it
compromised Interadent‘s reputation and was sufficient basis for the finding of willful breach
of trust. It also ruled that Simbillo was not denied due process and that she was the one who
did not avail herself of the opportunity to explain her side. The dispositive portion of the
NLRC ruling reads as follows:

WHEREFORE, premises considered, the appeal is hereby DISMISSED, and the appealed decision
AFFIRMED.

SO ORDERED.[20]

Simbillo filed a Motion for Reconsideration which was, however, denied in the NLRC
Resolution[21] dated May 19, 2011.

Ruling of the Court of Appeals


Labor Cases Penned By Justice Del Castillo

Aggrieved, Simbillo filed a Petition for Certiorari[22] before the CA ascribing upon the NLRC
grave abuse of discretion amounting to lack or in excess of jurisdiction in upholding the
legality of her dismissal.

The CA, in a Decision[23] dated January 4, 2013, found merit in Simbillo‘s Petition. It ruled that
to constitute a valid cause for dismissal, the breach of trust should be willful and intentional,
which petitioners failed to prove in this case. It rejected petitioners‘ allegation that Simbillo
divulged confidential company information. It noted that the Facebook entry did not contain
any corporate record or confidential information but was merely ―a vague expression of
feelings or opinion towards a person or entity, which was not even identified with
certainty.‖[24] It pointed out that the term ―b_i_r_‖ in the entry cannot be construed as the
acronym ―B.I.R.‖ or the Bureau of Internal Revenue. Finding no willful breach of trust, the CA
held that Simbillo‘s dismissal was illegal and ordered the payment of her separation pay in
lieu of reinstatement due to strained relations of the parties plus backwages. The dispositive
portion of the CA Decision reads:

WHEREFORE, the instant petition of GRANTED. The Resolutions dated March 24, 2011 and May
19, 2011 of the National Labor Relations Commission, are hereby SET ASIDE. Finding private
respondent InteraDent Zahntechnik Philippines, Inc. to have dismissed petitioner Rebecca Simbillo
without valid or just cause, InteraDent is hereby ordered to pay her a separation pay in lieu of
reinstatement, of one (1) month salary for every year of service plus full backwages, inclusive of
allowances and other benefits or their monetary equivalent from the time her compensation was
withheld until finality of this decision.

SO ORDERED.[25]

Petitioners filed a Motion for Reconsideration but was denied by the CA in its
Resolution[26] dated May 24, 2013.

Hence, petitioners filed this Petition for Review on Certiorari[27] and a Motion for Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction [28] to restrain the
implementation of the CA Decision and Resolution.

Issues

Petitioners raise the question on whether the CA may reverse the factual declarations of
both the Labor Arbiter and the NLRC that there was substantial evidence of willful and
intentional breach of trust. According to petitioners, the CA has no power to revisit the
findings of fact of the NLRC by making the following erroneous interpretations in its Decision:
a) that the Facebook entry ―does not contain any corporate record or confidential
information;‖ b) that the entry is ―[a]t worst, x x x a vague expression of feelings or opinion
towards a person or entity, which was not even identified with certainty;‖[29] and (c) that the
term ―b_i_r_‖ ―does not, in any way, represent the acronym ‗B.I.R.‘ or Bureau of Internal
Revenue.‖[30] In essence, they insist that, on account of such Facebook post, Simbillo has
failed to observe the degree of cautiousness expected of a manager like herself and
therefore may be dismissed on the ground of loss of trust and confidence.

Our Ruling

The Petition lacks merit.


Labor Cases Penned By Justice Del Castillo

As a rule, factual findings of quasi-judicial agencies such as the NLRC are generally
accorded not only respect but also finality because of the special knowledge and expertise
gained by these agencies from handling matters under their specialized
jurisdiction.[31] However, well-settled is the rule that for want of substantial basis, in fact or in
law, these factual findings cannot be given the stamp of finality and conclusiveness normally
accorded to it.[32] Hence, the CA can review the factual findings or legal conclusions of the
NLRC and ―is not proscribed from ‗examining evidence anew to determine whether the
factual findings of the NLRC are supported by the evidence presented and the conclusions
derived therefrom accurately ascertained‘.‖[33] In the exercise of its power to review decisions
of the NLRC, the CA can make its own factual determination when it finds that the NLRC
gravely abused its discretion in overlooking or disregarding the evidence which are material
to the controversy.[34] In the instant case, the Court agrees with the CA that the conclusions
arrived at by the Labor Arbiter and the NLRC are manifestly erroneous because the
evidence does not support their findings.

As a managerial employee, the existence of a basis for believing that Simbillo has breached
the trust of petitioners justifies her dismissal.[35] However, to be a valid ground, loss of trust
and confidence must be based on willful breach of trust, that is, done intentionally, knowingly
and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly, or inadvertently.[36]

It bears emphasizing that the right of an employer to dismiss its employees on the ground of loss of
trust and confidence must not be exercised arbitrarily. For loss of trust and confidence to be a valid
ground for dismissal, it must be substantial and founded on clearly established facts. Loss of
confidence must not be used as a subterfuge for causes which are improper, illegal or unjustified; it
must be genuine, not a mere afterthought, to justify earlier action taken in bad faith. Because of its
subjective nature, this Court has been very scrutinizing in cases of dismissal based on loss of trust and
confidence because the same can easily be concocted by an abusive employer. x x [37]

In this case, the act alleged to have caused the loss of trust and confidence of petitioners in
Simbillo was her Facebook post which supposedly suggests that Interadent was being
―feasted on‖ by the BIR and also contains insulting statements against a co-worker and
hence has compromised the reputation of the company. According to petitioners, there was
disclosure of confidential information that gives the impression that Interadent is under
investigation by the BIR for irregular transactions. However, we agree with the CA‘s
observation that the Facebook entry did not contain any corporate record or any confidential
information. Otherwise stated, there was really no actual leakage of information. No
company information or corporate record was divulged by Simbillo.

Simbillo‘s failure to substantiate her claim that the Facebook entry was posted for a friend
who consulted her on a predicament she has with her company and that the term ―b_i_r_‖
represents ‖bwitre‖ will not weaken her case against petitioners. It must be emphasized at
this point that in illegal dismissal cases, the burden of proof is upon the employer to show
that the employee‘s dismissal was for a valid cause.[38] ‖The employer‘s case succeeds or
fails on the strength of its evidence and not on the weakness of that adduced by the
employee, in keeping with the principle that the scales of justice should be tilted in favor of
the latter in case of doubt in the evidence presented by them.‖[39]The Facebook entry did not
mention any specific name of employer/company/ government agency or person. Contrary to
petitioners‘ insistence, the intended subject matter was not clearly identifiable. As
acknowledged by petitioners themselves, Simbillo‘s Facebook account contained a list of her
former and present employers. If anything, the entry would merely merit some suspicion on
the part of Interadent being the present employer, but it would be far-fetched to conclude
Labor Cases Penned By Justice Del Castillo

that Interadent may be involved in anomalous transactions with the BIR. Clearly, petitioners‘
theory was based on mere speculations.

If at all, Simbillo can only be said to have acted ―carelessly, thoughtlessly, heedlessly or
inadvertently‖ in making such a comment on Facebook; however, such would not amount to
loss of trust and confidence as to justify the termination of her employment. When the
breach of trust or loss of confidence conjectured upon is not borne by clearly established
facts, as in this case, such dismissal on the ground of loss of trust and confidence cannot be
upheld.

Petitioners‘ contention that Simbillo‘s second offense of divulging confidential company


information merits her termination deserves scant consideration. Other than self-serving
allegations of petitioners, there was no concrete proof that Simbillo had a past infraction
involving disclosure of confidential information of the company. If indeed Simbillo has been
found guilty for not being trustworthy due to an incident that happened in July 2009 as
alleged by petitioners, she should not have been promoted to a higher position as Finance
and Accounting Manager in April 2010 and elected as Treasurer in March 2010. Moreover,
she was given salary and merit increases for the period covering June 2009-May
2010,[40] which is an indication of her high performance rating.

All told, we find no reversible error on the CA in finding that Simbillo was illegally dismissed.
The allegation of loss of trust and confidence was not supported by substantial evidence,
hence, we find Simbillo‘s dismissal unjustified. A lighter penalty would have sufficed for
Simbillo‘s laxity and carelessness. As this Court has held, termination of employment is a
drastic measure reserved for the most serious of offenses.[41]

WHEREFORE, the Petition is DENIED. The January 4, 2013 Decision and May 24, 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 120474 are AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

14 NOV 2016 | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C.


DEL CASTILLO | SUBJECT | LABOR AND EMPLOYMENT | NON-
PAYMENT OF SALARIES, BENEFITS AND DAMAGES | SUBJECT | RULES
OF COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY CERTIORARI TO
THE SUPREME COURT

Juan B. Hernandez Vs. Crossworld Marines


Services, Inc., et al.; G.R. No. 209098;
November 14, 2016
DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari1 are the November 29, 2012 Decision2 of
the Court of Appeals (CA) in CA-G.R SP No. 124685 which set aside the February 23, 2012
Decision3 and March 16, 2012 Resolution4 of the National Labor Relations Commission
(NLRC) in NLRC LAC (OFW-M)-11-000995-11 and dismissed herein petitioner‘s Complaint5
in NLRC-NCR Case No. (M) 04-05732-11. Also assailed herein is the CA‘s September 3,
2013 Resolution6 denying reconsideration of its assailed Decision.

Factual Antecedents

The Labor Arbiter, NLRC, and CA adopt an identical narrative of the salient facts.

Petitioner Juan B, Hernandez has been working continuously for respondents Mykonos
Shipping Co., Ltd. (Mykonos ), Crossworld Marine Services, Inc. (Crossworld), and Eleazar
Diaz (Diaz) – Crossworld‘s President/Chief Executive Officer – since November 14, 2005,
under different employment contracts covering the latter‘s several oceangoing vessels.

On October 7, 2008, petitioner was once more engaged by respondents to work as Chief
Cook aboard the vessel M/V Nikomarin. This latest employment was for a period of nine
months, with a monthly salary of US$587.00, plus fixed overtime pay, food allowance, leave
pay, and long service bonus. When his contract expired, petitioner‘s service was extended
for an additional five months. Thereafter, he was repatriated on December 19, 2009.

With a view to serving respondents anew under a new contract, petitioner was made to
undergo a pre-employment medical examination on March 22, 2010, and he was found to be
suffering from hypertension and diabetes mellitus. He was declared fit for duty and required
to take maintenance medication. However, respondents deferred his employment on
account of his state of health.

In 2011, petitioner consulted two separate physicians who turned out the same diagnosis:
that he was suffering from hypertension, stage 2, and type 2 diabetes mellitus, and was
therefore unfit for sea duty in whatever capacity as seaman.
Labor Cases Penned By Justice Del Castillo

Petitioner demanded compensation by way of disability benefits and medical expenses from
respondents, but the latter refused to pay.

Ruling of the Labor Arbiter

On April 8, 2011, petitioner filed a claim for disability benefits, medical expenses,
allowances, damages, and attorney‘s fees against respondents before the Labor Arbiter,
which was docketed as NLRC-NCR Case No. (M) 04-05732-11.

On August 31, 2011, Labor Arbiter Jose G. De Vera issued his Decision7 in the case, which
decreed as follows:

There are formidable grounds why said complainant‘s claims must fail.

First, the complainant was repatriated not on medical grounds but on account of the completion of his
employment contract x x x

Second, it cannot be denied that before complainant was deployed and joined his vessel on October
17, 2008, he was already afflicted with hypertension and diabetes mellitus as found during his pre-
employment medical examination. As a matter of fact, complainant admitted that upon joining the
vessel in France, he had with him various maintenance drugs for his hypertension and diabetes
mellitus. This necessarily indicates that complainant‘s medical condition of hypertension and diabetes
mellitus were pre-existing and contracted during his employment on board the vessel from October
17, 2008 until he finished his contract and eventually repatriated on December 19, 2009. Moreover,
there is no record that while on board the vessel for the entire period of his employment, he was
treated on board the vessel and/or confined in a clinic or hospital in the foreign ports. In short, there is
no proof of any aggravation of his ailments.

Third, the complainant was repatriated not on medical grounds but precisely on account of completion
of his employment contract. Hence, there was no reason for him to submit to post-employment
medical examination within three (3) days from date of his arrival on December 19, 2009. In fact,
there is no record that complainant had reported to the respondents Crossworld for the mandatory
post-employment medical examination preparatory to further treatment and management of his
ailments as contemplated under Section 20 [B] paragraph 3 of the POEA Standard Employment
Contract. If there was any medical examination conducted thereafter, it was not for purposes of the
complainant‘s claim for disability benefit and medical expenses, but precisely for purposes of his
aborted next employment contract sometime in March 2010.

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered dismissing
the complaint for lack of merit.

SO ORDERED.8

Ruling of the National Labor Relations Commission

Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC (OFW-
M)-11-000995-11.
Labor Cases Penned By Justice Del Castillo

On February 23, 2012, the NLRC rendered its Decision granting the appeal, thus setting
aside the Labor Arbiter‘s August 31, 2011 Decision and awarding petitioner‘s claims, as
follows:

Complainant claims that as Chief Cook, his duties include the provisioning of the ship, food
preparation and budgeting, cleaning of dining, kitchen, galley and food compartment and work areas;
carrying of ship provisions, and cleaning the heavy cooking utensils used by the vessel‘s cooks;
likewise, he is constantly exposed to the different climates, unpredictable weather and the perils of the
sea.

In general, diabetes mellitus is a group of metabolic diseases which a person has high blood sugar,
either because the body does not produce enough insulin, or because cells do not respond to the
insulin that is produced.

‗What are its risk factors?‘

‗Stress, both physical and mental, cap send the blood sugar out of wreck. x x x Both physical and
emotional stress can prompt an increase in these hormones, resulting in an increase in blood sugars.‘

Day in and day out, with the continuous discharge by complainant of his duties, the increase in his
blood sugar becomes inevitable, thus aggravating his controlled diabetes mellitus.

x x xx

Upon the other hand, high blood pressure is an ailment that is work connected and is listed as a
compensable ailment.

x x xx

Section 20, paragraph (B) sub paragraph 4 of the POEA-SEC provides that those illnesses not listed in
Section 32 of this contract are disputably presumed work related.

x x xx

undeniably, therefore, there is work connection between the complainant‘s aggravation of his illness
and his work.

Capital is being made by respondents, and concurred in by the Labor Arbiter, over the alleged non-
reporting for post employment medical examination within three (3) days from his arrival.

On the other hand complainant claims ‗that he reported his condition to respondents, but the latter
refused to provide him with his needed medical assistance and attention. He was just told to go home
to his province and rest. Complainant then went home to his province and had his condition checked
by a local doctor.

In Interorient Maritime Enterprises, Inc. vs. Leonora Remo,9 it was ruled that where the absence of a
post-employment medical examination was not due to seafarer‘s fault but to the inadvertence or
deliberate refusal of petitioners, this cannot defeat respondent‘s claim.‘
Labor Cases Penned By Justice Del Castillo

In a change of heart, and after realizing their folly, respondents ordered complainant to undergo a
medical examination by the company doctor on March 22, 20l0 again preparatory to the signing of a
new employment contract.

Under the circumstances, We have no other recourse but to re-echo the Supreme Court ruling that
should doubt exist between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter.

In this regard, We have noted that the claims of the parties (complainant and respondents) were orally
made.

As the records show, the next employment contract was no longer consummated because of the
hypertension and diabetes mellitus. In fact, complainant was never redeployed by respondents.

In Lloreta vs. Philippine Transmarine Carriers, Inc., et al., the Court held that there is permanent
disability where a worker fails to perform his job for more than 120 days, regardless of whether or not
he loses the use of any part of his body, while ‗total disability means that disablement of an employee
to earn wages in the same kind of work of similar nature that he was trained for or accustomed to
perform, or any kind of work which a person of his mentality and attainments could do. It does not
mean absolute helplessness. In disability compensation, it is not the injury which is compensated, but
rather it is the incapacity to work resulting in the impairment of one‘s earning capacity.‘

Under Section 32 of the POEA-SEC, an impediment grade 1 is equivalent to 120% of US$50,000.00


or US$60,000.00.

Further medical expenses in the sum of ₱3,221.0010 were incurred by complainant as shown by the
receipts attached to the records.

As complainant was assisted by a counsel de parte, attorney‘s fees equivalent to 10% of the money
awards.

WHEREFORE, the judgment on appeal is REVERSED and SET ASIDE and a NEW ONE entered
ordering the respondents, to pay in solidum, in peso equivalent at the time of payment, the following
amounts:

1. US$60,000.00 as disability benefit;

2. 123,721.00 as reimbursement of medical expenses; and

3. 10% of the amounts awarded as attorney‘s fees.

SO ORDERED.11

Respondents moved to reconsider, but the NLRC stood its ground.

Ruling of the Court of Appeals


Labor Cases Penned By Justice Del Castillo

In a Petition for Certiorari12 filed with the CA and docketed therein as CA-G.R SP No.
124685, respondents sought to set aside the above NLRC Decision and thus reinstate that
of the Labor Arbiter‘s, arguing mainly that petitioner‘s illness is not compensable, and
consequently, he is not entitled to his other money claims.

Meanwhile, on July 17, 2012, respondents paid petitioner the amount of the

judgment award – or the sum of ₱2,702,766.00. In return, petitioner was made to sign a
Conditional Satisfaction of Judgment (All Without Prejudice to the Pending Petition
for Certiorari in the Court of Appeals),13 Receipt of Payment,14 and Affidavit15 – which
were duly filed with the NLRC and CA. The Conditional Satisfaction of Judgment states, in
part:

1. x x x. That payment is hereby made to complainant only to prevent imminent execution that
this Honorable Office and the complainant are undertaking.

2. xxxx

3. That by virtue of said conditional payment of the judgment award x x x, herein complainant will no
longer pursue the execution proceedings he initiated by virtue of the judgment x x x.

4. That this Conditional Satisfaction of Judgment is without prejudice to herein respondents‘ Petition
for Certiorari pending with the Court of Appeals docketed as CA GR SP No. 124685 x x x; and this
Conditional Satisfaction of Judgment is being made only to prevent imminent execution being
undertaken by this Honorable office and complainant.

5. That Complainant understands that in case of reversal and/or modification x x x by the Court
of Appeals and/or the Supreme Court, he shall return whatever is due and owing to
shipowners/manning agents without need of further demand.16 (Emphasis in the original)

On the other hand, the Affidavit essentially states:

3. x x x. That I understand this payment is being made by the shipowners/manning agents to me


only to prevent further execution proceedings that I have initiated with the National Labor
Relations Commission (NLRC);

4. That I understand that the conditional payment of the judgment award is without prejudice to the
shipowners‘/manning agents‘ Petition for Certiorari pending with the Court of Appeals docketed
as CA GR SP No: 124685 x x x;

5. That I understand that the payment of the judgment award x x x includes all my past, present and
future expenses and claims, and all kinds of benefits due to me under the POEA employment contract
and all collective bargaining agreements and all labor laws and regulations, civil law or any other law
whatsoever and all damages, pains and sufferings in connection with my claim;

6. That I have no further claims whatsoever in any theory of law against the Owners of MV
„NIKOMARIN‟ because of the payment made to me. That I certify and warrant that I will not file
any complaint or prosecute any suit or action in the Philippines, Panama, Japan or any other country
against the shipowners and/or the released parties herein after receiving the payment
of US$66,000.00 or its peso equivalent x x x.17 (Emphasis in the original)
Labor Cases Penned By Justice Del Castillo

On November 29, 2012, the CA issued the assailed Decision, containing the following
pronouncement:

Before proceeding, this Court must tackle the issue raised by private respondent that the instant
petition has already been rendered moot and academic by virtue of the Conditional Satisfaction of
Judgment, in relation to the pronouncement of the Supreme Court in Career Phils. Shipmanagement,
Inc. vs. Madjus.18 Private respondent‘s contention must be rejected.

First, in Career Phils. Shipmanagement, the Supreme Court no longer passed upon the merits of the
case because of the concurrence between the findings of the Labor Arbiter and the NLRC. The
Supreme Court, not being a trier of facts and taking into account the parallel findings of the two
administrative offices specializing in Labor Cases, invoked the doctrine of finality of judgment with
respect to factual findings of administrative bodies. The same does not hold true in the instant case, as
the NLRC had an opposing view vis-a-vis that of the Labor Arbiter.

Second, the Supreme Court upheld the validity of the conditional settlement of the judgment
in Career Phils. Shipmanagement. However, the Supreme Court opted to render the action therein
moot and academic due to the fact that part of the condition is a prohibition on the part of the seafarer
to pursue further claims. It basically rendered the judgment final and executory as against the seafarer
but not against the employer. The same does not obtain in the present action. Private respondent still
retains the right to judicial recourse in the event the instant petition is granted.

Third, Article 19 of the Civil Code exhorts: ‗[E]very person must, in the exercise of his rights arid in
the performance of his duties, act with justice, give everyone his due, and observe honesty and good
faith.‘ Accordingly, private respondent was expected to honor his covenant with petitioners when he
signed the Conditional Satisfaction of Judgment. To renege thereon constitutes bad faith.

From the foregoing disquisition, it is clear that the present action is not yet moot and academic.

x x xx

There is no question that private respondent was able to finish his contract with petitioners without
any incident, notwithstanding the fact that private respondent was already suffering from hypertension
and diabetes mellitus prior to boarding the latter‘s vessel. x x x

xxxx

On the other hand, this Court disagrees with the NLRC‘s finding that private respondent‘s work
aggravated his condition. As aptly noted by the Labor Arbiter, private respondent was able to finish
his contract without any incident. x xx

x x xx

Likewise, the Court disagrees with the NLRC‘s pronouncement that petitioners had a change of heart
anent private respondent‘s post-employment medical examination when they directed the latter to
undergo medical examination by the company doctor on March 22, 2010 because the said
examination is preparatory to the signing of a new contract. x x x

Indeed, it cannot be concluded that private respondent‘s condition was aggravated after the expiration
of his previous contract, considering that he was still willing to enter into a new contract for
Labor Cases Penned By Justice Del Castillo

deployment on board one of petitioners‘ vessels. In fact, private respondent indicated in his Exit
Interview dated December 21, 2009 that the condition of the ship, its safety level as well as the food,
was good and that he actually showed willingness to rejoin the vessel.

Accordingly, this Court finds no basis for the NLRC to declare that private respondent‘s work
aggravated his condition. Certainly, there is also no basis for the NLRC to observe that the dietary
provisions on board the ship likewise aggravated private respondent‘s condition, considering that the
latter, as chief cook, prepared the food himself, which he rated as good.

In a plethora of cases, the Supreme Court has ruled that grave abuse of discretion may arise when a
lower court or tribunal violates or contravenes the Constitution, the law or existing jurisprudence. By
grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction.

In fine, We hold that the NLRC committed grave abuse of discretion in rendering/issuing its
said Decision and Resolution.

WHEREFORE, the instant petition is hereby GRANTED. The NLRC Decision dated February 12,
2012 and Resolution dated March 16, 2012 are hereby ANNULLED and SET ASIDE. Accordingly,
private respondent‘s complaint is hereby DISMISSED.

SO ORDERED.19

Petitioner filed a Motion for Reconsideration,20 insisting among others that the Petition
for Certiorari has been rendered moot and academic by the respondents‘ satisfaction of the
judgment in full, and that his illness is compensable. However, the CA denied the same in its
September 3, 2013 Resolution. Hence, the present Petition.

Issues

Petitioner submits the following assignment of errors for resolution:

1. THE HONORABLE COURT OF APPEALS ACTED IN A WAY NOT IN ACCORD WITH THE
DECISIONS OF THE HONORABLE SUPREME COURT IN HOLDING THAT THE PETITION
FOR CERTIORARI WAS NOT RENDERED MOOT AND ACADEMIC BY THE VOLUNTARY
PAYMENT OF THE JUDGMENT AWARD BY THE PETITIONERS WHICH RESULTED IN
THE FULL AND FINAL SATISFACTION OF THE JUDGMENT.

2. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRE110N


IN REVERSING THE NLRC AND DENYING THE CLAIMS OF SEAMAN HERNANDEZ FOR
PERMANENT TOTAL DISABILITY COMPENSATION AND OTHER BENEFITS.21

Petitioner’s Arguments

Praying that the assailed CA pronouncements be set aside and that the NLRC judgment be
reinstated instead, petitioner contends in his Petition and Reply22 that contrary to the ruling
of the CA, the doctrine in Career Phils. Ship Management, Inc. v. Madjus case applies to him
as well, since he is likewise prohibited from pursuing further claims under the documents he
was made to sign; that all these documents – Conditional Satisfaction of Judgment, Receipt
of Payment, and Affidavit – in Career Phils. Ship Management and in this case are identical
Labor Cases Penned By Justice Del Castillo

and were prepared by one and the same counsel, the del Rosario and del Rosario Law
Offices; that in signing these documents, he did so out of financial necessity and was left
with no other recourse; that nonetheless, even assuming that the CA is correct in not
applying Career Phils. Ship Management, he is still entitled to disability benefits and other
claims awarded by the NLRC, as his illness is work-connected and thus compensable; and
that he has worked for respondents since 2005 – which shows that his hypertension and
diabetes developed and/or were aggravated while working for respondents and having to
contend with the perils of the sea, harsh climate and weather conditions, and emotional
strain of being away from his family.

Respondents’ Arguments

In their joint Comment,23 respondents reiterate the CA pronouncement, adding that in


paying petitioner conditionally, they simply acted in good faith, complied with the execution
proceedings, and wanted to prevent garnishment of their accounts; that petitioner‘s illness
was not contracted during his employment with them; that diabetes is not a compensable
occupational disease; that petitioner‘s failure to submit to a post-employment medical test by
a company-designated physician foreclosed his right to claim disability benefits; and that for
the foregoing reasons, petitioner is not entitled to his other claims.

Our Ruling

The Court grants the Petition.

Respondents profess that the Conditional Satisfaction of Judgment, Receipt of Payment,


and Affidavit which petitioner was made to sign were prepared in good faith and simply to
comply with the execution proceedings below and prevent garnishment of their accounts.
However, this Court believes otherwise. Hidden behind these documents appears to be a
convenient ploy to deprive petitioner of all his rights to claim indemnity from respondents
under all possible causes of action and in all available fora, and effectively for nothing in
return or exchange – because in the event that the NLRC ruling is reversed, then petitioner
must return what he received, thus leaving him with the proverbial empty bag. This is
fundamentally unfair, and goes against public policy.

As was held before, human life is not more expendable than corporate capital.24 The
survival of the petitioner and his family depends on the former‘s ability to find and perform
work for wages they need to secure food, shelter, clothing, and the education of his children.
It may be that in this jurisdiction, petitioner may ultimately be adjudged as not entitled to the
monetary claims he seeks, but in other fora – such as in Panama, Japan, or any other
country- he may be found to be entitled thereto, and to other indemnities as well. Yet by
affixing his signature upon the Conditional Satisfaction of Judgment, Receipt of Payment,
and Affidavit, petitioner effectively surrendered all his rights and waived all his claims and
causes of action in all jurisdictions, and in exchange for nothing. Indeed, in the Affidavit,
petitioner even went so far as to certify and warrant that he will not file any other complaint
or prosecute any suit or action here or in any other country after receiving the settlement
amount.

6. That I have no further claims whatsoever in any theory of law against the Owners of MV
“NIKOMARIN” because of the payment made to me. That I certify and warrant that I will not file
any complaint or prosecute any suit or action in the Philippines, Panama, Japan or any other country
against the shipowners and/or the released parties herein after receiving the payment
of US$66,000.00 or its peso equivalent x xx.‖25 (Emphasis in the original)
Labor Cases Penned By Justice Del Castillo

This waiver by petitioner in exchange for nothing has in fact become a reality, since the CA
reversed the NLRC ruling, which means that petitioner would now have to return what he
received from the respondents, and yet he is left with no available recourse since he agreed
that he will not ―prosecute any suit or action in the Philippines x xx against the shipowners
and/or the released parties herein after receiving the payment of US$66,000.00 or its peso
equivalent.‖26 ―Any suit or action‖ literally includes a petition before this Court to review the
CA reversal – or the instant petition. It also covers a claim for interest that may justly
accrue in his favor during the pendency of the case.

In effect, while petitioner27 had the luxury of having other remedies available to it such as its petition
for certiorari pending before the appellate court, and an eventual appeal to this Court, respondent,28
on the other hand, could no longer pursue other claims, including for interests that may accrue during
the pendency of the case.29

That respondents did not invoke the prohibition in the Affidavit – when the instant Petition
was instituted – does not take away the fact that petitioner has been unduly deprived of such
recourse through the documents he was made to sign.

In Career Philippines, believing that the execution of the LA Decision was imminent after its petition
for injunctive relief was denied, the employer filed before the LA a pleading embodying a conditional
satisfaction of judgment before the CA and, accordingly, paid the employee the monetary award in the
LA decision. In the said pleading, the employer stated that the conditional satisfaction of the judgment
award was without prejudice to its pending appeal before the CA and that it was being made only to
prevent the imminent execution.

The CA later dismissed the employer‘s petition for being moot and academic, noting that the decision
of the LA had attained finality with the satisfaction of the judgment award. This Court affirmed the
ruling of the CA, interpreting the ‗conditional settlement‘ to be tantamount to an amicable settlement
of the case resulting in the mootness of the petition for certiorari, considering (i) that the employee
could no longer pursue other claims, and (ii) that the employer could not have been compelled to
immediately pay because it had filed an appeal bond to ensure payment to the employee.

Stated differently, the Court ruled against the employer because the conditional satisfaction of
judgment signed by the parties was highly prejudicial to the employee. The agreement stated
that the payment of the monetary award was without prejudice to the right of the employer to
me a petition for certiorari and appeal, while the employee agreed that she would no longer file
any complaint or prosecute any suit of [sic] action against the employer after receiving the
payment.30 (Emphasis supplied)

Within the context of the constitutional, legislative, and jurisprudential guarantees afforded to
labor, the position petitioner has been led into is unjust, unfair, and arbitrary.

In More Maritime Agencies, Inc. v. NLRC,31 the Court ruled that:

The law does not consider as valid any agreement to receive less compensation than what a worker is
entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims
executed by the employees are thus commonly frowned upon as contrary to public policy and
ineffective to bar claims for the full measure of the workers legal rights, considering the economic
disadvantage of the employee and the inevitable pressure upon him by financial necessity. (Citation
omitted)
Labor Cases Penned By Justice Del Castillo

Respondents could have simply paid the judgment award without attaching conditions that
have far-reaching consequences other than those intended by a simple compliance with
what was required under the circumstances – that is, the mandatory execution proceedings
following a favorable judgment allowed under the Labor Code. But they did not; they had to
find a way to tie petitioner‘s hands permanently, dangling the check as bait, so to speak. To
borrow from a fairly recent ruling of the Court, ‖[t]he execution [of the documents] cannot be
tolerated as it amounts to a deceptive scheme to unconditionally absolve employers from
every liability.32

x x x. As a rule, quitclaims and waivers or releases are looked upon with disfavor and frowned upon
as contrary to public policy. They are thus ineffective to bar claims for the full measure of a
worker‘s legal rights, particularly when the following conditions are applicable: 1) where there is
clear proof that the waiver was wangled from cm unsuspecting or gullible person, or (2) where the
terms of settlement are unconscionable on their face. To determine whether the Quitclaims signed by
respondents are valid, one important factor that must be taken into account is the consideration
accepted by respondents; the amount must constitute a reasonable settlement equivalent to the
full measure of their legal rights. In this case, the Quitclaims signed by the respondents do not
appear to have been made for valuable consideration. x x x33 (Emphasis supplied)

For what they did, respondents are guilty of bad faith, and should suffer the consequences of
their actions. One is that their payment of petitioner‘s claim should properly be treated as a
voluntary settlement of his claim in full satisfaction of the NLRC judgment – which thus
rendered the Petition in CA-G.R. SP No. 124685 moot and academic.

For its part, the CA refused to apply the pronouncement in Career Phils.
Shipmanagement, insinuating that the situation of the parties in said case and in the present
one are different in that, in the instant case, petitioner ―still retains the right to judicial
recourse in the event‖34 that the NLRC decision is reversed, while in Career Phils.
Shipmanagement, ―the Supreme Court opted to render the action therein moot and
academic due to the fact that part of the condition is a prohibition on the part of the seafarer
to pursue further claims‖35 as stated in the same Conditional Satisfaction of Judgment,
Receipt of Payment, and Affidavit which he was made to sign. The appellate court‘s position
is flawed: petitioner‘s situation is no different from that of the seafarer in the Career Phils.
Shipmanagement case. The CA‘s reasoning laid down in its pronouncement is a mere
convenient play on words. Just as in the Career Phils. Shipmanagement case, petitioner is
equally prohibited from pursuing further claims; it is not simply that petitioner ―still retains the
right to judicial recourse‖; what is of significance is that he stands to gain nothing in the end,
and yet is unduly prevented from pursuing further claims – all without the benefit of
receiving, in return, valuable consideration or a reasonable settlement equivalent to the full
measure of his legal rights.

Respondents‘ counsel – the Del Rosario & Del Rosario Law Offices – should have known
better than to once more utilize the Conditional Satisfaction of Judgment, Receipt of
Payment, and Affidavit, knowing that this Court looked upon these very same documents
with disfavor in the Career Phils. Ship Management case and in subsequent dispositions of
the Court,36 insofar as these and similar documents contain terms and conditions that are
unfair to the employee.

Having disposed of the case in the foregoing manner, there is no need to pass upon the
other issues raised by the parties.
Labor Cases Penned By Justice Del Castillo

WHEREFORE, the Petition is GRANTED. The November 29, 2012 Decision and September
3, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124685
are REVISED and SET ASIDE, and respondents‘ Petition for Certiorari in said case is
considered MOOT and ACADEMIC in view of the full settlement and complete satisfaction of
petitioner‘s claims.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

19 OCT 2016 | SUBJECT | LABOR AND


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

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


Laarne C. Densing; G.R. No. 208535; October
19, 2016
DECISION

DEL CASTILLO, J.:

This is a Petition for Review en Certiorari assailing the November 27, 2012 Decision [2] of the
Court of Appeals (CA) in CA GR. SP No, 03222-MIN, The CA set aside the June 4,
2009[3] and July 31, 2009[4] Resolutions of the National Labor Relations Commission (NLRC)
in NLRC Case No. MAC-02-010081-2008, and reinstated the November 28, 2008 NLRC
Resolution[5] finding illegal respondent Laarne C. Densing‘s (respondant) dismissal from
work. Also assailed is the July 12, 2013 CA Resulution[6] denying petitioners‘ Motion for
Reconsideration.

Factual Antecedents

On January 2, 2002, Kimwa Construction & Development Corporation (Kimwa) employed


respondent as liaison officer.[7] Allegedly, Kimwa also operated Leo‘s Restaurant and Bar
Cafe (Restobar), and the Mountain Suite Business Apartelle (Apartelle); on July 4, 2005, it
appointed respondent as Administrative Officer/Human Resource (HR) Head of these
establishments with a salary of P15,000.00 per month; and, said appointment took effect on
October 18, 2005 when the establishments became fully operational.[8]

Thereafter, Leo Y. Lua (Leo), the Manager of the Restobar and the Apartelle, issued upon
respondent a Memorandum[9] requesting her to temporarily report at Kimwa‘s Main Office
starting December 30, 2005.

On December 30, 2005, respondent received another Memorandum[10] from Leo requiring her
to explain the circumstances surrounding the agreement between the Restobar and Pepsi
Products Philippines, Inc. (Pepsi), and the benefits she derived therefrom. Leo accused her
of having signed said contract without authority from him and of not informing him of the
benefits arising from the contract. The Memorandum also indicated that Pepsi gave the
Restobar 10 cases of soft drinks during its opening night, and additional 67 cases for
December 2005 but its records reflected receiving only 20 out of said 67 cases.

In her Explanation,[11] respondent stated that on October 24, 2005, in the presence of
Jovenal[12] Ablanque (Ablanque), Sales Manager of Pepsi, Leo verbally authorized her to sign
the contract with Pepsi on behalf of the Restobar. The following day, Ablanque, returned to
the Restobar, and respondent signed the contract pursuant to Leo‘s verbal instruction. She
gave no explanation anent the benefits arising from the contract as she purportedly did not
Labor Cases Penned By Justice Del Castillo

intervene in Leo and Ablanque‘s discussion on the matter. She added that the Restobar
received only 10 and additional 20 cases of Pepsi drinks, and she did not receive personal
benefits arising from the contract.

On January 2, 2006, Leo issued another Memorandum[13] requiring respondent to answer


why she signed the Pepsi contract even without authority to do so, and to explain whether
her apology addressed to Leo was an acceptance of her fault on the charges against her.

In her Answer,[14] respondent remained firm that she did not receive any personal benefits
from Pepsi. Also, she stated that she apologized to Leo because she knew that the latter
had ―feelings of doubt‖ about her but it was not because she accepted the accusations
against her.

Later, in a Memorandum[15] dated January 3, 2006, respondent was required to answer these
charges: 1) she committed dishonesty when she charged to the Restobar‘s account 50% of
the food she ordered therefrom without approval of its Owner or Manager; 2) she violated
her duties when she did not inform Leo of the signing of the Pepsi contract; and, 3) she
failed to account for 47 soft drinks cases that Pepsi gave the Restobar.

In her Explanation,[16] respondent asserted that the charges of dishonesty was not related to
the Pepsi Qonteact such that she opted not to answer said accusation. With regard to the
alleged missing Pepsi drinks, she affirmed that Pepsi clarified the matter already, particularly
to where these soft drinks were placed or given.

In a Letter[17] dated January 4, 2006, Pepsi, through its Settlement and Credit Manager
Jerome T. Eslabon, certified that Pepsi gave the Restobar 10 cases of Pepsi products on its
opening day, and 20 cases of Pepsi 12 oz. on December 7, 2005. It stressed that it did riot
give cash assistance or cash equivalent to any staff of the Restobar. It also asked Leo to
disregard the erroneous volume of documents it inadvertently gave him, and assured him
that Pepsi already adjusted his records to reflect the correct figures.

However, on January 12, 2006, on the ground of loss of trust and confidence, Leo
terminated respondent effective January 15, 2006.[18]

Respondent thus filed an Amended Complaint[19] for illegal dismissal, illegal suspension, non-
payment of 13th month pay, separation pay in lieu of reinstatement, moral and exemplary
damages, and attorney‘s fees against Kimwa, and herein petitioners, the Restobar, the
Apartelle, Leo, and/or Amelia Y. Lua (Amelia).

In her Position Paper,[20] respondent claimed that petitioners and Kimwa failed to establish
that she was dismissed for valid causes. She argued that as Administrative Officer/HR Head,
she was tasked to oversee the operations of the Restobar and the Apartelle, including the
authority to sign the agreement with Pepsi. According to her, Leo also authorized her to sign
the agreement in his behalf, and such authority was. communicated to her in the presence of
the Sales Manager of Pepsi.

In addition, respondent emphasized that she received no personal benefits in connection


with the Pepsi contract, and there was no proof that she received anything from Pepsi. She
also stressed that Pepsi was delivering its products to the Restobar and the Apartelle, not to
her. In fine, she. argued that her having entered the Pepsi contract was insufficient basis for
petitioners and Kimwa to lose their trust in her, and use the same to terminate her.
Labor Cases Penned By Justice Del Castillo

For their part, petitioners and Kimwa, in their Position Paper,[21] argued that it was Amelia,
Leo‘s sister, who owned the Restobar and the Apartelle. They averred that these
establishments were separate entities from Kimwa, and Leo was merely its Manager. They
further claimed that on October 15, 2005, respondent resigned from Kimwa and transferred
to the Restobar and the Apartelle for higher pay.

In addition, petitioners and Kimwa asserted that respondent, was validly terminated as she
committed dishonesty, abuse of confidence, and breach of trust against her employer. They
explained that respondent entered into a contract with Pepsi, whereby the Restobar
committed to purchase 2,400 cases of Pepsi products per year for a period of two years or
from October 2005 to October 2007. They stressed that respondent entered this contract
without prior authority from Leo or Amelia, and without disclosure to them of the benefits
arising therefrom. They also alleged that respondent committed dishonesty when she
charged some of her meals and offer/invitation expenses to the Restobar, without approval
of its Owner or Manager. They likewise stated that respondent was given opportunity to
explain her side before she was terminated.

Furthermore, petitioners and Kimwa insisted that while under the employ of Kimwa,
respondent received advance payment of her benefits, separation pay and other claims.
They added that having received monetary benefits, respondent had no more cause of
action against them.

Ruling of the Executive Labor Arbiter

On November 20, 2007, the Executive Labor Arbiter (LA) rendered a Decision[22]dismissing
the Complaint for lack of. merit. The LA, nonetheless, ordered petitioners and Kimwa to pay
respondent separation pay amounting to P15,000.00.

The LA decreed that petitioners and Kimwa validly dismissed respondent on the ground of
loss of trust and confidence. He pointed out that employers cannot be compelled to retain
the services of their employees who were guilty of acts inimical to the interests of the
employer; and, the dismissal of an erring employee was a measure of self-protection,

The LA also declared that respondent committed acts contrary to the interest of her
employer when she charged personal food consumption to the Restobar, entered into an
exclusive contract with Pepsi, and failed to account for the Pepsi products donated to the
Restobar. He further stated that petitioners and Kimwa complied with the required
procedural due process when they issued memoranda informing respondent of the charges
against her and giving her notice of her dismissal.

Nevertheless, the LA granted respondent one month salary as separation pay ratiocinating
that respondent entered the Pepsi contract in good faith and she presumed that she was
authorized to enter the same.

Respondent appealed the LA Decision.

Ruling of the National Labor Relations Commission

On November 28, 2008, the NLRC issued its Resolution[23] finding respondent‘s dismissal
illegal. It set aside the LA Decision and ordered petitioners to pay respondent backwages,
Labor Cases Penned By Justice Del Castillo

separation pay, moral and exemplary damages, 13thmonth pay differential, and attorney‘s
fees. The dispositive portion of the NLRC Resolution reads:

WHEREFORE, premises laid, the appealed Decision of the Executive Labor Arbiter dated November
20, 2007 is hereby set aside and a new one is entered finding complainant Laarne Densing illegally
dismissed and respondents Leo Restaurant and Bar Cafe and Mountain Suite Apartelle and/or Leo Y.
Lua and Amelia Y. Lua, proprietors of the said establishment, to be solidarily liable to pay
complainant Laarne Densing‘s backwages, based on her latest salary, to be computed from the date of
her dismissal on January 15, 2006 up to the finality of this resolution; separation pay, based on her
latest salary, to be computed from the inception of her employment on January 2, 2002 up to the
finality of this Resolution; moral and exemplary damages in the amount of Fifty Thousand
(Php50,000.00) each; 13th month pay differential in the amount of Pbp1,250.00; and ten percent (10%)
attorney‘s fees computed from the total monetary awards.

SO ORDERED.[24]

According to the NLRC, respondent‘s claim that she had the authority to enter the contract
with Pepsi was supported by evidence, which included the Sworn Statement of the Sales
Manager of-Pepsi, and a Certification from concerned Pepsi Managers that Pepsi donated
only 10 cases of softdrinks and additional 20 cases of Pepsi 12 oz. to the Restobar.

The NLRC added that even assuming that respondent was without explicit authority from the
owner of the Restobar, she still validly entered the contract with Pepsi as the signing thereof
was within her duty as the one in charge of the operations of the Restobar. It also noted that
there was no showing that respondent was ill-motivated in signing the Pepsi contract; and
she signed it to the best interest of the Restobar.

The NLRC ruled that the imputation that respondent charged food to the Restobar was
related to her representation privilege granted her by the Restobar; and, there was no
evidence that she abused this privilege.

Petitioners and Kimwa moved for a reconsideration of the November 28, 2008 NLRC
Resolution.

On June 4,2009, the NLRC granted the Motion for Reconsideration. It set aside its
November 28, 2008 Resolution, and dismissed the Complaint for lack of merit.[25]

In reversing itself, the NLRC held that respondent‘s functions did not include any authority to
sign or execute contracts for and in behalf of the Restobar. It added that even assuming that
Leo verbally authorized her to sign the Pepsi agreement, respondent signed the same in her
name, as if she was the Restobar‘s owner. It also held that if not for the fact that respondent
was suspended and later dismissed, the whereabouts of the donated Pepsi products would
not have been traced. It likewise faulted respondent for charging 50% of her meals to the
Restobar without approval from its Owner or Chief Officer. It added that respondent was
given opportunity to be heard when various memoranda were issued to her.

On July 31, 2009, the NLRC denied[26] respondent‘s Motion for Reconsideration.

Ruling of the Court of Appeals


Labor Cases Penned By Justice Del Castillo

Respondent filed: with the CA a Petition for Certiorari essentially reiterating that she was
illegally dismissed.

On November 27, 2012s the CA rendered the assailed Decision[27] setting aside the June 4,
2009 and July 31, 2009 Resolutions of the NLRC, and reinstating the November 28, 2008
NLRC Resolution.

The CA reasoned that as Administrative Officer/HR Head, respondent held a position of trust
and confidence. Nevertheless, it explained that petitioners failed to prove that respondent
committed any of the following acts imputed against her: a) signing the Pepsi agreement on
behalf of the Restobar without authority from Leo; b) failure to account for the products
donated by Pepsi to the Restobar; and, c) unauthorized charges of food on the account of
the Restobar.

The CA stressed that the foregoing grounds had been adequately passed upon in the NLRC
November 28, 2008 Resolution before it reversed itself and issued its June 4, 2009 and July
31, 2009 Resolutions. It added that even if respondent had no express authority to sign the
agreement with Pepsi, her having entered it was not sufficient to dismiss her from work,
especially in the absence of malicious intent or fraud on her part. It pointed out that the
Restobar did not suffer damage because of respondent‘s act.

According to the CA, respondent even acted in good faith when she signed the contract with
Pepsi on the impression that sit was part of her duties and responsibilities. It also quoted
with approval the November 28, 2003 NLRC Resolution declaring that there was no
evidence that respondent abused her representation privilege, which included the charging
of food expense when entertaining guests of the Restobar. Finally, it held that respondent
did not deserve the penalty of dismissal especially so since she committed no prior
infractions in her more than three years of service.

On July 12,2013, the CA denied[28] petitioners‘ Motion for Reconsideration. Petitioners thus
filed this Petition raising these grounds:

1. [T]he Honorable Appellate Court erred in [accepting the [t]heory of the Respondent
that Kimwa Construction operated Leo‘s Restobar or Leo‘s Restaurant and Bar Cafe,
Mountain Suite Business Apartelle.[29]

2. [T]he Honorable Appellate Court erred when it [h]eld that x x x to justify the dismissal
of an employee base[d], on loss of trust and confidence, the acts of said employee
should be proven by substantial evidence and founded on clearly established facts.[30]

3. [T]he Petition for Review [r]aises a question of law and of facts that justif[y r]eview of
the Appellate Court‘s Decision and its denial of the Motion for Reconsideration.[31]

4. [T]he Appellate Court also erred in [granting] Moral and Exemplary Damages [to
respondent].[32]

Petitioners argue that the CA erred in holding that Kimwa owned and operated the Restobar
and the Apartelle. They assert that these establishments are single proprietorships owned by
Amelia and managed by Leo. They also asseverate that there are sufficient bases to dismiss
respondent as she signed the exclusivity contract with Pepsi as if she was the owner of the
Restobar, and she did not account for the products donated by Pepsi to the latter. Finally,
Labor Cases Penned By Justice Del Castillo

they submit that respondent is not entitled to moral and exemplary damages as they did not
act in bad faith in dismissing her.

Respondent, on her end, counters that although she held a position of trust and confidence,
there is no showing that she committed willful breach of trust against her employer. She
argued that she acted in good faith when she signed the exclusivity contract with Pepsi such
that there is no reason to hold that she committed any dishonest conduct that would warrant
her employer‘s loss of trust in her.

Issue

Whether respondent was validly dismissed on the ground of loss of trust and
confidence.
Our Ruling

The Court denies the Petition.


As a rule, the findings of fact of the CA when fully supported by evidence are conclusive and
binding on the parties and are not reviewable by the Court. However, this rule admits of
exceptions including such instance where the factual findings of the CA are contrary to those
of the labor tribunals.[33]

In this case, the LA and the NLRC are one in ruling that respondent was validly dismissed
from work. The CA ruled otherwise, Considering these divergent positions, the Court deems
it necessary to review, re-evaluate, and re-examine the findings of the CA as they are
contrary to those of the LA and the NLRC.[34]

First, petitioners deny that Kimwa owned and operated the Restobar and the Apartelle. They
claim that Amelia owned these establishments, and Leo only managed them.

The Court is unconvinced.

As will be discussed hereunder, sufficient pieces of evidence show that Kimwa, Leo, and
Amelia owned, managed, and operated the Restobar and the Apartelle. They also
continuously employed respondent, previously as liaison officer and thereafter as
Administrative Officer/HR Head of the Restobar and the Apartelle.

On July 4, 2005, while respondent was still a liaison officer of Kimwa, Leo, as
―Proprietor/Chief Executive Officer of Kimwa Construction & Development Corp./Mountain
Suite Business Apartelle‖ appointed her as Administrative Officer/HR Head of the Restobar
and the Apartelle to be effective as soon as the establishments were officially
operational.[35] On October 19, 2005, Leo, in the same capacity as cited above, confirmed the
appointment of respondent and declared its effectivity beginning October 18, 2005.[36]

Moreover, in his January 2, 2006 Memorandum,[37] while respondent was acting as


Adrninistrative Officer/HR Head of the Restobar and the Apartelle, Leo required her to
temporarily report at Kimwa‘s Main Office. Apart from this, all Memoranda[38] to Explain
issued by Leo to respondent as well as the Notice[39] of her Termination were written under
the heading ―Kimwa Construction & Dev. Corp.‖ It is also worth noting that the Restobar is a
namesake of Leo as the same is named ―Leo‘s Restaurant and Bar Cafe.‖ As regards
Amelia, petitioners repeatedly alleged that she is the owner of the Restobar and the
Apartelle and she never disputed this matter.
Labor Cases Penned By Justice Del Castillo

At the same time, it is settled that where it shows that business entities are owned,
controlled, and conducted by the same parties, law and equity will disregard the legal fiction
that they are distinct and shall treat them as one entity in order to protect the rights of third
persons. Here, it appearing that Kimwa, Leo, and Amelia owned, controlled and managed
the Restobar and the Apartelle, they are treated as a single entity accountable for the
dismissal of respondent.[40]

Based on the foregoing, petitioners continually employed respondent from the time she was
assigned in Kimwa until she was appointed Administrative Officer/HR Head of the Restobar
and the Apartelle.

Second, petitioners argue that respondent was validly terminated for loss of trust and
confidence.

Such argument is without merit.

An employer has the right to dismiss an employee for just causes, which include willful
breach of trust and confidence reposed on him or her by the employer. To temper such right
to dismiss, and to reconcile it with the employee‘s security of tenure, it is the employer who
has the burden to show that the dismissal of the employee is for a just cause.[41] Such
determination of just cause must also be made with fairness, in good faith, and only after
observance of due process of law.[42]

Moreover, to dismiss an employee on the ground of loss of trust and confidence, two
requisites must concur: (a) the concerned employee must be holding a position of trust; and,
(b) the loss of trust must be based on willful breach of trust based on clearly established
facts.[43]

Loss of trust and confidence as a ground for dismissal is never intended for abuse by reason
of its subjective nature. It must be pursuant to a breach done willfully, knowingly and
purposely without any valid excuse. It must rest on substantial grounds and not on mere
suspicion, whims, or caprices of the employer.[44]

In fine, ―loss of confidence should not be simulated. It should not be used as a subterfuge for
causes which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a
mere afterthought to justify earlier action taken in bad faith.‖[45]

Here, respondent, as Administrative Officer/HR Head of the Restobar and the Apartelle, had
the following duties and functions:

1. Has the authority/information in all operation, administrative and functional matters.

2. Reports directly to the owner.

3. Oversees the entire operations of the business that includes over-all


property/furnitur[e] maintenance & expenditures.

4. Handles all employees of the establishments.


Labor Cases Penned By Justice Del Castillo

5. Carries out HR policies & procedures[.]

6. Responsible in the recruitment, screening & selection of new employment for vacant
position. .

7. Plans & conducts new employee orientation to foster positive attitude towards
company goals.

8. Develops & maintains a human resourc[e] system that meets top management
information needs.

9. Wage and salary administration.

10. Labor & Employee relations, welfare & benefits. [46]

As far as the first requisite is concerned, respondent is shown to occupy a position of trust as
her managerial work was directly related to management policies, and generally required
exercise of discretion and independent judgment.[47]

Nonetheless, the second requirement is wanting since petitioners failed to prove that their
loss of trust on respondent was founded on clearly established facts.

Records show that on December 30, 2005, Leo required respondent to explain her
supposed infractions when she signed, without the approval of the owner, the contract
between the Restobar and Pepsi; and her failure to account the items Pepsi donated to the
Restobar.

Respondent aptly explained these matters to Leo. According to her, Leo verbally authorized
her to sign the agreement with Pepsi. This verbal instruction was given in the presence of
Ablanque, Sales Manager of Pepsi.

In his Affidavit[48] dated February 9, 2006, Ablanque corroborated respondent‘s assertion. He


certified that during his visits in the Restobar, he discussed with Leo his proposal of an
exclusivity contract between Pepsi and the Restobar. In the course of their negotiation in
September 2005, Leo agreed to the contract, and authorized respondent to sign the same.

Also, as declared by the CA, even granting for the sake of argument that respondent signed
the Pepsi contract without the express authority from Leo, her act was .well within her
functions. As above quoted, respondent 1) had the authority in all operational, administrative
and functional matters of the Restobar and the Apartelle; and, 2) had the duty to oversee the
entire operations of the business, including the over-all property/furniture, maintenance and
expenditures.[49]

Therefore, having entered the Pepsi contract is not sufficient basis for petitioners to lose
their;; trust in respondent. Leo authorized her to enter said agreement. Even assuming that
there was no explicit order for her to do so, respondent still acted within her authority as in-
charge of all operation, administrative and functional matters of the establishments.

Notably, although the LA ruled that respondent was validly dismissed, the LA (in granting
separation pay), recognized that respondent acted in good faith when she entered into the
Pepsi contract, viz.:
Labor Cases Penned By Justice Del Castillo

[Respondent] x x x nonetheless entered into said agreement in good faith. [Respondent] presumed that
she was authorized to enter into said Exclusivity Agreement. In this regard, the undersigned is
inclined to grant [respondent‘s] claim for separation pay considering that her dismissal is premised on
a vague authority, x x x[50]

Indeed, there was no malice or any fraudulent intent on the part of respondent when she
sighed the Pepsi contract. There is likewise no evidence that she personally benefited
therefrom. In fact, the Restobar itself received the items donated by Pepsi, and the Restobar
did not suffer any damage arising from the Pepsi contract.

Loss of trust and confidence must stem from dishonest, deceitful or fraudulent acts. In the
absence of such malicious intent or fraud on the part of respondent, she committed no willful
breach of trust against her employer.[51]

In addition, the Court finds that the charge that respondent failed to account for a certain
number of products Pepsi donated to the Restobar is without basis.

On January 4, 2006, Pepsi clarified that it donated only 10 cases of its products on the
opening night of the Restobar, and an additional 20 cases of Pepsi 12 oz. on December 7,
2005. It added that Pepsi gave no other donation to the Restobar or its staff. Pepsi admitted
its lapses, and apologized to Leo; it also requested him to disregard the inadvertent entries
in the documents it gave him.

Since Pepsi clarified the matter and as established, there is no unaccounted donation made
by Pepsi to the Restobar, then the allegation – that respondent committed loss of trust
because of unaccounted donation from Pepsi — is untenable. Indeed, petitioners‘ loss of
trust and confidence was merely simulated. It was arbitrarily asserted despite sufficient
evidence to the contrary.[52]

Moreover, the charge of dishonesty against respondent for purportedly charging 50% of the
food she personally ordered to the account of the Restobar is unsubstantiated. This
accusation was cited in Leo‘s January 3,2006 Memorandum but was not at all specified in
the Notice of Termination against respondent as said notice centered on respondent‘s act of
having entered the contract with Pepsi. In any case, as correctly observed in the November
28, 2008 Resolution of the NLRC, Restobar ―was not really saddled by those entertainment
expenses because the foods and meals were eventually deducted against [respondent‘s]
salary, which for one reason or another [respondent] offered no objection.‖[53]

Finally, the Court sustains the grant of moral and exemplary damages, and attorney‘s fees in
favor of respondent.

Moral damages is awarded to an illegally dismissed or suspended employee when the


employer acted in bad faith or fraud, or in such manner oppressive to labor or contrary to
morals, good customs or public policy,[54] as in this case.

As discussed, petitioners primarily charged respondent of having entered the contract with
Pepsi without authority from the Owner or the Manager of the Restobar. Nevertheless, as
also established, Leo was well aware of this contract, as Pepsi itself attested, The Restobar
also directly received the Pepsi products. Moreover, despite respondent having explained
herself, and Pepsi having fully and timely clarified the matters surrounding the contract,
petitioners still dismissed respondent. It thus appears that such dismissal was pre-
Labor Cases Penned By Justice Del Castillo

determined by petitioners even before respondent explained herself regarding the charges
against her.

For having shown bad faith or such ―conscious and intentional design to do a wrongful act
for a dishonest purpose or moral obliquity,‖[55] petitioners are liable to pay respondent moral
damages amounting to P50,000.00. They are ‗likewise liable to pay respondent exemplary
damages amounting to P50,000.00 as it is also shown that her dismissal was carried out in
such a malicious and oppressive manner. Such grant of exemplary damages is deemed
necessary to deter employers from committing the same or similar acts. The award of
attorney‘s fees is likewise sustained since exemplary damages is awarded here, and
considering further that respondent has been compelled to file this case and incurred
expenses to protect her interest.[56]

To recapitulate, in order to dismiss an employee on the ground of loss of trust and


confidence, the employee must be guilty of an actual and willful breach of duty duly
supported by substantial evidence.57 Since petitioners failed to show that respondent
actually and willfully breached their trust, then the CA properly ruled that petitioners
dismissed her without any valid cause. Henceforth, the CA properly set aside the NLRC
Resolutions dated June 4, 2009 and July 31, 2009, and reinstated the NLRC Resolution
dated November 28,2008.

WHEREFORE, the Petition is DENIED. The Decision dated November 27, 2012 and
Resolution dated July 12, 2013 of the Court of Appeals in CA-G.R SP No. 03222-MIN
are AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

18 APR 2016 | JURISPRUDENCE | PONENTE | JUSTICE


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

Doehle-Philman Manning Agency Inc., et al.


Vs. Henry C. Haro; G.R. No. 206522; April
18, 2016
DECISION

DEL CASTILLO, J.:

―[T]he constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not prevent us
from sustaining the employer when it is in the right. We should always be mindful that justice
is in every case for the deserving, to be dispensed with in the light of established facts, the
applicable law, and existing jurisprudence.‖[2]

This Petition for Review on Certiorari assails the July 20, 2012 Decision[3] of the Court of
Appeals (CA) in CA-GR. SP No. 117988. The CA reversed and set aside the September 28,
2010[4] and November 30, 2010[5] Resolutions of the National Labor Relations Commission
(NLRC) in NLRC LAC (OFW) No. 04-000295-10 which affirmed the February 26, 2010
Decision[6] of the Labor Arbiter (LA) dismissing the Complaint in NLRC OFW Case No. 06-
09031-09. Accordingly, the CA ordered Doehle-Philman Manning Agency, Inc. (Doehle-
Philman), Dohle (IOM) Limited (Dohle Ltd.) and Capt. Manolo T. Gacutan (petitioners) to
jointly and severally pay respondent Henry C. Haro permanent and total disability benefits
amounting to US$60,000.00 and attorney‘s fees of 10% of the total monetary award. Also
assailed is the March 27, 2013 CA Resolution[7] denying petitioners‘ Motion for
Reconsideration.

Factual Antecedents

On May 30, 2008, Doehle-Philman, in behalf of its foreign principal, Dohle Ltd., hired
respondent as oiler aboard the vessel MV CMA CGM Providencia[8] for a period of nine
months with basic monthly salary of US$547.00 and other benefits.[9] Before deployment,
respondent underwent pre-employment medical examination (PEME) and was declared fit
for sea duty.[10]

Respondent stated that on June 1, 2008, he boarded the vessel and assumed his duties as
oiler; however, in November 2008, he experienced heartache and loss of energy after
hammering and lifting a 120-kilogram machine; thereafter, he was confined at a hospital in
Rotterdam where he was informed of having a hole in his heart that needed medical
attention.[11]

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


turn referred him to Clinico-Med. Respondent claimed that he was confined for two days in
Labor Cases Penned By Justice Del Castillo

UST[12] Hospital and that a heart operation was recommended to him. He nevertheless
admitted that he had not yet undergone any surgery.[13] On April 24, 2009, respondent‘s
personal doctor, Dr. Luminardo M. Ramos (Dr. Ramos), declared him not fit to work.[14]

Consequently, on June 19, 2009, respondent filed a Complaint for disability benefits,
reimbursement of medical expenses, moral and exemplary damages, and attorney‘s fees
against petitioners.[15] Respondent claimed that since he was declared fit to work before his
deployment, this proved that he sustained his illness while in the performance of his duties
aboard the vessel; that he was unable to work for more than 120 days; and that he lost his
earning capacity to engage in a work he was skilled to do. Thus, he insisted he is entitled to
permanent and total disability benefits.[16]

For their part, petitioners alleged that respondent boarded the vessel on June 2, 2008; that
on or about November 21, 2008, respondent was confined at a hospital in Rotterdam; and
that upon repatriation, he was referred to Dr. Leticia Abesamis (Dr. Abesamis), the
company-designated doctor, for treatment.[17]

Petitioners denied that respondent has a hole in his heart. Instead, they pointed out that on
December 27, 2008, Dr. Abesamis diagnosed ―him of ―aortic regurgitation, moderate‖ but
declared that his condition is not work-related.[18]They averred that despite such declaration,
they still continued with respondent‘s treatment.[19] However, on January 19, 2009, Dr.
Abesamis declared that respondent had not reported for follow up despite repeated
calls.[20] On April 8, 2009, the company-designated doctor reported that respondent refused
surgery.[21] And on April 15, 2009, she reiterated that respondent‘s condition is not work-
related.[22]

Petitioners insisted that the determination of the fitness or unfitness of a medically


repatriated seafarer rests with the company-designated physician; and since Dr. Abesamis
declared that respondent‘s illness is not work-related, such determination must
prevail.[23] They also stressed that the company-designated doctor continuously treated
respondent from, his repatriation in December 2008, until April 2009, hence, her finding that
his illness is not work-related must be respected.[24]

Finally, petitioners argued that since respondent‘s illness is not an occupational disease,
then he must prove that his work caused his illness; because of his failure to do so, then he
is not entitled to disability benefits.[25]

Ruling of the Labor Arbiter

On February 26, 2010, the LA dismissed[26] the case for lack of merit. The LA noted that Dr.
Abesamis declared that respondent‘s illness is not work-related; therefore, it is incumbent
upon respondent to prove otherwise. He further held that even respondent‘s personal doctor,
Dr. Ramos, did not state that his illness is work-related as he; only declared that respondent
is not fit for work.

Ruling of the National Labor Relations Commission

Respondent interposed an appeal. He maintained that he is entitled to permanent and total


disability benefits because he underwent the PEME and was declared fit to work; and his
illness transpired while he was in the performance of his duties and during the effectivity of
his employment contract.
Labor Cases Penned By Justice Del Castillo

On September 28, 2010, the NLRC dismissed[27] the appeal. It found no sufficient evidence
that respondent‘s illness is work-connected. It decreed that instead of establishing that the
alleged hole in his heart was work-related, respondent focused more on his inability to work
for more than 120 days. It also explained that respondent‘s reliance on his PEME is
misplaced as the same is neither rigid nor exploratory. It likewise reiterated the finding of the
LA that even respondent‘s personal doctor did not pronounce his condition as Work-
connected, and only declared him unfit to resume sea duty.

On November 30, 2010, the NLRC denied[28] respondent‘s Motion for Reconsideration.

Ruling of the Court of Appeals

Respondent filed a Petition for Certiorari with the CA arguing that the NLRC committed
grave abuse of discretion in finding him not entitled to disability benefits, moral and
exemplary damages, and attorney‘s fees.

On July 20, 2012, the CA granted[29] the Petition and concomitantly reversed and set aside
the September 28, 2010 and November 30, 2010 NLRC Resolutions. The decretal portion of
the CA Decision reads:

WHEREFORE, the foregoing considered, the present petition is hereby GRANTED and the assailed
Resolutions [dated] 28 September 2010 and 30 November 2010 [are] REVERSED and SET ASIDE.
Accordingly, private respondents are hereby held jointly and severally liable to pay petitioner
permanent and total disability benefits in the sum of US$60,000.00 and attorney‘s fees often percent
(10%) of the total monetary award, both at its peso equivalent at the time of actual payment.

SO ORDERED.[30]

According to the CA, the NLRC committed grave abuse of discretion in affirming the LA
Decision dismissing the Complaint. The CA gave credence to respondent‘s arguments that
he acquired his illness during his employment contract with petitioners; and that his illness
has rendered him totally and permanently disabled as he had not been able to perform his
customary work for more than 120 days.

On March 27, 2013, the CA denied[31] petitioners‘ Motion for Reconsideration.

Thus, petitioners filed this Petition stating that:

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS, REVERSIBLE AND


GROSS ERROR IN LAW BASED ON THE FOLLOWING GROUNDS:

1. In failing to uphold the legal and jurisprudential principle that a writ of certiorari may
be issued only for the correction of errors of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction which is absolutely lacking in this case.

2. In utilizing [r]espondent‘s alleged inability to work for a period exceeding 120 days as
sole basis for entitlement to permanent total disability benefits in absolute disregard of
the provisions of the POEA Standard Employment Contract making work-relation as a
condition sine qua non for compensability of an illness or injury.
Labor Cases Penned By Justice Del Castillo

3. In awarding ten percent (10%) attorney‘s fees in favor of [respondent solely on the
ground that he was constrained to engage the services of counsel contrary to the well-
entrenched principle that attorney‘s fees shall only be awarded upon a showing that the
petitioner acted in gross and evident bad faith.[32]

Petitioners’Arguments

Petitioners posit that no abuse of discretion may be imputed against the NLRC because its
findings and conclusions were based on the facts and evidence on record Thus, they claim
that the CA erred in setting aside the NLRC Resolutions and in not upholding that a writ
of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of
discretion amounting to lack or excess of jurisdiction.[33]

Additionally, petitioners insisted that the CA erred in granting permanent and total disability
benefits in favor of respondent on the sole basis that he was unable to work for a period
exceeding 120 days.[34] They argue that since respondent‘s illness is not an occupational
disease then there must be causal connection between his work and his illness. They
contend that the burden to prove such connection is upon respondent. They added that
there is no proof that the nature of respondent‘s job increased the risk of his illness.[35]

Lastly, petitioners reiterate that the company-designated doctor continuously treated


respondent for a period of about four months; that nothing in the records disproves the
finding of company-designated physician that respondent‘s condition is not job-related; that
since respondent‘s illness is not work-related then, the company-designated doctor is not
obliged to make a declaration on his fitness or unfitness to work; and, that respondent‘s
personal doctor merely concluded that respondent is ―not fit‖ but he did not also make any
declaration on whether respondent‘s condition is work-related or not.[36]

Respondent’s Arguments

Respondent contends that the CA properly ruled that he is entitled to permanent and total
disability benefits.[37] He insists that since his illness is not listed as an occupational disease,
he is ―relieved of the burden to show the causation [of] his rights over the disability
benefits‖[38] as his illness is disputably presumed work-related.[39] He maintains that he
sustained his illness while employed as oiler and his condition resulted in the loss of his
earning capacity.[40]

Issue

Is the CA correct in setting aside the NLRC Resolutions denying respondent‘s claim
for permanent and total disability benefits?
Our Ruling

The Court finds merit in the Petition.


This Court does not review factual issues as only questions of law can be raised in a Rule 45
Petition. However, such rule admits of exceptions including a situation where the factual
findings of the tribunals or courts below are conflicting. Here, there being contrary findings of
fact by the LA and NLRC, on one hand, and the CA, on the other, we deem it necessary to
make our own determination and evaluation of the evidence on record.[41]
Labor Cases Penned By Justice Del Castillo

Essentially, petitioners claim that respondent is not entitled to permanent and total disability
benefits on the sole basis that he was unable to work for more than 120 days.

The Court agrees.

The Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-
Board Ocean-Going Vessels (POEA-SEC), particularly Section 20(B) thereof, provides that
the employer is liable for disability benefits when the seafarer suffers from a work-related
injury or illness during the term of his contract. To emphasize;, to be compensable, the injury
or illness 1) must be work-related and 2) must have arisen during the term of the
employment contract.[42]

In Jebsen Maritime, Inc. v. Ravena,[43] the Court held that those diseases not listed as
occupational diseases may be compensated if it is shown that they have been caused or
aggravated by the seafarer‘s working conditions. The Court stressed that while the POEA-
SEC provides for a disputable presumption of work-relatedness as regards those not listed
as occupational diseases, this presumption does not necessarily result in an automatic grant
of disability compensation. The claimant still has the burden to present substantial evidence
or ―such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion‖[44] that his work conditions caused or at least increased the risk of contracting the
illness.[45]

In this case, considering that respondent did not suffer from any occupational disease listed
under Section 32-A of the POEA-SEC, then to be entitled to disability benefits, the
respondent has the burden to prove that his illness is work-related. Unfortunately, he failed
to discharge such burden.

Records reveal that respondent was diagnosed of aortic regurgitation, a heart ―condition
whereby the aortic valve permits blood ejected from the left ventricle to leak back into the left
ventricle.‖[46] Although this condition manifested while respondent was aboard the vessel,
such circumstance is not sufficient to entitle him to disability benefits as it is of equal
importance to also show that respondent‘s illness is work-related.

In Ayungo v. Beamko Shipmanagement Corporation;[47] the Court held that for a disability to
be compensable, the seafarer must prove a reasonable link between his work and his illness
in order for a rational mind to determine that such work contributed to, or at least
aggravated, his illness. It is not enough that the seafarer‘s injury or illness rendered him
disabled; it is equally necessary that he establishes a causal connection between his injury
or illness, and the work for which he is engaged.[48]

Here, respondent argues that he was unable to work as a seaman for more than 120 days,
and that he contracted his illness while under the employ of petitioners. However, he did not
at all describe his work as an oiler, and neither did he specify the connection of his work and
his illness.

In Panganiban v. Tara Trading Shipmanagement, Inc.,[49] the Court denied the claim for
disability benefits of a seafarer who was an oiler like herein respondent. The Court held that
petitioner therein failed to elaborate on the nature of his work or to even specify his tasks as
oiler which rendered it difficult to determine a link between his position and his illness.
Labor Cases Penned By Justice Del Castillo

The Court is confronted with a similar situation in this case. Respondent simply relied on the
presumption that his illness is work-related. He did not adduce substantial evidence that his
work conditions caused, or at the least increased the risk of contracting his illness. Like
in Panganiban, herein respondent did not elaborate on the nature of his work and its
connection to his illness. Certainly, he is not entitled to any disability compensation.

In an attempt to establish work-relatedness, respondent stated in his Memorandum before


the Court that his illness is compensable due to stress.[50] Aside from being belatedly argued,
such claim is unmeritorious as it still failed to prove the required linkage between
respondent‘s work and his illness to entitle him to disability benefits.

In this regard, we quote with approval the pronouncement of the NLRC as follows:

x x x [Respondent] admitted that he was told by the attending physician that ‗his heart has a hole
somewhere in the left ventricle‘ x x x. Instead of showing how a hole in the heart may be work[-
]related, [respondent] argued on his being ‗unable to perform his customary work for more than 120
days‘ x x x. He stressed in his Appeal that ‗probability‘ is the ultimate test of proof in compensation
proceedings, but he did not cite any probable circumstance which could have made [a] hole in the
heart [w]ork[-]related.

xxxx

x x x [T]o be entitled to compensation and benefits, the seafarer must prove by substantial evidence
that he contracted the illness during the term of his contract and [that] such infirmity was work-related
or at the very least aggravated by the conditions of the work for which he was engaged. Failing on this
aspect, the assertion of [respondent] that his illness was work-connected is nothing but an empty
imputation of fact without any probative weight.[51]

Moreover, the company-designated doctor determined that respondent‘s condition is not


work-related.

Section 20(B)(3) of the POEA-SEC provides that the company-designated doctor is tasked
to determine the fitness or the degree of disability of a medically repatriated seafarer. [52] In
addition, the company-designated doctor was shown to have closely examined and treated
respondent from his repatriation up to four months thereafter. Thus, the LA and the NLRC‘s
reliance on the declaration of the company-designated doctor that respondent‘s condition is
not work-related is justified.[53]

The Court also notes that even respondent‘s physician of choice made no pronouncement
whether his condition is work-related or not. In his one-page medical report, Dr. Ramos only
stated that respondent is not fit for Work. He neither stated that respondent‘s condition is‘ not
work-related nor did he expound on his conclusion, that respondent is not fit for work.

Lastly, the Court holds that the fact that respondent passed the PEME is of no moment in
determining whether he acquired his illness during his employment. The PEME is not
exploratory in nature. It is not intended to be a thorough examination of a person‘s medical
condition, and is not a conclusive evidence that one is free from any ailment before
deployment.[54] Hence, it does not follow that because respondent was declared fit to work
prior to his deployment, then he necessarily sustained his illness while aboard the vessel.
Labor Cases Penned By Justice Del Castillo

Given all these, the Court finds that the CA erred in setting aside the NLRC Resolutions,
which affirmed the dismissal of the Complaint. The findings and conclusions arrived at by the
NLRC were not tainted with grave abuse of discretion as respondent‘s claim for disability
benefits is unsupported by substantial evidence. Indeed, when the evidence adduced
negates compensability, the claim must necessarily fail.[55]

WHEREFORE, the Petition is GRANTED. The July 20, 2012 Decision and March 27,2013
Resolution of the Court of Appeals in CA-G.R. SP No. 117988 are REVERSED and SET
ASIDE. Accordingly, the Complaint is DISMISSED for lack of merit.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

18 APR 2016 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Lynman Bacolor, et al. Vs. VL Makabali


Memorial Hospital, Inc., et al.; G.R. No.
204325; April 18, 2016
DECISION

DEL CASTILLO, J.:

Rules of procedure must be used to achieve speedy and efficient administration of justice
and not derail it. When strict application of the rules on verification and non-forum shopping
will result in patent denial of substantial justice, these rules may be construed liberally. After
all, the ends of justice are better served when cases are determined on the merits, not on
mere technicality.[1]

This Petition for Review on Certiorari assails the Resolution[2] dated July 12, 2012 of the
Court of Appeals (CA) in CA-G.R. SP No. 125333. The CA dismissed the Petition
for Certiorari filed therewith because of the purported defective Verification/Certificate of
Non-Forum Shopping with Undertaking appended to the Petition; and of petitioners‘ violation
of Section 3, Rule 46 of the Rules of Court. Also challenged is, the CA Resolution[3] dated
October 22, 2012 which denied the Motion for Reconsideration for lack of merit.

Factual Antecedents

The case stemmed from an amended Complaint[4] for illegal dismissal and money claims filed
by Drs. Lynman Bacolor (Dr. Bacolor), Jeffrey R. Galura (Dr. Galura), Helen B. Torres (Dr.
Helen), Fritzie C. Villegas (Dr. Villegas), Raymond Canlas (Dr. Canlas), Zheila C. Torres (Dr.
Zheila) and Dax Tidula (Dr. Tidula) against VL Makabali Hospital Inc. (the Hospital),
Alejandro S. Makabali, its owner and President, and Melchor Catambing (Catambing), its
Emergency Room (ER) Manager.[5]

Allegedly, the Hospital engaged Drs. Bacolor, Galura, Villegas and Canlas as resident
physicians assigned in its ER for one year, commencing October 2000 until October 2001. It
engaged Drs. Helen and Zheila, also as ER resident physicians, starting March 2001 until
March 2002, and January 2002 until January 2003, respectively. Despite the expiration of
their contracts, the Hospital continued to employ Drs. Bacolor, Galura, Villegas, Canlas,
Helen and Zheila (petitioners).[6]

Petitioners stated that on May 3, 2006, Catambing and one Dr. Lopez instructed them to
resign, and re-apply to the Hospital as resident physicians under a one-year fixed term
contract. They further alleged that Catambing and Dr. Lopez later directed them to sign a.
waiver and offered them ―gratitude‖ pay of P27,000.00 but they refused to resign; and
because of their refusal, respondents demoted them as assistant physicians in the
Operating-Room (OR) of the Hospital.[7]
Labor Cases Penned By Justice Del Castillo

Additionally, petitioners insisted that to compel them to resign, respondents issued notices to
explain to Drs. Bacolor, Galura, Helen, Villegas and Canlas. In particular, Drs. Bacolor,
Galura and Helen were charged with dishonesty for allegedly directing patients to secure
laboratory examinations outside the Hospital; while Drs. Villegas and Canlas were charged
with violation of timekeeping procedure and habitual violation of rules and regulations.[8]

Consequently, petitioners filed a case for constructive illegal dismissal against respondents.
They argued that despite their complaint, respondents still conducted an administrative
investigation against them.[9] On June 30, 2006, Drs. Bacolor and Galura received notices of
termination from the Hospital.[10]

Petitioners contended that they were constructively dismissed when respondents demoted
them as assistant physicians in the OR of the Hospital.[11] They stated that such demotion
was neither necessary nor temporary, and was arbitrarily done to force them to resign. They
further averred that Drs. Bacolor and Galura were actually illegally dismissed after they were
given respective notices of termination.[12]

On the other hand, Dr. Tidula stated that the Hospital engaged him as resident physician for
a year commencing on January 1, 2001 to December 31, 2001; the Hospital renewed his
contract for the year 2002 to 2003; and after his contract expired, the Hospital continued to
engage his services.[13]

Dr. Tidula likewise alleged that in 2005, several resident physicians in the Hospital resigned.
As a result, the remaining resident physicians were made to fill in their duties. Allegedly, it
was agreed upon that when a resident doctor was absent, a reliever would take his place;
and the reliever‘s fee would be charged against the salary of the absent doctor. Dr. Tidula
claimed that the reliever shall punch in the time card of the absent doctor for t recording,
accounting and expediency purposes.[14]

Furthermore, Dr. Tidula asserted that in February 2006, Dr. Amelita Lising (Dr. Lising), who
was a resident physician, went on leave. He averred that being the acting Chief Resident, he
implemented the agreement regarding the designation of reliever. He stated that the
relievers of Dr. Lising were made to punch in and out her time card to prove that they had
taken her place; and they received salary from that intended for Dr. Lising.[15]

Dr. Tidula narrated that on May 3, 2006, he and his fellow residents were directed to resign
with the promise that they would be re-engaged under a fixed term of one year. He averred
that Catambing and Dr. Lopez also instructed him and the other resident physicians to
tender their resignation and sign a waiver in favor of the Hospital. He alleged that they were
also offered P27,000.00 as financial assistance; however, he and the other resident
physicians refused to resign.[16]

Additionally, Dr. Tidula alleged that on May 16, 2006, he was ordered to report exclusively at
the OR of the Hospital as assistant physician; and this demotion was a result of his refusal to
resign. Consequently, he filed a complaint for constructive dismissal against the Hospital.[17]

Later, Catambing gave Dr. Tidula a Notice[18] of dismissal for violation of timekeeping
procedure. Dr. Tidula stated that he inquired from Catambing why he was not given any
notice to explain. Purportedly, Catambing informed him that a notice to explain was sent
through a private courier. Upon verification, Dr. Tidula discovered that the notice was
delivered to a person unknown to him. He informed the Hospital about the matter but the
Labor Cases Penned By Justice Del Castillo

Hospital insisted that he was given the opportunity to explain and was invited to an
investigation, as such, the sanction against him remains.[19]

Dr. Tidula argued that he was illegally dismissed since he did not receive a notice to explain;
and he did not violate any of the company rules.[20]

For their part, respondents asserted that Drs. Tidula, Bacolor and Galura were validly
dismissed. In particular, they alleged that Dr. Tidula violated timekeeping procedure of the
Hospital when he punched in Dr. Lising‘s time card on February 2, 6, 10 and 12, 2006.[21] On
the other hand Drs. Bacolor and Galura were found guilty of referring patients to other clinics
for laboratory examination in February 2006.[22]

Moreover, respondents claimed that the Hospital did not dismiss Drs. Helen, Villegas and
Canlas; thus, they should be dropped from the complaint. They added that Dr. Zheila was
never cited for any infraction but she abandoned her work as she had been absent since
July 2006.[23]

Ruling of the Labor Arbiter

On July 23, 2010, the LA rendered a Decision[24] finding respondents guilty of illegally
dismissing petitioners and Dr. Tidula, as well as ordering respondents to pay them
backwages from the time of their dismissal until finality of the Decision, and separation pay.
The LA also ordered the Hospital to pay petitioners and Dr. Tidula moral damages of
P100,000.00 each and exemplary damages of P100,000.00 each, and attorney‘s fees.

The Hospital appealed to the National Labor Relations Commission (NLRC).[25]

Ruling of the National Labor Relations Commission

On November 11, 2011, the NLRC reversed and set aside the LA Decision and dismissed
the complaints.[26] It held that there was no showing that petitioners and Dr. Tidula were
demoted, and that such demotion amounted to constructive dismissal. It ruled that ―it would
be difficult to discern the differences between the duties of a resident and assistant
physician, as both indubitably perform doctor‘s duties.‖[27] Also, the NLRC decreed that Dr.
Zheila did not even sign the verification and certificate of non-forum shopping in this case.

Moreover, the NLRC gave credence to respondents‘ position that Drs. Bacolor and Galura
were validly dismissed because they repeatedly referred patients to another clinic for
laboratory examinations. It ruled that such was an act of deceit because the Hospital offered
the same services.

On April 18, 2012, the NLRC denied petitioners and Dr. Tidula‘s motion for
reconsideration.[28]

Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse of
discretion on the part of the NLRC in giving due course to the appeal despite its alleged lack
of appeal bond; and in reversing the LA Decision.

The Petition was accompanied by three separate Verifications/Certificates of Non-Forum


Shopping signed by Drs. Galura, Bacolor and Helen.[29] Atty. Carlos Raphael N. Francisco
Labor Cases Penned By Justice Del Castillo

executed and signed a Verification/Certificate of Non-Forum Shopping with Undertaking in


behalf of Drs. Villegas, Canlas and Zheila.[30]

Ruling of the Court of Appeals

On July 12, 2012, the CA issued the assailed Resolution, the pertinent portions of which
read:

The Petition for Certiorari contains the following infirmities, hence is DISMISSED:

1. The Verification/Certification of Non-Forum Shopping With Undertaking attached to the Petition is


executed by Atty. Carlos Raphael N. Francisco, allegedly [sic] counsel of record of petitioners Fritzie
C. Villegas, Raymond Canlas and Zeila C. Torres, not by the three petitioners themselves, in violation
of Rule 7, Section 5 of the Rules of Court, and the ruling in Far Eastern Shipping Company v. Court
of Appeals et al.

2. The Petition does not indicate in its title that Dax Tidula is a party respondent, although in the
portion entitled ‗Parties‘ he is so named, and does not indicate the address of Dax Tidula, all in
violation of Rule 46, Section 3 of the Rules of Court, in relation to Rule 65 of the same Rules.

SO ORDERED.[31]

On October 22, 2012, the CA denied petitioners‘ Motion for Reconsideration.[32]

Aggrieved, petitioners filed this Petition raising the following assignment of errors:

[1]
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT PROBABLY
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHEN THE COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF THE
PETITIONERS DESPITE THE FACT THAT SEVERAL OF THE PETITIONERS HAD VALIDLY EXECUTED
VERIFICATIONS AND CERTIFICATES OF NON-FORUM SHOPPING WHICH WERE ATTACHED TO
SAID PETITION FOR CERTIORARI;

[2]
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT PROBABLY
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHEN THE COURT OF APPEALS DISMISSED THE PETITION FOR CERTIORARI OF THE
PETITIONERS DESPITE THE FACT THAT THE PETITIONERS HAD SUBSTANTIALLY COMPLIED WITH
THE RULES ON THE EXECUTION OF A VERIFICATION AND CERTIFICATE OF NON-FORUM
SHOPPING;

[3]
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT PROBABLY
IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE-HONORABLE COURT
WHEN THE COURT OF APPEALS. DISMISSED THE PETITION FOR CERTIORARI OF THE
Labor Cases Penned By Justice Del Castillo

PETITIONERS DESPITE THE FACT THAT THE ONLY KNOWN ADDRESS OF RESPONDENT TIDULA
WAS INCLUDED IN THE PETITION FOR CERTIORARI AND THAT RESPONDENT TIDULA, THROUGH
HIS COUNSEL, WAS SERVED WITH A COPY OF SUCH PETITION FOR CERTIORARI;

[4]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB. III-
06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS ALLOWED THE NLRC TO VIRTUALLY EXTEND THE PERIOD OF THE
RESPONDENT HOSPITAL TO FILE AN APPEAL FOR ALMOST FOUR MONTHS FROM THE
EXPIRATION OF THE PERIOD TO FILE SUCH APPEAL;

[5]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB.
111-06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS ALLOWED THE NLRC TO GIVE DUE COURSE TO AN APPEAL THAT WAS
CLEARLY FILED OUT OF TIME AND TO MODIFY THE DECISION OF THE LABOR ARBITER THAT
WAS ALREADY FINAL AND EXECUTORY; and

[6]
THE COURT OF APPEALS SANCTIONED A DEPARTURE BY THE NLRC IN NLRC CASE NO[.] RAB. III-
06-10180-06 FROM THE ACCEPTED OR USUAL COURSE OF JUDICIAL PROCEEDINGS AS THE
COURT OF APPEALS TOLERATED THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION COMMITTED BY THE NLRC IN REVERSING IN TOTO THE DECISION OF
THE LABOR ARBITER DESPITE THE FACT THAT SUCH REVERSAL IS NOT SUPPORTED BY ANY
EVIDENCE ON RECORD AND BY THE APPLICABLE LAWS.[33]

Petitioners argue that the verifications executed by three of the six petitioners and the
verification executed by their counsel constituted full compliance with the required
verification. They contended that the three petitioners who made their verification are real
parties-in-interest, and their counsel who also verified the Petition had been in possession of
authentic and relevant records of the case.

Also, petitioners posit that the failure of Drs. Villegas, Canlas and Zheila to execute a
certificate of non-forum shopping should not have caused the dismissal of the Petition
for Certorari. They insist that under justifiable circumstances, the signature of one of the
petitioners in the certificate against forum shopping substantially complies with the rules.
They further point out that all of them share a common interest and invoke a common cause
of action under the same set of facts.

Moreover, petitioners submit that they complied with Section 3, Rule 46 of the Rules of
Court. They contend that they included Dr. Tidula in the Petition for Certiorari as respondent
because he remains interested in the reversal of the NLRC Decision and Resolution. They
add that from the inception of the case, all pleadings had been coursed through Dr. Tidula‘s
counsel; and they are unaware of the address of Dr. Tidula as he never indicated it in his
position paper. Hence, they maintain that it is fair that in the present proceeding, any
pleading intended for Dr. Tidula be sent to his counsel.
Labor Cases Penned By Justice Del Castillo

In addition, petitioners state that the non-inclusion of Dr. Tidula is not a fatal defect but a
mere typographical error which does not prejudice the rights of any party.

Finally, petitioners fault the CA in not finding that the NLRC committed grave abuse of
discretion in giving due course to the Hospital‘s appeal despite its failure to post appeal bond
within the period to perfect an appeal. They also maintain that the NLRC committed grave
abuse of discretion in holding that they were not illegally dismissed by respondents.

The Hospital, on the other hand, asserts that the CA correctly dismissed the Petition
because it was filed by a counsel who had no authority from petitioners; and that the
Certificate against Forum Shopping attached thereto was fatally defective. It also declares
that the Petition for Certiorari improperly impleaded Dr. Tidula as respondent. Lastly, it
contends that petitioners are not entitled to money claims.

Our Ruling

The Petition is meritorious.

In Altres v. Empleo,[34] the Court summarized the basic tenets involving non-compliance with
the requirements on, or filing of defective verification and certificate against forum shopping,
to wit:

1) A distinction must be made between non-compliance with the requirement on or submission of


defective verification, and non-compliance with the requirement on or submission of defective
certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The court may order its submission or correction or act on the pleading if
the attending circumstances are such that strict compliance with the Rule may be dispensed with in
order that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear
to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in


verification, is generally not curable by its subsequent submission or correction thereof, unless there is
a need to relax the Rule on the ground of ―substantial compliance‖ or presence of ―special
circumstances or compelling reasons‖.

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest
and invoke a common cause of action or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his counsel of record to sign on his behalf.
Labor Cases Penned By Justice Del Castillo

The CA dismissed the Petition for Certiorari on the ground that the Verification/Certificate of
Non-Forum Shopping executed by petitioners‘ counsel on behalf of Drs. Villegas, Canlas
and Zheila violated Section 5, Rule 7 of the Rules of Court.[35]

As properly pointed out by the CA, the Verification/Certificate of Non-Forum Shopping with
Undertaking executed by petitioners‘ counsel is not valid. As stated in Altres, a certificate
against forum shopping must be signed by the party and in case his counsel signs the same
on his behalf, the counsel must be armed with a special power of attorney. Since petitioners‘
counsel is not shown to have been authorized by Drs. Villegas, Canlas and Zheila to sign a
certificate of non-forum shopping on their behalf, the execution of said certificate by counsel
violates the foregoing rules.

Nonetheless, the CA failed to consider the concept of ―substantial compliance‖ to the


requirements of verification and certificate of non-forum shopping, as it has been shown that
three of the six petitioners executed their own verification and certificate against forum
shopping.

The verification of a pleading is a formal and not a jurisdictional requirement. It is intended to


assure that the allegations in a pleading are true and correct. As such, the court may order
the correction of unverified pleadings, or it may act on them and waive strict compliance with
the rules.[36]

The verification requirement is deemed substantially complied with when a person who has
sufficient knowledge to swear to the truth of the allegations in the complaint or petition signs
the verification; and matters alleged therein have been made in good faith or are true and
correct. Thus, there is substantial compliance if at least one of the petitioners makes a
proper verification.[37]

In Ateneo de Naga University v. Manalo,[38] the signature of one of three petitioners therein
was considered substantial compliance with the verification requirement. The Court held that
Fr. Tabora, the petitioner who signed the verification, has sufficient knowledge to swear to
the truth of the allegations in the petition filed with the CA; and his signature was ample
assurance that the allegations have been made in good faith or are true and correct.

In SKM Art Craft Corporation v. Bauca,[39] the Court held that the verification and certificate
against forum shopping signed by nine out of 23 respondents substantially complied with the
verification requirement since they have common interest and cause of action. The Court
likewise stated that the apparent merit of the petition and the conflicting findings, of the LA
and the NLRC also justified the decision of the CA to resolve the case on the merits.

In this case, three out of six petitioners signed three separate verifications appended to the
Petition for Certiorari. Their signatures are sufficient assurance that the allegations in the
Petition were made in good faith, or are true and correct. Thus, there is substantial
compliance with the verification requirement.

On the other hand, as a rule, the certificate against forum shopping must be signed by all
plaintiffs or petitioners; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable situations, such as when the plaintiffs or petitioners
share a common interest and invoke a common cause of action or defense, the signature of
one of them in the certificate against forum shopping is considered substantial compliance
with the rules.[40]
Labor Cases Penned By Justice Del Castillo

In Abaria v. National Labor Relations Commission,[41] 47 out of 88 petitioners signed the


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

Furthermore, in Torres v. Specialized Packaging Development Corp.,[42] the Court allowed


the relaxation of the rules on submission. of certificate against forum shopping. One of the
compelling grounds for the allowance of said certificate therein where only two of 25
petitioners signed the same was the ―apparent merits of the substantive aspects of the
case.‖ It noted that the varying views of the LA and the NLRC give ample basis for the
necessity of a review on the merits and the outright dismissal of the petition was prejudicial
to the substantive rights.

Here, three of six petitioners signed the certificate of non-forum shopping. At the least, the
CA could have ordered that those who did not sign it be dropped as parties, but not the
outright dismissal of the Petition.

The Court, nevertheless, holds that there are justifiable reasons for the relaxation of the
rules on the filing of a certificate of non-forum shopping and that the certificate against forum
shopping signed by three out of six petitioners suffices.

Specifically, petitioners‘ cause of action revolves on the same issue, that is, respondents
illegally dismissed them under similar circumstances. They were all resident physicians who
were purportedly 1) re-employed by the Hospital even after the expiration of their respective
one year contracts; 2) forced to resign and offered to be re-engaged as fixed term
employees but declined; 3) demoted; 4) accused of violations of the Hospital rules and
regulations; and, 5) dismissed.

Moreover, substantial justice dictates that the Petition for Certiorari be given due course and
be resolved on the merits. This is especially so since the findings of the LA are contrary to
those of the NLRC,[43] particularly on the issues of whether respondents illegally dismissed
petitioners and of whether they were afforded due process of law.

The requirement of strict compliance with the rules on filing of certificate against forum
shopping highlights the mandatory character of the submission of such certificate. However,
this mandatory requirement allows substantial compliance provided that there are justifiable
circumstances for the relaxation of the rules.[44]

Furthermore, the CA dismissed the Petition for Certiorari because it did not indicate in its title
that Dr. Tidula is a party respondent and the Petition did not state Dr. Tidula‘s actual
address. The CA held that these omissions violate Section 3,[45] Rule 46 of the Rules of
Court, in relation to Rule 65 thereof.

We do not agree.

Since Dr. Tidula was included as one of the respondents in the body of the Petition, then the
CA could have clarified with petitioners the non-inclusion of Dr. Tidula in the title and could
have ordered the title rectified.
Labor Cases Penned By Justice Del Castillo

Likewise, the Court finds that the failure to state the address of Dr. Tidula is insufficient to
cause the dismissal of the Petition. The lack of address of Dr. Tidula is not a fatal defect as
he had been represented by his counsel in the case. The indication that the party ―could be
served with process care of his counsel was substantial compliance with the Rules.‖ And,
when a party has appeared through counsel, service is to be made upon the counsel, unless
the court expressly orders that it be made upon the party.[46]

In view of the foregoing, a remand of the case to the CA for proper disposition on the merits
is deemed proper.

WHEREFORE, the Petition is GRANTED. The July 42, 2012 and October 22, 2012
Resolutions of the Court of Appeals in CA-G.R. SP No. 125333 are REVERSED and SET
ASIDE. The case is REMANDED to the Court of Appeals for appropriate disposition.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

14 MAR 2016 | JURISPRUDENCE | PONENTE | JUSTICE


MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND
EMPLOYMENT | TERMINATION BY EMPLOYER

Tabuk Multi-Purpose Cooperative, Inc.


(TAMPCO), et al. Vs. Magdalena Duclan;
G.R. No. 203005; March 14, 2016
DECISION

DEL CASTILLO, J.:

An employee‘s willful and repeated disregard of a resolution issued by a cooperative‘s board


of directors (BOD) declaring a moratorium on the approval and release of loans, thus placing
the resources of the cooperative and ultimately the hard-earned savings of its members in a
precarious state, constitutes willful disobedience which justifies the penalty of dismissal
under Article 282 of the Labor Code.

Assailed in this Petition for Review on Certiorari[1] are: 1) the September 15, 2011
Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 114753, which reversed and set
aside the November 25, 2009 Decision[3] and April 8, 2010 Resolution[4] of the National Labor
Relations Commission (NLRC) in NLRC CA-No. 050848-06 (RA-06-09); and 2) the CA‘s July
11, 2012 Resolution[5] denying reconsideration of its assailed Decision.

Factual Antecedents

Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative


based in Tabuk City, Kalinga. It is engaged in the business of obtaining investments from its
members which are lent out to qualified member-borrowers. Petitioner Josephine Doctor is
TAMPCO Chairperson and member of the cooperative‘s BOD, while petitioner William, Bao-
Angan is TAMPCO Chief Executive Officer.

Respondent Magdalena Duclan was employed as TAMPCO Cashier on August 15, 1989, In
2002, TAMPCO introduced Special Investment Loans (SILs) to its members and prospective
borrowers. Among those who availed themselves of the SILs were Brenda Falgui (Falgui)
and Juliet Kotoken (Kotoken).[6]

In June 2003, the TAMPCO BOD issued Board Action (BA) No. 28 which limited the grant of
SILs to P5 million and instructed management to collect outstanding loans and thus reduce
the amount of loans granted to allowable levels. This was prompted by a cooperative report
stating that too many SILs were being granted, the highest single individual borrowing
reached a staggering P14 million, which thus adversely affected the cooperative‘s ability to
grant regular loans to other members of the cooperative.[7] However, despite said board
action, SILs were granted to Falgui and Kotoken over and above the ceiling set. This
prompted the BOD to issue, on October 26, 2003, BA No. 55 completely halting the grant of
SILs pending collection of outstanding loans.
Labor Cases Penned By Justice Del Castillo

Despite issuance of BA No. 55, however, additional SILs were granted to Falgui amounting
to P6,697,000.00 and to Kotoken amounting to P3.5 million.[8] Eventually, Falgui filed for
insolvency while Kotoken failed to pay back her loans.

On February 23, 2004, TAMPCO indefinitely suspended respondent and other cooperative
officials pursuant to BA No. 73-03, and required them to replace the amount of P6 million
representing unpaid loans as of February 21, 2004. On March 6, 2004, respondent‘s
suspension was fixed at 15 days, and she was ordered to return to work on March 15, 2004.

The TAMPCO BOD then created a fact-finding committee (committee) to investigate the SIL
fiasco.[9] Respondent and other TAMPCO employees were summoned to the proceedings
and required to submit their respective answers to the committee.[10]

Respondent submitted to the committee an October 21, 2004 letter,[11] admitting that despite
the issuance of BA No. 55, she and her co-respondents approved and released SILs, and
that she acknowledged responsibility therefor.

After conducting hearings, the committee issued its Report on the Special Investment
Loans,[12] which states as follows:

xxxx
a. There are loan notes which do not contain the signature of the spouse of the borrower as mandated
under Chapter 10 of the Policy Manual. This is true in the loan notes of Monica Oras, and Juliet
Kotoken for her loan application sometime on [sic] January 12, 2004;

b. Special loans were still granted even after the setting of the allowable ceiling on June 28, 2003 (BA
No. 28) and even after the Board of Directors stopped the granting of the Special Investment Loan on
October 26, 2003 (BA No. 55);

c. Loans were released even there [sic] were lacking documents. The case of the SIL granted for
example to Mrs. Juliet Kotoken and Mrs. Brenda Falgui on January 12, 2004 were released even
without the required loan note. It was revealed that Mr. Peter Socalo prepared the voucher and Mrs.
Aligo did the releasing of the amount upon the conformity of Mrs. Magdalena Duclan. The loan notes
were made and executed later after the loans were also released;

d. Checks used to secure or postdated checks intended to pay the Special Investment loans were not
presented for payment at the time that they fall [sic] due;

e. Extension of the term of the loan were done through the substitution of the checks without prior
approval of the Board of Directors.

All the above findings were not denied and in fact respondents CEO Rev. Ismael Sarmiento admitted
the charge against him. ―Mea Culpa‖ x x x he said[,] but at the same time prayed for the Committee‘s
and Board‘s understanding and compassion, Magdalena Duclan and Fruto Singwey admitted [their
fault under] command responsibility for the action of their subordinates.

All the other respondents invoked that they just [performed] their duties [or be charged with]
insubordination x x x.
Labor Cases Penned By Justice Del Castillo

To the issue of the missing check which was raised by Mr. Dulawon in the previous Board meetings,
the committee heard again the side of the cashier [who] denied that tine same is missing. Accordingly,
the same was changed by Mrs. Brenda Falgui, or that a substitute check was issued by Mrs. Falgui.
She [had a] conflicting statement before the Board when she stated that the amount belongs to Juliet‘s
account.

CONCLUSION:

There was indeed an error, mistake, negligence or abuse of discretion that transpired in the grant of
the special investment loans, x x x [T]here are violations of the policies or Board actions which
should be dealt with[.] x x x.

RECOMMENDATIONS:

AS TO THE ACCOUNTABILITY

xxxx

Mrs. Magdalena Duclan

The committee recommended that she will be immediately suspended without pay and for her to
collect the SIL she [had] released even without the loan note and for her to account [for] or pay the
missing value of the check bearing no. 00115533 in the amount of P1,500,000.00 [by] Dec. 31, 2004.

[For failure] to collect or account/pay [by then she] shall be [dismissed] from service with forfeiture
of all benefits.

She violated policies and Board actions, specially 28 and 55 in relation to the manual.[13]

On November 6, 2004. the BOD adopted the report of the committee and ordered that
respondent be suspended from November 8 until December 31, 2004; respondent was
likewise directed to collect, within the said period, the unauthorized SIL releases she made,
otherwise she would be terminated from employment.[14]

Unable to collect or account for the P1.5 million as required, respondent was dismissed from
employment. Thus, in a February 1, 2005 communication,[15] TAMPCO wrote:

Anent your letter dated January 26, 2005, reiterating your plea for a reconsideration of your
suspension for the reason that you were suspended twice on different days for the commission of the
same offense, the following quoted paragraph was lifted from lines 339 through 350 of the minutes of
the regular meeting of the TAMPCO BOD held on November 27, 2004, treating the matter of your
concern for your information, to wit:

―x x x CEO Sarmiento and Cashier Duclan [requested] reconsideration of their suspension pointing
out that they are being suspended twice for the same offense, The Board denied the request, clarifying
that the basis for the second suspension is the discovery of the release of cash to the SIL recipient
without first accomplishing the corresponding loan note and which action is. contrary to the
established processes. It was mentioned that such violation is punishable by outright dismissal but the
policy was humanized with the imposition only of suspension to the violators to give them ample time
Labor Cases Penned By Justice Del Castillo

to collect the unauthorized disbursement. x x x [The first] suspension was lifted because their services
were urgently needed in the distribution of dividends and patronage refunds. The Board decided to
stand by its decision based on the recommendation of the fact-finding committee.―

[For] failure to comply with the tasks required x x x within the effectivity period of your suspension
as set under Office Orders numbered 001-04 and 002-04, both dated November 6, 2004, the Board,
during its January 29, 2005 regular meeting, decided to terminate your services xxx effective as of the
closing of office hours on February 1, 2005.

Ruling of the Labor Arbiter

On July 12, 2005, respondent filed a complaint for illegal dismissal, with recovery of
backwages; unpaid holiday pay; premium and 13th month pay; moral, exemplary and actual
damages; and attorney‘s fees, against respondents which was docketed in the NLRC RAB,
Cordillera Administrative Region, Bagiuo City as NLRC Case No. RAB-CAR-07-Q344-05 (R-
11-08).

On April 24, 2009, Labor Arbiter Monroe C, Tabingan issued a Decision[16] in the case,
decreeing as follows:

WHEREFORE, all premises duly considered, the respondent is hereby found to have illegally
suspended, then illegally dismissed the herein complainant. In view of the fact that this decision was a
collective act of the Board of Directors and Officers of the respondent, they, as well as the respondent
Cooperative, are hereby jointly and severally held liable to pay to the complainant the following:

1. Her full backwages from the time of her illegal suspension beginning 24 February
2004 to 15 March 2004, and her illegal dismissal from 08 November 2004 to the
finality of this Decision, with legal rate of interest thereon until fully paid, currently
computed at PhP1,188,283.30, subject to re-computation at the time of the payment of
said monetary claim;x x x x

2. Her separation pay in lieu of reinstatement of one (1) month pay for every year of
service beginning at the time of her initial date of hiring, to the finality of this decision,
with legal rate of interest thereon until fully paid, currently computed at
PhP405,002.40, said interest subject to re-computation at the time of the payment;x x x
x

3. Moral damages in the amount of PhP100,000.00 and exemplary damages in the


amount of PhP100,000.00;

4. Her attorney‘s fees of not less than ten (10%) per centum of the total monetary award
hereto awarded, currently computed at P159,329.07, subject to re-computation at the
time of payment.

SO ORDERED.[17]

In ruling that respondent was illegally dismissed, the Labor Arbiter made the following
findings: a) respondent‘s first suspension was for an indefinite period, hence illegal; b)
respondent was not accorded the opportunity to explain her side before she was meted the
penalty of suspension; c) placing respondent on suspension and requiring her to personally
pay the loan is not the proper way to collect irregularly released loans; d) although
Labor Cases Penned By Justice Del Castillo

respondent‘s indefinite suspension was eventually reduced to 15 days, by that time


respondent was suspended for 20 days already; e) respondent was deprived of the
opportunity to explain her side when she was suspended the second time on November 8,
2004 to December 31, 2004; f) the second suspension was illegal because it was beyond 30
days; g) respondent was suspended twice for the same infraction; h) the February 1, 2005
letter informing respondent of her termination is redundant since respondent has been
deemed constructively dismissed as early as February 23, 2004 when she was indefinitely
suspended; i) as cashier, respondent‘s signing of the check before its release is merely
ministerial; she has no hand in the processing or approval of the loans; j) TAMPCO had
previously tolerated the practice of releasing loans ahead of the processing of vouchers and
board approval and during the prohibited period; and k) petitioners did not terminate
respondent‘s co-workers who were charged with committing the same infraction.[18]

Ruling of the National Labor Relations Commission

Petitioners filed an appeal before the NLRC, which was docketed as NLRC CA-No. 050848-
06 (RA-06-09). On November 25, 2009, the NLRC issued its Decision[19] containing the
following pronouncement:

Anent respondent‘s first suspension, the NLRC noted that petitioners already modified the
period from being indefinite to only 15 days and that respondent was properly paid her
wages corresponding to said period of suspension. Thus, there was no need to discuss the
validity of said suspension. Regarding the second suspension from November 8 to
December 31, 2004, the NLRC found the same as illegal considering that it was imposed as
a penalty and not as a preventive suspension pending investigation of her administrative
liability. In fact, during her suspension, she was ordered to collect the loan illegally released.
However, as regards her dismissal from service, the NLRC found the same as valid and for
cause. The NLRC opined that respondent was notified of the investigation to be conducted
by the Fact-Finding Committee; the notice apprised her that she was being charged with: (1)
violation of BA No. 55 stopping the giving of SILs; (2) violation of BA No. 28 limiting the
individual grant of SIL to P5 million; and (3) violation of lending policies requiring the consent
of spouse in the granting of loans. Respondent was given the opportunity to answer the
charges against her. In fact, she admitted having released SILs despite the board resolution
discontinuing the same. Despite this admission, petitioners continued with the investigation
and found the following infractions to have been committed by respondent:

1. There were loan notes which did not contain the signature of the borrower‘s spouse as mandated by
the Policy Manual of the Cooperative;

2. SILs were still granted even after the BOD passed BR Nos. 28 and 55 which limited the ceiling of
SILs to be granted and even subsequently stopping the grant of the said loan;

3. Loans were released even [when] there [were] documents [missing]. The cases of Ms. Kotoken and
Falgui were cited where their loans were released despite the absence of loan notes;

4. [Post-dated] checks used to secure the SlLs were not presented at the time they fell due; and

5. Extension of the term of the loans [was] done through substitution of checks without prior approval
of the BOD.[20]
Labor Cases Penned By Justice Del Castillo

According to the NLRC, the Fact-Finding Committee discovered that respondent unilaterally
altered the terms of the loan by extending the dates of maturity of checks which secured the
loans and that she reported a partial payment, by way of two (2) checks, of the loan of
Kotoken in the amount of P3 million although the subject checks were not yet encashed.
Worse, the checks were later dishonored when presented for payment.

As observed by the NLRC, respondent failed to refute the above findings. In fact, she
admitted having released SILs despite knowledge of board resolutions discontinuing the
grant of SILs and despite the fact that the borrower concerned had exceeded the allowable
ceiling.

The NLRC did not give credence to respondent‘s assertion that as a mere cashier, she has
no discretion at all on the approval of the loans. The NLRC opined that respondent was the
custodian of the entire funds of TAMPCO and also an honorary member of the BOD,
advising the latter on financial matters. The NLRC also held that the release of funds is not
purely ministerial as respondent was expected to check all the supporting documents and
whether pertinent policies regarding the loan had been met by the applicant.

For the NLRC, respondent‘s transgressions were deliberate infractions of clear and
mandatory policies of TAMPCO amounting to gross misconduct.

The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the appeal of respondents is GRANTED. The Decision of the
Labor Arbiter dated April 24, 2009 is hereby REVERSED AND SET ASIDE, and a new one is
hereby rendered DISMISSING the above-entitled complaint for lack of merit. Respondent Tabuk
Multi-Purpose Cooperative, Inc., is, however, ordered to pay complainant‘s wages for the period of
November 8 to December 31, 2004.

SO ORDERED.[21]

Respondent moved to reconsider. However, in a Resolution dated April 8, 2010, the NLRC
held its ground.[22]

Ruling of the Court of Appeals

In a Petition for Certiorari[23] filed with the CA and docketed therein as CA-G.R. SP No.
114753, respondent sought to set aside the NLRC dispositions and reinstate the Labor
Arbiter‘s judgment, arguing that she had no discretion in the release of the SILs; that she
was not an ex-officio member of the cooperative‘s BOD; that while she committed a violation
of the cooperative‘s policies, she should be accorded clemency just as her co-respondents
were pardoned and allowed to collect their benefits; that she did not commit gross
misconduct, as she was not solely responsible for the prohibited release of the SILs to
Kotoken and Falgui, since they were previously approved by the loan investigator, the Credit
Committee, and the General Manager prior to their release; that petitioners did not properly
observe the twin-notice rule prior to her dismissal, as she was not given any notice to
present her side – instead, she was dismissed outright when she failed to collect and return
the amount she disbursed via the SILs; that there is no just cause for her dismissal; that her
length of service (15 years) and her unblemished record with the cooperative should merit
the setting aside of her dismissal, and instead, her previous suspensions should suifice as a
penalty for her infraction; that the exoneration of her co-respondents – notably the General
Labor Cases Penned By Justice Del Castillo

Manager – who was allowed to retire, given a ―graceful exit‖ from the cooperative, honorably
discharged, allowed to collect his benefits in full, and given a certification to the effect that he
did not commit any violation of the cooperative‘s policies, rules, and regulations – constitutes
discrimination, favoritism, evident bad faith, and a violation of her constitutional right to equal
protection; and that the Labor Arbiter‘s decision is entirely correct and should be given full
credence and respect.

In their Comment[24] seeking dismissal of the Petition, petitioners contended that the Petition
was filed to cover up for a lost appeal; that no reversible error is evident; that contrary to
respondent‘s claim, her position as cashier is the ―lifeblood and very existence of the
Cooperative‖ since she was the ―key to the vault and the dispenser of the Cooperative‘s
fund‖; that respondent is responsible and accountable for all disbursements because before
the release of the loan proceeds, she must ensure that all the processes and necessary
documents are duly complied with and tibere are no violations of any of the cooperative‘s
policies and rules; that she is likewise responsible for the collection activities of the
cooperative and the coordination thereof, as required under her job description; that
respondent was customarily appointed by the BOD as its adviser and treasurer – being so,
she very well knew of its policies; that as cashier, her signature to the checks were required
prior to the release thereof to the SIL borrowers – thus, she is liable for signing these checks
and releasing them to the borrowers in disregard of BA No. 55 prohibiting the further release
of loans pending collection of those outstanding; that there is no favoritism or discrimination
when the former General Manager was allowed a graceful exit while respondent was
dismissed, as the decision to allow the former to retire and collect his benefits is a
management prerogative that respondent cannot interfere with; and that ultimately,
respondent was dismissed not for her failure to collect the outstanding loans, but for her
violation of the cooperative‘s policies (BA Nos. 28 and 55); that in dismissing her, due
process was observed.

On September 15, 2011, the CA issued the herein assailed Decision, decreeing as follows:

WHEREFORE, premises considered, the Decision of the NLRC dated 25 November 2009 is hereby
REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated 24 April 2009 in NLRC Case
No. RAB-CAR-07-0344-05 (R-11-18) is hereby REINSTATED.

SO ORDERED.[25]

The CA held that respondent‘s dismissal was illegal; that she was not guilty of violating her
duties and responsibilities as Cashier; that she was under the supervision of the
cooperative‘s Finance and Credit Managers, who are primarily responsible for the approval
of loan applications; that as Cashier, she was a mere co-signatory of check releases and
simply acts as a ―check and balance on the power and authority of the General Manager;‖
that she does not exercise discretion on the matter of SILs – specifically the assessment,
recommendation, approval and granting thereof; that only the Loan Officers, as well as the
Credit, Finance, and General Managers, have a direct hand in the evaluation, assessment
and approval of SEL applications, including their required attachments/documents; that while
the questioned SILs were released without the approval of the BOD, such practice was
sanctioned and had been adopted and tolerated within TAMPCO ever since; that it is unjust
to require respondent to pay the amounts released to SEL borrowers but which could no
longer be collected; that it was unfair to condemn and punish respondent for the anomalies,
while her corespondents, particularly the former General Manager, was given a graceful exit,
honorably discharged, and was even allowed to collect his retirement benefits in full; that
respondent‘s suspension from November 8 to December 31, 2004 was illegal; and that
petitioners failed to comply with the twin-notice rule prior to her dismissal.
Labor Cases Penned By Justice Del Castillo

Petitioners filed a Motion for Reconsideration,[26] but the CA denied the same in its July 11,
2012 Resolution. Hence, the present Petition.

In a November 11, 2013 Resolution,[27] this Court resolved to give due course to the Petition.

On March 19, 2014, petitioners filed an Urgent Motion[28] seeking injunctive relief to enjoin the
execution of judgment. In a March 24, 2014 Resolution,[29] the motion was denied.

Issues

Petitioners submit the following issues for resolution:


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

2. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ERROR


WHEN IT DID NOT CONSIDER THE EVIDENCE OF THE PETITIONERS AS IT RULED THAT
THE RESPONDENT WAS REMOVED IN VIOLATION OF THE TWO-NOTICE RULE AND
THAT THERE IS NO JUST CAUSE FOR HER REMOVAL.

3. WHETHER THE HONORABLE COURT OF APPEALS PATENTLY COMMUTED A GRAVE


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

4. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT ACTED ON THE


PETITION FOR CERTIORARI (RULE 65) FILED BY THE RESPONDENT DESPITE THE FACT
THAT THE PROPER REMEDY SHOULD [HAVE] BEEN X X X A PETITION FOR REVIEW ON
CERTIORARI.[30]

Petitioners’ Arguments

Praying that the assailed CA pronouncements be set aside and that the NLRC judgment be
reinstated instead, petitioners essentially argue in their Petition and Reply[31] that due process
was observed in the dismissal of respondent; that there was just and valid cause to dismiss
her, as she violated the cooperative‘s policies and board resolutions limiting and
subsequently prohibiting the grant and release of SILs – which actions jeopardized
TAMPCO‘s financial position; that respondent‘s actions constituted serious misconduct and
willful disobedience, justifying dismissal under Article 282 of the Labor Code; [32] that while the
Credit and General Managers possessed discretion in the evaluation and approval of SIL
applications, respondent as Cashier was still accountable as she was duty-bound to check
that the release of the loan amounts was proper and done in accordance with the
cooperative‘s rules and policies; and that there is no basis to suppose that respondent was
unfairly treated, since all those found responsible for the SIL fiasco were dismissed from
service after their respective cases were individually considered and accordingly treated
based on the infractions committed.

Respondent’s Arguments
Labor Cases Penned By Justice Del Castillo

In her Comment,[33] respondent counters that the Petition fails to present any cogent
argument that warrants reversal of the assailed CA dispositions; that on the contrary, the CA
correctly upheld her rights to security of tenure and due process; that there was no valid
cause to dismiss her; that as Cashier, she had no power to approve SIL applications, but
only release the loan amounts after the applications are evaluated and approved by the
Credit Manager, and under the supervision of the Finance Manager; and that the respective
decisions of the CA and the Labor Arbiter are correct on all points and must be upheld.

Our Ruling

The Court grants the Petition.


Under Article 282 of the Labor Code, the employer may terminate the services of its
employee for the latter‘s serious misconduct or willful disobedience of its or its
representative‘s lawful orders. And for willful disobedience to constitute a ground, it is
required that: ―(a) the conduct of the employee must be willful or intentional; and (b) the
order the employee violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties that he had been engaged to discharge.
Willfulness must be attended by a wrongful and perverse mental attitude rendering the
employee‘s act inconsistent with proper subordination, hi any case, the conduct of the
employee that is a valid ground for dismissal under the Labor Code constitutes harmful
behavior against the business interest or person of his employer. It is implied that in every
act of willful disobedience, the erring employee obtains undue advantage detrimental to the
business interest of the employer.‖[34]

The persistent refusal of the employee to obey the employer‘s lawful order amounts to willful
disobedience.[35]Indeed, ―[o]ne of the fundamental duties of an employee is to obey all
reasonable rules, orders and instructions of the employer. Disobedience, to be a just cause
for termination, must be willful or intentional, willfulness being characterized by a wrongful
and perverse mental attitude rendering the employee‘s act inconsistent with proper
subordination. A willful or intentional disobedience of such rule, order or instruction justifies
dismissal only where such rule, order or instruction is (1) reasonable and lawful, (2)
sufficiently known to the employee, and (3) connected with the duties which the employee
has been engaged to discharge.‖[36]

As TAMPCO Cashier, respondent was, among her other designated functions and duties,
responsible and accountable for all disbursements of cooperative funds and the coordination
of delinquency control and collection activities.[37] She was likewise expected to understand
the cooperative‘s operational procedures,[38] and of course, follow its rules, regulations, and
policies.

A year after introducing the SIL program, TAMPCO realized that a considerable amount of
the cooperative‘s loanable funds was being allocated to SILs, which thus adversely affected
its ability to lend under the regular loan program. It further discovered that single individual
borrowings under the SIL program reached precarious levels, thus placing the resources of
the cooperative at risk. Thus, in June 2003, the TAMPCO BOD issued BA No. 28, putting a
cap on SIL borrowings at P5 million. In October of the same year, BA No. 55 was issued,
completely prohibiting the grant of SILs. However, despite issuance of BA Nos. 28 and 55,
respondent and the other officers of the cooperative including its former General Manager,
continued to approve and release SILs to borrowers, among them Falgui and Kotoken, who
received millions of pesos in loans in January and December of 2004, and in January 2005.
Eventually, Falgui claimed insolvency, and Kotoken failed to pay back her loans.
Labor Cases Penned By Justice Del Castillo

The CA failed to consider that in releasing loan proceeds to SIL borrowers like Falgui and
Kotoken even after the BOD issued BA Nos. 28 and 55, respondent, and the other
cooperative officers, willfully and repeatedly defied a necessary, reasonable and lawful
directive of the cooperative‘s BOD, which directive was made known to them and which they
were expected to know and follow as a necessary consequence of their respective positions
in the cooperative. They placed the resources of the cooperative – the hard-earned savings
of its members – in a precarious state as a result of the inability to collect the loans owing to
the borrowers‘ insolvency or refusal to honor their obligations, Respondent committed gross
insubordination which resulted in massive financial losses to the cooperative. Applying
Article 282, her dismissal is only proper.

Respondent cannot pretend to ignore the clear mandate of BA Nos. 28 and 55 and justify
her actions in releasing the loan proceeds to borrowers by claiming that she had no choice
but to release the loan proceeds after the SIL loan applications were evaluated and
approved by the loan investigator, the Credit Committee, and the General Manager. These
officers were themselves bound to abide by BA Nos. 28 and 55 – they, just as respondent,
are subordinate to the TAMPCO BOD. Pursuant to the Philippine Cooperative Code of 2008,
or Republic Act No. 9520, TAMPCO‘s BOD is entrusted with the management of the affairs
of the cooperative (Article 5 [3]); the direction and management of the cooperative‘s affairs
shall be vested in the said board (Article 37); and it shall be responsible for the strategic
planning, direction-setting and policy-formulation activities of the cooperative (Article 38).

Just the same, respondent could have simply refused to release the loan proceeds even if
the loan applications were duly approved. Had she done so, she would have been excluded
from the indictments. She would have continued with her employment. In this regard, the CA
erred completely in declaring that only the Loan Officers, as well as the Credit, Finance, and
General Managers are primarily responsible since only they exercised discretion over SIL
applications, and respondent had no choice but to perfunctorily release the loan proceeds
upon approval of the applications.

The Court likewise finds that in dismissing respondent, petitioners observed the
requirements of due process. An investigation was conducted by a fact-finding committee;
respondent and her colleagues were summoned and required to explain – and they did;
respondent submitted an October 21, 2004 letter acknowledging and confessing her
wrongdoing – that despite BA No. 55, she and her colleagues continued to approve and
release SILs. After the investigation proceedings, the committee prepared a detailed Report
of its findings and containing a recommendation to suspend the respondent, require her to
restore the amounts she wrongly disbursed – by collecting the credits herself, and in the
event of failure to restore the said amounts, she would be dismissed from the service. The
Report was approved and adopted by the cooperative‘s BOD, which resolved to suspend
respondent from November 8 until December 31, 2004 and ordered her to collect, within the
said period, the unauthorized SIL releases she made; otherwise, she would be terminated
from employment. When respondent failed to restore the amounts in question, the BOD
ordered her dismissal from employment. Respondent was informed of her dismissal in a
February 1, 2005 communication addressed to her; this is the second of the twin notices
required by law. Thus, as to respondent, the cooperative observed the proper procedure
prior to her dismissal.

In termination proceedings of employees, procedural due process consists of the twin requirements of
notice and hearing. The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second informs the employee of the
employer‘s decision to dismiss him. x x x[39]
Labor Cases Penned By Justice Del Castillo

During the proceedings below, respondent questioned the cooperative‘s decision requiring
her to collect the credits from Falgui and/or Kotoken, claiming this was illegal and improper.
But there is nothing wrong in requiring her to do so; this is simply ordering her to restore the
amounts she unlawfully released. She may do so in any way she deemed best: either by
paying the amounts from her own funds, or by collecting the same from the borrowers
themselves. The cooperative could have rephrased its directive to her by simply ordering her
to restore the lost amounts. This is pretty much standard procedure in cases of this nature:
the accused in malversation cases is required to restore the amount lost, and bank tellers or
cashiers are told to pay back what the banks lose through their willful or negligent acts.

There is also nothing irregular in the cooperative‘s decision to require from respondent and
her colleagues the collection or restoration of the amounts that were illegally released, with a
threat that in case of failure to do so, they would be dismissed from employment.
Respondent and her colleagues were simply given the opportunity to clear themselves from
the serious infractions they committed; their failure to restore the amounts lost in any manner
could not prevent the imposition of the ultimate penalty, since their commission of the
serious offense has been adequately shown. In fact, respondent voluntarily confessed her
crime. To the mind of the Court, respondent and her colleagues were afforded ample
opportunity to clear themselves and thus restore the confidence that was lost, and TAMPCO
was not precluded from testing their resolve.

Finally, while the CA finds that it is unfair for TAMPCO to treat respondent differently from
the former General Manager, who was permitted to retire and collect his benefits in full, the
appellate court must nonetheless be reminded that ―[t]he law protects both the welfare of
employees and the prerogatives of management. Courts will not interfere with prerogatives
of management on the discipline of employees, as long as they do not violate labor laws,
collective bargaining agreements if any, and general principles of fairness and
justice.‖[40] Moreover, management is not precluded from condoning the infractions of its
employees; as with any other legal right, the management prerogative to discipline
employees and impose punishment may be waived.[41] As far as respondent is concerned,
the cooperative chose not to waive its right to discipline and punish her; this is its privilege as
the holder of such right. Finally, it cannot be said that respondent was discriminated against
or singled out, for among all those indicted, only the former General Manager was accorded
leniency; the rest, including respondent, were treated on equal footing. As to why the former
General Manager was allowed to retire, this precisely falls within the realm of management
prerogative; what matters, as far as the Court is concerned, is that respondent was not
singled out and treated unfairly.

WHEREFORE, the Petition is GRANTED. The assailed September 15, 2011 Decision and
July 11, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 114753
are REVERSED and SET ASIDE. The November 25, 2009 Decision of the National Labor
Relations Commission in NLRC CA-No. 050848-06 (RA-06-09)
is REINSTATED and AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

25 JAN 2016 | JURISPRUDENCE | PONENTE | JUSTICE


MARIANO C. DEL CASTILLO | SUBJECT | RULES OF
COURT | CIVIL PROCEDURE | RULE 45 - APPEAL BY
CERTIORARI TO THE SUPREME
COURT | SUBJECT | LABOR AND EMPLOYMENT | UNFAIR
LABOR PRACTICE

Allan M. Mendoza Vs. Officers of Manila


Water Employees Union, namely, Eduardo B.
Borela, et al.; G.R. No. 201595; January 25,
2016
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the April 24, 2012 Decision[2] of the Court of
Appeals (CA) which dismissed the Petition for Certiorari[3] in CA-G.R.SP No. 115639.

Factual Antecedents

Petitioner was a member of the Manila Water Employees Union (MWEU), a Department of
Labor and Employment (DOLE)-registered labor organization consisting of rank-and-file
employees within Manila Water Company (MWC). The respondents herein named –
Eduardo B. Borela (Borela), Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa),
Alejandro Torres (Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban), Luis Rendon
(Rendon), Virginia Apilado (Apilado), Teresita Bob (Bolo), Rogelio Barbero (Barbero), Jose
Casañas (Casañas), Alfredo Maga (Maga), Emilio Fernandez (Fernandez), Rosita
Buenaventura (Buenaventura), Almenio Cancino (Cancino), Adela Imana, Mario Mancenido
(Mancenido), Wilfredo Mandilag (Mandilag), Rolando Manlapaz (Manlapaz), Efren
Montemayor (Montemayor), Nelson Pagulayan, Carlos Villa, Ric Briones, and Chito
Bernardo – were MWEU officers during the period material to this Petition, with Borela as
President and Chairman of the MWEU Executive Board, Quebral as First Vice-President and
Treasurer, and Cometa as Secretary.[4]

In an April 11, 2007 letter,[5] MWEU through Cometa informed petitioner that the union was
unable to fully deduct the increased P200.00 union dues from his salary due to lack of the
required December 2006 check-off authorization from him. Petitioner was warned that his
failure to pay the union dues would result in sanctions upon him. Quebral informed Borela,
through a May 2,2007 letter,[6] that for such failure to pay the union dues, petitioner and
several others violated Section 1(g), Article IX of the MWEU‘s Constitution and By-Laws.[7] In
turn, Borela referred the charge to the MWEU grievance committee for investigation.

On May 21, 2007, a notice of hearing was sent to petitioner, who attended the scheduled
hearing. On June 6, 2007, the MWEU grievance committee recommended that petitioner be
suspended for 30 days.
Labor Cases Penned By Justice Del Castillo

In a June 20, 2007 letter,[8] Borela informed petitioner and his corespondents of the MWEU
Executive Board‘s ―unanimous approval‖[9] of the grievance committee‘s recommendation
and imposition upon them of a penalty of 30 days suspension, effective June 25, 2007.

In a June 26, 2007 letter[10] to Borela, petitioner and Ms co-respondents took exception to the
imposition and indicated their intention to appeal the same to the General Membership
Assembly in accordance with Section 2(g), Article V of the union‘s Constitution and By-
Laws,[11] which grants them the right to appeal any arbitrary resolution, policy and rule
promulgated by the Executive Board to the General Membership Assembly. In a June 28,
2007 reply,[12] Borela denied petitioner‘s appeal, stating that the prescribed period for appeal
had expired.

Petitioner and his co-respondents sent another letter[13] on July 4, 2007, reiterating their
arguments and demanding that the General Membership Assembly be convened in order
that their appeal could be taken up. The letter was not acted upon.

Petitioner was once more charged with non-payment of union dues, and was required to
attend an August 3, 2007 hearing.[14] Thereafter, petitioner was again penalized with a 30-day
suspension through an August 21, 2007 letter[15] by Borela informing petitioner of the
Executive Board‘s ―unanimous approval‖[16] of the grievance committee recommendation to
suspend him effective August 24, 2007, to which he submitted a written reply, [17] invoking his
right to appeal through the convening of the General Membership Assembly. However, the
respondents did not act on petitioner‘s plea.

Meanwhile, MWEU scheduled an election of officers on September 14, 2007. Petitioner filed
his certificate of candidacy for Vice-President, but he was disqualified for not being a
member in good standing on account of his suspension.

On October 2, 2007, petitioner was charged with non-payment of union dues for the third
time. He did not attend the scheduled hearing. This time, he was meted the penalty of
expulsion from the union, per ―unanimous approval‖[18] of the members of the Executive
Board. His pleas for an appeal to the General Membership Assembly were once more
unheeded.[19]

In 2008, during the freedom period and negotiations for a new collective bargaining
agreement (CBA) with MWC, petitioner joined another union, the Workers Association for
Transparency, Empowerment and Reform, All-Filipino Workers Confederation (WATER-
AFWC). He was elected union President. Other MWEU members were inclined to join
WATER-AFWC, but MWEU director Torres threatened that they would not get benefits from
the new CBA.[20]

The MWEU leadership submitted a proposed CBA which contained provisions to the effect
that in the event of retrenchment, non-MWEU members shall be removed first, and that upon
the signing of the CBA, only MWEU members shall receive a signing bonus. [21]

Ruling of the Labor Arbiter

On October 13,2008, petitioner filed a Complaint[22] against respondents for unfair labor
practices, damages, and attorney‘s fees before the National Labor Relations Commission
(NLRC), Quezon City, docketed as NLRC Case No. NCR-10-14255-08. In his Position Paper
and other written submissions,[23] petitioner accused the respondents of illegal termination
Labor Cases Penned By Justice Del Castillo

from MWEU in connection with the events relative to his non-payment of union dues;
unlawful interference, coercion, and violation of the rights of MWC employees to self-
organization – in connection with the proposed CBA submitted by MWEU leadership, which
petitioner claims contained provisions that discriminated against non-MWEU members.
Petitioner prayed in his Supplemental Position Paper that respondents be held guilty of
unfair labor practices and ordered to indemnify him moral damages in the amount of
P100,000.00, exemplary damages amounting to P50,000.00, and 10% attorney‘s fees.

In their joint Position Paper and other pleadings,[24] respondents claimed that the Labor
Arbiter had no jurisdiction over the dispute, which is intra-union in nature; that the Bureau of
Labor Relations (BLR) was the proper venue, in accordance with Article 226 of the Labor
Code[25] and Section 1, Rule XI of Department Order 40-03, series of 2003, of the
DOLE;[26] and that they were not guilty of unfair labor practices, discrimination, coercion or
restraint.

On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga issued her Decision[27] which
decreed as follows:

Indeed the filing of the instant case is still premature. Section 5, Article X-Investigation Procedures
and Appeal Process of the Union Constitution and By-Laws provides that:

Section 5. Any dismissed and/or expelled member shall have the rights to appeal to the Executive
Board within seven (7) days from the date of notice of the said dismissal and/or expulsion, which in
[turn] shall be referred to the General Membership Assembly. In case of an appeal, a simple majority
of the decision of the Executive Board is imperative. The same shall be approved/disapproved by a
majority vote of the general membership assembly in a meeting duly called for the purpose.

On the basis of the foregoing, the parties shall exhaust first all the administrative remedies before
resorting to compulsory arbitration. Thus, instant case is referred back to the Union for the General
Assembly to act or deliberate complainant‘s appeal on the decision of the Executive Board.

WHEREFORE PREMISES CONSIDERED, instant case is referred back to the; Union level for the
General Assembly to act on complainant‘s appeal.

SO ORDERED.[28]

Ruling of the National Labor Relations Commission

Petitioner appealed before the NLRC, where the case was docketed as NLRC LAC No. 07-
001913-09. On March 15, 2010, the NLRC issued its Decision,[29] declaring as follows:

Complainant[30] imputes serious error to the Labor Arbiter when she decided as follows:

1. Referring back the subject case to the Union level for the General Assembly to
act on bis appeal.

2. Not ruling that respondents are guilty of ULP as charged.

3. Not granting to complainant moral and exemplary damages and attorney‘s fees.
Labor Cases Penned By Justice Del Castillo

Complainant, in support of his charges, claims that respondents restrained or coerced him in the
exercise of his right as a union member in violation of paragraph ―a‖, Article 249 of the Labor
Code,[31] particularly, in denying him the explanation as to whether there was observance of the proper
procedure in the increase of the membership dues from P100.00 to P200.00 per month. Further,
complainant avers that he was denied the right to appeal his suspension and expulsion in accordance
with the provisions of the Union‘s Constitution and By-Laws. In addition, complainant claims that
respondents attempted to cause the management to discriminate against the members of WATER-
AFWC thru the proposed CBA.

Pertinent to the issue then on hand, the Labor Arbiter ordered that the case be referred back to the
Union level for the General Assembly to act on complainant‘s appeal. Hence, these appeals.

After a careful look at all the documents submitted and a meticulous review of the facts, We find that
this Commission lacks the jurisdictional competence to act on this case.

Article 217 of the Labor Code,[32] as amended, specifically enumerates the cases over which the Labor
Arbiters and the Commission have original and exclusive jurisdiction. A perusal of the record reveals
that the causes of action invoked by complainant do not fall under any of the enumerations therein.
Clearly, We have no jurisdiction over the same.

Moreover, pursuant to Section 1, Rule XI, as amended, DOLE Department Order No. 40-03 in
particular, Item A, paragraphs (h) and (j) and Item B, paragraph (a)(3), respectively, provide:

“A. Inter-Intra-Union disputes shall include:

―(h) violation of or disagreements over any provision of the Constitution and By-Laws of a Union or
workers’ association.

―(j) violation of the rights and conditions of membership in a Union or workers‘ association.

―B. Other Labor Relations disputes, not otherwise covered by Article 217 of the Labor Code, shall
include –

―3. a labor union and an individual who is not a member of said union.‖

Clearly, the above-mentioned disputes and conflict fall under the jurisdiction of the Bureau of Labor
Relations, as these are inter/intra-union disputes.

WHEREFORE, the decision of the Labor Arbiter a quo dated May 29, 2009 is hereby declared NULL
and VOID for being rendered without jurisdiction and the instant complaint is DISMISSED.

SO ORDERED.[33]

Petitioner moved for reconsideration,[34] but in a June 16, 2010 Resolution,[35] the motion was
denied and the NLRC sustained its Decision.

Ruling of the Court of Appeals


Labor Cases Penned By Justice Del Castillo

In a Petition for Certiorari[36] filed with the CA and docketed as CA-G.R. SP No. 115639,
petitioner sought to reverse the NLRC Decision and be awarded his claim for damages and
attorney‘s fees on account of respondents‘ unfair labor practices, arguing among others that
his charge of unfair labor practices is cognizable by the Labor Arbiter; that the fact that the
dispute is inter- or intra-union in nature cannot erase the fact that respondents were guilty of
unfair labor practices in interfering and restraining him in the exercise of his right to self-
organization as member of both MWEU and WATER-AFWC, and in discriminating against
him and other members through the provisions of the proposed 2008 CBA which they
drafted; that his failure to pay the increased union dues was proper since the approval of
said increase was arrived at without observing the prescribed voting procedure laid down in
the Labor Code; that he is entitled to an award of damages and attorney‘s fees as a result of
respondents‘ illegal acts in discriminating against him; and that in ruling the way it did, the
NLRC committed grave abuse of discretion.

On April 24, 2012, the CA issued the assailed Decision containing the following
pronouncement:

The petition lacks merit.

Petitioner‘s causes of action against MWEU are inter/intra-union disputes cognizable by the BLR
whose functions and jurisdiction are largely confined to union matters, collective bargaining registry,
and labor education. Section 1, Rule XI of Department Order (D.O.) No. 40-03, Series of 2003, of the
Department of Labor and Employment enumerates instances of inter/intra-union disputes, viz:

Section 1. Coverage. – Inter/intra-union disputes shall include:

xxxx

(b) conduct of election of union and workers‘ association officers/nullification of election of union
and workers‘ association officers;

(c) audit/accounts examination of union or workers‘ association funds;

xxxx

(g) validity/invalidity of impeachment/expulsion of union and workers‘ association officers and


members;

xxxx

(j) violations of or disagreements over any provision in a union or workers‘ association constitution
and by-laws;

xxxx

(l) violations of the rights and conditions of union or workers‘ association membership;

xxxx
Labor Cases Penned By Justice Del Castillo

(n) such other disputes or conflicts involving the rights to self-organization, union membership and
collective bargaining –

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers‘ association.

In brief, ―Inter-Union Dispute‖ refers to any conflict between and among legitimate labor unions
involving representation questions for purposes of collective bargaining or to any other conflict or
dispute between legitimate labor unions. ―Intra-Union Dispute‖ refers to any conflict between and
among union members, including grievances arising from any violation of the rights and conditions of
membership, violation of or disagreement over any provision of the union‘s constitution and by-laws,
or disputes arising from chartering or affiliation of union. On the other hand, the circumstances of
unfair labor practices (ULP) of a labor organization are stated in Article 249 of the Labor Code, to
wit:

Article 249. Unfair labor practices of labor organizations. It shall be unlawful for labor organization,
its officers, agents, or representatives to commit any of the following unfair labor practices:

(a) To restrain or coerce employees in the exercise of their right to self-organization; Provided,
That the labor organization shall have the right to prescribe its own rules with respect to the
acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including


discrimination against an employee with respect to whom membership in such organization has
been denied or terminated on any ground other than the usual terms and conditions under which
membership or continuation of membership is made available to other members;

xxxx
Applying the aforementioned rules, We find that the issues arising from petitioner‘s right to
information on the increased membership dues, right to appeal his suspension and expulsion
according to CBL provisions, and right to vote and be voted on are essentially intra-union disputes;
these involve violations of rights ;and conditions of union membership. But his claim that a director of
MWEU warned that non-MWEU members would not receive CBA benefits is an inter-union dispute.
It is more of an ―interference‖ by a rival union to ensure the loyalty of its members and to persuade
non-members to join their union. This is not an actionable wrong because interfering in the exercise of
the right to organize is itself a function of self-organizing.[37] As long as it does not amount to restraint
or coercion, a labor organization may interfere in the employees‘ right to self-
organization.[38] Consequently, a determination of validity or illegality of the alleged acts necessarily
touches on union matters, not ULPs, and are outside the scope of the labor arbiter‘s jurisdiction.

As regards petitioner‘s other accusations, i.e., discrimination in terms of meting out the penalty of
expulsion against him alone, and attempt to cause the employer, MWC, to discriminate against non-
MWEU members in terms of retrenchment or reduction of personnel, and signing bonus, while We
may consider them as falling within the concept of ULP under Article 249(a) and (b), still, petitioner‘s
complaint cannot prosper for lack of substantial evidence. Other than his bare allegation, petitioner
Labor Cases Penned By Justice Del Castillo

offered no proof that MWEU did not penalize some union members who failed to pay the increased
dues. On the proposed discriminatory CBA provisions, petitioner merely attached the pages
containing the questioned provisions without bothering to reveal the MWEU representatives
responsible for the said proposal. Article 249 mandates that ―x x x only the officers, members of the
governing boards, representatives or agents or members of labor associations or organizations who
have actually participated in, authorized or ratified unfair labor practices shall be held criminally
liable.‖ Plain accusations against all MWEU officers, without specifying their actual participation, do
not suffice. Thus, the ULP charges must necessarily fail.

In administrative and quasi-judicial proceedings, only substantial evidence is necessary to establish


the case for or against a party. Substantial evidence is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. Petitioner failed to discharge the
burden of proving, by substantial evidence, the allegations of ULP in his complaint. The NLRC,
therefore, properly dismissed the case.

FOR THESE REASONS, the petition is DISMISSED.

SO ORDERED.[39]

Thus, the instant Petition.

Issue

In an August 28, 2013 Resolution,[40] this Court resolved to give due course to the
Petition, which claims that the CA erred:
1. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-UNION CONFLICTS
NEGATES THE COMPLAINT FOR UNFAIR LABOR PRACTICES AGAINST A
LABOR ORGANIZATION AND ITS OFFICERS, AND IN AFFIRMING THAT
THE NLRC PROPERLY DISMISSED THE CASE FOR ALLEGED LACK OF
JURISDICTION.

2. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF UNFAIR LABOR


PRACTICES UNDER ARTICLE 249(a) AND (b) OF THE LABOR CODE.

3. IN DECLARING THAT THE THREATS MADE BY A UNION OFFICER


AGAINST MEMBERS OF A RIVAL UNION IS (sic) MERELY AN
―INTERFERENCE‖ AND DO NOT AMOUNT TO ―RESTRAINT‘ OR
―COERCION‖.

4. IN DECLARING THAT PETITIONER FAILED TO PRESENT SUBSTANTIAL


EVIDENCE IN PROVING RESPONDENTS‘ SPECIFIC ACTS OF UNFAIR
LABOR PRACTICES.

5. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY LIABLE TO


PETITIONER FOR MORAL AND EXEMPLARY DAMAGES, AND
ATTORNEY‘S FEES.[41]

Petitioner’s Arguments

Praying that the assailed CA dispositions be set aside and that respondents be declared
guilty of unfair labor practices under Article 249(a) and (b) and adjudged liable for damages
Labor Cases Penned By Justice Del Castillo

and attorney‘s fees as prayed for in bis complaint, petitioner maintains in his Petition and
Reply[42] that respondents are guilty of unfair labor practices which he clearly enumerated and
laid out in his pleadings below; that these unfair labor practices committed by respondents
fall within the jurisdiction of the Labor Arbiter; that the Labor Arbiter, the NLRC, and the CA
failed to rule on his accusation of unfair labor practices and simply dismissed his complaint
on the ground that his causes of action are intra- or inter-union in nature; that admittedly,
some of his causes of action involved intra- or inter-union disputes, but other acts of
respondents constitute unfair labor practices; that he presented substantial evidence to
prove that respondents are guilty of unfair labor practices by failing to observe the proper
procedure in the imposition of the increased monthly union dues, and in unduly imposing the
penalties of suspension and expulsion against him; that under the union‘s constitution and
by-laws, he is given the right to appeal his suspension and expulsion to the general
membership assembly; that in denying him his rights as a union member and expelling him,
respondents are guilty of malice and evident bad faith; that respondents are equally guilty for
violating and curtailing his rights to vote and be voted to a position within the union, and for
discriminating against non-MWEU members; and that the totality of respondents‘ conduct
shows that they are guilty of unfair labor practices.

Respondent’s Arguments

In their joint Comment,[43] respondents maintain that petitioner raises issues of fact which are
beyond the purview of a petition for review on certiorari; that the findings of fact of the CA
are final and conclusive; that the Labor Arbiter, NLRC, and CA are one in declaring that
there is no unfair labor practices committed against petitioner; that petitioner‘s other
allegations fall within the jurisdiction of the BLR, as they refer to intra- or inter-union disputes
between the parties; that the issues arising from petitioner‘s right to information on the
increased dues, right to appeal his suspension and expulsion, and right to vote and be voted
upon are essentially intra-union in nature; that his allegations regarding supposed coercion
and restraint relative to benefits in the proposed CBA do not constitute an actionable wrong;
that all of the acts questioned by petitioner are covered by Section 1, Rule XI of Department
Order 40-03, series of 2003 as intra-/inter-union disputes which do not fall within the
jurisdiction of the Labor Arbiter; that in not paying his union dues, petitioner is guilty of
insubordination and deserved the penalty of expulsion; that petitioner failed to petition to
convene the general assembly through the required signature of 30% of the union
membership in good standing pursuant to Article VI, Section 2(a) of MWEU‘s Constitution
and By-Laws or by a petition of the majority of the general membership in good standing
under Article VI, Section 3; and that for his failure to resort to said remedies, petitioner can
no longer question his suspension or expulsion and avail of his right to appeal.

Our Ruling

The Court partly grants the Petition.


In labor cases, issues of fact are for the labor tribunals and the CA to resolve, as this Court
is not a trier of facts. However, when the conclusion arrived at by them is erroneous in
certain respects, and would result in injustice as to the parties, this Court must intervene to
correct the error. While the Labor Arbiter, NLRC, and CA are one in their conclusion in this
case, they erred in failing to resolve petitioner‘s charge of unfair labor practices against
respondents.

It is true that some of petitioner‘s causes of action constitute intra-union cases cognizable by
the BLR under Article 226 of the Labor Code.
Labor Cases Penned By Justice Del Castillo

An intra-union dispute refers to any conflict between and among union members, including
grievances arising from any violation of the rights and conditions of membership, violation of or
disagreement over any provision of the union‘s constitution and by-laws, or disputes arising from
chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-03,
Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes x x
x.[44]

However, petitioner‘s charge of unfair labor practices falls within


the original and exclusive jurisdiction of the Labor Arbiters, pursuant to Article 217 of the
Labor Code. In addition, Article 247 of the same Code provides that ―the civil aspects of all
cases involving unfair labor practices, which may include claims for actual, moral, exemplary
and other forms of damages, attorney‘s fees and other affirmative relief, shall be under the
jurisdiction of the Labor Arbiters.‖

Unfair labor practices may be committed both by the employer under Article 248 and by
labor organizations under Article 249 of the Labor Code,[45] which provides as follows:

ART. 249. Unfair labor practices of labor organizations. – It shall be unfair labor practice for a labor
organization, its officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their right to self- organization. However, a
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including


discrimination against an employee with respect to whom membership in such organization has been
denied or to terminate an employee on any ground other than the usual terms and conditions under
which membership or continuation of membership is made available to other members;

(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees;

(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money or
other things of value, in the nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;

(e) To ask for or accept negotiation or attorney‘s fees from employers as part of the settlement of any
issue in collective bargaining or any other dispute; or

(f) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing
boards, representatives or agents or members of labor associations or organizations who have actually
participated in, authorized or ratified unfair labor practices shall be held criminally liable. (As
amended by Batas Pambansa Bilang 130, August 21, 1981).

Petitioner contends that respondents committed acts constituting unfair labor practices –
which charge was particularly laid out in his pleadings, but that the Labor Arbiter, the NLRC,
and the CA ignored it and simply dismissed his complaint on the ground that his causes of
action were intra- or inter-union in nature. Specifically, petitioner claims that he was
Labor Cases Penned By Justice Del Castillo

suspended and expelled from MWEU illegally as a result of the denial of his right to appeal
his case to the general membership assembly in accordance with the union‘s constitution
and bylaws. On the other hand, respondents counter that such charge is intra-union in
nature, and that petitioner lost his right to appeal when he failed to petition to convene the
general assembly through the required signature of 30% of the union membership in good
standing pursuant to Article VI, Section 2(a) of MWEU‘s Constitution and By-Laws or by a
petition of the majority of the general membership in good standing under Article VI, Section
3.

Under Article VI, Section 2(a) of MWEU‘s Constitution and By-Laws, the general
membership assembly has the power to ―review revise modify affirm repeal [sic] resolution
and decision of the Executive Board and/or committees upon petition of thirty percent (30%)
of the Union in good standing,‖[46] and under Section 2(d), to ―revise, modify, affirm or reverse
all expulsion cases.‖[47] Under Section 3 of the same Article, ―[t]he decision of the Executive
Board may be appealed to the General Membership which by a simple majority vote reverse
the decision of said body. If the general Assembly is not in session the decision of the
Executive Board may be reversed by a petition of the majority of the general membership in
good standing.‖[48] And, in Article X, Section 5, ―[a]ny dismissed and/or expelled member shall
have the right to appeal to the Executive Board within seven days from notice of said
dismissal and/or expulsion which, in [turn] shall be referred to the General membership
assembly. In case of an appeal, a simple majority of the decision of the Executive Board is
imperative. The same shall be approved/disapproved by a majority vote of the general
membership assembly in a meeting duly called for the purpose.‖[49]

In regard to suspension of a union member, MWEU‘s Constitution and By-Laws provides


under Article X, Section 4 thereof that ―[a]ny suspended member shall have the right to
appeal within three (3) working days from the date of notice of said suspension. In case of
an appeal a simple majority of vote of the Executive Board shall be necessary to nullify the
suspension.‖

Thus, when an MWEU member is suspended, he is given the right to appeal such
suspension within three working days from the date of notice of said suspension, which
appeal the MWEU Executive Board is obligated to act upon by a simple majority vote. When
the penalty imposed is expulsion, the expelled member is given seven days from notice of
said dismissal and/or expulsion to appeal to the Executive Board, which is required to act by
a simple majority vote of its members. The Board‘s decision shall then be
approved/disapproved by a majority vote of the general membership assembly in a meeting
duly called for the purpose.

The documentary evidence is clear that when petitioner received Borela‘s August 21, 2007
letter informing him of the Executive Board‘s unanimous approval of the grievance
committee recommendation to suspend him for the second time effective August 24, 2007,
he immediately and timely filed a written appeal. However, the Executive Board – then
consisting of respondents Borela, Tierra, Bolo, Casañas, Fernandez, Rendon, Montemayor,
Torres, Quebral, Pagulayan, Cancino, Maga, Cometa, Mancenido, and two others who are
not respondents herein – did not act thereon. Then again, when petitioner was charged for
the third time and meted the penalty of expulsion from MWEU by the unanimous vote of the
Executive Board, his timely appeal was again not acted upon by said board – this time
consisting of respondents Borela, Quebral, Tierra, Imana, Rendon, Yeban, Cancino, Torres,
Montemayor, Mancenido, Mandilag, Fernandez, Buenaventura, Apilado, Maga, Barbero,
Cometa, Bolo, and Manlapaz.
Labor Cases Penned By Justice Del Castillo

Thus, contrary to respondents‘ argument that petitioner lost his right to appeal when he
failed to petition to convene the general assembly through the required signature of 30% of
the union membership in good standing pursuant to Article VI, Section 2(a) of MWEU‘s
Constitution and By-Laws or by a petition of the majority of the general membership in good
standing under Article VI, Section 3, this Court finds that petitioner was illegally suspended
for the second time and thereafter unlawfully expelled from MWEU due to respondents‘
failure to act on his written appeals. The required petition to convene the general assembly
through the required signature of 30% (under Article VI, Section 2[a]) or majority (under
Article VI, Section 3) of the union membership does not apply in petitioner‘s case; the
Executive Board must first act on his two appeals before the matter could properly be
referred to the general membership. Because respondents did not act on his two appeals,
petitioner was unceremoniously suspended, disqualified and deprived of his right to run for
the position of MWEU Vice-President in the September 14, 2007 election of officers,
expelled from MWEU, and forced to join another union, WATER-AFWC. For these,
respondents are guilty of unfair labor practices under Article 249 (a) and (b) – that is,
violation of petitioner‘s right to self-organization, unlawful discrimination, and illegal
termination of his union membership – which case falls within the original and exclusive
jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.

The primary concept of unfair labor practices is stated in Article 247 of the Labor Code,
which states:

Article 247. Concept of unfair labor practice and procedure for prosecution thereof. — Unfair labor
practices violate the constitutional right of workers and employees to self-organization, are inimical to
the legitimate interests of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.

―In essence, [unfair labor practice] relates to the commission‘ of acts that transgress the
workers‘ right to organize.‖[50] ―[A]ll the prohibited acts constituting unfair labor practice in
essence relate to the workers‘ right to self-organization.‖[51] ―[T]he term unfair labor practice
refers to that gamut of offenses defined in the Labor Code which, at their core, violates the
constitutional right of workers and employees to self-organization.‖[52]

Guaranteed to all employees or workers is the ‗right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining.‘ This is made plain
by no less than three provisions of the Labor Code of the Philippines. Article 243 of the Code
provides as follows:

ART. 243. Coverage and employees‘ right to self-organization. — All persons employed in
commercial, industrial and agricultural enterprises and in religious, charitable, medical, or educational
institutions whether operating for profit or not, shall have the right to serf-organization and to form,
join, or assist labor organizations of their own choosing for purposes or collective bargaining.
Ambulant, intermittent and itinerant workers, self-employed people, rural workers and those without
any definite employers may form labor organizations for their , mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to ‗interfere
with, restrain or coerce employees in the exercise of their right to self-organization.‘ Similarly, Article
249 (a) makes it an unfair labor practice for a labor organization to ‗restrain or coerce employees in
the exercise of their rights to self-organization…‘

xxxx
Labor Cases Penned By Justice Del Castillo

The right of self-organization-includes the right to organize or affiliate with a labor union or
determine which of two or more unions in an establishment to join, and to engage in concerted
activities with co-workers for purposes of collective bargaining through representatives of their own
choosing, or for their mutual aid and protection, i.e., the protection, promotion, or enhancement of
their rights and interests.[53]

As members of the governing board of MWEU, respondents are presumed to know,


observe, and apply the union‘s constitution and by-laws. Thus, their repeated violations,
thereof and their disregard of petitioner‘s rights as a union member – their inaction on his
two appeals which resulted in his suspension, disqualification from running as MWEU officer,
and subsequent expulsion without being accorded the foil benefits of due process – connote
willfulness and bad faith, a gross disregard of his rights thus causing untold suffering,
oppression and, ultimately., ostracism from MWEU. ―Bad faith implies breach of faith and
willful failure to respond to plain and well understood obligation.‖[54]This warrants an award of
moral damages in the amount of P100,000.00. Moreover, the Civil Code provides:

Art. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages:

xxxx

(12) The right to become a member of associations or societies for purposes not contrary to law;

In Vital-Gozon v. Court of Appeals,[55] this Court declared, as follows:

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. They may be
recovered if they are the proximate result of the defendant‘s wrongful act or omission. The instances
when moral damages may be recovered are, inter alia, ‗acts and actions referred to in Articles 21, 26,
27, 28, 29, 30, 32, 34 and 35 of the Civil Code,‘ which, in turn, are found in the Chapter on Human
Relations of the Preliminary Title of the Civil Code. x x x

Under the circumstances, an award of exemplary damages in the amount of P50,000.00, as


prayed for, is likewise proper. ―Exemplary damages are designed to permit the courts to
mould behavior that has socially deleterious consequences, and their imposition is required
by public policy to suppress the wanton acts of the offender.‖[56] This should prevent
respondents from repeating their mistakes, which proved costly for petitioner.

Under Article 2229 of the Civil Code, ‗[e]xemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.‘ As this court has stated in the past: ‗Exemplary damages are designed by our
civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by
creating negative incentives or deterrents against such behaviour.‘[57]

Finally, petitioner is also entitled to attorney‘s fees equivalent to 10per cent (10%) of the total
award. The unjustified acts of respondents clearly compelled him to institute an action
primarily to vindicate his rights and protect his interest. Indeed, when an employee is forced
to litigate and incur expenses to protect his rights and interest, he is entitled to an award of
attorney‘s fees.[58]
Labor Cases Penned By Justice Del Castillo

WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed April 24, 2012 Decision
of the Court of Appeals in CA-G.R. SP No. 115639 is hereby MODIFIED, in that all of the
respondents – except for Carlos Villa, Ric Briones, and Chito Bernardo – are declared guilty
of unfair labor practices and ORDERED TO INDEMNIFY petitioner Allan M. Mendoza the
amounts of P100,000.00 as and by way of moral damages, P50,000.00 as exemplary
damages, and attorney‘s fees equivalent to 10 per cent (10%) of the total award.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

20 JAN 2016 | JURISPRUDENCE | PONENTE | JUSTICE


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

Wallem Maritime Services, Inc., Reginaldo A.


Oben and Wallem Shipmanagement, Ltd. Vs.
Edwinito V. Quillao; G.R. No. 202885;
January 20, 2016
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the May 15, 2012 Decision[1] of the Court of
Appeals (CA) in CA-G.R. SP No. 122787. The CA affirmed the December 8, 2011
Decision[2] of the Panel of Voluntary Arbitrators (PVA), National Conciliation and Mediation
Board in AC-0809-NCR-46-04-07-11, with modification that the amount to be jointly and
severally paid by Wallem Maritime Services, Inc. (WMS) and Wallem Shipmanagement Ltd.
(WSL) to Edwinito V. Quillao (respondent) is US$98,010.00 or its peso equivalent at the time
of payment, instead of US$98,110.00. Also challenged is the August 1, 2012 CA
Resolution[3] denying reconsideration of its Decision.

Factual Antecedents

WMS is a local manning agency, with Reginaldo A. Oben (Oben) as its President and
Manager.[4] On September 30, 2008, WMS, for and in behalf of its foreign principal, WSL,
hired respondent as fitter aboard the vessel Crown Garnet for a period of nine months with a
monthly salary of US$698.00.[5]

Respondent alleged that his employment was covered by a collective bargaining agreement
(CBA) between the Associated Marine, Officers‘ and Seamen‘s Union of the Philippines
(AMOSUP) and WSL – Hong Kong, represented by WMS.[6] He stated that after undergoing
pre-employment medical examination, he was declared fit to work. He joined the vessel on
October 4, 2008.[7]

Respondent averred that in January 2009, he started experiencing neck and lower back
pain. In April 2009, he purportedly noticed numbness and weakness of his left hand.
Respondent stated that towards the end of his contract, the Chief Engineer tried to convince
him to extend his contract but he declined. The Chief Engineer then told him that he would
report to their Superintendent respondent‘s ailment.[8]

Respondent further stated that he signed off from the vessel on July 13, 2009. Upon arrival
in the Philippines on July 15, 2009, he was referred to the company-designated physician
Dr. Ramon S. Estrada (Dr. Estrada) and was diagnosed of cervical radiculopathy, thoracic
and lumbar spondylosis, as well as carpal tunnel syndrome of the left, and trigger finger,
Labor Cases Penned By Justice Del Castillo

third digit of his right hand. He was also referred to Dr. Arnel V. Malaya (Dr. Malaya) for back
rehabilation and to Dr. Ida Tacata, a specialist for hand surgery orthopedics. [9] He underwent
carpal tunnel surgery on his left hand, and physical therapy (PT) sessions for his cervical
and lumbar condition.[10]

On September 9, 2009, Dr. Estrada reported that respondent‘s carpal tunnel surgery was
healing well. Respondent followed up with Dr. Malaya, his physiatrist, for his shoulder
pain.[11] As of November 12, 2009, respondent had completed 24 PT sessions for his
shoulder, upper back and cervical pain. However, the company-designated doctor declared
that respondent was complaining of pain in these areas with poor response to therapy and
medications. And because of complaint for low back pain, he advised respondent to defer
PT sessions and seek the opinion of an orthopedic specialist.[12]

However, on November 23, 2009, the Legal Affairs Department of AMOSUP informed WMS
of respondent‘s claim for disability benefits[13] and the clarificatory conference scheduled on
November 27, 2009.

On November 24, 2009, respondent requested from the company-designated doctor the final
assessment of his health condition but to no avail.[14]

Thereafter, grievance proceedings were held at the AMOSUP office regarding respondent‘s
claim. Respondent admitted that after several meetings, he was advised to continue his PT
sessions until March 15, 2010.[15]

On January 9, 2010, the company-designated doctor opined that respondent‘s chance of


being declared fit to work was ―quite good‖ provided he completes his remaining physical
therapy sessions for about 4-6 weeks for his left hand pain and back pain. He also reported
that respondent failed to return for his consultation since November 12, 2009.[16]

On February 5, 2010, upon referral of Dr. Malaya, respondent underwent EMG-NCV[17] test
which revealed that: ―1.) A severe chronic distal focal neuropathy of the left median nerve as
in carpal tunnel syndrome. A moderately severe CTS is also seen on the left[; and,] 2.)
Findings compatible with a chronic lumbar radiculopathy involving the right L4-5 spinal
roots.‖[18]

On March 12, 2010, the company-designated doctor gave respondent a final disability rating
of Grade 10, and made the following pronouncements:

x x x [Respondent] was seen and re-evaluated by the physiatrist Dr. Malaya and with findings of no
apparent improvement in his pain symptoms which is not compatible with all the tests and clinical
evaluation/findings. He still complains of pain [on] the upper back and both hands, apparently with no
significant improvement after several sessions of intensive physical therapy. Discontinuation of his
rehabilitation program was advised by the specialist. With those developments, [I would declare that
respondent‘s] condition is already at the stage of maximum medical wellness and no further treatment
will improve his pain perception. Disability Grade 10 will be applicable to his present physical status
under the POEA guidelines. x x x.[19]

On August 2, 2011, respondent consulted Dr. Renato P. Runas (Dr. Runas), an independent
orthopedic surgeon. Dr. Runas diagnosed him of being afflicted with cervical and lumbar
spondylosis with nerve root compression.[20] On August 15, 2011, Dr. Runas opined that
respondent ―is not fit for further sea duty permanently in whatever capacity with a status
Labor Cases Penned By Justice Del Castillo

equivalent to Grade 8‖ Impediment – moderate rigidity or 2/3 loss of trunk motion or lifting
power.[21]

Respondent posited that he was entitled to permanent and total disability benefits because:
he was declared fit to work prior to his last contract with petitioners; he sustained his illness
in the course of and by reason of his work; despite surgery and PT, his condition did not
improve; the company-designated physician did not assess the degree of his disability; his
chosen physician declared him permanently unfit for sea duty; and, since repatriation, he
had never been employed and his earning capacity had since then been impaired.[22]

For their part, WMS, WSL and Oben (petitioners) confirmed that respondent‘s employment
with them was covered by a CBA; and that while he was aboard the vessel he complained of
pain and finger numbness on his left hand. They affirmed that upon repatriation, they
referred him to the company-designated physician, Dr. Estrada, as well as to Dr. Malaya for
back rehabilitation, and to Dr. Ida Tacata for hand surgery.[23]

Petitioners stressed that when respondent filed a complaint before the AMOSUP on
November 23, 2009, he was still undergoing treatment; and during which the company-
designated physician had not yet given him a final disability assessment.[24] They insisted that
the company-designated doctor failed to give an assessment within 120 days because
respondent failed to appear for his consultations with the company-designated
doctors.[25] They explained that although no assessment was issued within the 120-day
period, respondent was given a final assessment on March 12, 2010, or within the 240-day
maximum period for treatment.[26]

Ruling of the Panel of Voluntary Arbitrators

On December 8, 2011, the PVA rendered its Decision[27] for respondent, the dispositive
portion of which reads:

WHEREFORE, premises considered, a decision is hereby rendered, ORDERING herein respondents


Wallem Maritime Services[,] Inc. and/or Wallem Shipmanagement Ltd., to jointly and severally pay
complainant Edwinito V. Quillao, the amount of Eighty Nine Thousands [sic] One Hundred US
Dollars (US$89,100.00) as disability benefits, plus ten percent thereof as attorney‘s fees, or a total of
Ninety Eight Thousands [sic] One Hundred Ten US Dollars (US$98,110.00) or its peso equivalent
converted at the time of payment.

The complainant‘s prayer for exemplary [damages], moral damages and reimbursement of medical
expenses are dismissed for sheer lack of merit.

xxxx

SO ORDERED.[28]

In ruling that respondent is entitled to permanent and total disability benefits, the PVA held
that despite the lapse of 120 days, the company-designated doctor neither gave respondent
an assessment on his condition nor issued a certificate on his fitness or unfitness for sea
duty. The PVA also declared that the amount of disability should not be based on the
schedule of disability gradings in the Standard Terms and Conditions Governing the
Overseas Employment of Filipino Seafarers On-Board Ocean-Going Vessels of the
Labor Cases Penned By Justice Del Castillo

Philippine Overseas Employment Administration (POEA-SEC) considering that despite


continuous treatment, he was not restored to his former health condition. The PVA
disregarded petitioner‘s allegation of prematurity or lack of cause of action and medical
abandonment reasoning that no final assessment was issued within 120 days and that Dr.
Estrada discontinued respondent‘s rehabilitation based on his opinion that the latter already
reached the maximum level of medical wellness. Moreover, the PVA lent more credence to
the assessment of Dr. Runas ratiocinating that he is ―an orthopedic surgeon specialist‖ vis-a-
vis Dr. Estrada ―who was not an orthopedic surgeon but a general and colorectal
surgeon.‖[29] Finally, it also decreed that respondent was covered by the CBA from which his
entitlement for disability benefits must be based.

Ruling of the Court of Appeals

Petitioners filed a Petition for Review with the CA arguing that the PVA seriously erred in
finding them liable to pay respondent total disability benefits and attorney‘s fees.

On May 15, 2012, the CA rendered the assailed Decision,[30] the decretal portion of which
reads:

WHEREFORE, premises considered the Petition is DENIED for lack of merit. The Decision dated 08
December 2011 of the Panel of Voluntary Arbitrators, National Conciliation and Mediation Board
in AC-0809-NCR-46-04-07-11 is AFFIRMED with the correction that total amount to be jointly and
severally paid by petitioners Wallem Maritime Services, Inc. and Wallem Shipmanagement Ltd, to
respondent Edwinito V. Quillao is Ninety Eight Thousand and Ten US Dollars (US$98,010,00) or its
peso equivalent converted at the time of payment, and not US$98,110.00.

Costs against petitioners.

SO ORDERED.[31]

Like the PVA, the CA gave more weight to the opinion of Dr. Runas explaining thus:

While the company-designated physician Dr. Estrada, a general and colorectal surgeon, gave
respondent a Grade 10 disability, he, however, utterly failed to issue any certification as to the fitness
or unfitness of respondent to render further sea duties in any capacity. It was respondent‘s personal
physician Dr. Runas, an orthopedic surgeon, who declared him as not fit for further sea duty
permanently in whatever capacity, and assessed that he has an impediment Grade 8 (33.59%)
moderate rigidity or 2/3 loss of trunk motion or lifting power.[32]

Moreover, the CA affirmed the PVA‘s ruling that respondent has a cause of action against
petitioners ―because they failed to pay his disability benefits.‖[33] It also agreed with the PVA
that respondent is not guilty of medical abandonment because he was already pronounced
to have reached the maximum level of wellness.[34] Finally, it held that in case of conflict
between the medical opinion of the company-designated doctor and that of the seafarer‘s
doctor-of-choice, the latter‘s opinion shall prevail because the ―law looks tenderly on the
laborer.‖[35]

On August 1, 2012, the CA denied petitioners‘ Motion for Reconsideration.[36]

Thus, petitioners filed this Petition stating that:


Labor Cases Penned By Justice Del Castillo

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


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

2. Assuming x x x respondent is entitled to disability benefits x x x his entitlement to


disability benefits should be limited to Grade 10 as subsequently assessed by the
company-designated physician.[38]

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


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

4. x x x the Court of Appeals [erred] in awarding attorney‘s fees in favor of respondent x


x x. No bad faith attended the denial of respondent‘s claims as the denial was based on
just and legal grounds, to wit: respondent has no cause of action against petitioners as
he was still undergoing treatment when he commenced his claim for permanent total
disability benefits, he was guilty of medical abandonment and assuming respondent is
still entitled to disability benefits despite the foregoing, he was only assessed a
disability of Grade 10 by the company-designated physician.[40]

Issue
Is respondent entitled to permanent and total disability benefits?

Petitioners’ Arguments

Petitioners maintain that respondent‘s right to permanent and total disability benefits only
arises from the moment the company-designated doctor declares him permanently and
totally disabled. Since the company-designated physician has not yet issued any certification
when this case was filed, then, respondent has no cause of action against them. They assert
that assuming they are liable, their liability is limited only to the disability rating as assessed
by the company-designated doctor.

Moreover, petitioners insist that respondent was guilty of medical abandonment because
after November 12, 2009, he stopped reporting to the company-designated physician. They
add that at that time, the company-designated doctor opined that it was possible for
respondent to be declared fit to work had he continued his remaining PT sessions.

Lastly, petitioners assert that they are not in bad faith in denying respondent‘s disability
claims, thus, they should not be held liable for attorney‘s fees.

Respondent’s Arguments
Labor Cases Penned By Justice Del Castillo

Respondent counters that he has a cause of action against petitioners. He claims that the
lack of declaration from the company-designated physician prompted him to file a Complaint
for disability benefits.

Respondent states that he is entitled to permanent and total disability benefits because the
company-designated physician only arrived at a final assessment of his condition after more
than 240 days from his repatriation. He argues that notwithstanding the assessments of the
company-designated doctor and his chosen physician, his disability is deemed permanent
and total by reason of his inability to perform customary work for more than 120 days; and
his disability remained beyond 240 days.

Finally, respondent states that the award of attorney‘s fees is proper as he was compelled to
litigate to protect his interest.

Our Ruling

The Court finds merit in the Petition.


We agree with petitioners‘ contention that at the time of filing of the Complaint, respondent
has no cause of action because the company-designated physician has not yet issued an
assessment on respondent‘s medical condition; moreover the 240-day maximum period for
treatment has not yet lapsed. As reiterated by the Court in the recent case of C.F. Sharp
Crew Management, Inc. v. Obligado,[41] the 120-day rule applies only when the complaint was
filed prior to October 6, 2008; however, if the complaint was filed from October 6, 2008
onwards, the 240-day rule applies. Here, it is beyond dispute that the complaint for disability
benefits was filed after October 6, 2008. Hence, the 240-day rule should apply. It was thus
error on the part of the PVA to reckon respondent‘s entitlement to permanent and total
disability benefits based on the 120-day rule.

The records clearly show that respondent was still undergoing treatment when he filed the
complaint. On November 12, 2009, the physiatrist even advised respondent to seek the
opinion of an orthopedic specialist[42] Respondent, however, did not heed the advice, instead,
he proceeded to file a Complaint on November 23, 2009 for disability benefits. And, it was
only a day after its filing (or on November 24, 2009) that respondent requested from the
company-designated doctor the latter‘s assessment on his medical condition.

Stated differently, respondent filed the Complaint within the 240-day period while he was still
under the care of the company-designated doctor. Significantly, we note that respondent has
not even consulted his doctor-of-choice before instituting his Complaint for disability benefits.

Clearly, the Complaint was premature. Respondent has no cause of action yet at the time of
its filing as the company-designated doctor has no opportunity to definitely assess his
condition because he was still undergoing treatment; and the 240-day period had not
lapsed.[43] Moreover, he has no basis for claiming permanent and total disability benefits
because he has not yet consulted his doctor-of-choice.

In addition, it is unclear if respondent was in fact medically repatriated or that he returned


home under a finished contract. Respondent commenced his work aboard the vessel on
October 4, 2008. He signed off from the vessel on July 12, 2009 (or July 13, 2009, as
claimed by respondent) and arrived in the country on July 15, 2009. At any rate, considering
that petitioners acknowledged that while still on the vessel, respondent complained of pain
and numbness of hand, and upon his return, they referred him to the company-designated
Labor Cases Penned By Justice Del Castillo

doctor for treatment, then we hold that petitioners considered respondent as a medically
repatriated seafarer. Under these circumstances, the pertinent provisions of the Labor Code
on disability benefits, including its Implementing Rules and Regulations, as well as those of
the POEA-SEC apply here.

Accordingly, citing Vergara v, Hammonia Maritime Services, Inc.,[44] the Court in Magsaysay
Maritime Corporation v. National Labor Relations Commission[45] harmonized the application
of the Labor Code, its Rules and Regulations and the POEA-SEC in the determination of
permanent and total disability in this manner:

[T]he seafarer, upon sign-off from his vessel, must report to the company-designated physician within
three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case
to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He
receives his basic wage during this period until he is declared fit to work or his temporary disability is
acknowledged by the company to be permanent, either partially or totally, as his condition is defined
under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days
initial period is exceeded and no such declaration is made because the seafarer requires further
medical attention, then the temporary total disability period may be extended up to a maximum of 240
days, subject to the right of the employer to declare within this period that a partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such declaration is
justified by his medical condition.

Further, in Ace Navigation Co. v. Garcia[46] and Carcedo v. Maine Marine Phils., Inc.,[47] the
Court pointed out that the 120 or 240-day period to determine the seafarer‘s disability or
fitness to work is reckoned from his repatriation.

Here, respondent reported to the company-designated physician within three days from his
arrival and was given medical attention. He was also referred to a physiatnst and to a
surgeon for his hand operation. The company-designated physiatrist later advised him to
consult an orthopedic specialist. Respondent, nonetheless, failed to abide by the rule that
the company-designated physician is to determine his fitness to return to work or the degree
of his disability within 240 days from his repatriation. As already discussed, respondent
prematurely filed his Complaint for disability benefits prior to the lapse of the 240-day period.

Not only did respondent prematurely file his Complaint, he reneged on his duties to continue
his treatment as necessary to improve his condition. In his Report dated January 9, 2010,
the company-designated doctor made the following pronouncements:

x x x [T]he chance of [respondent‘s] being declared fit to work is quite good on the premise that he
[complete] his remaining therapy sessions (about 4-6 weeks more) for the left hand pain and back
pain. However, in my 8th medical report dated November 12, 2009, I mentioned that during follow-up
evaluation and interview with him, he complained of pain [on] the neck and additional pain of the
lower back which was not originally present at the start of the treatment. I have also mentioned this to
the physiatrist, Dr. Malaya[,] and there seem[s] to be an intent to prolong treatment and seek
disability, respondent] did not report to my clinic after that day until the present time.[48]

As we ruled in Magsaysay,[49] the Court cannot blame petitioners for holding that respondent
abandoned his treatment. Respondent failed to reasonably explain his failure to report to the
company-designated physician after November 12, 2009 until January 9, 2010. The only
clear circumstance that transpired between these periods is that he already filed his
Complaint on November 23, 2009.
Labor Cases Penned By Justice Del Castillo

Under Section 20(D) of the POEA-SEC ―[n]o compensation and benefits shall be payable in
respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or
criminal act or intentional breach of his duties, provided however, that the employer can
prove that such injury, incapacity, disability or death is directly attributable to the seafarer.‖
Respondent was duty-bound to comply with his medical treatment, PT sessions, including
the recommended consultation to an orthopedic specialist in order to give the company-
designated doctor the opportunity to determine his fitness to work or to assess the degree of
his disability. His inability to continue his treatment after November 12, 2009 until January 9,
2010, without any valid explanation proves that he neglected his corresponding duty to
continue his medical treatment[50] Consequently, respondent‘s inability to regularly return for
his treatment caused the regress of his condition, as shown by the statement of the
company-designated doctor on January 9, 2010 as follows:

On your query about the effect of the delay in the treatment program, this can prolong the period of
treatment due to the fact that the physical therapy will have to start in accordance with his functional
capacity at the present time.[51]

Moreover, on April 20, 2010, the company-designated physician reported that had
respondent ―been cooperative with his treatment and shown interest in improving his medical
condition, it is possible to declare him fit to work on board as a fitter and in any capacity. For
this reason, [he advised] that the permanent unfitness clause does not apply in his case.‖[52]

Furthermore, in his Affidavit[53] dated September 10, 2011, the company-designated


physiatrist, Dr. Malaya, averred that respondent failed to report to him and to the company-
designated doctor for the completion of his PT sessions. He added that respondent was
referred to him for re-evaluation and resumption of therapy until March 8, 2010 but
respondent did not report to him. He also shared the view of the company-designated doctor
that had respondent been cooperative with his treatment and shown interest in improving his
condition, it was possible to declare him fit to work as a fitter.

Respondent was well aware of the need for him to undergo and continue his PT sessions.
He even admitted during the grievance proceedings on his disability claim that he was
advised to continue his PT until March 15, 2010.[54]

Indeed, respondent did not comply with the terms of the POEA-SEC. The failure of the
company-designated doctor to issue an assessment was not of his doing but resulted from
respondent‘s refusal to cooperate and undergo further treatment. Such failure to abide with
the procedure under the POEA-SEC results in his non-entitlement to disability benefits.[55]

Given these, the Court finds that the CA erred in affirming the PVA Decision that respondent
is entitled to permanent and total disability benefits.

WHEREFORE, the Petition is GRANTED. The May 15, 2012 Decision and August 1, 2012
Resolution of the Court of Appeals in CA-G.R. SP No. 122787 are REVERSED and SET
ASIDE. Accordingly, the Complaint is DISMISSED for lack of merit.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

09 DEC 2015 | SUBJECT | LABOR AND EMPLOYMENT | ILLEGAL


DISMISSAL | JURISPRUDENCE | PONENTE | JUSTICE MARIANO C. DEL
CASTILLO | SUBJECT | RULES OF COURT | CIVIL PROCEDURE | RULE
45 - APPEAL BY CERTIORARI TO THE SUPREME COURT

Vicmar Development Corporation Vs. Camilo


Elarcosa, et al.; G.R. No. 202215; December
9, 2015
DECISION

DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari assailing the November 24, 2009
Decision[9] of the Court of Appeals (CA) in CA-G.R SP No. 01853-MN. The CA granted the
Petition for Certiorari filed therewith, and reversed and set aside the February 2,
2007[10] Resolution of the National Labor Relations Commission (NLRC), Fifth Division,
Cagayan de Oro, which in turn, affirmed the May 25, 2006[11] and May 29, 2006[12] respective
Decisions of Executive Labor Arbiters (LA) Benjamin E. Pelaez (Pelaez) and Noel Augusto
S. Magbanua (Magbanua) dismissing the complaints for lack of merit. Also assailed is the
May 10, 2012 CA Resolution[13] denying the motion for reconsideration.

Factual Antecedents

This case stemmed from a Complaint for illegal dismissal and money claims filed by Ruben
Panes, Ruel Cabanday and Jonard Abugho (respondents) against Vicmar Development
Corporation (Vicmar) and/or Robert Kua (Kua), its owner and Juanito Pagcaliwagan
(Pagcaliwagan), its manager, docketed as NLRC Case No. RAB-10-08-00593-2005;[14] and
consolidated Complaints for illegal dismissal and money claims filed by Camilo Elarcosa,
Marlon Banda, Dante Balamad, Rodrigo Colanse, Chiquito Pacaldo, Robinson Panaga,
Romel Patoy, Wilfredo Ladra, Junie Abugho, Silverio Narisma, Armando Gonzales, Teofilo
Elbina, Francisco Baguio, Gelven Rhyan Ramos, Julito Siman, Recarido Panes, Jesus
Tinsay, Agapito Cañas, Jr., Oliver Lobaynon, Rolando Tacbobo, Simeon Baguio, Roberto
Paguican, Joseph Salcedo, Donil Indino, Wilfredo Gulben, Jesreil Taneo, Renante Pamon,
Richie Gulben, Daniel EUo, Rexy Dofeliz, Ronald Noval, Norberto Belarca, and Allan Baguio
(respondents), among others, against Vicmar, Kua, and Pagcaliwagan (petitioners),
docketed as NLRC Case Nos. RAB-10-09-00603-2004; RAB-10-09-00609-2004; RAB-10-
09-00625-2004; and RAB-10-02-00190-2005.[15]

Respondents alleged that Vicmar, a domestic corporation engaged in manufacturing of


plywood for export and for local sale, employed them in various capacities – as boiler
tenders, block board receivers, waste feeders, plywood checkers, plywood sander, conveyor
operator, ripsaw operator, lumber grader, pallet repair, glue mixer, boiler fireman, steel strap
repair, debarker operator, plywood repair and reprocessor, civil workers and plant
maintenance. They averred that Vicmar has two branches, Top Forest Developers,
Incorporated (TFDI) and Greenwood International Industries, Incorporated (GUI) located in
the same compound where Vicmar operated.[16]
Labor Cases Penned By Justice Del Castillo

According to respondents, Vicmar employed some of them as early as 1990 and since their
engagement they had been performing the heaviest and dirtiest tasks in the plant
operations. They claimed that they were supposedly employed as ―extra‖ workers; however,
their assignments were necessary and desirable in the business of Vicmar. They asserted
that many of them were assigned at the boilers for at least 11 hours daily. [17] They
emphasized that the boiler section was necessary to Vicmar‘s business because it was
where pieces of plywood were dried and cooked to perfection.[18] They further stated that a
number of them were also assigned at the plywood repair and processing section, which
required longer working hours.[19]

Respondents declared that Vicmar paid them minimum wage and a small amount for
overtime but it did not give them benefits as required by law, such as Philhealth, Social
Security System, 13th month pay, holiday pay, rest day and night shift differential.[20] They
added that Vicmar employed more than 200 regular employees and more than 400 ―extra‖
workers.[21]

Sometime in 2004, Vicmar allegedly informed respondents that they would be handled by
contractors.[22]Respondents stated that these contractors were former employees of Vicmar
and had no equipment and facilities of their own.[23] Respondents averred that as a result
thereof, the wages of a number of them who were receiving P276.00 as daily wage, were
reduced to P200.00 or P180.00, despite overtime work; and the wages of those who were
receiving P200.00 and P180.00 were reduced to P145.00 or P131.00. Respondents
protested said wage decrease but to no avail. Thus, they filed a Complaint with the
DOLE[24] for violations of labor standards for which appropriate compliance orders were
issued against Vicmar.[25]

Respondents claimed that on September 13, 2004, 28 of them were no longer scheduled for
work and that the remaining respondents, including their sons and brothers, were
subsequently not given any work schedule.[26]

Respondents maintained that they were regular employees of Vicmar; that Vicmar employed
a number of them as early as 1990 and as late as 2003[27] through Pagcaliwagan, its plant
manager; that Vicmar made them perform tasks necessary and desirable to its usual
business; and that Vicmar paid their wages and controlled the means and methods of their
work to meet the standard of its products. Respondents averred that Vicmar dismissed them
from service without cause or due process that prompted the filing of this illegal dismissal
case.[28]

Respondents claimed that they were illegally dismissed after vicmar learned that they
instituted the subject Complaint through the simple expedience of not being scheduled for
work. Even those persons associated with them were dismissed. They also asserted that
Vicmar did not comply with the twin notice requirement in dismissing employees.[29]

Furthermore, respondents contended that while Vicmar, TFDI and Gin were separately
registered with the SEC,[30]they were involved in the same business, located in the same
compound, owned by one person, had one resident manager, and one and the same
administrative department, personnel and finance sections. They claimed that the
employees of these companies were identified as employees of Vicmar even if they were
assigned in TFDI or GIII.[31]

On the other hand, petitioners stated that Vicmar is a domestic corporation engaged in wood
processing, including the manufacture of plywood since 1970;[32] that Vicmar employed
Labor Cases Penned By Justice Del Castillo

adequate regular rank-and-file employees for its normal operation; and that it engaged the
services of additional workers when there were unexpected high demands of plywood
products and when several regular employees were unexpectedly absent or on leave.[33]

Petitioners pointed out that the engagement of Vicmar‘s ―extra‖ workers was not continuous
and not more than four of them were engaged per section in every shift. They added that
from the time of engagement, respondents were not assigned for more than one year in a
section or a specific activity.[34] They explained that some of Vicmar‘s ―extra‖ workers were
engaged under ―pakyaw‖ system and were paid based on the items repaired or
retrieved.[35]Petitioners also stated that respondents Allan Baguio, Romel Patoy, Rexy
Dofeliz, Marlon Banda, Gulben Rhyan Ramos, Julieto Simon and Agapito Canas, Jr. were
―extra‖ workers of TFDI, not Vicmar.[36] They likewise alleged that a number of respondents
were engaged to assist regular employees in the company,[37] and the others were hired to
repair used steel straps and retrieve useable veneer materials, or to perform janitorial
services.[38]

Moreover, petitioners argued that the engagement of additional workforce was subject to the
availability of forest products, as well as veneer materials from Malaysia or Indonesia and
the availability of workers.[39]

Petitioners further asseverated that sometime in August 2004, they decided to engage the
services of legitimate independent contractors, namely, E.A. Rosales Contracting Services
and Candole Contracting Services, to provide additional workforce.[40] Petitioners claimed that
they were unaware that respondents were dissatisfied with this decision leading to the DOLE
case.[41] They insisted that hiring said contractors was a cost-saving measure, which was part
of Vicmar‘s management prerogative.[42]

Ruling of the Executive Labor Arbiters

On May 25, 2006, ELA Pelaez dismissed the complaints in NLRC Case Nos. RAB-10-09-
00603-2004; RAB-10-09-00609-2004; RAB-10-09-00625-2004; and RAB-10-02-00190-
2005.[43] On May 29, 2006, ELA Magbanua dismissed the complaint in NLRC Case No. RAB-
10-08-00593-2005.[44]

Both ELAs Pelaez and Magbanua held that respondents were seasonal employees of
Vicmar, whose work was ―co-terminus or dependent upon the extraordinary demands for
plywood products and also on the availability of logs or timber to be processed into
plywood.‖[45] They noted that Vicmar could adopt cost-saving measures as part of its
management prerogative, including engagement of legitimate independent contractors.[46]

Ruling of the National Labor Relations Commission

Consequently, respondents filed a Notice of Appeal with Motion to Consolidate


Cases[47] alleging that the foregoing cases involved same causes of actions, issues,
counsels, and respondents, and complainants therein were similarly situated.

Thereafter, in their Consolidated Memorandum on Appeal,[48] respondents argued that their


work in Vicmar was not seasonal. They averred that since their employment in 1990 until
their termination in 2004, they continuously worked for Vicmar and were not allowed to work
for other companies. They alleged that there was never a decline in the demand and
production of plywood. They also claimed that they continuously worked in Vicmar the whole
Labor Cases Penned By Justice Del Castillo

year, except in December during which the machines were shut down for servicing and
clean-up. They, nonetheless, stated that some of them were the ones who had been
cleaning these machines.

In addition, respondents averred that even assuming that they were seasonal employees,
they were still regular employees whose employment was never severed during off-season.
Thus, they asserted that the decision to farm them out to contractors was in violation of their
right to security of tenure and was an evidence of bad faith on the part of Vicmar.

On February 2, 2007, the NLRC affirmed the Decisions of ELAs Pelaez and
Magbanua.[49] On April 30, 2007, it denied respondents‘ motion for reconsideration.[50]

Ruling of the Court of Appeals

Undaunted, respondents filed with the CA a Petition[51] for Certiorari maintaining that they
were regular employees of Vicmar and that the latter illegally dismissed them. They insisted
that the labor contractors engaged by Vicmar were ―labor-only‖ contractors, as they have no
equipment and facilities of their own.

Petitioners, for their part, reiterated that Vicmar employed respondents as additional
workforce when there was high demand for plywood thus, they were merely seasonal
employees of Vicmar. They argued that Vicmar engaged independent contractors as a cost-
saving measure; and these contractors exercised direct control and supervision over
respondents. In conclusion, petitioners declared that respondents were not illegally
dismissed but lost their employment because of refusal to coordinate with Vicmar‘s
independent contractors.

On November 24, 2009, the CA rendered the assailed Decision granting the Petition
for Certiorari, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is GRANTED. The Resolution dated February 2,
2007 of the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City is
REVERSED and SET ASIDE. Private respondents are ORDERED to reinstate petitioners to their
former positions, without loss of seniority rights, and to pay full backwages from the time they were
illegally dismissed until actual reinstatement.

SO ORDERED.[52]

The CA held that a number of respondents were assigned to the boiler section where
plywood was dried and cooked to perfection; and while the other respondents were said to
have been assigned at the general service section, they were ―cleaners on an industrial level
handling industrial refuse.‖[53] As such, according to the CA, respondents performed activities
necessary and desirable in the usual business of Vicmar, as they were assigned to
departments vital to its operations. It also noted that the repeated hiring of respondents
proved the importance of their work to Vicmar‘s business. It maintained that the contractors
were engaged by Vicmar only for the convenience of Vicmar. In sum, the CA declared that
respondents were illegally dismissed since there was no showing of just cause for their
termination and of compliance by Vicmar to due process of law.

On May 10, 2012, the CA denied petitioners‘ motion for reconsideration.[54]


Labor Cases Penned By Justice Del Castillo

Petitioners thus filed this Petition raising the sole ground as follows:

THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT AND DEFERENCE,
ERRED IN REVERSING AND SETTING ASIDE THE FINDINGS OF FACTS AND
CONCLUSIONS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC). THE
DECISION AS WELL AS THE RESOLUTION ARE NOT IN ACCORDANCE WITH LAW AND
APPLICABLE JURISPRUDENCE AND IF NOT CORRECTED, WILL CAUSE GRAVE
INJUSTICE AND IRREPERABLE [SIC] DAMAGE TO THE PETITIONERS WHO WILL BE
CONSTRAINED TO ABSORB UNCESSARY [SIC] WORKFORCE, WHICH WILL LEAD TO
THE FURTHER DETERIORATION OF ITS FINANCIAL INSTABILITY [SIC] AND POSSIBLY
TO ITS CLOSURE.[55]

Petitioners contend that it is irregular for the CA to reverse the findings of facts of the NLRC
and the ELAs based on two work schedules of different companies and identification cards
of five respondents. They maintain that said evidence cannot conclusively prove that
respondents were regular employees of Vicmar.[56]

Additionally, petitioners argue that the CA erred in finding that they (petitioners) have the
burden to prove that respondents were hired for only one season to establish that they were
mere seasonal employees. Petitioners emphasize that since the inception of this case, they
have been denying respondents‘ claim that they were working under regular working hours
and working days.[57]

Petitioners maintain that respondents were Vicmar‘s ―extra‖ workers;[58] that the engagement
of independent contractors was a management prerogative exercised in good faith;[59] that
some of the respondents were engaged by TFDI and thus, they have no standing in this
case.[60]

Respondents, on their part, assert that petitioners have the burden to prove that they
(respondents) were seasonal employees because such allegation is a critical fact that must
be substantiated.[61] They likewise restate that they were regular employees of Vicmar
because they had been performing tasks necessary and desirable for the production of
plywood; they continuously worked in Vicmar for more than 11 hours daily until they were
terminated in September 2004; and they were not allowed to work for companies other than
Vicmar.[62]

Respondents claim that assuming that they were ―extra‖ workers, still, their continued and
repeated hiring for more than 10 years made their functions necessary or desirable in the
usual business of Vicmar.[63]

Issue

Did the CA err in finding that the NLRC gravely abused its discretion in affirming the ELAs‘
Decisions dismissing the complaint?

Our Ruling

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence or such relevant evidence that a
Labor Cases Penned By Justice Del Castillo

reasonable mind might accept as adequate to support a conclusion.[64] The CA may grant a
Petition for Certiorari if it finds that the NLRC committed grave abuse of discretion by
capriciously, whimsically or arbitrarily disregarding the material evidence decisive of a case.
It cannot ―make this determination without looking into the evidence presented by the
parties. Necessarily, the appellate court can only evaluate the materiality or significance of
the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily
disregarded by the NLRC, in relation to all other evidence on record.‖[65]

In this case, we find that the CA correctly granted respondents‘ Petition


for Certiorari because the NLRC gravely abused its discretion when it affirmed the dismissal
of respondents‘ Complaints.

Section 280 of the Labor Code defines a regular employee as one who is 1) engaged to
perform tasks usually necessary or desirable in the usual business or trade of the employer,
unless the employment is one for a specific project or undertaking or where the work is
seasonal and for the duration of a season; or 2) has rendered at least 1 year of service,
whether such service is continuous or broken, with respect to the activity for which he is
employed and his employment continues as long as such activity exists.[66]

Here, there is substantial evidence to prove that respondents were regular employees such
that their separation from work without valid cause amounted to illegal dismissal.

To support their illegal dismissal case, respondents listed the date of their hiring, the date
they were terminated and the sections where they were assigned prior to dismissal, to wit:[67]

NAMES DATE HIRED SECTION DATE FIRED

Panes, Ruben June 1990 Boiler Oct. 2004

Panes, Recarido August 1990 Boiler Sept. 2004

Tinsay, Jesus 1991 Boiler Sept. 2004

Gonzales, Armando June 1991 Assy./Fin. Feb. 2004

Patoy, Romel Nov. 1991 Boiler Sept. 2004

Ladra, Wilfredo 1992 Plant Maint. Sept. 2004

Balamad, Dante July 1994 Boiler Sept. 2004


Labor Cases Penned By Justice Del Castillo

Baguio, Simeon 1995 Boiler Sept. 2004

Baguio, Francisco 1995 Block Board June 2004

Tacbobo, Rolando Jan. 1995 Plant Maint. Sept. 2004

Belarga, Norberto 1995 Boiler July 2004

Elarcosa, Camilo 1995 Boiler Sept. 2004

Abugho, Junie June 1996 Boiler Sept. 2004

Pamon, Renante June 1996 Assy./Fin. Sept. 2004

Abugho, Jonard June 1996 Boiler Oct. 2004

Noval, Ronald 1997 Boiler Aug. 2004

Siman, Julito 1997 Boiler Sept. 2004

Baguio, Allan 1997 Boiler Sept. 2004

Cabanday, Ruel 1998 Assy./Fin. Oct. 2004

Salcedo, Joseph 1998 Assy./Fin. Sept. 2004

Lobaynon, Oliver 1998 Boiler Sept. 2004

Panaga, Robinson 1999 Assy./Fin. March 2004

Paguican, Roberto 1999 Boiler Sept. 2004


Labor Cases Penned By Justice Del Castillo

Ello, Daniel 1999 Boiler Sept. 2004

Taneo, Jesrile 1999 Plywood Rep. Sept. 2004

Indino, Donil 1999 Plywood Rep. Sept. 2004

Narisma, Silverio July 1999 Assy ./Fin. Sept. 2004

Canas, Agapito Jr. Jan. 2000 Plant Maint. Sept. 2004

Gulben, Wilfredo Dec. 2000 Plywood Rep. Sept. 2004

Gulben, Rechie Mar. 2000 Plywood Rep. Sept. 2004

Pacaldo, Chiquito Mar. 2000 Green End May 2002

Dofeliz, Rexy June 2001 Boiler Aug. 2004

xxxx

Ramos, Gelven Rhyan July 2002 Boiler Sept. 2004

Colansi, Rodrigo Oct. 2002 Assy./Fin. Sept. 2004

xxxx Jan. 2002 Boiler Sept. 2004

Banda, Marlon June 2003 Boiler Sept. 2004

Elbina, Teofilo Nov. 2003 Boiler July 2004

The foregoing allegations were uncontroverted as no relevant employment files, payrolls and
records were submitted by petitioners to refute the information. Being the employer,
petitioners have custody and control of important employment documents. As such, failure to
submit them gives rise to the presumption that their presentation would be prejudicial to
Labor Cases Penned By Justice Del Castillo

petitioners‘ cause and leads the Court to conclude that the assertions of respondents are
truthful declarations.[68]

Interestingly, in the DOLE case filed by respondents against Vicmar and TFDI, the latter did
not also submit documents to disprove respondents‘ claim for wage differentials, 13th month
pay and holiday pay. Because of this, the DOLE Secretary denied their appeal. In her
February 17, 2006 Order,[69] the DOLE Secretary made the following pronouncements:

In this case, the appellants (Vicmar and TFDI) were given seven x x x days to comply with the Notice
of Inspection Results or to contest the findings therein, but they chose to ignore the directive.
Summary hearings were conducted x x x to give the appellants ample time to submit payrolls, but
they merely promised to do so x x x [A]t the extra hearing on 18 November, they still failed to do so.
x x x There being none, the Director could not but sustain the inspection report.

Neither can the Director be faulted for not referring the case to the NLRC on the ground that material
evidence, namely, the payrolls and the daily time records, were not duly considered during inspection.
The appellants cannot raise this argument because it was they who failed to produce the records for
the consideration of the inspector and the Regional Director[.][70]

Similarly, we cannot fault the CA in the instant case for giving credence to the assertions and
documentary evidence adduced by respondents. Petitioners had the opportunity to discredit
them had they presented material evidence, including payrolls and daily time records, which
are within their custody, to prove that respondents were mere additional workforce engaged
when there are extraordinary situations, such as high demands for plywood products or
unexpected absences of regular employees; and that respondents were not assigned for
more than one year to the same section or activity.

Moreover, respondents were shown to have performed activities necessary in the usual
business of Vicmar. Most of them were assigned to activities essential for plywood
production, the central business of Vicmar. In the list above, more than half of the
respondents were assigned to the boiler, where pieces of plywood were cooked to
perfection. While the other respondents appeared to have been assigned to other sections in
the company, the presumption of regular employment should be granted in their favor
pursuant to Article 280 of the Labor Code since they had been performing the same activity
for at least one year, as they were assigned to the same sections, and there is no indication
that their respective activities ceased.[71]

The test to determine whether an employee is regular is the reasonable connection between
the activity he performs and its relation to the employer‘s business or trade, as in the case of
respondents assigned to the boiler section. Nonetheless, the continuous re-engagement of
all respondents to perform the same kind of tasks proved the necessity and desirability of
their services in the business of Vicmar.[72] Likewise, considering that respondents appeared
to have been performing their duties for at least one year is sufficient proof of the necessity,
if not the indispensability of their activities in Vicmar‘s business.[73]

The Court also holds that Vicmar failed to prove that the contractors it engaged were
legitimate labor contractors.

To determine the existence of independent contractorship, it is necessary to establish that


the contractor carries a distinct and independent business, and undertakes to perform work
on its own account and under its responsibility and pursuant to its own manner and method,
Labor Cases Penned By Justice Del Castillo

without the control of the principal, except as to the result; that the contractor has substantial
capital or investment; and, that the agreement between the principal and the contractor
assures the contractual employees to all labor and occupational safety and health standards,
to right to self-organization, security of tenure and other benefits.[74]

Other than their respective Certificates[75] of Registration issued by the DOLE on August 12,
2004, E.A Rosales Contracting Services and Candole Labor Contracting Services were not
shown to have substantial capital or investment, tools and the like. Neither was it established
that they owned equipment and machineries for the purported contracted job. Also, the
allegation that they had clients other than Vicmar remained to be bare assertion without
corresponding proof. More importantly, there was no evidence presented that these
contractors undertook the performance of their service contracts with Vicmar pursuant to
their own manner and method, without the control and supervision of Vicmar.[76]

Petitioners cannot rely on the registration of their contractors to prove that the latter are
legitimate independent contractors. Such registration is not conclusive of the status of a
legitimate contractor; rather, it merely prevents the presumption of being a labor-only
contractor from arising. Indeed, to determine whether labor-only contracting exists, the
totality of the facts and circumstances of the case must be considered.[77]

The Court also gives merit to the finding of the CA that Vicmar is the employer of
respondents despite the allegations that a number of them were assigned to the branches of
Vicmar. Petitioners failed to refute the contention that Vicmar and its branches have the
same owner and management – which included one resident manager, one administrative
department, one and the same personnel and finance sections. Notably, all respondents
were employed by the same plant manager, who signed their identification cards some of
whom were under Vicmar, and the others under TFDI.

Where it appears that business enterprises are owned, conducted and controlled by the
same parties, law and equity will disregard the legal fiction that these corporations are
distinct entities and shall treat them as one. This is in order to protect the rights of third
persons, as in this case, to safeguard the rights of respondents.[78]

Considering that respondents were regular employees and their termination without valid
cause amounts to illegal dismissal, then for its contrary ruling unsupported by substantial
evidence, the NLRC gravely abused its discretion in dismissing the complaints for illegal
dismissal. Therefore, the CA Decision setting aside that of the NLRC is in order and must be
sustained.[79]

WHEREFORE, the Petition is DENIED. The Decision dated November 24,2009 and
Resolution dated May 10, 2012 of the Court of Appeals in CA-G.R. SP No. 01853-MIN
are AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

07 DEC 2015 | JURISPRUDENCE | PONENTE | JUSTICE


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

Island Overseas Transport Corporation Vs.


Armando N. Beja; G.R. No. 203115;
December 7, 2015
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the March 28, 2012 Decision[2] and August 13,
2012 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 113550 affirming the
October 26, 2009 Decision[4] and February 15, 2010 Resolution[5] of the National Labor
Relations Commission (NLRC), which ordered petitioners Island Overseas Transport
Corporation/Pine Crest Shipping Corporation/Capt. Emmanuel L. Regio (petitioners) to pay
respondent Armando M. Beja (Beja) US$110,000.00 as permanent total disability benefits
and 10% thereof as attorney‘s fees.

Antecedent Facts

On March 6, 2007, Beja entered into a Contract of Employment[6] with petitioner Island
Overseas Transport Corp. for and on behalf of its foreign principal, petitioner Pine Crest
Shipping Corporation, for a period of nine months as Second Assistant Engineer for the
vessel M/V Atsuta. Beja underwent the pre-employment medical examination, where he was
declared fit for work. He boarded the vessel on March 14, 2007.

In November 2007, Beja experienced pain and swelling of his right knee, which he
immediately reported to the Master of the vessel. On November 10, 2007, he was brought to
a hospital in Italy and was diagnosed to have Arthrosynovitis. He underwent arthrocentesis
of the right knee, was referred to an orthopedic surgeon and was advised to take a
rest.[7] However, while in Spain, the pain in his right knee recurred and persisted. He was
brought to a physician on November 19, 2007 and was advised to be medically repatriated.

Upon arrival in Manila on November 22, 2007, petitioners referred him to Nicomedes G.
Cruz (NGC) Medical Clinic for evaluation. The Magnetic Resonance Imaging of his right
knee showed Chronic Tenosynovitis with Vertical Tear, Postero-Lateral
Meniscus and Probable Tear Anterior Cruciate and Lateral Collateral Ligaments.[8] Beja
underwent physical therapy and was advised to undergo operation.[9] On April 23, 2008,
Anterior Cruciate Ligament Reconstruction and Partial Menisectomy of the Medial Meniscus
was done on his right knee at Medical Center Manila.[10] After the operation, petitioners sent
him for rehabilitation at St. Luke‘s Medical Center under the supervision of Dr. Reynaldo R.
Rey-Matias (Dr. Matias).
Labor Cases Penned By Justice Del Castillo

Meantime, while undergoing therapy, or on May 15, 2008, Beja filed a complaint [11] against
petitioners for permanent total disability benefits, medical expenses, sickness allowance,
moral and exemplary damages and attorney‘s fees. Beja alleged that his knee injury resulted
from an accident he sustained on board the vessel when a drainage pipe fell on his knee. He
claimed that from the time of his repatriation on November 22, 2007, his knee has not
recovered which rendered him incapable of returning to his customary work as seafarer.
This, according to him, clearly entitles him to permanent total disability benefits pursuant to
AMOSUP-JSU Collective Bargaining Agreement (CBA) which provides:

Article 28.1:

A seafarer who surfers permanent disability as a result of an accident whilst in the employment of the
Company regardless of fault, including, accidents occurring while travelling to or from the ship, and
whose ability to work as a seafarer is reduced as a result thereof, but excluding permanent disability
due to willful acts, shall in addition to sick pay, be entitled to compensation, according to the
provisions of this Agreement.[12]

He claimed for compensation in the amount of US$137,500.00 in accordance with the


degree of disability and rate of compensation indicated in the said CBA, to wit:

Disability

In the event a seafarer suffers permanent disability in accordance with the provisions of Article 28 of
this Agreement, the scale of compensation provided for under Article 28.3 shall, unless more
favourable benefits are negotiated, be:

xxxx

Effective from 1st January to 31st December, 2007

Degree of Disability Rate of Compensation (US$)

Junior Officers &


% Ratings, AB & Below Senior Officers (4)
Ratings Above AB

100 82,500 110,000 137,500

75 61,900 82,500 103,150

60 49,500 66,000 82,500

50 41,250 55,000 68,750


Labor Cases Penned By Justice Del Castillo

40 33,000 44,000 55,000

30 24,750 33,000 41,250

20 16,500 22,000 27,500

10 8,250 11,000 13,750

Note: ―Senior Officers‖ for the purpose of this clause means Master, Chief Officer, Chief Engineer
and 1st Engineer.[13]

On May 26, 2008, the company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz),
issued an assessment of Beja‘s disability:

1. Prognosis – guarded.

2. Combined disability grading under the POEA schedule of disabilities:

1. Grade 10 – stretching leg of the ligaments of a knee resulting in instability of the


joint.

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


lesion or disturbance of weight-bearing line.[14]

After more than three months of therapy, Dr. Matias issued on August 28, 2008 a medical
report[15] stating that Beja is still under pain as verified by the Visual Analog System which
measures his pain at 6 out of 10 (10 being the highest measure of pain) and is having
difficulty in his knee movements. Thereafter, on August 30, 2008, Beja consulted an
orthopedic surgeon, Dr. Nicanor F. Escutin (Dr. Escutin), who examined and certified him to
be unfit for sea duty in whatever capacity due to pain and difficulty of the use of his right
knee despite the operation and therapy performed on him.[16]

Proceedings before the Labor Arbiter

During the preliminary conference, petitioners offered to pay Beja the amount of
US$13,345.00, corresponding to the combined disability grading given by Dr. Cruz, which is
disability Grade 10 (US$50,000 x 20.15%) and Grade 13 (US$50,000 x 6.72%) under the
Schedule of Disability Allowances in the POEA Standard Employment Contract (POEA-
SEC). Beja, however, rejected petitioners‘ offer and reiterated his claim for total disability
benefits as strengthened by the certification of Dr. Escutin that he suffers from a permanent
total disability, which he claimed, confirmed the findings of Dr. Matias.

Petitioners, however, insisted that the combined disability assessment given by Dr. Cruz,
who for months continuously treated and monitored Beja‘s condition, prevails over that
rendered by Dr. Escutin, who examined Beja only once and whose diagnosis was merely
based on the medical reports and findings of the company-designated physicians.
Labor Cases Penned By Justice Del Castillo

Petitioners further disclaimed Beja‘s entitlement to disability claim under the CBA as it
expressly requires the parties to consult a third doctor whose opinion shall be binding on
them. Since Beja failed to observe this procedure which is also mandated under the POEA-
SEC, the finding of Dr. Cruz deserves utmost respect. Petitioners also asseverated that Beja
already received his sickness allowance by presenting several vouchers.[17]

In a Decision[18] dated February 27, 2009, the Labor Arbiter awarded Beja maximum disability
benefits under the CBA. The Labor Arbiter did not give credence to the assessment given by
Dr. Cruz as it was issued after the lapse of 120 days which, by operation of law, transformed
Beja‘s disability to total and permanent. Moreover, despite continued physical therapy,
Bejars condition did not improve even beyond the 240-day maximum medical treatment
period. The Labor Arbiter found doubtful Dr. Cruz‘s assessment considering that he was not
the one who performed the operation on Beja‘s knee. The Labor Arbiter denied Beja‘s claim
for sickness allowance since payment thereof was fully substantiated by evidence presented
by petitioners. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered against the above-named


respondents ISLAND OVERSEAS TRANSPORT CORP. and/or PINE CREST SHIPPING CORP.
and/or CAPT. EMMANUEL L. REGIO, who are hereby ordered to pay, jointly and severally,
complainant‘s Permanent Total Disability benefits in the amount of US DOLLARS ONE HUNDRED
THIRTY SEVEN THOUSAND FIVE HUNDRED (US$137,500.00), in Philippine currency at the
prevailing rate of exchange at the time of payment, plus ten percent (10%) thereof as attorney‘s fees.

SO ORDERED.[19]

Proceedings before the National Labor Relations Commission

On appeal, petitioners attributed error in the Labor Arbiter in granting Beja the maximum
disability benefits under the CBA. Petitioners argued that since Dr. Cruz made an
assessment on May 26, 2008 or before the lapse of the maximum 240-day treatment period
from the date of Beja‘s repatriation on November 22, 2007, mere was no factual basis in
ruling that Beja is entitled to full disability benefits. They cited Vergara v. Hammonia Maritime
Services, Inc.,[20] where it was pronounced that only after the lapse of 240 days of continuous
medical treatment without any assessment given by the company doctor that a medically
repatriated seafarer could be adjudged as permanently and totally disabled. They also
claimed that the CBA is inapplicable in Beja‘s case because Beja failed to comply with the
procedure regarding the third doctor referral and more importantly, no proof was adduced to
show that his medical condition resulted from an accident Petitioners presented a
certification[21] of the Master of vessel M/V Atsuta, Captain Henry M. Tejado, and a written
declaration[22] of the vessel‘s Chief Engineer, Ramon B. Ortega, both confirming that Beja
neither met an accident on board nor was injured during his stay in the vessel under their
command. Finally, petitioners contended that assuming that the CBA applies, the award of
US$137,500.00 is erroneous as Beja is not a Senior Officer. In fine, petitioners insisted that
the disability assessment given by Dr. Cruz based on the POEA-SEC is binding and
controlling.

Beja, however, disputed petitioners‘ belated and self-serving denial that an accident took
place and insisted that his failure to resume his work as Second Engineer for more than 240
days resulted in his entitlement to the maximum disability benefit under the CBA, as correctly
ruled by the Labor Arbiter.
Labor Cases Penned By Justice Del Castillo

In a Decision[23] dated October 26, 2009, the NLRC sustained the Labor Arbiter‘s finding that
Beja is permanently and totally disabled. It found Dr. Cruz‘s disability assessment premature
and inaccurate considering that it was issued only a month after Beja‘s surgery when the
latter was still under medical evaluation and treatment. On the other hand, it found Dr.
Escutin‘s evaluation of Beja‘s condition more credible as it conforms to Dr. Matias‘ medical
report which was rendered after four months of therapy following the operation. The NLRC
likewise ruled that Beja is entitled to compensation under the CBA for an accident-sustained
disability. It noted that his medical records reveal indications of tear and injury on his right
knee that could have resulted from an accident on board. It, however, reduced the award
from US$137,500.00 to US$110,000.00 as Beja was only a Second Engineer and not a
Senior Officer, thus:

WHEREFORE, premises considered, the Decision appealed from is hereby declared Modified to the
extent only that complainant‘s permanent total disability award should be US Dollars 110,000.00
(US$110,000.00). All other dispositions are hereby Affirmed.

SO ORDERED.[24]

Petitioners‘ motion for reconsideration[25] was denied in the NLRC Resolution[26] dated
February 15, 2010.

Proceedings before the Court of Appeals

Petitioners filed a Petition for Certiorari with Prayer for the Urgent Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order[27] to enjoin the enforcement/
execution of the NLRC judgment. In a Resolution[28]dated June 23, 2010, the CA denied
Petitioners‘ application for the issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.

On March 28, 2012, the CA rendered a Decision[29] denying the Petition for Certiorari and
affirming the NLRC ruling. Trie CA similarly found that Beja‘s injury resulting from an
accident while on board the vessel. It likewise found merit in Dr. Escutin‘s disability report
declaring Beja unfit to work since his injury has prevented him from performing his
customary work as Second Engineer for more than 240 days and thus entitles him to
permanent total disability benefits in accordance with the CBA.

Petitioners sought reconsideration[30] of the CA Decision. In a CA Resolution[31] dated August


13, 2012, petitioners‘ motion was denied.

Issues

Hence, petitioners filed the present Petition for Review on Certiorari raising the
following grounds:
1. In awarding permanent total disability benefits in favor of the Respondent in utter
disregard of extant case laws outlining the instances when and how a temporary total
disability can be converted into a permanent total one.

2. In relying on the opinion of Respondent‘s chosen doctor to justify an award of


disability compensation contrary to the clear edicts of the POEA Contract, the CBA
and of the Supreme Court in jurisprudential precedents on the proper establishment
and/or determination of a seafarer‘s entitlement to disability benefits.
Labor Cases Penned By Justice Del Castillo

3. In awarding benefits based on the compensation provided in the parties‘ CBA when
the said agreement unequivocally confines compensation to injuries arising from
accident, which is absolutely wanting in this case.

4. In sustaining the award of attorney‘s fees albeit [without] legal and factual
substantiation.[32]

Petitioners assert that Beja cannot be automatically declared as permanently and totally
disabled by the mere lapse of 120 days without any assessment or certification of fit to work
being issued. Citing Vergara, they argue that the 120-day period may be extended up to the
maximum of 240 days if the seafarer requires further medical attention. Since Dr. Cruz‘s
assessment was issued within the 240-day medical treatment period, albeit beyond 120
days, this could serve as the basis for determining Beja‘s disability and the degree thereof.
In short, Beja should have been declared as partially disabled with Grades 10 and 13
disability under the POEA-SEC, as assessed by Dr. Cruz.

Moreover, they posit that Beja‘s complaint was prematurely filed and lacked cause of action
for total and permanent disability benefits. According to petitioners, the lack of a second
opinion from Beja‘s chosen physician at the time of the filing of the complaint and a third-
doctor opinion is fatal to Beja‘s cause, for without a binding third opinion, the assessment of
the company-designated physician stands.

Further, they insist that Beja is not entitled to compensation under the parties‘ CB A which is
only confined to injuries arising from accident.

Our Ruling

The Petition is partially meritorious.


The parties’ CBA is inapplicable.

Beja based his claim for full disability benefits under the CBA, claiming that his disability
resulted from an accident while in the employ of petitioners and that petitioners‘ belated
denial cannot negate the applicability of the CBA provisions.

We are not convinced.

While, indeed, petitioners did not dispute, before the Labor Arbiter, the fact that Beja met an
accident while performing his duties, they, however, disputed the same in their appeal with
the NLRC by submitting the certifications of the Master of the vessel and Chief Engineer that
no accident happened under their command. We have held that ―rules of procedure and
evidence should not be applied in a very rigid and technical sense in labor cases in order
that technicalities would not stand in the way of equitably and completely resolving the rights
and obligations of the parties.‖[33] The Court is, thus, not precluded to examine and admit this
evidence, even if presented only on appeal before the NLRC, if only to dispense substantial
justice.

We, however, note that Beja has not presented any proof of his allegation that he met an
accident on board the vessel. There was no single evidence to show that Beja was injured
due to an accident while doing his duties in the vessel. No accident report existed nor any
medical report issued indicating that he met an accident while on board. Beja‘s claim was
simply based on pure allegations. Yet, evidence was submitted by petitioners disputing
Labor Cases Penned By Justice Del Castillo

Beja‘s allegation. The certifications by the Master of the vessel and Chief Engineer affirmed
that Beja never met an accident on board nor was he injured while in the performance of his
duties under their command. Beja did not dispute these certifications nor presented any
contrary evidence. ―It is an inflexible rule that a party alleging a critical fact must support his
allegation with substantial evidence, for any decision based on unsubstantiated allegation
cannot stand without offending due process.‖[34]

The Court also takes notice of the fact that Beja‘s medical condition cannot be solely
attributable to accidents. His injury could have possibly been caused by other factors such
as chronic wear and tear[35] and aging.[36] Thus, the NLRC‘s conclusion that the tear and injury
on Beja‘s knee was caused by an accident on board had no factual basis but was anchored
merely on speculation. The Court cannot, however, rest its rulings on mere speculation and
presumption.[37]

Thus, we find the CBA inapplicable; the determination of Beja‘s entitlement to disability
benefits must, consequently, be governed by the POEA-SEC and relevant labor laws.

Beja is entitled to a total and permanent disability compensation of US$60,000.00 under the
POEA-SEC.

Article 192(c)(1) of the Labor Code provides that:

Art. 192. Permanent total disability. – x x x

(c) The following disabilities shall be deemed total and permanent:

(1) Temporary total disability lasting continuously for more than one hundred twenty days, except as
otherwise provided for in the Rules;

The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended Rules
on Employees Compensation (AREC) implementing Title II, Book IV of the Labor Code,
which states:

Sec. 2. Period of Entitlement — (a) The income benefit shall be paid beginning on the first day of
such disability. If caused by an injury or sickness it shall not be paid longer than 120 consecutive days
except where such injury or sickness still requires medical attendance beyond 120 days but not to
exceed 240 days from onset of disability in which case benefit for temporary total disability shall be
paid. However, the System may declare the total and permanent status at any time after 120 days of
continuous temporary total disability as may be warranted by the degree of actual loss or impairment
of physical or mental functions as determined by the System.

Section 20 B (3) of the POEA-SEC, meanwhile provides that:

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

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return except when he is
Labor Cases Penned By Justice Del Castillo

physically incapacitated to do so, in which case, a written notice to the agency within the same period
is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed
jointly between the employer and the seafarer. The third doctor‘s decision shall be final and binding
on both parties.

In Vergara,[38] this Court has ruled that the aforequoted provisions should be read in harmony
with each other, thus: (a) the 120 days provided under Section 20 B(3) of the POEA-SEC is
the period given to the employer to determine fitness to work and when the seafarer is
deemed to be in a state of total and temporary disability; (b) the 120 days of total and
temporary disability may be extended up to a maximum of 240 days should the seafarer
require further medical treatment; and (c) a total and temporary disability becomes
permanent when so declared by the company-designated physician within 120 or 240 days,
as the case may be, or upon the expiration of the said periods without a declaration of either
fitness to work or disability assessment and the seafarer is still unable to resume his regular
seafaring duties.

Thus, although Section 32[39] of the POEA-SEC states that only those injuries or disabilities
classified as Grade 1 are considered total and permanent, a partial and permanent disability
could, by legal contemplation, become total and permanent.[40] The Court ruled in Kestrel
Shipping Co., Inc. v. Munar,[41] viz.:

Indeed, under Section 32 of the POEA-SEC, only those injuries or disabilities that are classified as
Grade 1 may be considered as total and permanent. However, if those injuries or disabilities with a
disability grading from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from
performing his usual sea duties for a period of more than 120 or 240 days, depending on the need for
further medical treatment, then he is, under legal contemplation, totally and permanently disabled. In
other words, an impediment should be characterized as partial and permanent not only under the
Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the relevant
provisions of the Labor Code and the Amended Rules on Employee Compensation (AREC)
implementing Title II, Book IV of the Labor Code. That while the seafarer is partially injured or
disabled, he is not precluded from earning doing the same work he had before his injury or disability
or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from
engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be
deemed totally and permanently disabled.

Moreover, the company-designated physician is expected to arrive at a definite assessment of the


seafarer‘s fitness to work or permanent disability within the period of 120 or 240 days. That should he
fail to do so and the seafarer‘s medical condition remains unresolved, the seafarer shall be deemed
totally and permanently disabled.[42]

Beja was repatriated on November 21, 2007. Roughly a month after his right knee operation
or on May 26, 2008, Dr. Cruz rendered a Grade 10 and 13 partial disability grading of his
medical condition. Thereafter, Beja‘s medical treatment, supervised by another company-
referred doctor, Dr. Matias, continued. On August 28, 2008, Dr. Matias issued a medical
report declaring that Beja has not yet fully recovered despite continued therapy. Hence,
although he was given Grades 10 and 13 combined disability rating by Dr. Cruz, this
assessment may only be considered as tentative because he still continued his physical
therapy sessions, which even went beyond 240 days.
Labor Cases Penned By Justice Del Castillo

In Sealanes Marine Services, Inc. v. Dela Torre,[43] the seafarer was repatriated on August 4,
2010 and underwent rehabilitation until July 20, 2011, exceeding the 240 days allowed to
declare him either fit to work or permanently disabled. A partial disability rating of Grade 11
was issued by the company-designated physician on March 10, 2011 but the Court deemed
this assessment only an interim one because of De La Torre‘s continued physical therapy
sessions. The Court then granted De La Torre the maximum disability compensation
because despite his long treatment and rehabilitation, he was unable to go back to work as a
seafarer. In applying the Kestrel ruling, the Court held that if the seafarer‘s illness or injury
prevents him from engaging in gainful employment for more than 240 days, then he shall be
deemed totally and permanently disabled. The Court ratiocinated that while the seafarer is
partially injured or disabled, he must not be precluded from earning or doing the same work
he had before his injury or disability or that which he is accustomed or trained to do.

In Belchem Philippines, Inc. v. Zafra, Jr.,[44] the Court stressed that partial disability exists
only if a seafarer is found capable of resuming sea duties within the 120/240-day period. The
premise is such that partial injuries did not disable a seafarer to earn wages in the same kind
of work or similar nature for which he was trained.

In this case, there was no assessment that Beja was found fit to resume sea duties before the end of the
240-day period. Also Beja‘s allegation that he has not been able to perform his usual activities has not
been contradicted by petitioners or by contrary documentary evidence. In fact, in his medical report
dated August 28, 2008, Dr. Matias opined that there was still difficulty in Beja‘s knee movements.
Beja should, therefore, be deemed to be suffering permanent total disability.

It must also be stressed that Dr. Cruz did not even explain how he arrived at the partial permanent
disability assessment of Beja. Dr. Cruz merely stated that Beja was suffering from impediment Grades
10 and 13 disability but without any justification for such conclusion. Petitioners‘ claim that Beja only
suffered a partial disability has undoubtedly no basis on record.

Petitioners still argue that Beja‘s complaint is premature and as of its filing, no cause of action for
total and permanent disability benefits had set in. They contend that despite the lapse of the 120-day
period, Beja was still considered under a state of temporary total disability at the time he filed his
complaint. In this regard, we quote the following pronouncements in Kestrel, which involved the
same circumstances as in the case at bar:

In this case, the following are undisputed: (a) when Munar filed a complaint for total and permanent
disability benefits on April 17, 2007, 181 days had lapsed from the time he signed-off from M/V
Southern Unity on October 18, 2006; (b) Dr. Chua issued a disability grading on May 3, 2007 or after
the lapse of 197 days; and (c) Munar secured the opinion of Dr. Chiu on May 21, 2007; (d) no third
doctor was consulted by the parties; and (e) Munar did not question the competence and skill of the
company-designated physicians and their familiarity with his medical condition.

It may be argued that these provide sufficient grounds for the dismissal of Munar‘s complaint.
Considering that the 240-day period had not yet lapsed when the NLRC was asked to intervene,
Munar‘s complaint is premature and no cause of action for total and permanent disability benefits had
set in. While beyond the 120-day period, Dr. Chua‘s medical report dated May 3, 2007 was issued
within the 240-day period. Moreover, Munar did not contest Dr. Chua‘s findings using the procedure
outlined under Section 20-B(3) of the POEA-SEC. For being Munar‘s attending physicians from the
time he was repatriated and given their specialization in spine injuries, the findings of Dr. Periquet
and Dr. Lim constitute sufficient bases for Dr. Chua‘s disability grading. As Munar did not allege,
much less, prove the contrary, there exists no reason why Dr. Chiu‘s assessment should be preferred
over that of Dr. Chua.
Labor Cases Penned By Justice Del Castillo

It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet determined the
nature and extent of Munar‘s disability. Also, Munar was still undergoing physical therapy and his
spine injury had not yet been fully addressed. Furthermore, when Munar filed a claim for total and
permanent disability benefits, more than 120 days had gone by and the prevailing y rule then was that
enunciated by this Court in Crystal Shipping, Inc. v. Natividad that total and permanent disability
refers to the seafarer‘s incapacity to perform his customary sea duties for more than 120 days.
Particularly:

Permanent disability is the inability of a worker to perform his job for more than 120 days,
regardless of whether or not he loses the use of any part of his body. As gleaned from the records,
respondent was unable to work from August 18, 1998 to February 22, 1999, at the least, or more than
120 days, due to his medical treatment. This clearly shows that his disability was permanent.

Total disability, on the other hand, means the disablement of an employee to earn wages in the same
kind of work or similar nature that he was trained for, or accustomed to perform, or any kind of work
which a person of his mentality and attainments could do. It does not mean absolute helplessness. In
disability compensation, it is not the injury which is compensated, but rather it is the incapacity to
work resulting in the impairment of one‘s earning capacity.

xxxx

Petitioners tried to contest the above findings by showing that respondent was able to work again as a
chief mate in March 2001. Nonetheless, this information does not alter the fact that as a result of his
illness, respondent was unable to work as a chief mate for almost three years. It is of no consequence
that respondent was cured after a couple of years. The law does not require that the illness
should be incurable. What is important is that he was unable to perform his customary work for
more than 120 days which constitutes permanent total disability. An award of a total and
permanent disability benefit would be germane to the purpose of the benefit, which is to help the
employee in making ends meet at the time when he is unable to work. x x x

Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made any
declaration as to Munar‘s fitness to work and Munar had not yet fully recovered and was still
incapacitated to work sufficed to entitle the latter to total and permanent disability benefits.

In addition, that it was by operation of law that brought forth the conclusive presumption that Munar
is totally and permanently disabled, there is no legal compulsion for him to observe the procedure
prescribed under Section 20-B(3) of the POEA-SEC. A seafarer‘s compliance with such procedure
presupposes that the company-designated physician came up with an assessment as to his fitness or
unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively put, absent a
certification from the company-designated physician, the seafarer had nothing to contest and the law
steps in to conclusively characterize his disability as total and permanent.

This Court‘s pronouncements in Vergara presented a restraint against the indiscriminate reliance
on Crystal Shippingsuch that a seafarer is immediately catapulted into filing a complaint for total and
permanent disability benefits after the expiration of 120 days from the time he signed off from the
vessel to which he was assigned. Particularly, a seafarer‘s inability to work and the failure of the
company-designated physician to determine fitness or unfitaess to work despite the lapse of 120 days
will not automatically bring about a shift in the seafarer‘s state from total and temporary to total and
permanent, considering that the condition of total and temporary disability may be extended up to a
maximum of 240 days.
Labor Cases Penned By Justice Del Castillo

Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years from the time
Munar filed his complaint and observance of the principle of prospectivity dictates that Vergara
should not operate to strip Munar of his cause of action for total and permanent disability that had
already accrued as a result of his continued inability to perform his customary work and the failure of
the company-designated physician to issue a final assessment.[45](Emphasis in the original)

More importantly, in Montierro v. Rickmers Marine Agency Phils., Inc.[46] and Eyana v.
Philippine Transmarine Carriers, Inc.,[47] the Court applied the ruling in Kestrel, that if the
maritime compensation complaint was filed prior to October 6, 2008, the rule on the 120-day
period, during which the disability assessment should have been made in accordance
with Crystal Shipping, Inc. v. Natividad,[48] that is, the doctrine then prevailing before the
promulgation of Vergara on October 6, 2008, stands; if, on the other hand, the complaint
was filed from October 6, 2008 onwards, the 240-day rule applies.

In the case at bar, Beja filed the complaint on May 15, 2008. Dr. Cruz issued his assessment
only on May 26, 2008 or 187 days from Beja‘s repatriation on November 21, 2007.
Therefore, due to Dr. Cruz‘s failure to issue a disability rating within the 120-day period, a
conclusive presumption that Beja is totally and permanently disabled arose. Consequently,
there was no need for Beja to secure an opinion from his own doctor or resort to a third
doctor as prescribed under Section 20 B (3) of the POEA-SEC.

In sum, the CA is correct in affirming the NLRC‘s award of permanent total disability benefit
to Beja. It, however, erred in pertaining to the parties‘ CBA in granting the award relative to
the amount due. The Schedule of Disability Allowances under Section 32 of the POEA-SEC
should instead apply. Under this section, Beja is entitled to US$60,000.00 (US$50,000.00 x
120%) corresponding to Grade 1 Disability assessment.

The award of attorney‘s fees is likewise justified in accordance with Article 2208 (2) [49] and
(8)[50] of the Civil Code since Beja was compelled to litigate to satisfy his claims for disability
benefits.

WHEREFORE, the Petition is PARTIALLY GRANTED. The March 28, 2012 Decision and
August 13, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 113550
are MODIFIED in that petitioners, Island Overseas Transport Corp./Pine Crest Shipping
Corp./Capt. Emmanuel L. Regio, are ordered to jointly and solidarily pay respondent
Armando M. Beja total and permanent disability benefits in the amount of US$60,000.00 or
its equivalent amount in Philippine currency at the time of payment, plus 10% thereof as
attorney‘s fees.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

11 NOV 2015 | JURISPRUDENCE | PONENTE | JUSTICE


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

New Filipino Maritime Agencies, Inc. Taiyo


Nippon Kisen Co., Ltd and Angelita T. Rivera
Vs. Vincent H. Datayan; G.R. No. 202859;
November 11, 2015
DECISION

DEL CASTILLO, J.:

As a rule, the death of a seafarer during the term of his employment makes his employer
liable for death benefits. The employer, may, however, be exempt from liability if it can
successfully establish that the seafarer’s death was due to a cause attributable to his own
willful act.[2]

This Petition for Review on Certiorari assails title February 22, 2012 Decision[3] of the Court
of Appeals (CA) in CA-G.R. SP No. 119775. The CA granted the Petition for Certiorari filed
therewith and reversed and set aside the October 28, 2010 Decision[4] and March 15, 2011
Resolution[5] of the National Labor Relations Commission (NLRC) in NLRC LAC No. 07-
000536-10, which, in turn, affirmed the May 31, 2010 Decision[6] of Labor Arbiter Arden S.
Anni (LA) dismissing the complaint in NLRC-NCR OFW Case No. (M)05-07052-09.

Likewise challenged is the July 24, 2012 CA Resolution[7] denying the motion for
reconsideration for lack of merit.

Factual Antecedents

On August 8, 2007, New Filipino Maritime Agencies, Inc. (NFMA), for and on behalf of St.
Paul Maritime Corp. (SPMC), employed Simon Vincent Datayan II (Simon) as deck cadet on
board the vessel Corona Infinity. His employment was for nine months with basic monthly
salary of US$23 5.00.[8] Prior to his deployment, Simon underwent pre-employment medical
examination (PEME) and was declared fit for sea duties. On August 17, 2007, he boarded
the vessel and assumed his duties as deck cadet.[9]

On December 30,2007, at 12:40 a.m., the Master authorized the conduct of an emergency
fire drill in which the crew participated. At about 1:25 a.m., he declared that Simon jumped
overboard. A futile search-and-rescue operation ensued. After a few weeks, Simon was
declared missing and was presumed dead.[10]

Simon‘s father, Vincent H. Datayan (respondent), alleged that he went to NFMA to claim
death benefits but his claim was unheeded.[11] On May 11, 2009, he filed a complaint[12] for
Labor Cases Penned By Justice Del Castillo

death benefits and attorney‘s fees against NFMA, Taiyo Nippon Kisen Co., Ltd.,[13] and
Angelina T. Rivera (petitioners).

Respondent averred that because Simon died during the term of his employment, the
provisions of the collective bargaining agreement (CBA) among All Japan Seamen‘s Union,
Associated Marine Officers‘ and Seamen‘s Union of the Philippines (AMOSUP), and the
International Mariners Management Association of Japan, must be applied in the grant of
death benefits and burial assistance in his favor, being the heir of Simon.[14]

Respondent also stated that the fire drill was conducted at 12:40 a.m. where there was
heavy concentration of fishing boats in the area; and during which the water temperature
was expected to cause hypothermia. He asserted that petitioners were presumed to be at
fault or had acted negligently, unless they could prove that Simon‘s death was due to causes
not legally compensable.[15] He declared that there was no evidence that Simon committed
suicide and maintained that his death was a result of negligence and reckless instruction of
the Master.[16]

On the other hand, petitioners alleged that on December 29/2007, the crew, except those on
duty, were in the mess hall for a birthday celebration. They stated that Simon was invited by
the Master to join the party but he refused.[17]At about 12:40 a.m. of December 30, 2007, the
Master ordered the conduct of a fire and emergency drill. After the drill, a crew meeting was
held where the Master reprimanded Simon for his poor performance. They stated that Simon
left even before the meeting was concluded. Thus, the Master ordered the crew to search for
him. At about 1:25 a.m. to 1:30 a.m. of December 30, 2007, Raymond Ocleasa (Ocleasa)
saw Simon jump overboard.[18]

Additionally, petitioners declared that they exerted efforts to search, locate and rescue
Simon.[19] They alleged that the vessel retraced its course to where he fell. The Master also
informed the Japan Coast Guard about the incident. In response, the Yokohama Coastguard
Patrol conducted a search-and-rescue operation to no avail.[20]

Petitioners also averred that during a search made on the vessel, a note from Simon was
found.[21]

Petitioners argued that respondent had no cause of action against them because Simon‘s
death was a result of his (Simon‘s) deliberate act. They insisted that based on the Philippine
Overseas Employment Administration (POEA) Standard Employment Contract (SEC) and
CBA, a complainant is not entitled to death benefits when the cause of the seaman‘s death
was the latter‘s willful act.[22] Petitioners added that the Master‘s Report, Statement of Facts,
Marine Note of Protest and Investigation Report conclusively proved that Simon committed
suicide. They stated that this conclusion was bolstered by the suicide note found on the
vessel, signed by Simon himself.[23]

Ruling of the Labor Arbiter

On May 31, 2010, the LA dismissed the complaint.[24] The LA held that Simon‘s suicide was
established by the evidence on record. Specifically, the Master‘s Report, as corroborated by
Simon‘s suicide note, showed that he voluntarily jumped overboard. The LA stated that ‖the
signature of the deceased seafarer in said note and in his POEA Contract would show
similarity, if not identity. To say that it was fabricated or concocted will not lessen the
credibility of the suicide note, absent any concrete evidence to the contrary.‖[25]
Labor Cases Penned By Justice Del Castillo

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the LA Decision.[26] Like the LA, the NLRC gave probative
weight to the suicide note, the Master‘s Report, along with other pieces of documentary
evidence adduced, to establish that Simon committed suicide. It held that considering that
the death of the seafarer was due to his willful act, then his heir is not entitled to his death
benefits.

On March 15, 2011, the NLRC denied respondent‘s motion for reconsideration.[27]

Ruling of the Court of Appeals

Respondent then filed a Petition for Certiorari with the CA maintaining that there was no
evidence that Simon committed suicide hence his death is compensable.

On February 22, 2012, the CA rendered the assailed Decision,[28] finding for respondent, the
decretal portion of which reads:

WHEREFORE, the petition for certiorari is GRANTED. The assailed October 28, 2010 Decision and
March 15,2011 Resolution of public respondent are REVERSED and SET ASIDE. A new judgment
is rendered ordering private respondents New Filipino Maritime Agencies, Inc. and/or Taiyo Nippon
Kisen Co., Ltd. and Angelina T. Rivera to pay petitioner Vincent H. Datayan as heir of Simon
Vincent H. Datayan II, the following:

1. US$50,000.00 or its Philippine currency equivalent as death benefits in accordance


with the 2000 POEA Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean[-]Going Vessels;

2. US$1,000.00 or is [sic] Philippine currency equivalent as burial assistance;

3. P50,000.00 as moral damages and P25,000.00 as exemplary damages;

4. Attorney‘s fees equivalent to 10% of the total monetary awards; and

5. Legal interest on the foregoing amounts from the date of filing of the complaint until
fully paid.

SO ORDERED.[29]

The CA explained that it was beyond question that Simon died aboard the vessel and during
the effectivity of his contract, thus, respondent is entitled to receive death benefits arising
therefrom. It found that petitioners‘ evidence failed to prove that Simon committed suicide;
and ruled that the Master who executed and signed the Master‘s Report, Marine Note of
Protest and Statement of Facts failed to give positive testimony ascertaining Simon‘s actual
suicide. It further pointed out that the crew members who signed the Investigation. Report
had no personal knowledge of Simon‘s suicide. It added that Ocleasa, the alleged witness of
the incident, did not sign the report or issue a sworn statement on the matter.

In addition, the CA stated that Simon underwent PEME and was not declared emotionally
unfit. As such, it gave no probative weight to the alleged suicide note of Simon.
Labor Cases Penned By Justice Del Castillo

Finally, the CA reasoned that in computing the death benefits in favor of respondent, the
applicable provisions are those under the POEA SEC not the CBA which covers disability
benefits only; moreover, there was no evidence that Simon was an AMOSUP member.

On July 24,2012, the CA denied petitioners‘ motion for reconsideration.[30] Hence, petitioners
filed the instant Petition arguing that:

1. x x x the Court of Appeals committed serious, reversible error of law in awarding


death benefits in favor of respondent Mr. Vincent H. Datayan II despite the ruling of
this Honorable Court in the case of Reyes vs. Maxim‘s Tea House, that findings of fact
of quasi-judicial bodies like the NLRC, particularly when they coincide with those of
the Labor Arbiter and if supported by substantial evidence, are accorded respect and
even finality by appellate courts.[31]

2. x x x the Court of Appeals committed serious, reversible error of law in holding that
the death of the deceased seafarer was compensable as the defense of suicide was not
established with substantial evidence despite the suicide note made by the deceased
seafarer whose authenticity was affirmed by the Labor Arbiter and the First Division
of the NLRC.[32]

3. x x x the Court of Appeals committed serious, reversible error of law in awarding


damages, attorney‘s fees and legal interest in favor of respondent. The award of
damages and attorney‘s fees has no basis as the denial of respondent‘s claim for death
benefits was done in good faith. Further, the award of legal interests has no basis in
fact and in law.[33]

Petitioners submit that the documentary evidence established that Simon killed himself,
which makes respondent not entitled to death benefits. They contend the LA and the NLRC
found said documents to be authentic and are sufficient proof that the cause of Simon‘s
death was his willful act of committing suicide.

Petitioners posit that the CA erred in holding that the best evidence to prove Simon‘s alleged
suicide was his body, which was never found. They added that it would be unjust to hold that
the fact of death was established but its cause was not shown from the evidence on record.
They further aver that to follow this line of reasoning the fact of death must be established by
clear and convincing evidence. As such, according to petitioners, respondent‘s cause of
action would have accrued only after four years from the time Simon was presumed dead on
December 30, 2007.

Likewise, petitioners state that the Marine Note of Protest, Master‘s Report, Statement of
Facts and Investigation Report were not hearsay evidence because they were official
documents issued by the Master. Also, they point out that these documents were notarized
and were authenticated by an affidavit signed by the Master.

Petitioners also explain that the absence of signature of Ocleasa was addressed in the
Investigation Report. The report indicated that Ocleasa had already disembarked when the
investigation was conducted; he, nonetheless, reported to the local agents and narrated
what he witnessed on the vessel.

Petitioners emphasize the finding of the LA that the signatures in the alleged suicide note
and in the POEA contract were the same, if not identical.
Labor Cases Penned By Justice Del Castillo

Lastly, petitioners allege that damages were improperly awarded in favor of respondent
considering that necessary procedures were undertaken to locate Simon. They also state
that investigation was conducted to gather information from the crew regarding the
circumstances surrounding his death.

For his part, respondent reiterates that there was no evidence that Simon committed suicide
and that his death was a result of the Master‘s negligence. He insists that the alleged suicide
note could not have been written by Simon considering the proximity of events, that is, at
12:40 a.m., the fire drill was conducted and at 1:25 a.m., Simon was said to have jumped
overboard. He asserts that he is entitled to compensation for the death of his son because
he had established that he died during the term of his employment contract with petitioners.

Issue

Is the CA correct in finding that the NLRC committed grave abuse of discretion in
denying respondent‘s claim for death benefits?
Our Ruling

In labor cases, the review of the Court under Rule 45 of the Rules of Court involves
the determination of the legal correctness of the CA Decision. This means that the
Court must ascertain whether the CA properly determined the presence or absence
of grave abuse of discretion in the NLRC Decision. Simply put, ―in testing for legal
correctness, the Court views the CA Decision in the same context that the petition
for certiorari it ruled upon was presented to it.‖[34] It entails a limited review of the acts
of the NLRC, of whether it committed errors of jurisdiction. It does not cover the
issue of whether the NLRC committed any error of judgment, unless there is a
showing that its findings and conclusion were arbitrarily arrived at or were not based
on substantial evidence.[35]
In this case, both the LA and the NLRC ruled that respondent‘s claim for death benefits was
without basis. They agreed that Simon committed suicide, as principally established by the
Master‘s Report and Simon‘s suicide note. The CA ruled otherwise. It gave no weight to the
suicide note because Simon underwent the PEME and was declared fit to work. The CA also
refused to accord probative value to the Master‘s Report, among others, because the Master
gave no positive testimony on Simon‘s actual suicide.

To determine whether the CA correctly found that the NLRC gravely abused its discretion in
finding that there is substantial evidence – or such relevant evidence a reasonable mind
might accept as adequate to support a conclusion[36] – that Simon committed suicide, it
becomes imperative to resolve whether the parties discharged their respective burdens of
proof and the corresponding shift in the burden of evidence in this case.[37]

As claimant for death benefits, respondent has the burden to prove by substantial evidence
that his son‘s death is work-related and that it transpired during the term of his employment
contract. In this respect, respondent has discharged his burden. It is beyond question that
Simon died during the term of his contract. The next question is whether Simon‘s death was
due to his deliberate act. If such is the case, then respondent is not entitled to death
benefits. That Simon‘s death was a result of his willful act is a matter of defense. [38] Thus,
petitioners have the burden to prove this circumstance by substantial evidence.
Labor Cases Penned By Justice Del Castillo

The Court finds that petitioners discharged their burden to prove that Simon committed
suicide. The Master‘s Report[39] clearly described the situation on the vessel prior to, during
and after the time that Simon went overboard, to wit:

x x x WE CONDUCTED EMERGENCY FIRE DRILL AT NIGHT TIME 0040LT 30th DECEMBER


2007/ 1540TC 29thDECEMBER 2007. AFTER THE DRILL AT ABOUT 0055LT WE
CONDUCTED MEETING AT CREW MESSHALL FOR MASTER‘S EVALUATION AND AT
THE SAME TIME SAFETY MEETING DURING EVALUATION, I STRONGLY MENTIONED
ABOUT HIS (SIMON’S) BEHAVIOUR ON BOARD THE SHIP TO MOTIVATE HIM AND TO
IMPROVE HIS PERFORMANCE SINCE HE IS A DECK CADET AND ABOUT TO BE
PROMOTED AS ORDINARY SEAMAN x x x

x x x AFTER THE MEETING [I] OBSERVED THAT HE WAS NOT AROUND IN THE
MESSHALL. KNOWING THAT HE WAS SLIGHTED I ORDER TO LOOK FOR HIM IN WHICH
THE CREW COMPLIED. ONE OF THE CREW WIPER RAYMOND C. OCLEASA xxx SAW
DECK CADET SIMON VINCENT H. DATAYAN II WAS STANDING [SIC] ON THE
FAIRLEAD PORT QUARTER AND AT THAT POINT HE (WIPER) SAW TORCH LIGHT PASS
HIS (DECK CADET) FACE AND CAUGHT HIS (DECK CADET) ATTENTION THEN WHEN
HE ATTEMPTED TO JUMP, HE (WIPER) CALLED HIS NAME BUT HE (DECK CADET)
JUMPED OVERBOARD. THEN WIPER WENT TO SHIP‘S OFFICE AND DIAL 0 FOR PUBLIC
ADDRESS AND SHOUT MANOVERBOARD PORTSIDE. BUT THAT ANNOUNCEMENT WAS
NOT CLEAR ENOUGH. SO WHEN I REACH THE BRIDGE I ASKED SECOND OFFICER
WHICH SIDE HE FELL OVERBOARD BUT SECOND OFFICER ALSO NOT SURE [SIC]
WHICH SIDE HE FELL. IN ORDER TO RETURN I ORDERED HARD STARBOARD TO
MANEUVER WILLIAMSON TURN AND RETURN TO RECIPROCAL COURSE AND DROP
LIFEBOUY WITH BOUYANT SMOKE SIGNAL AND SELF IGNITING LIGHT. TURN ON ALL
DECK LIGHTS AND POSTED LOOKOUTS x x x[40]

At the same time, the Statement of Facts[41] submitted by petitioners indicated that after the
vessel retraced its course to where Simon fell, the incident was reported to the Japan Coast
Guard and to petitioners‘ local agents in the Philippines. The Yokohama Coastguard Patrol
also conducted search-and-rescue but to no avail.

Moreover, in their Investigation Report,[42] the crew described Simon as a ―very silent person,
bright student, [f]ast learner but very sensitive person and will not talk unless you x x x
question him. No problems with anybody since he embarked the vessel [sic].‖

The Master Report and Statement of Facts were executed by the Ship Master Arthur
Evangelista, who also subscribed and swore to his statements before a Notary Public.[43]

In Unicol Management Services, Inc. v. Malipot,[44] the Court considered the Master‘s Report
and the Investigation Report, among others, in ruling that the seaman‘s beneficiaries were
not entitled to death benefits. It noted that these documents completely detailed the events
that transpired prior to and the circumstances leading to the discovery of his death by
suicide.

Similarly, in the instant case, the Master‘s Report as well as the Statement of Facts
described the events that occurred prior to, during and after the incident when Simon went
overboard. In particular, Simon declined the Master‘s invitation for him to join the party;
thereafter, the Master reprimanded him because he performed poorly in the drill; Simon left
the meeting and was later seen to jump overboard by Ocleasa. Added to this narration is the
statement of the crew in the Investigation Report that Simon was a ―very sensitive‖ person.
Labor Cases Penned By Justice Del Castillo

Also, the Investigation Report addressed the question on why Ocleasa did not sign said
report. As stated therein, he already disembarked from the vessel when the report was
executed and was investigated at the (local) office, where he stated that he saw Simon jump
overboard.[45]

More importantly, the fact that Simon committed suicide is bolstered by the suicide note that
he executed. His note[46] reads:

0100LT Dec. 30, 2007

Dear loved ones & shipmates,

I cannot take it anymore. Sorry for letting you pay for my shortcomings. I ask you to let me end my
life. I cannot bear the shame of letting you all endure all what is due me. But I happily end my life
because I know it is the only [way] I can repay you [sic]. You suffered for not letting myself obey my
Master for a drink [sic], of which, he commenced a drill w/out anyones [sic] idea[.]

Sayonara & God bless.

w/ you always.
Simon
The suicide note is informative as to why Simon committed suicide. He declined to join the
party held prior to the drill and was reprimanded for his poor performance in said drill. It can,
thus, be inferred from the note that he blamed himself for the difficulties he assumed to have
caused his colleagues.

As such, to refute petitioners‘ position that Simon committed suicide, the burden of evidence
shifts to respondent. Nonetheless, respondent failed to discharge his burden. Respondent
relies on the alleged negligence of the Master in ordering the conduct of the drill and argues
that Simon could not have written a suicide note because of the proximity of the time when
the drill was conducted and the time when Simon jumped overboard. Respondent presented
no proof that said suicide note was fabricated, as no specimen of Simon‘s handwriting was
submitted to prove that it was not written by him.

On the contrary, the Court shares the observation of the LA that the signature [47] in the
suicide note and the signature[48] of Simon in his employment contract appear to be the
same.

Hence, by substantial evidence, there are adequate reasons and proof that Simon
committed suicide.

Under Section 20(D) of the POEA SEC,[49] no compensation or benefits shall arise in case of
death of a seafarer resulting from his willful act, provided that the employer could prove that
such death is attributable to the seafarer.

Although Simon died during the term of his contract with petitioners, still, respondent is not
entitled to receive benefits arising from his death. As clearly established, Simon died by his
willful act of committing suicide and death under that circumstance is not compensable
under the POEA SEC.
Labor Cases Penned By Justice Del Castillo

In consideration of the foregoing, the Court finds that the CA erred in setting aside the NLRC
Decision which affirmed the LA Decision dismissing the complaint for lack of merit.

WHEREFORE, the Petition is GRANTED. The February 22, 2012 Decision and July 24,
2012 Resolution of the Court of Appeals in CA-G.R. SP No. 119775
are REVERSED and SET ASIDE. The October 28, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 07-000536-10 is REINSTATED and AFFIRMED.
Accordingly, the complaint in NLRC-NCR OFW Case No. (M)05-07052-09 is DISMISSED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

09 NOV 2015 | SUBJECT | LABOR AND


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

Edilberto P. Etom, Jr. Vs. Aroma Lodging


House; G.R. No. 192955; November 9, 2015
DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari[1] is the January 21, 2010 Decision[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 110901. The CA granted the Petition
for Certiorari[3] filed therewith and set aside the April 30, 2009 Decision[4] and June 30, 2009
Resolution[5] of the National Labor Relations Commission (NLRC) in NLRC LAC No. 09-
003303-08 which affirmed with modification the August 20, 2008 Decision[6] of Labor Arbiter
(LA) Eduardo G. Magno in NLRC NCR No. 04-05453-08 and found Edilberto Etom
(petitioner) entitled to unpaid wages, 13th month pay and holiday pay. Also assailed is the
July 2, 2010 CA Resolution[7] which denied petitioner‘s motion for reconsideration.

Factual Antecedents

This case stemmed from a complaint[8] dated April 15, 2008 filed by petitioner against Aroma
Lodging House (respondent) for illegal dismissal and money claims. Petitioner alleged that
respondent, a business engaged in providing affordable lodging,[9] employed him as roomboy
in 1997 with a monthly salary of P2,500.00. He averred that his working hours were from
5:00 a.m. to 11:00 p.m. from Monday to Saturday, including holidays. His tasks included
cleaning the lodging house and washing towels and bedsheets.[10]

Petitioner claimed that on February 4, 2008, respondent refused to allow him to report for
work. Petitioner argued that respondent did not inform him of any violation that would
warrant his dismissal. He also claimed that he was not given an opportunity to explain and
answer any imputation against him by his employer.[11]

On the other hand, respondent asserted that it employed petitioner as roomboy in


2000.[12] He was paid salary above the required minimum wage, holiday pay, 13th month pay
and overtime pay. Respondent also stated that it provided petitioner with free meals, allowed
him to receive ―tips‖ from customers, and sell bottles left by customers in the lodge. It also
gave him commission on certain occasions.[13]

Respondent averred that despite its beneficence, petitioner still showed an adverse attitude
in work. In particular, he created trouble within the workplace, stole items from customers
and was even charged with rape in 2003.[14]Petitioner also figured in a fistfight with another
roomboy, Reynaldo Baccus, whom he tried to stab with a knife on September 2, 2006. He
likewise had an altercation with Arnold Sansona (Sansona), a checker in the lodge, who
reprimanded him for watching television during working hours. He also had a quarrel with
another co-worker, Jess Abuca (Abuca). On separate occasions, while purportedly armed
with a knife, petitioner chased Sansona and Abuca.[15]
Labor Cases Penned By Justice Del Castillo

Respondent averred that it served upon petitioner a memorandum[16] requiring him to explain
why he chased a co-employee with a knife. However, respondent refused to receive said
memorandum. Taking into consideration the safety of its employees and customers, it
terminated petitioner for serious misconduct.[17]

Ruling of the Labor Arbiter

On August 20, 2008, the LA rendered a Decision[18] finding petitioner to have been legally
dismissed. The LA, however, ordered respondent to pay petitioner punitive damages
amounting to P10,000.00 for non-compliance with the termination notice requirement, salary
differential computed at P199,482.80, holiday pay amounting to P3,107.50 and 13th month
pay of P7,150.00.

Respondent appealed to the NLRC arguing that petitioner was not underpaid.[19] It stated that
in a ―Sama-Samang Sinumpaang Salaysay―[20] – which was submitted in another labor case,
– petitioner and another employee averred that they were regular employees of respondent
since 2000 and that they were receiving wages beyond the minimum required by
law.[21] Respondent also claimed that it furnished petitioner with a copy of notice to explain
and notice of termination but the latter refused to receive them.[22]

Ruling of the National Labor Relations Commission

In its April 30, 2009 Decision,[23] the NLRC affirmed the ruling of the LA but deleted the award
of punitive damages.

The NLRC concurred with the LA ruling that petitioner was underpaid considering that he
was receiving only P2,500.00 as monthly salary. It decreed that petitioner was entitled to
receive salary differential amounting to P166,080.38 for three years computed from February
20, 2005 to February 20, 2008 less 10% thereof for the facilities provided by respondent.

On June 30, 2009, the NLRC denied respondent‘s motion for reconsideration.[24]

Undaunted, respondent filed with the CA a Petition for Certiorari insisting that petitioner was
not entitled to salary differential, 13th month pay and holiday pay because he admitted in an
affidavit that he had been receiving wages and other benefits in accordance with law.[25] It
also asseverated that it was exempt from Minimum Wage Law since it had no more than 10
employees.[26]

For his part, petitioner argued that the Petition for Certiorari should not be entertained for
late filing of the motion for reconsideration of the NLRC Decision. He contended that
respondent received the NLRC Decision on May 13, 2009 but filed a motion for
reconsideration only on May 26, 2009. Thus, he maintained that such filing was three days
late.[27]

Ruling of the Court of Appeals

On January 21, 2010, the CA rendered the assailed Decision[28] granting the Petition
for Certiorari, the decretal portion of which reads:
Labor Cases Penned By Justice Del Castillo

FOR THE STATED REASONS, the petition is GRANTED and the assailed decisions, dated April
30, 2009 and June 30, 2009 of the National Labor Relations Commission (Second Division), awarding
private respondent Edilberto Etom of unpaid wages, 13th month pay and holiday pay are hereby
REVERSED and SETASIDE.xxx

SO ORDERED.[29]

The CA held that respondent timely filed a motion for reconsideration of the NLRC Decision.
It added that ―if the motion for reconsideration was filed out of time, the NLRC would have
dismissed it outright, instead of resolving it on its merit.‖[30]

Moreover, the CA explained that for having executed an earlier notarized affidavit stating
that he received wages above the required minimum salary, petitioner could not
subsequently claim that he was underpaid by respondent.[31] It also declared that there is no
factual basis to support the grant of 13th month pay and holiday pay in favor of petitioner.[32]

On July 2, 2010, the CA denied petitioner‘s motion for reconsideration.[33]

Hence, petitioner filed the instant Petition raising the following assignment of errors:

1. THE HONORABLE COURT OF APPEALS COMMITTED A VERY GRAVE


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

2. THE HONORABLE COURT OF APPEALS COMMITTED A VERY GRAVE


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

3. THE COURT OF APPEALS COMMITTED A VERY GRAVE ERROR WHEN


HEREIN PETITIONER WAS NOT GIVEN THE OPPORTUNITY TO FILE A
REPLY AND SUCH OTHER RESPONSIVE PLEADING TO THE PETITION FOR
CERTIORARI, PURSUANT TO SECTION 6 OF RULE 65, AND/OR
MEMORANDUM PURSUANT TO SECTION 8 THEREOF.[34]

Petitioner reiterates that respondent‘s motion for reconsideration of the NLRC Decision was
filed beyond the reglementary period.[35] He also maintains that he was underpaid, and was
not given 13th month pay and holiday pay by respondent.[36]

In addition, petitioner alleges that his affidavit dated March 19, 2004 was executed during
the pendency of a criminal case against him. He contends that respondent pressured him to
sign it.[37] He likewise avers that he is illiterate and does not understand the implication of said
affidavit.[38] He further explains that he was unable to disclaim the voluntary execution and
authenticity of the affidavit because he was not given the chance to file a memorandum
where he could have discussed all the issues in the Petition for Certiorari.[39]
Labor Cases Penned By Justice Del Castillo

For its part, respondent reiterates the timely filing of its motion for reconsideration before the
NLRC. It also agrees with the CA ruling giving evidentiary value to petitioner‘s affidavit.[40]

Our Ruling

As a rule, the perfection of appeal within the period required by law is mandatory and
jurisdictional. Failure to appeal within such period results in the assailed decision
becoming final and executory. As regards a motion for reconsideration of a decision
of the NLRC, the same must be filed within 10 days from the receipt of the assailed
decision. It must, nevertheless, be emphasized that the NLRC is not bound by the
technical rules of procedure. Thus, in deciding labor cases, the NLRC is allowed to
liberally apply its rules.[41]
In this case, petitioner alleges that the subject motion for reconsideration was filed beyond
the 10-day reglementary period. However, we note the explanation made by respondent for
the seeming late filing of its motion to wit:

x x x [I]t is public knowledge that May 23, 2009 happens to be a Saturday, hence, under established
rules and relevant jurisprudence, the filing of petitioners‘ (herein respondent) Motion for
Reconsideration should be on May 25, 2009, the next working day after May 23, 2009. On May 25,
2009, Petitioners filed their Motion for Reconsideration before the public respondent, however,
through a glitch in the docket machine date and time puncher of the NLRC at that date and hour, the
petitioners‘ Motion for Reconsideration date of filing was erroneously marked and stamped as May
26, 2009 1:47 A.M. Petitioners only managed to take notice of the mistake in the date and time of the
docket of their Motion for Reconsideration on the following day, May 26, 2009, the real May 26,
2009. Petitioners thence quickly went to the NLRC Docket Section to report the mistake and x x x
was [sic] told by the Docket Section Personnel that they have already corrected the erroneous date and
time of petitioners‘ docketed Motion for Reconsideration to the x x x correct May 25, 2009, 1:47 P.M.
and have forwarded the Motion for Reconsideration of the [petitioners to the NLRC x x x Indeed, it
would be plainly absurd for a government office docket section like that of the public respondent
NLRC to be open for business at such unholy hour of 1:47 A.M. x x x[42]

Based on the foregoing explanation, we are convinced that respondent timely filed its motion
for reconsideration of the NLRC Decision. In fact, the NLRC took cognizance of it and
decided the motion on the merit.

In any event, we held in Opinaldo v. Ravina[43] that the NLRC may liberally apply its rules and
decide a motion for reconsideration on the merits. We upheld the liberal application by the
NLRC of its technical rules to resolve the issues on the merits because ―a full resolution of
the case on the merits is the more palpable explanation for the liberal application of its
rules.‖[44]

Petitioner also argues that he failed to disclaim the voluntary execution of the affidavit –
where he admitted to have been paid wages beyond the minimum required by law –
because he was not given the opportunity to file a memorandum.

His contention is unmeritorious.

Section 6,[45] Rule 65 of the Rules of Court provides that before the court gives due course to
a petition for certiorari, it may require the respondent to file a comment to the petition.
Afterwards, the court may require the filing of a reply and such pleadings as it may deem
necessary. In turn, Section 8[46] of Rule 65 states that after the comment or other pleadings
Labor Cases Penned By Justice Del Castillo

are filed or the period for their filing has expired, the court may require the parties to file
memoranda.

It is thus clear that the filing of a reply and other subsequent pleading, as well as
memoranda, is subject to the sound judgment of the court. ―The word ‗may‘ when used in a
statute is permissive only and operates to confer discretion x x x.‖ [47] In this case, the CA, in
the exercise of its judgment, may or may not require the filing of any pleading and submit the
case for resolution, after the petition and the comment thereto had been filed.

Anent the substantive issue raised by petitioner, the power of the Court to review a CA
Decision in labor cases is limited. Specifically, in a petition for review under Rule 45 of the
Rules of Court, the Court has to resolve whether the CA properly determined the presence
of grave abuse of discretion on the part of the NLRC in rendering its Decision, and not
whether the NLRC Decision on the merits was correct. However, while the strict inquiry on
the correctness of evaluation of evidence is not required in a certiorari proceeding, it is still
necessary to determine that the conclusions of labor tribunals were supported by substantial
evidence. This is because a decision unsupported by substantial evidence is a judgment
rendered with grave abuse of discretion.[48]

In addition, as a rule, once the employee has asserted with particularity in his position paper
that his employer failed to pay his benefits, it becomes incumbent upon the employer to
prove payment of the employee‘s money claims. In fine, the burden is on the employer to
prove payment, rather than on the employee to establish non-payment.[49]

Both the LA and the NLRC held that respondent did not pay petitioner the required minimum
wage, holiday pay and 13th month pay. The CA, however, overturned the factual findings of
these labor tribunals. Thus, we deem it necessary to review the facts on record.

While a notarized document is presumed to be regular such presumption is not absolute and
may be overcome by clear and convincing evidence to the contrary. The fact that a
document is notarized is not a guarantee of the validity of its contents.[50]

Here, petitioner is an unlettered employee who may not have understood the full import of
his statements in the affidavit. Notably, petitioner, along with a co-worker did not state the
specific amount of what they referred as salary above the minimum required by law. Their
statement only reads as follows:

Na kami ay namamasukan bilang mga ‗roomboy‘ sa naturang Aroma Lodge magmula pa noong taong
2000 at bilang mga regular na mga empleyado nito, kami ay nakakatangap ng pasueldo na lagpas sa
‗minimum wage‘ na takda ng batas, bukod pa sa libreng tirahan (stay-in), pagkain, [paggamit] ng ilaw
at tubig, at mga ‗tips‘ at komisyon sa mga parokyano ng Aroma Lodge.[51]

As found by the LA, respondent did not present substantial evidence that it paid the required
minimum wage, 13thmonth pay and holiday pay in favor of petitioner.[52] Respondent‘s mere
reliance on the foregoing affidavit is misplaced because the requirement of established
jurisprudence is for the employer to prove payment, and not merely deny the employee‘s
accusation of non-payment on the basis of the latter‘s own declaration.

In conclusion, we find that the CA erred in ascribing grave abuse of discretion on the part of
the NLRC in awarding salary differential, 13th month pay and holiday pay in favor of
petitioner.
Labor Cases Penned By Justice Del Castillo

WHEREFORE, the Petition is GRANTED. The January 21, 2010 Decision and July 2, 2010
Resolution of the Court of Appeals in CA-G.R. SP No. 110901 are REVERSED and SET
ASIDE. Accordingly, the April 30, 2009 Decision and June 30, 2009 Resolution of the
National Labor Relations Commission in NLRC LAC No. 09-003303-08 are REINSTATED
and AFFIRMED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

21 SEP 2015 | JURISPRUDENCE | PONENTE | JUSTICE


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

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


A/C Vs. Rommel Rene O. Jaleco; G.R. No.
201945; September 21, 2015
DECISION

DEL CASTILLO, J.:

Assailed in this Petition for Review on Certiorari[1] are: 1) the March 13, 2012 Decision[2] of the
Court of Appeals (CA) granting the Amended and/or Supplemental Petition for Certiorari in
CA-G.R. SP No. 118688; and 2) the CA‘s May 21, 2012 Resolution[3] denying reconsideration
of its assailed Decision.

Factual Antecedents

On December 4, 2006, respondent Rommel Rene O. Jaleco was hired by petitioner Maersk-
Filipinas Crewing, Inc. (Maersk), on behalf of its foreign principal and co-petitioner herein,
A.P. Moller A/S (Moller), as Able Bodied Seaman on board the vessel ―M/T Else
Maersk.‖[4] Respondent boarded ―M/T Else Maersk‖ on January 16, 2007 and commenced
his work.

Sometime in February 2007, respondent complained of intermittent pain on the left buttock
radiating to the. lower back and left groin.[5] When examined in Singapore on April 13, 2007,
his lumbosacral spine x-ray generated normal results but he was diagnosed as having
―suspected prolapsed intervertebral disc.‖ Nonetheless, he was declared fit to sail.[6]

On April 29, 2007, respondent was once more examined in Dubai, United Arab Emirates,
where the doctor diagnosed him with ―acute lumbago with left-sided sciatica r/o disc
prolapsed.‖[7] He was advised to obtain an MRI[8]scan of the lumbar spine, undergo
neurosurgical review, and to avoid lifting heavy objects for one week. Moreover, he was
declared unfit for duty.[9]

Respondent was repatriated on May 1, 2007 and was immediately referred to the company-
designated physician, Dr. Natalio Alegre II (Dr. Alegre), who examined him on May 2 and 3,
2007. He found respondent to be suffering from ―paralumbar spasm and limitation of
movement due to pain. Straight leg raise is normal and sensation intact.‖ [10] He prescribed
medication and physical therapy at three sessions per week.[11]

On May 17, 2007, respondent was again examined, and found to still have ―left buttock pain
radiating to his lower back and lateral side of his left thigh which is most severe at 8/10 on a
pain scale x x x (which) is slightly relieved with intake of his pain medications.‖ MRI scan
was recommended[12] as well as epidural steroid injection and further physical therapy.
Labor Cases Penned By Justice Del Castillo

When respondent was examined on June 4, 2007, Dr. Alegre found that he ―still has low
back pain radiating to his left lower extremity even with physical therapy. This is associated
with numbness on the lateral aspect of his left leg and paralumbar spasm is still
present.‖[13] Thus, further medication, physical therapy and epidural steroid injection were
recommended.

Respondent was confined at the St. Luke‘s Medical Center from June 13 to 19, 2007 and
from July 24 to 27, 2007.14 On June 16, 2007,[14] he underwent epidural steroid
injection,[15] as well as electromyogram and nerve conduction velocity (EMG-NCV) testing.[16]

Respondent returned on June 20, 2007, complaining of headache and low back pain. He
was diagnosed with stage 1 hypertension and given medication.[17]

On June 29, 2007, respondent was evaluated by a spine surgeon who recommended
provocative discography to find out whether he will need a disc replacement.[18]

In his July 9, 2007 Progress Report,[19] Dr. Alegre noted the evaluation of respondent by a
spine surgeon who declared that the EMG-NCV tests returned normal[20] and ―beginning
L5S1 disc herniation.‖ Dr. Alegre further stated:

The low back pain intensity is not commensurate with the alleged symptoms of back pain so that a
Provocative Discography is recommended and the schedule will follow as the operating room right
now is fully book [sic].

Likewise an incidental note of a probable small cyst in the left kidney was noted. Since this is only an
incidental finding, we would need your approval to evaluate Ms.[21]

On July 26, 2007, respondent underwent Provocative Discography[22] at the St. Luke‘s
Medical Center which generated the following result:

Finding: There is midposterior Grade 1 annular tear with contrast medium leakage more to the left.

CONCLUSION: ELICITED AREAS ARE NOT CONCORDANT WITH USUAL PAIN BASED ON
PATIENT‘S EXPERIENCE.[23]

On July 27, 2007, Dr. Alegre issued another Progress Report[24] stating essentially as follows:

Objective Findings:

Tenderness over the loose paralumbar muscles.


Truncal mobility restricted.
Small Cyst in the left kidney.

Assessment:

Beginning Disk Dessication, L5S1


Small Cyst, Left
Labor Cases Penned By Justice Del Castillo

Urology evaluated the small kidney cyst and opined that it will be observed as it is small and no
impairment of kidney function is noted.

Provocative Discography was done on 26 July 2007 and showed leakage of contrast material at the
midposterior aspect of the disk more towards the left thru a mild posterior annular tear. It was opined
by Interventional Radiology that the pain complained of is not commensurate with the Discography.

Plans:

As the pain is not commensurate with the discography, personality reasons should be evaluated to rule
out malingering is for your approval the form of [sic] Minnesota Multiphasic Personality Test.
Approximate cost is Phpl0,000.00.[25]

On August 15, 2007, respondent took the Minnesota Multiphasic Personality Inventory – 2
Test[26] (MMPI-2) at the St. Luke‘s Medical Center. The results of the test are contained in Dr.
Alegre‘s August 30,2007 Progress Report,[27]thus:

The MMPI-2 Test provides a number of validity indices that are designed to provide an assessment of
factors that could distort the results of testing. Such factors could include failure to complete test
items properly, carelessness, reading difficulties, confusion, exaggeration, malingering or
defensiveness.

During the interview phase, he was highly defensive finishing the test in more than 5 hours which is
normally completed within P/2 hours. He expressed doubts as to whether his injury or back pain will
be cured doubting about his capacity and fitness to return to work. He already approached an attorney
for disability claims and he is expecting a large sum of money from his claim. According to him, he
was informed and-encouraged by the ship‘s ―Master‖ on board regarding disability benefits.

The test showed that he tried to create a favorable impression of himself by not being honest in
responding to the items. He reported a number of vague physical complaints and the development of
physical problems occur when he is under stress. The medical history is characterized by excessive
and vague physical complaints, weakness and pain. He tends to rely on hysterical defenses or
exaggeration in the face of conflict. The test also showed Mr. Jaleco converting psychological conflict
into physical complaints.

Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and
exaggerating hi [sic] symptoms. The essential feature is the intentional production of exaggerated
physical symptoms motivated by external incentives – obtaining financial compensation and avoiding
work.[28]

On September 4, 2007, respondent underwent another check-up. The results thereof are
contained in Dr. Alegre‘s Progress Report[29] of even date, thus:

Subjective Complaints:
Complained of persistence of back pains

Objective Findings:

1. Slightly spastic paraspinal muscles


Labor Cases Penned By Justice Del Castillo

2. Truncal mobility functional

3. Straight leg raising test normal

4. Personality test (MMPI) indicates malingering and exaggeration of symptoms

Assessment:
Mild Disc Dessication, L5S1

Plans:

Physical therapy

If a disability is to be assessed now, a disability grade of 11 [would be obtained] based on the POEA
Contract, Chest-Trunk-Spine #6 – Slight Rigidity or 1/3 loss of motion or lifting power of the trunk.[30]

On February 8, 2008, respondent underwent physical examination by an independent


physician, Dr. Ramon Santos-Ocampo (Dr. Santos-Ocampo), at the Department of
Radiology of the Makati Medical Center. Dr. Santos-Ocampo‘s Clinical Abstract[31] of the
examination reads as follows:

Physical Examination:

There is no tenderness elicited when pressing on the left buttock. Slight tenderness and radiating pain
was noted when the L5-S1 facet joints were pressed.

Assessment;
Sacro-iliitis, left and Bilateral facet joint arthropathy, L5-S1

Plan:

Local anesthesia injection into the left sacro-iliac joint to determine significance of the sacro-ilitis. If
there is a slight improvement or complete improvement, then the sacro-iliac joint will be injected with
steroids and long-acting local anesthesia. Then bilateral facet joint injections at L4-5 and L5-S1 will
be performed on the same day.[32]

On April 28, 2008, respondent consulted another independent physician, Dr. Alan Leonardo
R. Raymundo (Dr. Raymundo) – an orthopedic surgeon of the Philippine Orthopedic Institute
– who issued a Medical Report[33] which states:

This 37-year-old seaman was repatriated here last May 2007, because of low back pain after carrying
a heavy load while on board a ship. He was first seen at St. Luke‘s Medical Center when he was
repatriated x x x and has undergone an epidural shot for his low back pain. His MRI plates show no
significant disc protrusion that might be impinging on the nerve and his EMG NCV results were also
normal. However he continuous [sic] to have low back pain whenever he would walk for long
distances and whenever he would sit for long periods. He claims that his pain is actually in the area of
the sacroiliac joint radiating down the buttock area and posterior to the thigh when this would occur.
Labor Cases Penned By Justice Del Castillo

He was referred to Dr. Ramon Santos Ocampo to look for the pain generator and injection of the Facet
Joint and the Sacroiliac Joint of the Lumbar Spine were done. After the procedure the pain was
relieved, however after three weeks the pain recurred.

Because of the recurrence of the pain and considering the nature of his job as a seaman, I told him that
it would be impossible for him to return to his previous work duties. I would therefore declare him not
fit for duty.[34]

On October 8, 2009, respondent underwent a second MRI of the lumbar spine at the Makati
Medical Center. The results are as follows:

Examination of the sagittal imaging demonstrates normal alignment of the vertebral bodies. The
lumbar curvature is maintained. The conus medullaris is seen to be normal and ends at T12-L1 level.
No abnormal signal is seen within the conus.

Focal T1W/T2W hyperintensity is noted in the anterosuperior corner of the L3 vertebral body. There
is also a Tl W/T2W hyperintense focus in the L5 vertebral body. Examination of the intervertebral
disc reveals no signal abnormality. No paraspinal or intraspinal mass noted.

T12-L1: No evidence of disc bulge or herniation.


LI-2: No evidence of disc bulge or herniation.
L2-3: No evidence of disc bulge or herniation.
L3-4: No evidence of disc bulge or herniation.
L4-5: No evidence of disc bulge or herniation.
L5-S1: Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root.

A 1.0 cm. cyst is noted in the superior pole of the left kidney.

IMPRESSION:

1. Degenerative osteitis, L3 vertebral body


2. L5 vertebral body hemangioma
3. Focal left of central disc protrusion mildly abutting the ipsilateral traversing nerve root, L5-S1.
4. Above findings are generally unchanged from previous study.
5. Left renal cyst[35]

On October 12, 2009, respondent was again examined by Dr. Raymundo, who thereafter
issued another Medical Report[36] stating as follows:

The patient is here today with his new MRI results showing a disk protrusion at the level of L5-S1
with [sic] mildly abutting the ipsilateral traversing nerve root. I have already given this patient a rating
of grade 8 with a moderate rigidity or % loss of motion or lifting power of the trunk.

If I were to re-evaluate this, the functional capacity of the patient is actually more severe than this
grading. However, the next grading which is grade 6 indicates or points to a fracture of the dorsal or
lumbar spine which the patient does not have. However, the severity of his symptom is almost equal
to a grade 6 with severe or total rigidity or total loss of lifting power of heavy objects.

In my opinion, despite the absence of a fracture of the dorsal lumbar spine, I will still give this patient
a rating of grade 6 in terms of pain and affectation of the spinal cord.[37]
Labor Cases Penned By Justice Del Castillo

No further attempt to secure the opinion of a third physician was made by the parties.
Instead, respondent filed a complaint for illegal dismissal, nonpayment of salaries/wages and
other benefits, disability claims, medical expenses, damages, and attorney‘s fees against
petitioners and Maersk General Manager Jerome P. delos Angeles (delos Angeles) before
the National Labor Relations Commission (NLRC) docketed as NLRC-NCR Case No. (M)
12-17087-08.

In his Position Paper,[38] respondent claimed that in February 2007, while performing the
difficult task of ship-to-ship mooring on deck – which involved lifting and pulling heavy wires
and ropes thus placing pressure and stress on the back and spine – something in his spine
snapped and he felt terrible lower back pain such mat he could not stand erect or carry
anything for more than a month. He averred that despite his protestations and appeals for
medical intervention, petitioners – in bad faith and acting with inexcusable negligence –
failed and refused to give him immediate medical attention. He was forced to continue
working in spite of his injury and the excruciating pain it caused him. For this reason, his
injury and pain were aggravated. It was only after two months from his injury – or in April
2007 – that he was medically attended to. Despite post-repatriation treatment and
medication by the company-designated physician, his injury persisted and incapacitated him
from returning to work. After consulting an independent physician, he was declared unfit for
sea duty and was given a Grade 6 disability raiting. For petitioners‘ acts and refusal to
compensate him, he suffered injury for which he should be indemnified. Thus, he prayed that
petitioners be declared liable for malice or inexcusable negligence which caused the
aggravation of his injury, and that they be ordered to pay him a) disability benefits
corresponding to a Grade 6 rating, b) reimbursement for his medical and other expenses, c)
compensation for permanent injury based on the Consolidated Workers‘ Compensation Act
of Denmark, d) P1 million actual damages, e) P1 million moral damages, f) P1 million
exemplary damages, g) 20% attorney‘s fees, and h) costs of suit.

In their joint Position Paper,[39] petitioners and delos Angeles sought dismissal of the
complaint, arguing that respondent is not entitled to a Grade 6 disability rating, but only
Grade 11 as determined by the company-designated physician. They argued that it has
been shown that respondent is merely malingering, feigning, and exaggerating his pain; that
assuming arguendo that a different opinion was issued by an independent physician, the
opinion of a third doctor should have been obtained by the parties pursuant to the provisions
of the POEA[40] Standard Employment Contract.[41] Since no third opinion was obtained, then
the company-designated physician‘s opinion prevails over the respondent‘s doctor‘s findings.
They also contended that respondent is not entitled to reimbursement of his medical and
other expenses, which were incurred after the company-designated physician declared his
findings on September 4, 2007. Moreover, respondent is not entitled to his claim for
damages, attorney‘s fees and costs, for being unfounded and in the absence of malice, bad
faith, or negligence on their part.

In his Reply/Comment,[42] respondent insisted that he is entitled to disability benefits based


on his physician‘s recommendation; that the company-designated physician‘s treatment was
inadequate, and his findings inaccurate and based on fraud and malice, which thus
prompted him to secure the opinion of an independent doctor; and that for these reasons, he
should be paid all his claims as prayed for in his Position Paper.

In their Reply[43] to respondent‘s Position Paper, petitioners argued that there is no basis for
the accusation of refusal or failure to give respondent immediate and proper medical
attention after his injury, as he failed to show convincingly that indeed he suffered his injuries
sometime in February 2007. His only basis for such claim – a supposed ―Notification of
Accident at Work‖ marked Annex ―D‖ of his Position Paper[44] — is self-serving and hearsay,
Labor Cases Penned By Justice Del Castillo

since it was not signed by him. Moreover, there is no truth to his allegation that he protested
and appealed for medical intervention or that he was forced to work and endure excruciating
pain for two months before proper medical intervention was done. On the contrary, he was
able to work until his repatriation in May 2007. In addition, they gave him timely and
extensive medical attention and treatment, with the company-designated physician closely
monitoring his condition all throughout. Also, based on the medical findings of the company-
designated physician, respondent was feigning his illness. Moreover, respondent‘s doctor‘s
opinion cannot prevail over the company-designated physician‘s findings, as it was merely
based on a single MRI report, and not on an extensive treatment and monitoring of
respondent‘s condition over an extended period of time; and that for lack of legal basis,
respondent cannot claim indemnity based on a supposed collective bargaining agreement or
foreign law.

Ruling of the Labor Arbiter

On March 23, 2010, a Decision[45] was rendered by Labor Arbiter Catalino R. Laderas
granting disability benefits and attorney‘s fees in favor of respondent. The Decision decrees
as follows:

Upon his repatriation on 01 May 2007, complainant was assessed and medically treated by
respondents‘ company-designated physician and the latter‘s team of specialists and was never
declared fit to work.

Finding that complainant‘s illness is compensable, we now determine whether the same is permanent
or total in order that he may claim full disability benefits.

xxxx

In the case at bar, x x x while respondents‘ company-designated doctor/s provided a disability rating
for complainant‘s sustained injury, the former, nonetheless failed to make any declaration and/or
assessment as to the latter‘s fitness for work and/or capability to render sea duty.

Indubitably, the failure of respondents‘ company-designated doctor/s to declare complainant‘s fitness


for work reasonably infers a scheme to evade full payment of disability benefits to the complainant,
by merely declaring complainant partially disabled with a Grade 6 Impediment assessment.

Verily, it was undisputed that despite continuous medical treatment, complainant continue[s] to suffer
his ailment and the same remained uncured, until [the] present, which rendered him unable to work
and earn income for his family.

As a result therefore of the injury he sustained while on board the vessel ―ELSE MAERSK
DENMARK‖, complainant was unable to work for more than 120 days that resulted in the
impairment of his earning capacity.

xxxx

Hence, this Office rules that notwithstanding the medical assessment of respondents‘ company-
designated doctors, jurisprudence dictates that complainant be entitled to permanent total disability
benefits by reason of his continued medical condition that rendered him incapacitated for work for
more than 120 days from the date he was medically repatriated x x x to the Philippines.
Labor Cases Penned By Justice Del Castillo

On the other hand, for lack of particulars, complainant‘s claim for medical expenses and for non-
payment of wages, overtime pay, vacation leave and sick leave pay, the same could not be reasonably
granted under the circumstances for lack of factual basis with which to make an appropriate award.

xxxx

Similarly, for lack of particulars as to complainant‘s claim for damages, the same could not be
reasonably granted under the circumstances for lack of factual basis with which to make an
appropriate award.

xxxx

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondents, jointly
and severally, to pay the complainant total disability benefits corresponding the [sic] schedule of rates
provided for under the CBA between the AMOSUP and respondent manning agency.

Respondents are likewise ordered to pay respondents [sic] attorney‘s fees equivalent to ten (10%)
percent of the total judgment award.

The computation unit of this Office is hereby directed to compute the monetary award of the
complainant which forms part of this decision.[46]

Other claims are DISMISSED.

SO ORDERED.[47]

Ruling of the National Labor Relations Commission

Petitioners appealed before the NLRC which docketed the case as NLRC LAC No. OFW(M)
07-000539-10.

On November 30> 2010, the NLRC issued a Decision,[48] declaring as follows:

The instant appeal is impressed with merit.

At the outset, it should be pointed out that had the parties in the instant case complied strictly with the
provisions of the POEA Standard Employment Contract, particularly on the appointment of a third
physician in case of disagreement, a lot of controversy would have been averted, x x x

xxxx

We are thus compelled to evaluate the divergent opinions of the company-designated physicians and
complainant‘s private physician.

xxxx
Labor Cases Penned By Justice Del Castillo

As can therefore be seen from the last MRI of complainant, the findings of the latter are basically
unchanged. However, complainant‘s physician issued a disability grading of Grade 6 ―in terms of pain
and affectation of the spinal cord,‖ observing that the severity of complainant‘s symptom is equivalent
to said grading.

A close perusal of the above finding of Dr. Raymundo shows that there is ―severe or total rigidity or
total loss of lifting power of heavy objects‖ based on complainant‘s symptom, that is, his pain. This
however has been put in issue by the company-designated physician, who earlier observed that:

―Provocative Discography was done on 26 July 2007 and showed leakage of contrast material in the
midposterior aspect of the disk more towards the left thru a mild posterior annular tear. It was opined
by Interventional Radiology that the pain complained of is not commensurate with the Discography.‖

This resulted in the following recommendation:

As the pain is not commensurate with the discography, personality reasons should be evaluated to rule
out malingering is for your approval the form of Minnesota Multiphasic Personality Test [sic].
Approximate cost is Php 10,000.00.‖

And the findings of said Minnesota Multiphasic Personality Test shows that:

Based on the test protocol and interview, there are indicators that Mr. Jaleco is malingering and
exaggerating hi [sic] symptoms. The essential feature is the intentional production of exaggerated
physical symptoms motivated by external tendencies – obtaining financial compensation and avoiding
work.‖

As the company-designated physician has opined that complainant is malingering and exaggerating
his pain, the same pain made the basis for the disability grading of Dr. Raymundo, it was incumbent
upon complainant to refute the same. He has failed to do so.

xxxx

We therefore uphold the disability grading of Grade 11 as opined by the company-designated


physician, which amounts to US$7,465.00 corresponding to 14.93% disability as provided for in the
POEA Standard Employment Contract.

Likewise, the mere fact that complainant was no longer able to return to work as a seaman, by itself,
is no ground to automatically entitle him to Grade 1 permanent total disability benefits, x x x.

xxxx

As the instant complaint is clearly unfounded, complainant is not entitled to any attorney‘s fees.

WHEREFORE, premises considered, the appealed Decision is hereby MODIFIED, in that


complainant Rommel Rene O. Jaleco is entitled only to disability benefits of US$7,465.00,
corresponding to 14.93% disability (Grade 11) as provided for in the POEA Standard Employment
Contract. The award of 10% attorney‘s fees is DELETED for lack of legal basis.

SO ORDERED.[49]
Labor Cases Penned By Justice Del Castillo

Respondent moved for reconsideration, but in a February 28, 2011 Resolution,[50] the NLRC
held its ground.

Ruling of the Court of Appeals

In an Amended and/or Supplemental Petition for Certiorari[51] filed with the CA and docketed
therein as CA-G.R. SP No. 118688, respondent sought to set aside the dispositions of the
NLRC, arguing that since he was incapacitated to work since his repatriation up to the filing
of his Petition, or for a period of more than three years, he should be entitled to permanent
total disability benefits as adjudged by the Labor Arbiter. He also argued that he is entitled to
reimbursement of medical and other expenses incurred for his continued treatment,
rehabilitation and aid even after treatment by the company-designated physician because a)
the company-designated physician‘s services proved to be inadequate and incomplete, and
b) the collective bargaining agreement (CBA) between AMOSUP[52] and the Danish
Shipowners Association, as well as the Consolidated Workers‘ Compensation Act of
Denmark, mandates reimbursement of these expenses. Moreover, as a consequence of
petitioners‘ bad faith and inexcusable negligence, he should also be entitled to moral and
exemplary damages; and that as there is ground to award his pecuniary claims, he should
likewise be awarded attorney‘s fees, since he was compelled to litigate and incur expenses
as a result of petitioners‘ refusal to indemnify him.

On March 13, 2012, the CA issued the assailed Decision which contains the following
pronouncement:

The petition is meritorious.

In this case, Dr. Alegre based his assessment of petitioner Jaleco‘s disability at Grade 11 on the spine
surgeon‘s evaluation conducted on July 9, 2007 finding that the low back pain intensity was not
commensurate to the alleged symptoms of back pain, the opinion of the Interventional Radiology that
the pain complained of was not commensurate with the Provocative Discography performed on July
26, 2007 which showed ―leakage of contrast material in the midposterior aspect of the disk more
towards the left thru a mild posterior annular tear‖, and the Minnesota Multiphasic Personality
Inventory – 2 Test (MMPI-2) which found petitioner Jaleco to be malingering and intentionally
exaggerating his physical symptoms to obtain financial compensation and avoid work.

On the other hand, Dr. Raymundo not only assessed petitioner Jaleco‘s disability at Grade 6 or
Moderate Rigidity or two thirds (%) loss of motion or lifting power of the trunk, but also declared him
to be unfit for duty because of the recurrence of pain and the nature of his job as a seaman.

The law does not require that the illness should be incurable. What is important is that he was unable
to perform his customary work for more than 120 days which constitutes permanent total disability.[53]

Dr. Alegre may have referred petitioner Jaleco‘s case to the proper medical specialist, monitored the
latter‘s case during its progress and issued a certification based on the medical records available and
the results obtained. However, there is no showing that he made a categorical declaration as regards
petitioner Jaleco‘s fitness to resume sea-duty.

The POEA Standard Employment Contract for Seamen is designed primarily for the protection and
benefit of Filipino seaman [sic] in the pursuit of their employment on board ocean-going vessels. Its
provisions must, therefore, be construed and applied fairly, reasonably and liberally in their favor.
Only then can its beneficent provisions be fully carried into effect.
Labor Cases Penned By Justice Del Castillo

Hence, petitioner Jaleco is entitled to the US$60,000.00 for Impediment Grade 1 award.

As regards the award of attorney‘s fees, this Court finds that petitioner Jaleco is entitled to attorney‘s
fees equivalent to ten percent (10%) of the monetary award.

xxxx

Petitioner Jaleco averred that as a registered member of AMOSUP, he is necessarily covered by the
CBA (Ratings) between the AMOSUP-FIGWO-ITF and the Danish Shipowners Association. But
there is no showing that he was able to prove by substantial evidence his positive assertions that he is
a registered member of the said union and the said CBA is applicable to him in this case.

xxxx

Petitioner Jaleco invokes protection under the Consolidated Workers‘ Compensation Act of Denmark
by merely quoting its pertinent provisions in his position paper, x x x

Foreign laws do not prove themselves in our courts. Foreign laws are not a matter of judicial notice.
Like any other fact, they must be alleged and proven.

Besides, the snap on petitioner Jaleco‘s back was an injury sustained from carrying and pulling the
heavy wires that allegedly got stuck and messed up everything during a mooring operation, which
injury resulted in his disability. The injury cannot be said to be the result of an accident, that is, an
unlooked for mishap, occurrence, or fortuitous event, because the injury resulted from the
performance of a duty. Although petitioner Jaleco may not have expected the injury, yet, it is common
knowledge that carrying heavy objects can cause back injury, as what happened in this case.

xxx

Hence, the injury cannot be viewed as unusual under the circumstances, and is not synonymous with
the term ―accident‖ as defined above.

With respect to the award for moral and exemplary damages, there is no showing of bad faith or
malice on the part of private respondents when they relied on Dr. Alegre‘s assessment of petitioner
Jaleco‘s disability in denying the latter‘s claim.

Petitioner Jaleco‘s claim for actual damages was premised on his bare allegation that he was deprived
of his sole source of livelihood as a consequence of his dismissal without due process, by private
respondents in violation of the Labor Code and their failure and refusal to grant him the correct
disability benefits. A party is entitled to adequate compensation only for such pecuniary loss actually
suffered and duly proved. It is a basic rule that to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with a reasonable degree of certainty, premised
upon competent proof or best evidence obtainable of the actual amount thereof.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated November 30,
2010 and Resolution dated February 28, 2011 of public respondent NLRC, First Division in NLRC
NCR Case No. OFW(M) 12-17087-08 NLRC LAC No. OFW(M) 07-000539-10 are hereby
REVERSED and SET ASIDE. Judgment is hereby rendered ordering private respondents, jointly and
severally, to pay petitioner Jaleco US$60,000.00 as total permanent disability benefit and to pay him
attorney‘s fees equivalent to ten percent (10%) of the total judgment award.
Labor Cases Penned By Justice Del Castillo

SO ORDERED.[54]

Petitioners filed a Motion for Reconsideration,[55] but the CA denied the same in its May
21,2012 Resolution. Hence, the present Petition.

Issues

Petitioners submit that –


THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS, REVERSIBLE AND
GROSS ERROR IN LAW BASED ON THE FOLLOWING GROUNDS:

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


Crystal Shipping v. Natividad (G.R. No. 154798, October 20, 2005) and equally
erroneous interpretation of the case of Jesus Vergara v. Hammonia Maritime Services,
Inc. (G.R. No. 172933, October 6, 2008)

2. In awarding attorney ‗s fees without legal and factual basis.[56]

Petitioners’ Arguments

Praying that the assailed CA pronouncements be set aside and that the NLRC‘s November
30, 2010 Decision be reinstated, petitioners maintain in their Petition and Reply[57] that the
company-designated physician‘s findings and recommendation relative to disability grading
and compensation should be upheld, the same being accurate, reliable, and reflective of
respondent‘s true state of health. They also insist that there should be no reason to doubt
the results of the tests indicating that respondent deliberately exaggerated the physical
symptoms of his illness to obtain financial compensation and avoid work as these tests are
scientific and accurate. They posit that the CA erroneously applied the doctrine in the Crystal
Shipping case and that since the opinion of a third physician was not obtained, the company-
designated physician‘s assessment should prevail. Moreover, what happened to respondent
was not an accident. Since there is no ground to grant respondent‘s claims, and absent bad
faith on their part, no attorney‘s fees may be awarded to him.

Respondent’s Arguments

In his Comment,[58] respondent counters that his permanent total disability benefits should be
increased to US$105,761.00 in accordance with the Consolidated Workers‘ Compensation
Act of Denmark; that the opinion of Dr. Raymundo should prevail, as it correctly reflects his
true state of health, while the findings of the company-designated physician are inadequate
and inaccurate; that he is likewise entitled to additional reimbursement of medical expenses;
and that he should be paid moral and exemplary damages. Thus, he prays that petitioners
be ordered to pay disability benefits in the amount of US$105,761.00; reimbursement of his
medical expenses; combined actual, moral and exemplary damages in the amount of P3
million; and 10% of said amounts as attorney‘s fees.

Our Ruling
The Court grants the Petition.
Labor Cases Penned By Justice Del Castillo

The evidence indicates that contrary to the findings of the CA, the company-designated
physician made a categorical declaration relative to respondent‘s fitness to resume duty –
approximately one hundred and twenty-seven (127) days from his repatriation. Thus, in his
September 4, 2007 Progress Report, Dr. Alegre declared:

If a disability is to be assessed now, a disability grade x x x 11 [would be obtained] based on the


POEA Contract, Chest-Trunk-Spine #6 – Slight Rigidity or 1/3 loss of motion or lifting power of the
trunk.[59]

In addition, Dr. Alegre concluded – after conducting extensive tests – that respondent was
malingering or feigning his illness. For these reasons, respondent sought the opinion of an
independent physician, who came up with a Grade 6 disability rating.

―An employee‘s disability becomes permanent and total [only 1)] when so declared by the
company-designated physician, or, [2)] in case of absence of such a declaration either of
fitness or permanent total disability, upon the lapse of the 120- or 240-day treatment periods,
while the employee‘s disability continues and he is unable to engage in gainful employment
during such period, and the company-designated physician fails to arrive at a definite
assessment of the employee‘s fitness or disability.‖[60] The ―mere lapse of the 120-day period
itself does not automatically warrant the payment of permanent total disability benefits.‖[61] ―If
the 120 days initial period is exceeded and no such declaration is made because the
seafarer requires further medical attention, then the temporary total disability period may be
extended up to a maximum of 240 days, subject to the right of the employer to declare within
this period that a permanent partial or total disability already exists. The seaman may of
course also be declared fit to work at any time such declaration is justified by his medical
condition.‖[62]

Since the company-designated physician, Dr. Alegre, arrived at an assessment that


respondent‘s disability rating was only a Grade 11 prior to the expiration of the maximum
240-day period prescribed, then there is no permanent total disability to speak of. The
appellate court erred in not considering that the mere lapse of the 120-day period itself does
not automatically warrant the payment of permanent total disability benefits, as said period
may be extended up to 240 days.

Moreover, pursuant to Section 20(B)(3) of the POEA Standard Employment Contract, the
parties should have secured the opinion of a third doctor jointly appointed by them, whose
decision shall be final and binding. However, this procedure was not observed, and instead,
respondent went on to file his labor complaint. Such misstep should prove costly for him.
In Philippine Hammonia Ship Agency, Inc. v. Dumadag,[63] it was held that –

We are confronted, once again, with the question of whose disability assessment should prevail in a
maritime disability claim – the fit-to-work assessment of the company-designated physician or the
contrary opinion of the seafarer‘s chosen physicians that he is no longer fit to work. A related
question immediately follows – how are the conflicting assessments to be resolved?

xxxx

The POEA-SEC and the CBA govern the employment relationship between Dumadag and the
petitioners. The two instruments are the law between them. They are bound by their terms and
conditions, particularly in relation to this case, the mechanism prescribed to determine liability for a
disability benefits claim. In Magsaysay Maritime Corp. v. Velasquez, the Court said: ―The POEA
Labor Cases Penned By Justice Del Castillo

Contract, of which the parties are both signatories, is the law between them and as such, its provisions
bind both of them.‖ Dumadag, however, pursued his claim without observing the laid-out procedure.
He consulted physicians of his choice regarding his disability after Dr. Dacanay, the company-
designated physician, issued her fit-to-work certification for him. There is nothing inherently wrong
with the consultations as the POEA-SEC and the CBA allow him to seek a second opinion. The
problem only arose when he pre-empted the mandated procedure by filing a complaint for
permanent disability compensation on the strength of his chosen physicians‟ opinions, without
referring the conflicting opinions to a third doctor for final determination.

xxxx

The filing of the complaint constituted a breach of Dumadag‟s contractual obligation to have
the conflicting assessments of his disability referred to a third doctor for a binding opinion. The
petitioners could not have possibly caused the non-referral to a third doctor because they were not
aware that Dumadag secured separate independent opinions regarding his disability. Thus, the
complaint should have been dismissed, for without a binding third opinion, the fit-to-work
certification of the company-designated physician stands, pursuant to the POEA-SEC and the CBA. x
xx

xxxx

Whatever his reasons might have been, Dumadag‘s disregard of the conflict-resolution procedure
under the POEA-SEC and the CBA cannot and should not be tolerated and allowed to stand, lest it
encourage a similar defiance. We stress in this respect that we have yet to come across a case where
the parties referred conflicting assessments of a seafarer‘s disability to a third doctor since the
procedure was introduced by the POEA-SEC in 2000 – whether the Court‘s ruling in a particular case
upheld the assessment of the company-designated physician, as in Magsaysay Maritime Corporation
v. National Labor Relations Commission (Second Division) and similar other cases, or sustained the
opinion of the seafarer‘s chosen physician as in HFS Philippines, Inc. v. Filar, cited by the CA, and
other cases similarly resolved. The third-doctor-referral provision of the POEA-SEC, it appears
to us, has been honored more in the breach than in the compliance. This is unfortunate
considering that the provision is intended to settle disability claims voluntarily at the parties‟
level where the claims can be resolved more speedily than if they were brought to court.

Given the circumstances under which Dumadag pursued his claim, especially the fact that he caused
the non-referral to a third doctor, Dr. Dacanay‘s fit-to-work certification must be upheld. In Santiago
v. Pacbasin Ship Management, Inc., the Court declared: ―[t]here was no agreement on a third doctor
who shall examine him anew and whose finding shall be final and binding, x x x [T]his Court is left
without choice but to uphold the certification made by Dr. Lim with respect to Santiago‘s disability.‖
(Emphasis and underscoring supplied)

The above pronouncement was reiterated in subsequent cases, particularly Veritas Maritime
Corporation v. Gepanaga, Jr.;[64] Daraug v. KGJS Fleet Management Manila, Inc.;[65] Bahia
Shipping Services, Inc. v. Hipe;[66]Magsaysay Maritime Corporation v.
Simbajon; and Ayungo v. Beamko Shipmanagement Corporation.[68]
[67]

Thus, following the ruling in Dumadag, this Court rules that for respondent‘s disregard of the
conflict-resolution procedure under the parties‘ POEA Standard Employment Contract, his
claims against petitioners should have been denied, since the company-designated
physician Dr. Alegre‘s assessment necessarily stands. Indeed, since respondent was the
one pursuing a claim, as he did by filing a labor complaint before the NLRC, then it was he –
Labor Cases Penned By Justice Del Castillo

and not petitioners – who should have taken the initiative to secure the opinion of a third
physician prior to seeking intervention by the labor tribunals.

Besides, there is no reason to doubt Dr. Alegre‘s medical opinion regarding respondent‘s
condition. Prior to his final declaration, he took pains to address respondent‘s condition and
did his best to reconcile the conflicting medical evidence with respondent‘s declared
symptoms. His objective resolve led him so far as to require respondent to undergo a
comprehensive battery of tests – EMG-NCV test, provocative discography, and even MMPI-
2 – just to make sure that respondent‘s complaints are addressed, while at the same time
insure that an objective diagnosis of his illness is obtained. There is thus merit in Dr. Alegre‘s
finding that respondent is malingering; medical evidence obtained after the battery of tests is
to the effect that respondent‘s supposed excruciating back pain is not supported by or
commensurate to the results of the provocative discography and MMPI-2 tests. Being
scientific medical procedures, the accuracy and reliability of these tests cannot be doubted;
besides, they have not been questioned in these proceedings.

As for respondent‘s claim that petitioners should answer for greater amounts than that
adjudged by the appellate court – that is, disability benefits in the amount of US$105,761.00;
reimbursement of his medical expenses; and combined actual, moral and exemplary
damages in the amount of P3 million -this Court may not allow it. In order for such claims to
be considered, respondent should have filed the corresponding petition for review
questioning the judgment of the CA. Settled is the rule that a party is barred from assailing
the correctness of a judgment not appealed from by him. In an appeal, an appellee may
argue only to sustain the appealed judgment, but not introduce arguments that would modify
the same; in order to do that, he likewise should have seasonably filed an appeal. The rule is
rooted in the presumption that a party who did not interpose an appeal is satisfied with the
judgment rendered by the lower court.

WHEREFORE, the Petition is GRANTED. The assailed March 13,2012 Decision and May
21, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 118688
are REVERSED and SET ASIDE. The November 30, 2010 Decision of the National Labor
Relations Commission in NLRC LAC No. 0FW(M) 07-000539-10 is REINSTATED.

SO ORDERED.
Labor Cases Penned By Justice Del Castillo

16 SEP 2015 | JURISPRUDENCE | PONENTE | JUSTICE


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

Philippine Transmarine Carriers,


Inc./Norwegian Crew Management Vs. Julia
T. Aligway (as substitute for her deceased
husband, Demetrio Aligway, Jr.); G.R. No.
201793; September 16, 2015
DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the February 20, 2012 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 120589. The CA granted the Petition for Certiorari filed
therewith and accordingly, nullified the February 24, 2011 Decision[3] and May 11, 2011