April 2014 Labor Cases

Topic: Constructive Dismissal

Ponente: Perez, J.
Chiang Kai Shek College v. Torres, G.R. No. 189456, April 2, 2014
Facts: Petitioner Chiang Kai Shek College is a private educational institution
that offers elementary to college education to the public. Individual
petitioner Carmelita Espino is the Vice-President of the school. Respondent
had been employed as a grade school teacher of the school from July 1970
until 31 May 2003.
Respondent was accused of leaking a copy of a special quiz given to Grade 5
students of HEKASI 5. Petitioners came to know about the leakage from one
of the teachers of HEKASI 5, Aileen Benabese. Ms. Benabese narrated that
after giving a special quiz, she borrowed the book of one of her students,
Aileen Regine M. Anduyan, for the purpose of making an answer key. When
she opened Aileens book, a piece of paper fell. Said paper turned out to be a
copy of the same quiz she had just given and the same already contained
answers.
Assistant Supervisor Encarnacion Koo, confronted respondent, who had
initially denied leaking the test paper but later on admitted that she gave the
test paper to Mrs. Teresita Anduyan, her co-teacher and the mother of Aileen.
The schools Investigating Committee found respondent and Mrs. Anduyan
guilty of committing a grave offense of the school policies by leaking a
special quiz. The Investigating Committee had actually decided to terminate
respondent but the respondent pleaded that she suspended instead and that
she will resign at the end of the school year. Petitioners acceded to the
request.
On 14 February 2003 however, respondents counsel sent a letter to
petitioners demanding the payment of her backwages, bonus, teachers day
gift, moral damages and exemplary damages. Respondents counsel also
required petitioner to cease and desist from calling respondent for her
resignation at the end of the school year 2002 2003.

Petitioners, through counsel, wrote to respondents counsel asserting that

respondent was being terminated but the latter requested that "she be
suspended instead on condition that she will tender her voluntary resignation
at the end of the school year."
On 10 June 2003, respondent filed a complaint for constructive dismissal and
illegal suspension with the Labor Arbiter. However, the complaint was
dismissed for lack of merit. The Labor Arbiter deemed respondents
suspension coupled with petitioners allowance of respondents resignation
at the end of the school year as generous acts considering the offense
committed.
On appeal, the NLRC affirmed the decision but ordered the petitioners to pay
separation pay equivalent to one-half (1/2) month salary for every year of
service on the grounds of equity and social justice.
The Court of Appeals reversed the NLRC
Reconsideration was filed but it was denied.

decision.

Motion

for

Hence, this petition.

Issue: Does the schools act of imposing the penalty of suspension instead
of immediate dismissal from service at the behest of the erring employee, in
exchange for the employees resignation at the end of the school year,
constitute constructive dismissal?
Ruling: NO.
Resignation is the voluntary act of an employee who is in a situation where
one believes that personal reasons cannot be sacrificed for the favor of
employment, and opts to leave rather than stay employed. It is a formal
pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment. As the
intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be
considered in determining whether, he or she, in fact, intended to sever his
or her employment.
There is constructive dismissal when there is cessation of work, because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay and other

benefits. Aptly called a dismissal in disguise or an act amounting to dismissal

but made to appear as if it were not, constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment. There was
here no discrimination committed by petitioners. While respondent did not
tender her resignation wholeheartedly, circumstances of her own making did
not give her any other option. With due process, she was found to have
committed the grave offense of leaking test questions. Dismissal from
employment was the justified equivalent penalty. Having realized that, she
asked for, and was granted, not just a deferred imposition of, but also an
acceptable cover for the penalty.
Respondents profession, the gravity of her infraction, and the fact that she
waited until the close of the school year to challenge her impending
resignation demonstrate that respondent had bargained for a graceful exit
and is now trying to renege on her obligation. Respondent should not be
rewarded for reneging on her promise to resign at the end of the school year.
Otherwise, employers placed in similar situations would no longer extend
compassion to employees. Compromise agreements, like that in the instant
case, which lean towards desired liberality that favor labor, would be
discouraged.
Topic: employer employee relationship; illegal dismissal; doctrine
of strained relation
Ponente: Reyes, J.
Tenazas v. R. Villegas Taxi Transport, G.R. No. 192998, April 2, 2014
Facts: On July 4, 2007, Bernard A. Tenazas and Jaime M. Francisco filed a
complaint for illegal dismissal against R. Villegas Taxi Transport and/or
Romualdo Villegas and Andy Villegas. At that time, a similar case had already
been filed by Isidro G. Endraca against the same respondents. The two (2)
cases were subsequently consolidated.
Relaying the circumstances of his dismissal, Tenazas alleged that on July 1,
2007, the taxi unit assigned to him was sideswiped by another vehicle,
causing a dent on the left fender near the driver seat. The cost of repair for
the damage was estimated at P500.00. Upon reporting the incident to the
company, he was scolded by respondents Romualdo and Andy and was told
to leave the garage for he is already fired. He was even threatened with

physical harm should he ever be seen in the companys premises again.

Despite the warning, Tenazas reported for work on the following day but was
told that he can no longer drive any of the companys units as he is already
fired.
Francisco, on the other hand, averred that his dismissal was brought about
by the companys unfounded suspicion that he was organizing a labor union.
He was instantaneously terminated, without the benefit of procedural due
process, on June 4, 2007.
Endraca, for his part, alleged that his dismissal was instigated by an occasion
when he fell short of the required boundary for his taxi unit. He related that
before he was dismissed, he brought his taxi unit to an auto shop for an
urgent repair. He was charged the amount of P700.00 for the repair services
and the replacement parts. As a result, he was not able to meet his boundary
for the day. Upon returning to the company garage and informing the
management of the incident, his drivers license was confiscated and was
told to settle the deficiency in his boundary first before his license will be
returned to him. He was no longer allowed to drive a taxi unit despite his
persistent pleas.
For their part, the respondents admitted that Tenazas and Endraca were
employees of the company, the former being a regular driver and the latter a
spare driver. The respondents, however, denied that Francisco was an
employee of the company or that he was able to drive one of the companys
units at any point in time.
The respondents further alleged that Tenazas was never terminated by the
company. They claimed that Tenazas went to the company garage to get his
taxi unit but was informed that it is due for overhaul because of some
mechanical defects reported by the other driver who takes turns with him in
using the same. He was thus advised to wait for further notice from the
company if his unit has already been fixed. On July 8, 2007, however, upon
being informed that his unit is ready for release, Tenazas failed to report back
to work for no apparent reason.
As regards Endraca, the respondents alleged that they hired him as a spare
driver in February 2001. They allow him to drive a taxi unit whenever their
regular driver will not be able to report for work. In July 2003, however,
Endraca stopped reporting for work without informing the company of his
reason.
On May 30, 2008, the Labor Arbiter rendered a Decision stating that there
was no illegal dismissal as there was no proof of overt act of dismissal
committed by the respondents.

On appeal, the NLRC reversed the decision of the LA. It held that the
additional pieces of evidence belatedly submitted by the petitioners sufficed
to establish the existence of employer-employee relationship and their illegal
dismissal.
The respondents then filed a petition for certiorari with the CA. The CA
agreed with the NLRCs finding that Tenazas and Endraca were employees of
the company, but ruled otherwise in the case of Francisco for failing to
establish his relationship with the company. It also deleted the award of
separation pay and ordered for reinstatement of Tenazas and Endraca.
Hence, this petition.
Issue:
1. Is Francisco an employee of the respondent?
2. Is reinstatement of Tenazas and Endraca possible?
Ruling:
1. NO.
In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to
wit: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control
the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most
important element."
There is no hard and fast rule designed to establish the aforesaid elements.
Any competent and relevant evidence to prove the relationship may be
admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts,
and personnel lists, serve as evidence of employee status.
In this case, however, Francisco failed to present any proof substantial
enough to establish his relationship with the respondents. Bereft of any
evidence, the CA correctly ruled that Francisco could not be considered an
employee of the respondents.
2. YES.
The CAs order of reinstatement of Tenazas and Endraca, instead of the
payment of separation pay, is also well in accordance with prevailing
jurisprudence. An illegally dismissed employee is entitled to two reliefs:

backwages and reinstatement. The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because of
strained relations between the employee and the employer, separation pay
is granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and backwages.
After a perusal of the NLRC decision, this Court failed to find the factual basis
of the award of separation pay to the petitioners. The NLRC decision did not
state the facts which demonstrate that reinstatement is no longer a feasible
option that could have justified the alternative relief of granting separation
pay instead.
The petitioners themselves likewise overlooked to allege circumstances
which may have rendered their reinstatement unlikely or unwise and even
prayed for reinstatement alongside the payment of separation pay in their
position paper. A bare claim of strained relations by reason of termination is
insufficient to warrant the granting of separation pay. Likewise, the filing of
the complaint by the petitioners does not necessarily translate to strained
relations between the parties. As a rule, no strained relations should arise
from a valid and legal act asserting ones right. Although litigation may also
engender a certain degree of hostility, the understandable strain in the
parties relation would not necessarily rule out reinstatement which would,
otherwise, become the rule rather the exception in illegal dismissal cases.
Thus, it was a prudent call for the CA to delete the award of separation pay
and order for reinstatement instead, in accordance with the general rule
stated in Article 279 of the Labor Code.

Topic: probationary employment of teachers in private schools;

illegal dismissal
Ponente: Villarama, Jr., J.
Universidad De Sta. Isabel v. Sambajon, Jr., G.R. Nos. 196280 &
196286, April 2, 2014
Facts: Universidad de Sta. Isabel is a non-stock, non-profit religious
educational institution in Naga City. Petitioner hired Marvin-Julian L.
Sambajon, Jr. as a full-time college faculty member with the rank of Assistant
Professor on probationary status, as evidenced by an Appointment Contract
dated November 1, 2002, effective November 1, 2002 up to March 30, 2003.
After the aforesaid contract expired, petitioner continued to give teaching
loads to respondent who remained a full-time faculty member of the
Department of Religious Education for the two semesters of school-year
2003-2004 and two semesters of SY 2004-2005.
Sometime in June 2003, after respondent completed his course in Master of
Arts in Education, major in Guidance and Counseling, he submitted the
corresponding Special Order from the Commission on Higher Education
(CHED), together with his credentials for the said masters degree, to the
Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondents salary was increased, as
reflected in his pay slips starting October 1-15, 2004. He was likewise reranked from Assistant Professor to Associate Professor.
In a letter dated October 15, 2004 addressed to the President of petitioner,
Sr. Ma. Asuncion G. Evidente, D.C., respondent vigorously argued that his
salary increase should be made effective as of June 2003 and demanded the
payment of his salary differential. The school administration replied by
explaining that there is no re ranking during the employees probationary
period.
To resolve the issue, a dialogue was held between respondent and Sr.
Evidente but the parties gave conflicting accounts. On February 26, 2005,
respondent received his letter of termination.
On April 14, 2005, respondent filed a complaint for illegal dismissal against
the petitioner.

The Labor Arbiter ruled that there was no just or authorized cause in the
termination of respondents probationary employment. Consequently,
petitioner was found liable for illegal dismissal.
Petitioner appealed to the NLRC raising the issue of the correct interpretation
of Section 92 of the Manual of Regulations for Private Schools and DOLEDECS-CHED-TESDA Order No. 01, series of 1996, and alleging grave abuse of
discretion committed by the Labor Arbiter in ruling on a cause of action/issue
not raised by the complainant (respondent) in his position paper.
On August 1, 2008, the NLRC rendered its Decision affirming the Labor
Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for
Private Schools, in relation to Article 281 of the Labor Code, as amended.
Under the circumstances, it must be concluded that the complainant has
acquired permanent status. The last paragraph of Article 281 of the Labor
Code provides that "an employee who is allowed to work after a probationary
period shall be considered a regular employee." Based thereon, the
complainant acquired permanent status on the first day of the first semester
of SY 2003-2004.
As presently worded, Section 92 of the revised Manual of Regulations for
Private Schools merely provides for the maximum lengths of the
probationary periods of academic personnel of private schools in the three
(3) levels of education (elementary, secondary, tertiary). The periods
provided therein are not requirements for the acquisition, by them, of
permanent status.
Both parties filed separate appeals before the CA. The CA sustained the
conclusion of the NLRC that respondent had already acquired permanent
status when he was allowed to continue teaching after the expiration of his
first appointment-contract on March 30, 2003. However, the CA found it
necessary to modify the decision of the NLRC to include the award of back
wages to respondent.
Hence, this petition.
Issues:
1. Did the NLRC correctly resolve an issue not raised in petitioners appeal
memorandum?
2. Was the respondent illegally dismissed?
Ruling:

1. YES.
The NLRC shall, in cases of perfected appeals, limit itself to reviewing those
issues which are raised on appeal. As a consequence thereof, any other
issues which were not included in the appeal shall become final and
executory.
In this case, petitioner sought the correct interpretation of the Manual of
Regulations for Private School Teachers and DOLE-DECS-CHED-TESDA Order
No. 01, series of 1996, insofar as the probationary period for teachers. In
reviewing the Labor Arbiters finding of illegal dismissal, the NLRC concluded
that respondent had already attained regular status after the expiration of
his first appointment contract as probationary employee. Such conclusion
was but a logical result of the NLRCs own interpretation of the law. Since
petitioner elevated the questions of the validity of respondents dismissal
and the applicable probationary period under the aforesaid regulations, the
NLRC did not gravely abuse its discretion in fully resolving the said issues.
2. YES.
The probationary employment of teachers in private schools is not governed
purely by the Labor Code. The Labor Code is supplemented with respect to
the period of probation by special rules found in the Manual of Regulations
for Private Schools. On the matter of probationary period, Section 92 of the
1992 Manual of Regulations for Private Schools regulations states:
Section 92. Probationary Period. Subject in all instances to
compliance with the Department and school requirements, the
probationary period for academic personnel shall not be more than
three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary level, and
nine (9) consecutive trimesters of satisfactory service for those in
the tertiary level where collegiate courses are offered on a
trimester basis.
In this case, it was explicitly provided in the third appointment contract of
the respondent that unless renewed in writing respondents appointment
automatically expires at the end of the stipulated period of employment.
Simply because the word "probationary" no longer appears below the
designation (Full-Time Faculty Member), respondent had already become a
permanent employee.
It bears stressing that full-time teaching primarily refers to the extent of
services rendered by the teacher to the employer school and not to the

nature of his appointment. Its significance lies in the rule that only full-time
teaching personnel can acquire regular or permanent status.
In this case, petitioner applied the maximum three-year probationary period
equivalent to six consecutive semesters provided in the Manual of
Regulations. The circumstance that respondents services were hired on
semester basis did not negate the applicable probationary period, which is
three school years or six consecutive semesters.
In a situation where the probationary status overlaps with a fixed-term
contract not specifically used for the fixed term it offers, Article 281 should
assume primacy and the fixed-period character of the contract must give
way.
Notwithstanding the limited engagement of probationary employees, they
are entitled to constitutional protection of security of tenure during and
before the end of the probationary period. The services of an employee who
has been engaged on probationary basis may be terminated for any of the
following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Thus, while no vested right to a permanent appointment had as yet accrued
in favor of respondent since he had not completed the prerequisite threeyear period (six consecutive semesters) necessary for the acquisition of
permanent status as required by the Manual of Regulations for Private
Schools -- which has the force of law -- he enjoys a limited tenure. During the
said probationary period, he cannot be terminated except for just or
authorized causes, or if he fails to qualify in accordance with reasonable
standards prescribed by petitioner for the acquisition of permanent status of
its teaching personnel.
In a letter dated February 26, 2005, petitioner terminated the services of
respondent stating that his probationary employment as teacher will no
longer be renewed upon its expiry on March 31, 2005, respondents fifth
semester of teaching. No just or authorized cause was given by petitioner.
Prior to this, respondent had consistently achieved above average rating
based on evaluation by petitioners officials and students. He had also been
promoted to the rank of Associate Professor after finishing his masters
degree course on his third semester of teaching. Clearly, respondents
termination after five semesters of satisfactory service was illegal.

Topic: circumstances when a seaman may be allowed to pursue an

action for permanent and total disability benefits; award of
attorneys fees
Ponente: Villarama, Jr., J.
United Philippine Lines, Inc. v. Sibug, G.R. No. 201072, April 2, 2014
Facts: Petitioners United Philippine Lines, Inc. and Holland America Line
hired Sibug as waste handler on board the vessel MIS Volendam. On August
5, 2005, Sibug fell from a ladder while cleaning the silo sensor at a garbage
room of the Volendam and injured his knee. He was repatriated and had
anterior cruciate ligament (ACL) reconstruction surgery at the Manila Doctors
Hospital. On January 19, 2006, he was declared fit to return to work from an
orthopedic point of view.
Sibug sought reemployment, passed the pre-employment medical
examination, and was re-hired by petitioners in the same capacity for the
vessel M/S Ryndam. On board Ryndam, Sibug met another accident while

driving a forklift and injured his right hand and wrist. He was repatriated. He
arrived in the Philippines on January 15, 2007, and had surgery for his
Ryndam injury. On September 7, 2007, the company-designated doctor
issued a medical report that Sibug has a permanent but incomplete
disability. In an email dated September 28, 2007, the company-designated
doctor classified Sibugs disability from his Ryndam injury as a grade 10
disability.
Sibug filed two complaints for disability benefits, illness allowance, damages
and attorneys fees against petitioners anchored on his Volendam injury and
Ryndam injury.
The Labor Arbiter dismissed the Volendam case on the ground that Sibug
was declared fit to work after his ACL reconstruction surgery. He also passed
the pre-employment medical examination when he sought reemployment,
was reemployed and was able to work again in Ryndam. As regards the
Ryndam case, the Labor Arbiter awarded to Sibug US$10,075 which is the
equivalent award for the grade 10 disability rating issued by the companydesignated doctor.
The NLRC reversed the Labor Arbiters Decision. It ruled that Sibug is entitled
to permanent and total disability benefit of US$60,000 for his Volendam
injury and another US$60,000 for his Ryndam injury. On reconsideration, the
NLRC reinstated the Labor Arbiters Decision.
Later, the NLRC denied Sibugs motion for reconsideration. Thus, the case
was elevated to the CA. The CA set aside the NLRC Decision dated May 29,
2009 and reinstated the NLRC Decision dated December 8, 2008. It ruled
that Sibug was unable to perform his customary work for more than 120 days
on account of his Volendam and Ryndam injuries. Thus, he is entitled to
permanent and total disability benefit for both injuries.
Hence, this petition.
Issues:
1. Is Sibug entitled to permanent and total disability benefits for his
Volendam and Ryndam injuries?
2. Is he entitled to attorneys fees?

Ruling:
1. Sibug is not entitled to permanent and total disability benefit for his
Volendam injury. But he is entitled to permanent and total disability benefit
for his Ryndam injury and to attorneys fees.
Sibug is not entitled to permanent and total disability benefit for his
Volendam injury since he became already fit to work again as a seaman. He
even admitted in his position paper that he was declared fit to work. He was
also declared fit for sea service after his pre-employment medical
examination when he sought reemployment with petitioners. The medical
certificate declaring Sibug fit for sea service even bears his signature. And he
was able to work again in the same capacity as waste handler in Ryndam.
As regards his Ryndam injury, Sibug is entitled to permanent and total
disability benefit amounting to US$60,000. In Millan v. Wallem Maritime
Services, Inc., the following are the circumstances when a seaman
may be allowed to pursue an action for permanent and total
disability benefits:
(a) The company-designated physician failed to issue a declaration as
to his fitness to engage in sea duty or disability even after the lapse of
the 120-day period and there is no indication that further medical
treatment would address his temporary total disability, hence, justify
an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the
company-designated physician;
(c) The company-designated physician declared that he is fit for sea
duty within the 120-day or 240-day period, as the case may be, but his
physician of choice and the doctor chosen under Section 20-B(3) of the
POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is
partially permanently disabled but other doctors who he consulted, on
his own and jointly with his employer, believed that his disability is not
only permanent but total as well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;

(f) The company-designated physician determined that his medical

condition is not compensable or work-related under the POEA-SEC but
his doctor-of-choice and the third doctor selected under Section 20-B(3)
of the POEA-SEC found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and
permanently disabled but the employer refuses to pay him the
corresponding benefits; and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of
said periods.
Paragraph (b) applies to Sibugs case. The company-designated doctor failed
to issue a certification with a definite assessment of the degree of Sibugs
disability for his Ryndam injury within 240 days.
In Fil-Pride Shipping Company, Inc., et al. v. Balasta, we held that the
"company-designated physician must arrive at a definite assessment of the
seafarers fitness to work or permanent disability within the period of 120 or
240 days, pursuant to Article 192 (c)(1) of the Labor Code and Rule X,
Section 2 of the Amended Rules on Employees Compensation. If he fails to
do so and the seafarers medical condition remains unresolved, the latter
shall be deemed totally and permanently disabled." This definite assessment
of the seamans permanent disability must include the degree of his
disability, as required by Section 20-B of the POEA-SEC.
In this case, Sibug was repatriated and arrived in the country on January 15,
2007 after his Ryndam injury. He had surgery on his injured hand. On
September 7, 2007, the company-designated doctor issued a medical report
that Sibug has a permanent but incomplete disability. But this medical report
failed to state the degree of Sibugs disability. Only in an email dated
September 28, 2007, copy of which was attached as Annex 3 of petitioners
position paper, was Sibugs disability from his Ryndam injury classified as a
grade 10 disability by the company-designated doctor. By that time,
however, the 240-day extended period when the company-designated doctor
must give the definite assessment of Sibugs disability had lapsed. From
January 15, 2007 to September 28, 2007 is 256 days. Hence, Sibugs
disability is already deemed permanent and total.

2. YES. Sibug is entitled to attorneys fees of US$6,000 since he was forced

to litigate to protect his valid claim. Where an employee is forced to
litigate and incur expenses to protect his right and interest, he is entitled
to an award of attorneys fees equivalent to 10% of the award.

Topic: Illegal Dismissal/Floating Status

Ponente: Antonio T. Carpio, J.:
Emeritus Security and Maintenance Systems Inc. v. Dailig, G.R. No.
204761, April 2, 2014
Facts: Petitioner hired respondent as one of its security guards. Respondent
was relieved from his post. Respondent filed a complaint for underpayment
of wages, non-payment of legal and special holiday pay, premium pay for
rest day and underpayment of ECOLA before the DOLE. The hearing officer
recommended the dismissal of the complaint since the claims were already
paid.
Respondent filed a complaint for illegal dismissal and payment of separation
pay against petitioner before the Conciliation and Mediation Center of the
NLRC. Respondent filed another complaint for illegal dismissal,
underpayment of salaries and non-payment of full backwages before the
NLRC.
Labor Arbiter found illegal dismissal and ordered respondent to reinstate
complainant and to pay him backwages.
Court of Appeals affirmed the finding of illegal dismissal but ordered
separation pay instead of reinstatement.
Issues: Whether or not there is illegal dismissal
Whether or not respondent is entitled to separation pay, instead of
reinstatement
Ruling: Yes.
Respondent was on floating status from 10 December 2005 to 16 June 2006
or more than six months. The Court found that a floating status of a
security guard, such as respondent, for more than six months
constitutes constructive dismissal. Factual findings of quasi-judicial

bodies like the NLRC, if supported by substantial evidence, are

accorded respect and even finality by this Court, more so when they
coincide with those of the Labor Arbiter.
No.
Article 279 of the Labor Code of the Philippines mandates the reinstatement
of an illegally dismissed employee, to wit:
Security of Tenure. - x x x An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full back wages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, reinstatement is the general rule, while the award of
separation pay is the exception. The circumstances warranting the grant
of separation pay, in lieu of reinstatement, are laid down by the Court in
Globe-Mackay Cable and Radio Corporation v. National Labor Relations
Commission, thus:
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law applicable
thereto; that reinstatement can no longer be effected in view of the long
passage of time (22 years of litigation) or because of the realities of the
situation; or that it would be inimical to the employers interest; or that
reinstatement may no longer be feasible; or, that it will not serve the best
interests of the parties involved; or that the company would be prejudiced by
the workers continued employment; or that it will not serve any prudent
purpose as when supervening facts have transpired which make execution
on that score unjust or inequitable or, to an increasing extent, due to the
resultant atmosphere of antipathy and antagonism or strained relations or
irretrievable estrangement between the employer and the employee.
Respondent admits receiving a reinstatement notice from petitioner.
Thereafter, respondent was assigned to one of petitioner's clients. However,
respondent pointed out that he was not sreinstated by petitioner, but was
employed by another company, Emme Security and Maintenance Systems,
Inc. Thus, according to respondent, he was not reinstated at all. Petitioner
countered that Emeritus and Emme are sister companies with the same

Board of Directors and officers, arguing that Emeritus and Emme are in effect
one and the same corporation.
Considering petitioner's undisputed claim that Emeritus and Emme are one
and the same, there is no basis in respondent's allegation that he was not
reinstated to his previous employment. Nothing in the records showed any
strained relations between the parties to warrant the award of separation
pay. There is neither allegation nor proof that such animosity existed
between petitioner and respondent.

Topic: Integration of Allowances

Ponente: Presbitero J. Velasco Jr., J.:
Land Bank v. Naval, G.R. No. 195687, April 7, 2014
Facts: Petitioner LBP granted its officers and employees Cost of Living
Allowance (COLA) and a monthly allowance called a "Bank Equity Pay" (BEP).
LBP issued a resolution integrating the COLA into the basic pay of LBP
employees which took effect on May 16, 1989. On August 21, 1989, R.A.
6758, otherwise known as the Salary Standardization Law (SSL), was enacted
which provides the integration/consolidation of allowances and additional
compensation into the standardized salary rates save for certain additional
compensation enumerated therein and others that the Department of Budget
and Management (DBM) is mandated to determine. DBM-CCC No. 10 (Rules
and Implementation of RA 6758 for GOCCs and GFIs) specifically stated that
the COLA and BEP granted to employees of GOCCs and GFIs shall be deemed
integrated into the basic salary effective July 1, 1989. Thus, LBP integrated
the BEP into the basic pay of its employees effective as of July 1, 1989.

On February 23, 1995, RA 7907 removed petitioner LBP from the coverage of
the SSL.
The Court nullified DBM-CCC No. 10 in De Jesus v. CoA because it was not
published in the Official Gazette or in a newspaper of general circulation, as
required by law.
The DBM remedied its circulars defect by publishing DBM-CCC No. 10 in the
Official Gazette in March 1999, which was released on July 1, 1999. Hence,
DBM-CCC No. 10, as published, took effect on July 16, 1999.
After the publication of the Decision in De Jesus, respondents started
negotiating with LBP for the payment of their COLA and BEP benefits over
and above their monthly basic salaries, and back payment of the same from
the time that LBP stopped to extend them until the finality of the Decision in
De Jesus.
Respondents appealed to LBP for the restoration of their COLA and BEP. LBP,
however, denied respondents appeal based on a Civil Service Commission
(CSC) ruling citing DBM Budget Circular 2001-03 which prohibits the payment
of COLA and similar allowances on top of the basic salary on the ground that
it would constitute double compensation.
Respondents instituted a Petition for Mandamus before the RTC to compel
LBP to pay their COLA and the BEP allowances over and above their basic
salaries. Trial court granted the petition for mandamus and ordered LBP to
pay respondents claim.
Court of Appeals affirmed with modification directing respondents to pay an
interest of 6% per annum on all the amounts due to respondents effective
May 16, 1989, in the case of COLA, and July 1, 1989, in the case of BEP, up to
the finality of this Decision, which interest rate should become 12% per
annum from the finality of this Decision up to its satisfaction.
Issue: Whether or not respondents and intervenors are entitled to the COLA
and the BEP on top of their basic salaries from 1989 up to the present
Ruling: No.
The Court clarified that the nullification of DBM-CCC No. 10 is irrelevant
to the validity of the provisions of the SSL. Notwithstanding the ruling
in De Jesus vs. Commission on Audit, the Court declared the nullity of DBMCCC No. 10, nothing in the decision suggested or intimated the suspension of
the effectivity of Rep. Act No. 6758 pending the publication in the Official
Gazette of DBM-CCC No. 10.

Section 12 of SSL. Consolidation of Allowances and Compensation. All

allowances, except for representation and transportation allowances;
clothing and laundry allowances; subsistence allowance of marine officers
and crew on board government vessels and hospital personnel; hazard pay;
allowances of foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as may be
determined by the DBM, shall be deemed included in the standardized salary
rates herein prescribed. Such other additional compensation, whether in
cash or in kind, being received by incumbents only as of July 1, 1989 not
integrated into the standardized salary rates shall continue to be authorized.
Existing additional compensation of any national government official or
employee paid from local funds of a local government unit shall be absorbed
into the basic salary of said official or employee and shall be paid by the
National Government.
From the foregoing provision, it is immediately apparent that the SSL
mandates the integration of all allowances except for the following:
1. Representation and transportation allowances;
2. Clothing and laundry allowances;
3. Subsistence allowance of marine officers and crew on board
government vessels;
4. Subsistence allowance of hospital personnel;
5. Hazard pay;
6. Allowances of foreign service personnel stationed abroad;
7. And such other additional compensation not otherwise specified
herein as may be determined by the DBM.
Since the COLA and the BEP are among those expressly excluded by
the SSL from integration, they should be considered as deemed
integrated in the standardized salaries of LBP employees under the
general rule of integration.

COLA is one of those allowances deemed integrated under Sec. 12 of the SSL
because (1) it had not been expressly excluded from the general rule of
integration and (2) it is a benefit intended to reimburse the employee for the
expenses he incurred in the performance of his official functions. COLA is not
in the nature of an allowance intended to reimburse expenses incurred by
officials and employees of the government in the performance of their official
functions. It is not payment in consideration of the fulfillment of official duty.
As defined, cost of living refers to "the level of prices relating to a range of
everyday items" or "the cost of purchasing those goods and services which
are included in an accepted standard level of consumption." Based on this
premise, COLA is a benefit intended to cover increases in the cost of living.
Thus, it is and should be integrated into the standardized salary rates.
LOI Nos. 104 and 116, however, would argue against the idea that they
prohibit the integration of either allowance into the basic pay of GFI
employees. Nowhere in either issuance is it mandated that these allowances
can only be paid on top of, and separate from, the basic and net pay of the
employees of GFIs. The rule is that the payment of a salary may be amended
by the power which granted it in the first place.
Sec. 10 of RA 7907 simply reads as follows:
Sec. 10. Section 90 of the same Act is hereby amended to read as follows:
"All positions in the Bank shall be governed by a compensation, position
classification system and qualification, standards approved by the Banks
Board of Directors based on a comprehensive job analysis and audit of actual
duties and responsibilities. The compensation loan shall be comparable with
the prevailing compensation plans in the private sector and shall be
subjected to periodic review by the Board no more than once every two (2)
years without prejudices to yearly merit reviews or increases based on
productivity and profitability. The bank shall therefore be exempt from
existing laws, rules and regulations on compensation, position classification
and qualification standards. It shall however endeavor to make its system
conform as closely as possible with the principle under Republic Act No.
6758."
It is at once apparent from the quoted provision that, by RA 7907,
petitioner LBP had been given sufficient independence and
autonomy to design its own compensation plan, i.e., to decide
whether to integrate the COLA and the BEP into the basic pay. This
Court cannot dictate the inclusion of the COLA and BEP contrary to the sound
business judgment of LBP recognized and sustained in RA 7907.

Thus, the back payment of the COLA and the BEP to respondents, were
reversed and set aside.

Topic: Unfair Labor Practice through Bad Faith Bargaining/ National

Interest
Ponente: Teresita J. Leonardo-De Castro, J.:
Tabangao Shell Refinery Employees Association v. Pilipinas Shell
Petroleum Corp., G.R. No. 170007, April 7, 2014
Facts: Near the expiration of the CBA, petitioner and respondent started
negotiations for a new CBA. Initially, the union proposed 20% annual
increase in basic pay for the next three years while the company made a
counter-proposal to grant all covered employees a lump sum amount of
P80,000.00 yearly for the three-year period of the new CBA. The union
lowered its proposal to 12% while the company increased the lump sum
amount to P88,000.00. The company justified that its counter-offer is based
on its affordability for the company, comparison with the then existing wage
levels of allied industry, and the then existing total pay and benefits package
of the employees. Unsatisfied, the union asked for additional justification and
requested for a copy of the comparison of the salaries of its members and
those from allied industries. The company denied the request on the ground
that the requested information was entrusted to the company under a
confidential agreement. Alleging failure on the part of the company to justify
its offer, the union manifested that the company was bargaining in bad faith.
The company proposed the declaration of a deadlock and recommended that
the help of a third party be sought. The union replied that they would
formally answer the proposal of the company a day after the signing of the
official minutes of the meeting. On that same day, however, the union filed a
Notice of Strike in the NCMB, alleging bad faith bargaining on the part of the
company. The NCMB immediately summoned the parties for the mandatory
conciliation-mediation proceedings but the parties failed to reach an
amicable settlement.
During the cooling off period, the members of the union unanimously voted
for the holding of a strike. Upon being aware of this development, the
company filed a Petition for Assumption of Jurisdiction with the Secretary of
Labor and Employment. Convinced that such a strike would have adverse
consequences on the national economy, the Secretary of Labor and

Employment ruled that the labor dispute between the parties would cause or
likely to cause a strike in an industry indispensable to the national interest.
Thus, he assumed jurisdiction and the union was enjoined from any form of
concerted action.
Court of Appeals ruled that the SoLE did not commit grave abuse of
discretion.
The union filed a complaint for unfair labor practice before NLRC on the
ground that the company refused, or violated its duty, to bargain. The
complaint was forwarded to SoLE because the issue raised by the union was
a proper incident of the labor dispute over which the Secretary of Labor and
Employment assumed jurisdiction.
SoLE held that there was already deadlock although the ground for the first
Notice of Strike was unfair labor practice for bargaining in bad faith. It found
no unfair labor practice through bad faith bargaining.
Issues: Whether or not there is unfair labor practice through bad faith
bargaining
Whether or not the Secretary of Labor committed grave abuse of discretion
when he assumed jurisdiction over the labor dispute
Ruling: No.
The doctrine of conclusiveness of judgment states that a fact or
question which was in issue in a former suit, and was there judicially passed
on and determined by a court of competent jurisdiction, is conclusively
settled by the judgment therein, as far as concerns the parties to that action
and persons in privity with them, and cannot be again litigated in any future
action between such parties or their privies, in the same court or any other
court of concurrent jurisdiction on either the same or a different cause of
action, while the judgment remains unreversed or unvacated by proper
authority. The only identities thus required for the operation of the judgment
as an estoppel x x x are identity of parties and identity of issues.
The Decision of the SoLE in the labor dispute over which he assumed
jurisdiction has long attained finality.
In this connection, Article 263(i) of the Labor Code is clear:
ART. 263. Strikes, picketing, and lockouts. x x x
xxxx
(i) The Secretary of Labor and Employment, the Commission or the voluntary
arbitrator shall decide or resolve the dispute within thirty (30) calendar days

from the date of the assumption of jurisdiction or the certification or

submission of the dispute, as the case may be. The decision of the President,
the Secretary of Labor and Employment, the Commission or the voluntary
arbitrator shall be final and executory ten (10) calendar days after receipt
thereof by the parties.
Pursuant to Article 263(i) of the Labor Code, the Decision of the SoLE
became final and executory after the lapse of the period provided under
the said provision. Moreover, neither party further questioned the Decision.
A question of fact cannot properly be raised in a petition for review
under Rule 45 of the Rules of Court. The existence of bad faith is a
question of fact and is evidentiary. The crucial question of whether or
not a party has met his statutory duty to bargain in good faith typically turns
on the facts of the individual case, and good faith or bad faith is an inference
to be drawn from the facts. Thus, the issue of whether or not there was bad
faith on the part of the company when it was bargaining with the union is a
question of fact. It requires that the reviewing court look into the evidence to
find if indeed there is proof that is substantial enough to show such bad faith.
The issue of whether there was already deadlock between the union and the
company is likewise a question of fact. It requires the determination of
evidence to find whether there is a "counteraction" of forces between the
union and the company and whether each of the parties exerted "reasonable
effort at good faith bargaining."
It is so because a deadlock is x x x the counteraction of things
producing entire stoppage; x x x There is a deadlock when there is a
complete blocking or stoppage resulting from the action of equal
and opposed forces x x x. The word is synonymous with the word
impasse, which x x x presupposes reasonable effort at good faith bargaining
which, despite noble intentions, does not conclude in agreement between
the parties.
The findings of fact of the SoLE that there already existed a bargaining
deadlock when she assumed jurisdiction over the labor dispute between the
union and the company, and that there was no bad faith on the part of the
company when it was bargaining with the union are both supported by
substantial evidence.
No.

As there is already an existing controversy on the matter of wage increase,

the Secretary of Labor and Employment need not wait for a deadlock in the
negotiations to take cognizance of the matter. That is the significance of the
power of the Secretary of Labor and Employment under Article
263(g) of the Labor Code to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest. Article 263(g) is both an
extraordinary and a preemptive power to address an extraordinary situation a strike or lockout in an industry indispensable to the national interest. This
grant is not limited to the grounds cited in the notice of strike or lockout that
may have preceded the strike or lockout; nor is it limited to the incidents of
the strike or lockout that in the meanwhile may have taken place. As the
term "assume jurisdiction" connotes, the intent of the law is to give the Labor
Secretary full authority to resolve all matters within the dispute that gave
rise to or which arose out of the strike or lockout; it includes and extends to
all questions and controversies arising from or related to the dispute,
including cases over which the labor arbiter has exclusive jurisdiction.

Topic: Loss of Trust and Confidence

Ponente: Bienvenido L. Reyes, J.:
Bluer than Blue Joint Ventures v. Esteban, G.R. No. 192582, April 7,
2014
Facts: Esteban was hired as Sales Clerk by petitioner. Part of her primary
tasks were attending to all customer needs, ensuring efficient inventory,
coordinating orders from clients, cashiering and reporting to the accounting
department.
Petitioner received a report that several employees have access to its POS
system through a universal password given by Flores. Upon investigation, it
was discovered that it was Esteban who gave Flores the password. The

petitioner sent a letter memorandum to Esteban, asking her to explain in

writing why she should not be disciplinary dealt with for tampering with the
companys POS system through the use of an unauthorized password.
Esteban was also placed under preventive suspension for ten days.
Esteban admitted that she used the universal password three times on the
same day, after she learned of it from two other employees who she saw
browsing through the petitioners sales inquiry. She inquired how the
employees were able to open the system and she was told that they used
the "123456" password.
Estebans preventive suspension was lifted, but at the same time, a notice of
termination was sent to her, finding her explanation unsatisfactory and
terminating her employment immediately on the ground of loss of trust and
confidence. Esteban was given her final pay, including benefits and bonuses,
less inventory variances incurred by the store. Esteban signed a quitclaim
and release in favor of the petitioner.
Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay,
rest day and separation pay. LA ruled in favor of Esteban and found that she
was illegally dismissed.
NLRC reversed the decision of the LA and dismissed the case for illegal
dismissal but ordered petitioner to refund to Esteban the illegal deductions
based on inventory variances.
Court of Appeals reinstated LAs ruling.
Issue: Whether or not Estebans acts constitute just cause to terminate her
employment with the company on the ground of loss of trust and confidence
Ruling: No.
Loss of trust and confidence is premised on the fact that the
employee concerned holds a position of responsibility, trust and
confidence. The employee must be invested with confidence on delicate
matters, such as the custody, handling, care and protection of the
employers property and funds. Among the fiduciary rank-and-file employees
are cashiers, auditors, property custodians, or those who, in the normal
exercise of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely charged with
the care and custody of the employers money or property, and are thus
classified as occupying positions of trust and confidence.
In this case, Esteban was a sales clerk. Her duties, however, were more than
that of a sales clerk. Aside from attending to customers and tending to the
shop, Esteban also assumed cashiering duties. As consistently ruled by the
Court, it is not the job title but the actual work that the employee performs

that determines whether he or she occupies a position of trust and

confidence. In Estebans case, given that she had in her care and custody the
stores property and funds, she is considered as a rank-and-file employee
occupying a position of trust and confidence.
Loss of trust and confidence to be a valid cause for dismissal must
be work related such as would show the employee concerned to be
unfit to continue working for the employer and it must be based on
a wilful breach of trust and founded on clearly established facts.
Such breach is wilful if it is done intentionally, knowingly, and purposely,
without justifiable excuse as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. The loss of trust and confidence
must spring from the voluntary or wilful act of the employee, or by reason of
some blameworthy act or omission on the part of the employee.
In this case, Estebans acts do not amount to a wilful breach of trust. Her
acts were out of curiosity and without any obvious intention of defrauding
the petitioner. She was acting in good faith in verifying what her co-staff told
her about the opening of the computer by the use of the "123456" password,
x x x. She even told her co-staff not to open again said computer, and that
was the first and last time she opened said computer. Moreover, the
petitioner even admitted that Esteban has her own password to the POS
system. If it was her intention to manipulate the stores inventory and funds,
she could have done so long before she had knowledge of the unauthorized
password. But the facts on hand show that she did not. The petitioner also
failed to establish a substantial connection between Estebans use of the
"123456" password and any loss suffered by the petitioner. Indeed, it may be
true that, as posited by the petitioner, it is the fact that she used the
password that gives cause to the loss of trust and confidence on Esteban.
However, such breach must have been done intentionally, knowingly, and
purposely, and without any justifiable excuse, and not simply something
done carelessly, thoughtlessly, heedlessly or inadvertently. Her careless acts
do not merit the imposition of the penalty of dismissal.
Preventive suspension is a measure allowed by law and afforded to
the employer if an employees continued employment poses a
serious and imminent threat to the employers life or property or of
his co-workers. It may be legally imposed against an employee whose
alleged violation is the subject of an investigation.
In this case, the petitioner was acting well within its rights when it imposed a
10-day preventive suspension on Esteban. While it may be that the acts
complained of were committed by Esteban almost a year before the
investigation was conducted, still, it should be pointed out that Esteban was
performing functions that involve handling of the petitioners property and

funds, and the petitioner had every right to protect its assets and operations
pending Estebans investigation.
Article 113 of the Labor Code provides that no employer, in his own
behalf or in behalf of any person, shall make any deduction from the
wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor
and Employment, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the employer is engaged
in a trade, occupation or business where the practice of making deductions
or requiring deposits is recognized to answer for the reimbursement of loss
or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the
employees to make deposits from which deductions shall be made, subject
to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for
the loss or damage;
(b) That the employee is given reasonable opportunity to show cause
why deduction should not be made;
(c) That the amount of such deduction is fair and reasonable and shall
not exceed the actual loss or damage; and
(d) That the deduction from the wages of the employee does not
exceed 20 percent of the employees wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was
responsible for the negative variance it had in its sales and that Esteban was
given the opportunity to show cause the deduction from her last salary
should not be made. The petitioners should first establish that the making of
deductions from the salaries is authorized by law, or regulations issued by
the Secretary of Labor.
Thus, the decision of the Court of Appeals is affirmed but the affirmation of
respondents preventive suspension was reversed. LA was ordered to re-

compute the monetary award in favor of Esteban and to exclude the award
of backwages during such period of preventive suspension, if any.

Topic: Award of loss of future earnings, moral damages, exemplary

damages and attorneys fees for Seafarers.
Ponente: Justice Roberto A. Abad
MAGSAYSAY MARITIME CORPORATION vs. OSCAR D. CHIN, JR, G.R.
No. 199022, April 7, 2014
Facts:
Thome Ship Management Pte. Ltd., acting through its agent
petitioner Magsaysay Maritime Corporation (Magsaysay) hired respondent
Oscar D. Chin, Jr. to work for nine months as able seaman on board MV Star
Siranger Chin was to receive a basic pay of US$515 per month. Chin
sustained injuries while working on his job aboard the vessel. Dr. Solan of
Wilmington, North Carolina, USA, found him to have suffered from
lumbosacral strain due to heavy lifting of pressurized machine. The doctor
gave him medications and advised him to see an orthopedist and a
cardiologist. Chin was repatriated. On return to the Philippines, Chin
underwent a surgical procedure called laminectomy and discectomy L-4-L-5.
A year after the operation, Dr. Robert D. Lim of the Metropolitan Hospital
diagnosed Chin to have a moderate rigidity of his tract.
Chin filed a claim for disability with PandimanPhils., Inc. which is the local
agent of P & I Club of which Magsaysay Maritime is a member. Pandiman
offered US$30,000.00 as disability compensation which Chin accepted. He
then executed a Release and Quitclaim in favor of Magsaysay Maritime. Chin
filed a complaint with the National Labor Relations Commission (NLRC),
claiming underpayment of disability benefits and attorneys fees. He later
amended his complaint to include claims for damages. The Labor Arbiter
dismissed Chins complaint for lack of merit. The NLRC affirmed the
dismissal. On appeal, however, the Court of Appeals (CA) reversed the
dismissal and ruled that Chin was entitled to permanent total disability
benefit of US$60,000.00. The CA remanded the case to the Labor Arbiter for
determination of the other monetary claims of Chin. This prompted petitioner
Magsaysay to come before this court on a petition for review on certiorari.
The Court denied the petition, however, in a Resolution. This Resolution
became final and executor.

Magsaysay paid the deficiency award of US$30,000.00 in full and final

settlement of Chins disability compensation claim. On February 26, 2007,
however, the Labor Arbiter rendered a Decision ordering it to pay Chin: a)
P19,279.75 as reimbursement for medical expenses; b) US$147,026.43 as
loss of future wages; c) P200,000.00 as moral damages; d) P75,000.00 as
exemplary damages; and e) 10% of the total award as attorneys fees. NLRC
modified the Labor Arbiters Decision by deleting the awards of loss of future
wages and moral and exemplary damages for lack of factual and legal bases.
On appeal, the CA reversed the NLRCs Decision and ordered the
reinstatement of the Labor Arbiters Decision, hence, this petition.
Issue: Whether or not the award of loss of future earnings on top of his
disability benefits as well as awards of moral and exemplary damages and
attorneys fees is valid.
Ruling:No.
Labor Arbiters award of loss of earning is unwarranted since Chin had
already been given disability compensation for loss of earning capacity. An
additional award for loss of earnings will result in double recovery. In a
catena of cases, the Court has consistently ruled that disability should not
be understood more on its medical significance but on the loss of
earning capacity. Permanent total disability means disablement of an
employee to earn wages in the same kind of work, or work of similar nature
that he was trained for or accustomed to perform, or any kind of work which
a person of his mentality and attainment could do. Disability, therefore, is
not synonymous with "sickness" or "illness." What is compensated is ones
incapacity to work resulting in the impairment of his earning capacity.
Moreover, the award for loss of earning lacks basis since the Philippine
Overseas Employment Agency (POEA) Standard Contract of
Employment (POEA SCE), the governing law between the parties,
does not provide for such a grant. What Section 20, paragraph (G) of the
POEA SCE provides is that payment for injury, illness, incapacity, disability, or
death of the seafarer covers "all claims arising from or in relation with or in
the course of the seafarers employment, including but not limited to
damages arising from the contract, tort, fault or negligence under the laws of
the Philippines or any other country." The permanent disability compensation
of US$60,000 clearly amounts to reasonable compensation for the injuries
and loss of earning capacity of the seafarer.

Topic:Computation of backwages
Ponente: Justice Arturo D. Brion
WENPHIL CORPORATION vs. ALMER R. ABING and ANABELLE M.
TUAZON,G.R. No. 207983
April 7, 2014
Facts: In a complaint for illegal dismissal filed by respondents Almer R.
Abing and Anabelle M. Tuazon against petitioner Wenphil Corp., the former
were awarded backwages. But the period for the computation of the
backwages set by the Labor Arbiter (LA) was inconsistent with that of the
Court of Appeals (CA). According to the LA, whose ruling the National Labor
Relations Commission (NLRC) affirmed, the period for computation should be
from Feb. 15, 2002, the day when petitioner last paid respondents
backwages, until Nov. 8, 2002 when the NLRCs decision became final and
executory.
On the other hand, the CA, in setting aside the NLRCs rulings, relied on the
case of Pfizer v. Velasco (G.R. No. 177467, March 9, 2011, 645 SCRA 135)
where the Supreme Court ruled that the backwages of the dismissed
employee should be granted during the period of appeal until reversal by a
higher court. Since the first CA decision that found the respondents had not
been illegally dismissed was promulgated on Aug. 27, 2003, then the
reversal by the higher court was effectively made on Aug. 27, 2003.
Issue: Whether or not the Court of Appeals is correct that the date of
computation should start on February 15, 2002.
Ruling:No.
Among various views, the commanding one is the rule in Pfizer, which
merely echoes the rulings the Supreme Court (SC) made in the cases of
Roquero v. Philippine Airlines (G.R. No. 152329, 449 Phil. 437 (2003)) and
Garcia v. Philippine Airlines (G.R. No. 164856, January 20, 2009, 576 SCRA
479) that the period for computing the backwages due to the
respondents during the period of appeal should end on the date
that a higher court reversed the labor arbitration ruling of illegal
dismissal. In this case, the higher court that first reversed the NLRCs ruling
was not the SC but rather the CA. In this light, the CA was correct when it
found that that the period of computation should end on Aug. 27, 2003. The
date when the SCs decision became final and executory need not matter as
the rule in Roquero, Garcia and Pfizer merely referred to the date of reversal,
not the date of the ultimate finality of such reversal.

As a last minor detail, we do not agree with the CA that the date of
computation should start on Feb. 15, 2002. Rather, it should be on Feb. 16,
2002. The respondents themselves admitted in their motion for computation
and issuance of writ of execution that the last date when they were paid their
backwages was on Feb. 15, 2002. To start the computation on the same date
would result to a duplication of wages for this day; thus, computation should
start on the following date Feb. 16, 2002.

Topic: Award of moral and exemplary damages

Ponente: Justice Bienvenido L. Reyes
SPI TECHNOLOGIES, INC. and LEA VILLANUEVA vs. VICTORIA K.
MAPUA, G.R. No. 191154
April 7, 2014
Facts:
Victoria
K.
Mapua
was
the
Corporate
Developments
Research/Business Intelligence Unit Head and Manager of SPI Technologies,
Inc. (SPI). Subsequently, the Vice President and Corporate Development
Head, Peter Maquera hired Elizabeth Nolan as Mapuas supervisor. The hard
disk on Mapuas laptop crashed, causing her to lose files and data. Mapua
informed Nolan and her colleagues that she was working on recovering the
lost data and asked for their patience for any possible delay on her part in
meeting deadlines. Mapua retrieved the lost data with the assistance of
National Bureau of Investigation Anti-Fraud and Computer Crimes Division.
Yet, Nolan informed Mapua that she was realigning Mapuas position to
become a subordinate of co-manager Sameer Raina due to her missing a
work deadline.
Nolan and Raina started giving out majority of her research work and other
duties under Healthcare and Legal Division to the rank-and-file staff. Mapua
consulted these work problems with SPIs Human Resource Director, Lea
Villanueva and asked if she can be transferred to another department within
SPI. Mapua allegedly saw the new table of organization of the Corporate
Development Division which would be renamed as the Marketing Division.
The new structure showed that Mapuas level will be again downgraded
because a new manager will be hired and positioned between her rank and
Rainas. She was informed that she should cease reporting for work the next
day. Her laptop computer and company mobile phone were taken right away
and her office phone ceased to function.
Mapua filed with the Labor Arbiter (LA) a complaint for illegal dismissal,
claiming reinstatement or for separation pay. Afterwards, she went to a
meeting with SPI, where she was given a second termination letter, the
contents of which were similar to the first one.Mapua received through mail,
a third Notice of Terminationbut the date of effectivity of the termination was
changed. It further stated that her separation pay will be released and a
notation was inscribed, "refused to sign and acknowledge" with unintelligible
signatures of witnesses. A recruitment advertisementof SPI was published in
the Philippine Daily Inquirer. It listed all vacancies in SPI, including a position
for Marketing Communications Manager under Corporate Support.
Mapua submitted an affidavit and alleged that Prime Manpower Resources
Development posted an advertisement on the website of Jobstreet
Philippines for the employment of a Corporate Development Manager in an

unnamed Business Process Outsourcing company located in Paraaque City.

Mapua suspected that this advertisement was for SPI because the writing
style used was similar to Rainas. She also claimed that SPI is the only BPO
office in Paraaque City at that time. Thereafter, she applied for the position
under the pseudonym of "Jeanne Tesoro". On the day of her interview with
Prime Manpowers consultant, Ms. Portia Dimatulac the latter allegedly
revealed to Mapua that SPI contracted Prime Manpowers services to search
for applicants for the Corporate Development Manager position.She
wasconvinced that her former position is not redundant. According to her,
she underwent psychiatric counseling and incurred medical expenses as a
result of emotional anguish, sleepless nights, humiliation and shame from
being jobless. She also averred that the manner of her dismissal was
unprofessional and incongruous with her rank and stature as a manager as
other employees have witnessed how she was forced to vacate the premises
on the same day of her termination.
The company, through Villanueva, served a written notice to Mapua,
informing her of her termination effective. Mapua refused to receive the
notice, thus, Villanueva made a notation "refused to sign and acknowledge"
on the letter. On that same day, SPI filed an Establishment Termination
Report with the Office of the Regional Director of the Department of Labor
and Employment-National Capital Region (DOLE-NCR) informing the latter of
Mapuas termination. Mapua was offered her separation and final pay, which
she refused to receive. Before the effective date of her termination, she no
longer reported for work. SPI has not hired a Corporate Development
Manager since then.
LA rendered a Decision, the redundancy of [Mapuas] position being in want
of factual basis, her termination is therefore hereby declared illegal.
Accordingly, she should be paid her backwages, separation pay in lieu of
reinstatement, moral and exemplary damages and attorneys fees. SPI
appealed the LA decision to the National Labor Relations Commission
(NLRC).In ruling so, the NLRC held that "[t]he determination of whether
[Mapuas] position as Corporate Development Manager is redundant is not
for her to decide. It essentially and necessarily lies within the sound business
management." Mapua elevated the case to the CA by way of petition for
certiorari, arguing that based on evidence, the LA decision should be
reinstated.Mapuas petition was initially dismissed by the CA. Mapua filed a
motion for reconsideration which was granted by the CA. It promulgated its
Decision, reinstating the LAs decree.
Issue:
1) Whether or not Mapua is illegally dismissed from work.
2) Whether or not the award of moral and exemplary damages is valid.

1) Ruling: Yes.
The Court does not agree with the rationalization of the NLRC that "[i]f it
were true that her position was not redundant and indispensable, then the
company must have already hired a new one to replace her in order not to
jeopardize its business operations. The fact that there is none only proves
that her position was not necessary and therefore superfluous."
What the above reasoning of the NLRC failed to perceive is that "[o]f
primordial consideration is not the nomenclature or title given to
the employee, but the nature of his functions."It is not the job title but
the actual work that the employee performs. Also, change in the job title
is not synonymous to a change in the functions. A position cannot be
abolished by a mere change of job title. In cases of redundancy, the
management should adduce evidence and prove that a position which was
created in place of a previous one should pertain to functions which are
dissimilar and incongruous to the abolished office.
2) Ruling: Yes.
Award of moral and exemplary damages for an illegally dismissed
employee is proper where the employee had been harassed and
arbitrarily terminated by the employer. Moral damages may be awarded
to compensate one for diverse injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation occasioned by the
employers unreasonable dismissal of the employee.
The Court has consistently accorded the working class a right to recover
damages for unjust dismissals tainted with bad faith; where the motive of the
employer in dismissing the employee is far from noble. The award of such
damages is based not on the Labor Code but on Article 220 of the Civil Code.
However, the Court observes that the CA decision affirming the LAs award of
P500,000.00 and P250,000.00 as moral and exemplary damages,
respectively, is evidently excessive because the purpose for awarding
damages is not to enrich the illegally dismissed employee.
Consequently, the Court hereby reduces the amount of P50,000.00 each as
moral and exemplary damages

Topic: Seaman Permanent Disability

Ponente: Justice Bienvenido L. Reyes
BARKO INTERNATIONAL, INC. /CAPT. TEODORO B. QUIJANO AND/OR
FUYO KAIUN CO. LTD. vs. EBERLY S. ALCAYNO, G.R. No. 188190, April
21, 2014
Facts: The respondent was employed by Fuyo Kaiun Co. Ltd. through its
local manning agent, Barko International, Inc. (petitioners), as Able-bodied
Seaman. The employment contract provided for a contract period of nine
months. His prime duty, among others, was to paint and chip rust on deck or
superstructure of ship and to give directions to the crew engaged in cleaning
wheelhouse and quarterdeck on board the vessel, M/V Cape Iris.Having
passed the required Pre-Employment Medical Examination (PEME) and found
fit for sea service, the respondent boarded the ocean vessel M/V Cape Iris.
After one month on board the vessel, the respondent complained of stiff
neck, and his right jaw started to swell. His physical condition worsened
despite medications given him on board until he signed off at the port of the
Suez Canal, Egypt where he was examined by a certain Dr. Michael H.
Mohsen of the Dr.Nazmy Hospital. Dr. Mohsens diagnosis stated that the
respondent had a "firm mass in the left side of neck with severe diffuse
infection and pus collection in the neck, gangrene and necrosis in skin and
tissues of neck, Uncontrolled D.M., Toxaemia and this condition may be due
to chronic disease or malignancy." The Medical Report issued by the
Dr.Nazmy Hospital recommended hospital confinement.
The respondent was repatriated to the Philippines.Upon arrival in Manila, the
respondent was examined by Dr.Nicomedes G. Cruz, a company-designated
physician. The Diagnosis indicated: Uncontrolled diabetes mellitus and
tuberculous adenitis. The respondent was placed under a six-month antituberculosis treatment. The respondent consulted a private physician, Dr.
Regina Pascua Barba, who also medically assessed him to be suffering from
cervical tuberculosis adenitis as similarly assessed by the companydesignated physician. She recommended continuous treatment and
medication for the respondent.
The respondent filed a complaint for disability benefits, reimbursement of
medical expenses, payment of the unexpired portion of his contract, moral
and exemplary damages and attorneys fees against the petitioners. To
support his claim, he alleged that his illness was contracted while he was on
board M/V Cape Iris; that he was repatriated for medical reasons and was
treated for more than 120 days; and, that he suffered a permanent total
disability with Grade 1 impediment. Thus, he should be compensated by the
petitioners. The petitioners denied the claim and averred that a company-

designated physician, in fact, issued a handwritten medical evaluation

finding his condition well-controlled, asymptomatic, and stable and therefore,
physically fit to resume work anytime. Dr. Cruz declared the respondent fit to
work on even date after completion of the anti-Kochs medication for six
months. Such fact was not disputed; hence, there is no disability to speak
of.LA granted the claim of the respondent. The NLRC reversed the decision of
the LA as it found no factual and legal basis to support the respondents
allegation. The CA granted the petition of the respondent and reversed the
resolution of the NLRC. Hence this petition.
Issue: Whether or not the respondent is entitled to total and permanent
disability benefits just because his injury rendered him incapable of
performing his work for more than 120 days.
Ruling: Yes.
What is important is that he was unable to perform his customary
work for more than 120 days which constitutes permanent total
disability, and not the actual injury itself. Undoubtedly, the illness of the
respondent which incapacitated him to work more than 120 days after
repatriation is considered as work-related which entitles him to disability
benefits.
The Court, moreover, agrees with the CA regarding the applicability of the
doctrine in the case of Crystal Shipping that a seafarer's continuous
inability to work due to a work-related illness for a period of more
than 120 days need not be qualified by a declaration of fitness to
work by a company-designated physician for it to be considered as a
permanent total disability which is compensable. It would, thus, be
illogical to apply the ruling laid down in Vergara which was promulgated on
October 6, 2008, or more than two years from the time the complaint was
filed. The observance of the principle of prospectivity dictates that
Vergara should not operate to strip the respondent of his cause of
action for total and permanent disability that accrued since the time of his
inability to perform his customary work.

Topic: Retrenchment differentiated from Redundancy

Ponente: BRION, J.
ARABIT, et al., v. JARDINE PACIFIC FINANCE, INC., G.R. No. 181719,
April 21, 2014
Facts: Petitioners were former regular employees of respondent Jardine
Pacific Finance, Inc. (formerly MB Finance) (Jardine). The petitioners were also
officers and members of MB Finance Employees Association-FFW Chapter
(the Union), a legitimate labor union and the sole exclusive bargaining agent
of the employees of Jardine. On the claim of financial losses, Jardine decided
to reorganize and implement a redundancy program among its employees.
The petitioners were among those affected by the redundancy program.
Jardine thereafter hired contractual employees to undertake the functions
these employees used to perform. The Union alleged unfair labor practice on
the part of Jardine, as well as discrimination in the dismissal of its officers
and members. Negotiations ensued between the Union and Jardine under the
auspices of the NCMB, and both parties eventually reached an amicable
settlement. In the settlement, the petitioners accepted their redundancy pay
without prejudice to their right to question the legality of their dismissal with
the NLRC.
On June 1, 1999, the petitioners and the Union filed a complaint against
Jardine with the NLRC for illegal dismissal and unfair labor practice. The LA
ruled in the petitioners favor. The CA reversed the LAs and the NLRCs
rulings, and granted Jardines petition for certiorari.
Issue: Whether or not the CA correctly ruled that the NLRC committed grave
abuse of discretion when it found that Jardine validly terminated the
petitioners employment because of redundancy
Ruling: No.

Retrenchment and redundancy are two different concepts; they are not
synonymous; thus, they should not be used interchangeably. Redundancy
exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is
redundant where it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as over hiring of workers,
decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
Primarily, employers resort to redundancy when the functions of an
employee have already become superfluous or in excess of what the
business requires. For the implementation of a redundancy program to be
valid, the employer must comply with the following requisites: (1) written
notice served on both the employees and the Department of Labor
and Employment at least one month prior to the intended date of
retrenchment; (2) payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant positions; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.
Topic: Payment of accrued wages despite reversal of decision
Ponente: BRION, J.
BERGONIO v. SOUTH EAST ASIAN AIRLINES, G.R. No. 195227, April
21, 2014
Facts: On April 30, 2004, the petitioners filed before the LA a complaint for
illegal dismissal and illegal suspension with prayer for reinstatement against
respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIRs
President (collectively, the respondents). The LA found the petitioners
illegally dismissed and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages. The respondents
appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its
November 29, 2006 resolution final and executory. The CA rendered its
decision (on the illegal dismissal ruling of the LA) partly granting the
respondents petition. The Court likewise denied the petitioners subsequent
motion for reconsideration, and thereafter issued an Entry of Judgment
certifying that its August 4, 2008 resolution had become final and executory
on March 9, 2009. In its July 16, 2008 resolution, the NLRC affirmed in toto
the LAs March 13, 2008 order. The CA reversed, for grave abuse of
discretion, the NLRCs July 16, 2008 decision that affirmed the LAs order to
release the garnished amount.
Issue: Whether or not the petitioners may recover the accrued wages prior
to the CAs reversal of the LAs May 31, 2005 decision.

Ruling: Yes.
An employer, who, despite the Labor Arbiters order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the reversal
by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. The rule, therefore, is that an employee may still
recover the accrued wages up to and despite the reversal by the higher
tribunal. This entitlement of the employee to the accrued wages proceeds
from the immediate and self-executory nature of the reinstatement aspect of
the LAs decision.
Exception. To determine whether an employee is thus barred, two tests
must be satisfied: (1) actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and (2) the delay must
not be due to the employers unjustified act or omission. Note that under the
second test, the delay must be without the employers fault. If the delay is
due to the employers unjustified refusal, the employer may still be required
to pay the salaries notwithstanding the reversal of the LAs decision.
Under the facts and the surrounding circumstances, the delay was due to the
acts of the respondents that we find were unjustified. The respondents'
failure in this case to exercise either option rendered them liable for the
petitioners' accrued salary until the LA decision was reversed by the CA on
December 17, 2008.
Topic: Standards for regularization; conceptual underpinnings
Ponente: PERLAS-BERNABE, J.
Abbot Laboratories Philippines, et al. v. Perlie Alcaraz GR No.
192571, July 23, 2013
Facts:
The
respondent Alcaraz was
the
Regulatory
Affairs
and Information Manager of Aventis Pasteur Philippines who showed interest
in applying as a Medical and Regulatory Affairs Manager, a position that was
published by the petitioner Abbot Laboratories in the newspaper. When the
petitioner formally offered the position to the respondent, the latter accepted
the position. It was on May 23, 2005 that Walsh, Almazar and Bernardo
formally handed to the respondent a letter terminating her employment with
the detailed explanation for her termination. The respondent then filed a
complaint for illegal dismissal with damages against the petitioner and its
officers. The Labor Arbiter upheld the termination of probationary
employment of the respondent holding that the termination was justified
with no evidence showing that the officers of the Abbot Lab acted in bad
faith when terminating her services.

The NLRC annulled and set aside the ruling of the Labor Arbiter which
prompted the petitioners to file before the Court of Appeals a petition for
certiorari with prayer for issuance of a temporary restraining order and writ
of preliminary injunction. Meanwhile, the action of the petitioner on its
motion for reconsideration of the CAs resolution in the second CA petition
was denied that became final on January 10, 2011 because the petitioner
failed to file a timely appeal on the said decision. Alcaraz, in her comment,
raised the issue on forum shopping when the petitioner filed its second
petition to the CA pending the resolution of the motion for reconsideration
that they filed earlier in the December 10, 2009 decision. Alcaraz further
contends that the petitioners failed to comply with certification requirement
under Section 5, Rule 7 of the rules of court when they failed to disclose in
their petition filed on June 16, 2010 Memorandum of Appeal filed before the
NLRC.
Issue: Whether or not Alcaraz was validly terminated from her employment.
Ruling: Yes.
Alcaraz was sufficiently informed of the reasonable standards. The employer
is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the
regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary
employees engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee.
A punctilious examination of the records reveals that Abbott had indeed
complied with the above-stated requirements. This conclusion is largely
impelled by the fact that Abbott clearly conveyed to Alcaraz her duties and
responsibilities as Regulatory Affairs Manager prior to, during the time of her
engagement, and the incipient stages of her employment.
Records show that Alcaraz was terminated because she (a) did not manage
her time effectively; (b) failed to gain the trust of her staff and to build an
effective rapport with them; (c) failed to train her staff effectively; and (d)
was not able to obtain the knowledge and ability to make sound judgments
on case processing and article review which were necessary for the proper
performance of her duties. Due to the nature and variety of these managerial
functions, the best that Abbott could have done, at the time of Alcaraz's
engagement, was to inform her of her duties and responsibilities, the
adequate performance of which, to repeat, is an inherent and implied
standard for regularization; this is unlike the circumstance in Aliling where a
quantitative regularization standard, in the term of a sales quota, was readily
articulable to the employee at the outset. Hence, since the reasonableness

of Alcaraz's assessment clearly appears from the records, her termination

was justified. Bear in mind that the quantum of proof which the employer
must discharge is only substantial evidence which, as defined in case law,
means that amount of relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise.
A different procedure is applied when terminating a probationary employee;
the usual two-notice rule does not govern. Section 2, Rule I, Book VI of the
Implementing Rules of the Labor Code states that "if the termination is
brought about by the failure of an employee to meet the standards of the
employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the
effective date of termination."
As the records show, Alcaraz's dismissal was effected through a letter dated
May 19, 2005 which she received on May 23, 2005 and again on May 27,
2005. Stated therein were the reasons for her termination, i.e., that after
proper evaluation, Abbott determined that she failed to meet the reasonable
standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the
performance of her functions as Regulatory Affairs Manager. Undeniably, this
written notice sufficiently meets the criteria set forth above, thereby
legitimizing the cause and manner of Alcarazs dismissal as a probationary
employee under the parameters set by the Labor Code.

Topic: Illegal Dismissal

Ponente: VILLARAMA, JR., J.
Mirant (Philippines) Corporation, et al. v. Joselito A. Caro,G.R. No.
181490, April 23, 2014
Facts: Respondent filed a complaint for illegal dismissal and money claims
for 13th and 14th month pay, bonuses and other benefits, as well as the
payment of moral and exemplary damages and attorneys fees. It is the
contention of respondent that he was illegally dismissed by petitioner

corporation due to the latters non-compliance with the twin requirements of

notice and hearing. He asserts that while there was a notice charging him of
"unjustified refusal to submit to random drug testing," there was no notice of
hearing and petitioner corporations investigation was not the equivalent of
the "hearing" required under the law which should have accorded respondent
the opportunity to be heard. To the mind of petitioners, they are not liable for
illegal dismissal because all of these circumstances prove that respondent
really eluded the random drug test and was therefore validly terminated for
cause after being properly accorded with due process. Labor Arbiter found
respondent to have been illegally dismissed. The NLRC found that
respondent was not only validly dismissed for cause he was also properly
accorded his constitutional right to due process. The CA disagreed with the
NLRC and ruled that it was immaterial whether respondent failed, refused, or
avoided being tested. The CA however found that award of moral and
exemplary damages is without basis due to lack of bad faith on the part of
the petitioner corporation which merely acted within its management
prerogative.
Issue: Whether or not the respondent was illegally dismissed
Ruling: Yes.
There was illegal dismissal. While the adoption and enforcement by
petitioner corporation of its anti-drugs policy is recognized as a valid exercise
of management prerogative as an employer, such exercise is not absolute
and unbridled.
We agree with the disposition of the appellate court that there was illegal
dismissal in the case at bar.
While the adoption and enforcement by petitioner corporation of its AntiDrugs Policy is recognized as a valid exercise of its management prerogative
as an employer, such exercise is not absolute and unbridled. Managerial
prerogatives are subject to limitations provided by law, collective bargaining
agreements, and the general principles of fair play and justice.46 In the
exercise of its management prerogative, an employer must therefore ensure
that the policies, rules and regulations on work-related activities of the
employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to
the degree of the infraction.47 The Anti-Drugs Policy of Mirant fell short of
these requirements.
Topic: Accident and Disability Benefits
Ponente: Brion, J.

Sunga v. Virjen Shipping Corporation, G.R. No. 198640, April 23,

2014
Facts: Virjen Shipping Corporation (Virjen), acting in behalf of its foreign
principal, Nissho Odyssey Ship Management Pte. Ltd., entered into a contract
of employment with Sunga. Under the contract, Sunga would be working as a
fitter on board the ocean-going vessel MT Sunway for nine (9) months on a
monthly salary of US$ 566.00. Sungas employment was covered by the IBF
JUS/AMOSUP-IMMAJ Collective Bargaining Agreement (CBA) executed
between Virjen and Nissho Odyssey, All Japan Seamens Union and AMOSUP.
Sometime in 2007, while already on board the MT Sunway vessel, Sunga
started to experience an on-and-off right flank pain, making it difficult for
him to work. The pain became more intense as the days progressed, thereby
prompting him to request for repatriation. The request was granted. Sunga
reported to Virjens company-designated physician, Dr. Cruz, for medical
examination. The doctor instructed him to undergo Magnetic Resonance
Imaging (MRI) of his lumbosacral spine. The MRIs results merited the
medical advice that Sunga undergo physical therapy for a period of four (4)
months under the supervision of Dr. Cruz. Despite the therapy, Sunga still
experienced episodes of moderate to severe pain on his right lower
extremity and back. He also manifested limited trunk mobility and was
unable to undertake lifting activities.
Dr. Cruz issued a medical certificate recommending a Grade 8 disability
(Moderate rigidity or 2/3 loss of motion or lifting power of the trunk) based on
the Philippine Overseas Employment Administration (POEA) Standard
Employment Contract for Seafarers. Dr. Cruz also issued another medical
certificate recommending a disability grading of 25% (Back pains with
considerable reduction of mobility) in accordance with the parties CBA. On
the strength of these two certificates, Virjen immediately offered Sunga the
amount of US$ 16,795.00, in accordance with the POEA Standard
Employment Contract for Seafarers, as full settlement for the latters
disability benefits. However, Sunga rejected the offer; he demanded instead
that his disability benefits be based on the disability grading of 25%,
pursuant to the provisions of the parties CBA.
Virjen denied Sungas demand. Hence, on October 23, 2007, Sunga filed a
complaint before the NLRC against Virjen for disability benefits as stated in
the parties CBA (not under the POEA Standard Employment Contract for
Seafarers) in the amount of US$ 110,000.00. The complaint likewise prayed
for attorneys fees, plus moral and exemplary damages.
Labor Arbiter ruled in Sungasfavour. It ordered Virjen to pay Sunga his
disability compensation benefits in the amount of US$ 110,000.00 pursuant
to the provisions of the parties CBA. The Labor Arbiter ruled that Sungas

injury is not merely an anatomical defect but a bodily harm brought upon by
the performance of his duties and functions as fitter of the vessel.
Virjen filed a petition for certiorari with the CA, attributing grave abuse of
discretion on the part of the NLRC which was granted. The CA reasoned that
accident is an unintended and unforeseen injurious occurrence, something
that does not occur in the usual course of events or could not be reasonably
anticipated. According to the appellate court, the injury was not accidental; it
is common knowledge that carrying heavy objects can cause injury and that
lifting and carrying heavy objects are part of his duties as fitter. Thus, a back
injury is reasonably anticipated. It cannot serve as basis, therefore, for Sunga
to be entitled to disability benefits.
Issues:
1. Whether the NLRC committed grave abuse of discretion to justify its
substitution by the CA
2. Whether the injury suffered by Sunga is accidental for him to get
disability benefits.
Ruling:
1. NO. Grave abuse of discretion, amounting to lack or excess of
jurisdiction, has been defined as the capricious and whimsical exercise
of judgment amounting to or equivalent to lack of jurisdiction. There is
grave abuse of discretion when the power is exercised in an arbitrary
or despotic manner by reason of passion or personal hostility, and
must be so patent and so gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty enjoined or to
act at all in contemplation of law.
The Court failed to see any grave abuse of discretion on the part of the
NLRC which would authorize the appellate court to substitute its own
ruling over that of the NLRC. There was ample evidence to support the
findings of the NLRC. The CA, in a Rule 65 petition, is limited to a
simple review of whether there existed grave abuse of discretion; the
CA should not concern itself with the determination of whether the
NLRC, after evaluation of the evidence presented before it, had
correctly ruled on the merits of the case. The question of intrinsic
merits is an issue best left to the labor tribunals which are deemed to
have mastery over the subject matter.
2. YES. As found by both the NLRC and the Labor Arbiter, Sungas injury
was the result of the accidental slippage in the handling of the 200kilogram globe valve which triggered Sungas back pain; the weight of
the globe valve, coupled with the abruptness of the fall, explained why
the injury was so severe as to render Sunga immobile. While indeed
Sunga had not explained in the request for repatriation the proximate

cause of the injury, there was enough circumstantial evidence to

substantiate the claim.
In Jarco Marketing Corporation, et al., v. Court of Appeals, we ruled that
an accident pertains to an unforeseen event in which no fault or
negligence attaches to the defendant. It is a fortuitous circumstance,
event or happening; an event happening without any human agency,
or if happening wholly or partly through human agency, an event
which under the circumstances is unusual or unexpected by the person
to whom it happens.
Since Sunga encountered an accident on board MT Sunway, the CA
thus grossly misappreciated and misread the ruling of the NLRC,
leading the appellate court to find a grave abuse of discretion sufficient
for a reversal of the NLRC ruling. In other words, as the NLRC found,
Sunga's disability benefits should fall within the coverage of the
parties' CBA, which provides:
Article 28: Disability 28.1
A seafarer who suffers permanent disability as a result of an accident
whilst in the employment of the Company regardless of fault, including
accidents occurring while traveling to or from the ship, and whose
ability to work as a seafarer is reduced as a result thereof, but
excluding permanent disability due to willful acts, shall in addition to
sick pay, be entitled to compensation according to the provisions of
this Agreement.
In sum, we find that the NLRC did not abuse its discretion. It arrived at
a proper decision after fully appreciated of the parties' arguments and
carefully considering the presented evidence. Thus, there was no basis
for the CAs conclusion that the NLRC committed grave abuse of
discretion.

July 2014 Labor Cases

Topic: Reimbursement of medical expenses
Ponente: Brion, J.
Javier v. Transmarine Carriers, Inc., G.R No. 204101, July 02, 2014
Facts: Philippine Transmarine Carriers, Inc. (PTCI) hired Alberto as
pumpman, on board the vessel MT Neptune Glory. This was Albertos 20th
contract with the respondents. Pursuant to the agreement, Alberto received
a basic monthly salary of US$656.00 for a contract period of nine months.
Prior to his hiring on March 3, 2003, Alberto underwent the required Preemployment Medical Examination (PEME) and was declared fit for work by
PTCIs designated physician. In 2003, Alberto suddenly felt severe headache
accompanied by dizziness, vomiting and physical weakness while he was on
board
MT
Neptune
Glory.
On November 15, 2003, Alberto was confined at the University of Texas
Medical Branch Hospital in Galveston, Texas. He underwent a series of
medical examination and was diagnosed to be suffering from hypertension.
On the doctors advice, Alberto was repatriated to the Philippines on
November
23,
2003
for
further
medical
treatment.
Upon arrival in Manila, Alberto was referred to Dr. Cammayo at the Manila
Doctors Hospital. Alberto underwent a series of medical treatment and
examination. On March 30, 2004, Alberto underwent coronary artery bypass
surgery due to a three vessel Coronary Artery Disease.
On April 14, 2004, Alberto was discharged from the Manila Doctors Hospital.
The doctors, however, failed to either declare him as fit to return to work or
to assess his disability grading. Thus, Alberto sought the opinion of Dr.
EfrenVicaldo, a private doctor-cardiologist, who assessed Albertos disability

as impediment grade 1 and declared the latter as unfit to resume work as

seaman in any capacity and not expected to land a gainful employment
given his medical background.
In view of Dr. Vicaldos assessment, Alberto claimed from the respondents
disability benefits and sickness allowance pursuant to the Philippine
Overseas Employment Administration Standard Employment Contract (POEASEC). The respondents denied Albertos claim. Hence, Alberto filed before the
LA a complaint for disability benefits, illness allowance, and reimbursement
of medical expenses, damages and attorneys fees. The LA ordered the
respondents to pay Alberto the total amount of US$68,886.40 or its
Philippine Peso equivalent at the prevailing rate of exchange; it consisted
of disability benefits (in the amount of US$60,000.00), sickness allowance (in
the amount of US$2,624.00 or Albertos basic monthly wage of US$656.00
for four months), and attorneys fees equivalent to 10% of the monetary
award. According to the LA, Alberto contracted his illness during the term of
his contract with the respondents and because of his constant exposure to
extraneous work. Hence, he is entitled to disability benefits.
The NLRC affirmed the LAs decision with modification. The NLRC found that
Alberto made an April 12, 2004 certification acknowledging receipt in full of
his sickness allowance equivalent to 120 days (in the amount of
P144,318.03) and payment in full of his medical treatment (in the amount of
P1,928,841.27). Since these expenses, in the total amount of P2,073,159.30,
have already been paid, the NLRC ordered its deduction from the peso
equivalent of the total monetary award of US$68,886.40.
CA affirmed the NLRCs resolution. The CA brushed aside the petitioners
claim for reimbursement of medical expenses incurred by Alberto because
the petitioners failed to appeal the portion of the LAs decision that denied
Albertos claim on these. It also denied Albertos claim for sickness allowance
because of Albertos April 12, 2004 certification. It rejected the petitioners
claim for death benefits. It pointed out that death benefits are granted to the
heirs of the seafarer only when the seafarer dies during the term of the
contract and for causes that are work-related. In this case, Alberto died after
his employment contract with the respondents had already been terminated.
Issue: Whether Albertos heirs are entitled to reimbursement of the
expenses that Alberto incurred for his medical treatment as medical
expenses and sickness allowance are separate and distinct from one another
and from disability benefits
Ruling: YES. The employment of seafarers and its incidents are governed by
the contracts they sign every time they are hired or rehired. These contracts
have the force of law between the parties as long as their stipulations are not
contrary to law, morals, public order or public policy. Every seaman and the

vessel owner (directly or represented by a local manning agency) are

required to execute the POEA-SEC as a condition sine qua non to the
seafarers deployment for overseas work. While the seafarers and their
employers are governed by their mutual agreements, the POEA rules and
regulations require that the POEA-SEC, which contains the standard terms
and conditions of the seafarers employment in foreign ocean-going vessels,
be
integrated
in
every
seafarers
contract.
In the present case, Section 20-B of the 2000 POEA-SEC (the governing
POEA-SEC at the time the respondents employed Alberto in 2003) is the
applicable provision. Under this section, the employers assume several kinds
of liabilities to the seafarer for any work-related illness or injury that the
seafarer may have suffered during the term of the contract.
The separate treatment of, and the distinct considerations in, these three
kinds of liabilities under the POEA-SEC can only mean that the POEA-SEC
intended to make the employer liable for each of these three kinds of
liabilities. In other words, employers must: (1) pay the seafarer sickness
allowance equivalent to his basic wage in addition to the medical treatment
that they must provide the seafarer with at their cost; and (2) compensate
the seafarer for his permanent total or partial disability as finally determined
by the company-designated physician.
Significantly, too, while Section 20 of the POEA-SEC did not expressly state
that the employers liabilities are cumulative in nature so as to hold the
employer liable for the sickness allowance, medical expenses and disability
benefits it does not also state that the compensation and benefits are
alternative or that the grant of one bars the grant of the others.
Under this setup, the Court must be guided by the principle that as a labor
contract, the POEA-SEC is imbued with public interest. Accordingly, its
provisions must be construed fairly, reasonably and liberally in favor of the
seafarer in the pursuit of his employment on board ocean-going vessels.
After all, the constitutional policy, which we here uphold and emphasize in
construing as we do these POEA-SEC provisions, accords and guarantees full
protection to labor, both local and overseas.
However,
since
the
sickness
allowance
was
already
paid,
it
should
be
deleted
from the monetary award. The Court finds no compelling reason to overturn
the NLRC and the CAs factual finding that the respondents have fully paid
Albertos sickness allowance. In this regard, we agree with the CA that the
NLRC committed no grave abuse of discretion in ordering the deletion of the
sickness allowance benefit in the amount of P144, 318.03 from the peso
equivalent of the amount awarded to Alberto. The LAs grant of sickness
allowance despite its full payment is clearly contrary to the provisions of the
POEA-SEC; its ruling inequitably resulted in a double payment to Alberto at
the respondents expense.

Similarly, we are bound by the NLRC and the CAs factual finding that the
respondents fully paid Albertos medical expenses. However, unlike the
deletion of sickness allowance benefits, we find that the CA legally erred in
not finding that the NLRC committed grave abuse of discretion in ordering
the deduction of the medical expenses paid by the respondents from the
total monetary award. The NLRCs action is whimsical and arbitrary for clear
lack of factual, legal and jurisprudential basis.
As earlier stated, the LA denied for lack of basis Albertos prayer for
reimbursement of medical expenses. The total monetary award of
US$68,886.40 consisted only of the disability benefits, sickness allowance
and attorneys fees. In view of the NLRCs ruling that ordered the deletion of
the sickness allowance from the total monetary award, Alberto was
effectively left with only the disability benefits and the 10% attorneys fees
as his monetary award. In this regard, the NLRC had no reason, both in fact
and in law, to order the deduction from the total monetary award
(US$68,886.40) the amount of P1,928,841.27 incurred (and which the
respondents had already paid in full) for Albertos medical treatment.
As a matter of fact, the LA did not award Alberto any amount as
reimbursement for his medical expenses which the NLRC could arguably
consider as double reimbursement or payment resulting in unjust
enrichment on Albertos part. As a matter of law, the benefit of medical
treatment at the employers expense is, as earlier discussed, separate and
distinct from the disability benefits and sickness allowance to which the
seafarer
is
additionally
entitled.
The NLRC reached its conclusion even if the POEA-SEC treats these two kinds
of liabilities distinctly and even if the bases for their payment are different.
This clearly smacks of grave abuse of discretion amounting to lack and
excess of jurisdiction. Grave abuse of discretion was patent when the NLRC
acted contrary to the facts that the LA did not award Alberto medical
expenses and the provisions of the law - in this case, the POEA-SEC.

Topic: Reinstatement without loss of seniority rights

Ponente: Perez, J.
Ampeloquio v. Jaka Distribution, Inc., G.R. No. 196936, July 2, 2014
Facts: Ampeloquio is a reinstated employee of respondent Jaka Distribution,
Inc. (JAKA), formerly RMI Marketing Corporation (RMI). Previously,
Ampeloquio had filed a complaint for illegal dismissal against RMI before the
National Labor Relations Commission (NLRC). Subsequently, the Labor
Arbiter found RMI guilty of illegal dismissal. Ampeloquio resumed work as
merchandiser at JAKA and reported at JAKAs outlets within Metro Manila,
Shopwise Makati and Alabang. He received a daily wage of P252.00, without
meal and transportation allowance. In 2005, Ampeloquio was transferred
outside of Metro Manila, to Lucena City and subsequently to San Pablo City.
At that time, he was receiving the same daily wage of P252.00, without meal

and transportation allowance. Ampeloquio was given a monthly cost of living

allowance (COLA) of P720.00.
Ampeloquio requested for salary adjustment and benefits retroactive to the
date of his reinstatement, 6 August 2004, and payment of salary differential
in the total amount of P42,196.00. In another letter, Ampeloquio wrote JAKA
reiterating his request for salary adjustment and payment of benefits
retroactive to his reinstatement, and an increase from his previous request of
salary differential which amounted to a total of P180,590.00.Ampeloquio
based his request on what other merchandisers of JAKA received.
Because of the discrepancy in wages, Ampeloquio filed anew before the
NLRC, a complaint for underpayment of wages, COLA, non-payment of meal
and transportation allowances.
LA Hernandez granted Ampeloquios complaint for underpayment of wages,
basic and COLA and non-payment of allowances, meal and transportation.
On appeal by JAKA, the NLRC proper, in its Resolutionmodified the amounts
ordered by the Labor Arbiter to be paid by JAKA to Ampeloquio. Ampeloquiois
therefore entitled to a total salary differential of only P22,172.00.

JAKAs contention that Ampeloquio is not entitled to reimbursement of

transportation expenses from the latters house to the outlet where he was
assigned and back is impressed with merit as JAKA submitted a copy of their
policies and the pertinent portion, states:
"7. The only transportation expenses allowed to be reimbursed are
those incurred from the first outlet to succeeding outlets. The
transportation reimbursement shall not include house to first outlet
and last outlet to house."
Aggrieved by the NLRCs modification of what Ampeloquio obviously
perceived as an acceptable monetary award, the latter filed a petition for
certiorari before the Court of Appeals bewailing grave abuse of discretion in:
(1) the reduction of his award of salary differential to only 22,172.00; (2) the
deletion of his entitlement to transportation expenses; and (3) the deletion of
the award of moral and exemplary damages.The appellate court dismissed
Ampeloquios petition for certiorari finding no grave abuse of discretion in
the NLRCs ruling and finding that, in fact, it is supported by substantial
evidence.
Issues:
1. What is the scope vis-a-vis wages of reinstatement "without loss of
seniority rights and other privileges."?
2. What is the salary rate he is entitled to?
Ruling:

Seniority rights refer to the creditable years of service in the employment

record of the illegally dismissed employee as if he or she never ceased
working for the employer. In other words, the employees years of service is
deemed continuous and never interrupted. Such is likewise the rationale for
reinstatements twin relief of full back wages.
Ampeloquio is correct in asserting that he is a senior employee compared to
the other merchandisers whom he himself designates as casual or
contractual merchandisers. He is likewise senior to other regular employees
subsequently hired by JAKA, specifically two regular messenger employees
which Ampeloquio claims receive wages higher than what he is receiving
from JAKA. Attached to the recognition of seniority rights of a reinstated
employee who had been illegally dismissed is the entitlement to wages
appurtenant thereto.
The case of Ampeloquio is outside the ordinary. His reinstatement was
ordered when merchandisers like him were no longer employed by JAKA. He
is not entitled to the same terms and conditions of employment as that
which was offered to the other regular employees (not merchandisers)
subsequently hired by JAKA.JAKAs decision to grant or withhold certain
benefits to other employees is part of its management prerogative as a
function of an employers constitutionally protected right to reasonable
return on investments.
Ampeloquio cannot likewise compare his wages to that received by "casual
or contractual merchandisers" or merchandisers who are admittedly
outsourced from manpower agencies or those who are considered seasonal
employees hired only during peak season when JAKA is in need of extra
merchandisers.
To say the least, these merchandisers are not, strictly speaking, employees
of JAKA, but of a service provider company which has a service contract with
JAKA. The merchandisers in this case simply perform the work at JAKAs
outlets, wearing uniforms approved by JAKA but provided by the service
company who is actually their employer. There is no employer-employee
relationship between JAKA and these merchandisers.
Receipt by these merchandisers of a benefit such as transportation or meal
allowance is part of the monies they receive from their employer and
embedded in the contract price of the service agreement the employer has
with JAKA.
The phrase without loss of seniority rights applies with practical and real
effect to Ampeloquio upon his retirement because he will reach earlier than

other regular employees of JAKA the required number of years of service to

qualify for retirement.
In all, the labor tribunals were right in using as guidepost the existing
statutory minimum wages and COLA during the three (3) year prescriptive
period within which Ampeloquio can make his money claims.
We are not unaware that reinstatement is the rule and such covers
reinstatement to the same or substantially equivalent position without loss of
seniority rights and privileges.
In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e.,
(1) strained relations, or (2) abolition of the position; JAKA immediately
complied with the Labor Arbiters order of reinstatement.
We note that, specifically, JAKA could have claimed that the position of
merchandiser no longer exists and has been abolished with the contracting
of this job function. However, it merely opted to reinstate Ampeloquio to the
same position. There is no quarrel that with his reinstatement, Ampeloquio is
now the lone regular merchandiser of JAKA.
The option of reinstatement to a substantially equivalent position does not
apply herein as reinstatement to a substantially equivalent position entails
the same or similar job functions and not just same wages or salary. As
applied to this case, Ampeloquio cannot be reinstated to a messengerial
position although such is a regular employment enjoying the same
employment benefits and privileges. His employment cannot likewise be
converted into a contractual employment as such is actually a downgrade
from his regular employment enjoying security of tenure with JAKA.
As the sole regular merchandiser of JAKA, Ampeloquios reinstatement
entitles him, at the minimum, to the standard minimum wage at the time of
his employment and to the wages he would have received from JAKA had he
not been illegally dismissed, as if there was no cessation of employment.
Ampeloquio is likewise entitled to any increase which JAKA may have given
across the board to all its regular employees. To repeat, Ampeloquio is not
entitled to all benefits or privileges received by other employees
subsequently hired by JAKA just by the fact of his seniority in the service with
JAKA.

Topic: Payment of separation pay

Ponente: Villarama, Jr., J.
Immaculate Conception Academy v. Camilon G.R. No. 188035 July 2,
2014
Facts: Petitioner Immaculate Conception Academy (ICA) is an educational
corporation duly organized and existing under the laws of the Philippines and
co-petitioner Dr. Jose Paulo Campos is the president of ICA. Respondent
Evelyn Camilon was an employee of ICA for 12 years. She was ICAs Chief
Accountant and Administrator from June 2000 until her dismissal. As Chief
Accountant, respondent was responsible, among others, for pre-auditing the
school cashiers report, checking the entries therein and keeping custody of
the petty cash fund. She has also direct supervision over the School Cashier,
Janice Loba (Loba).
In July 2004, ICAs Treasurer, Shirley Enobal, received a complaint from the
father of one student who claimed that his son was denied issuance of an
examination permit for nonpayment oftuition fees despite the fact that the
said fees had already been paid.
Cristina Javier, Internal Auditor of ICA, conducted an audit upon the
instruction of petitioner Campos. She made the following findings:
a) There were several payments of tuition and school fees made by a
number of ICA students which were neither accounted for, turned
over and/or posted by the ICA Cashier, Ms.Janice C. Loba, to the
students subsidiary ledgers, nor were the collected amounts
deposited in ICAs account with the Rural Bank of Dasmarias, Inc.;
b) The unaccounted collections received from more or less 186 ICA
students amount to ONE MILLION ONE HUNDRED SIXTY SEVEN
THOUSAND ONE HUNDRED EIGHTY-ONE PESOS and 45/100
(P1,167,181.45).
c) There were missing or unsurrendered booklets of official receipts
issued to and received by Ms. Janice C. Loba as cashier which were
not accounted for, the amount of collection made therein is still
undetermined.

d) Ms. Janice C. Loba manipulated entries in the computerized

subsidiary ledger and destroyed records so that the unaccounted
amounts collected by her and the missing official receipts issued to
her as cashier could not be traced or detected.
Petitioner Campos placed respondent under suspension pending
investigation of the case in light of her duties and responsibilities as Chief
Accountant of ICA.Respondent denied any involvement in the irregularities
committed and claimed that she had no intention of profiting at the expense
of the school or of betraying the trust reposed on her by the corporation.
On October 27, 2004, petitioners terminated the services of respondent after
finding that respondent was negligent and remiss in her duties as the
superior officer of Loba.
On November 26, 2004, respondent filed a complaint for illegal dismissal and
other money claims against petitioners. She claimed that petitioners failed to
cite specific negligent acts or to state the manner and means she employed
in assisting or cooperating with the cashier in the misappropriation of school
funds. Respondent claimed that she was suspended from work without pay
despite the absence of any evidence directly or indirectly implicating her in
the financial irregularity from September 1, 2004 until her termination on
October 27, 2004. Also, she was not given her salary from August 16-30,
2004 and the proportionate sick leave pay and 13th month pay.
The Labor Arbiter rendered a decisiondeclaring ICA guilty of illegal
dismissal.Petitioners appealed the decision of the Labor Arbiter to the NLRC. The
NLRC rendered a decision finding respondents dismissal and preventive
suspension legal and setting aside the awards for back wages, separation
pay and attorneys fees. However, the awards for unpaid salary for the
period from August 15-30, 2004, 13th month pay and service incentive leave
pay which respondent already earned even prior to her dismissal was upheld.
The NLRC likewise ordered the payment to respondent of her unpaid salaries
for the number of working days she remained under preventive suspension
beyond 30 days.
Respondent appealed to the CA. CA rendered a decision affirming the ruling
of the NLRC but with the modification that petitioners are held liable to pay
separation pay to respondent as a measure of social justice.
Issue: Whether the award of separation pay is proper despite legality of
suspension and dismissal
Ruling: NO. The issue of whether a validly dismissed employee is entitled to
separation pay has been settled in the 2007 case of Toyota Motor Philippines
Corporation Workers Association (TMPCWA) v. NLRC, where it was further
clarified that "in addition to serious misconduct, in dismissals based on other

grounds under Art. 282 like willful disobedience, gross and habitual neglect
of duty, fraud or willful breach of trust, and commission of a crime against
the employer or his family, separation pay should not be conceded to the
dismissed employee."
This ruling was reiterated in the case of Central Philippines Bandag
Retreaders, Inc. v. Diasnes, where the Court set aside the award of
separation pay to Diasnes in view of the latters gross and habitual
negligence. To quote:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must
demur the award of separation pay based on social justice when an
employees dismissal is based on serious misconduct or willful disobedience;
gross and habitual neglect of duty; fraud or willful breach of trust; or
commission of a crime against the person of the employer or his immediate
family grounds under Art.282 of the Labor Code that sanction dismissals of
employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide
full protection to labor is not meant to be an instrument to oppress the
employers. The commitment of the Court to the cause of labor should not
embarrass us from sustaining the employers when they are right, as here. In
fine, we should be more cautious in awarding financial assistance to the
undeserving and those who are unworthy of the liberality of the law.
Again in the recent case of Moya v. First Solid Rubber Industries, Inc., the
Court disallowed the payment of separation pay to an employee dismissed
from work based on one of the grounds under Article 282 of the Labor Code
or willful breach by the employee of the trust reposed in him by his
employer. Therein, the Court held that Moyas act of concealing the truth
from the company is outside of the protective mantle of the principle of
social justice.
Pursuant to the aforementioned rulings, respondent is clearly not entitled to
separation pay. Respondent was holding a position which involves a high
degree of responsibility requiring trust and confidence as it involves the
financial interests of the school. However, respondent proved to be unfit for
the position when she failed to exercise the necessary diligence in the
performance of her duties and responsibilities as Chief Accountant, thus
justifying her dismissal from service. Respondent was guilty of gross and
habitual negligence when she failed to regularly pre-audit the report of the
school cashier, check the entries therein and keep custody of the petty cash
fund. Respondents dereliction in her duties spanned a period of 11 months
thus enabling the school cashier to misappropriate tuition fee payments,
manipulate the school records and destroy official receipts, in the total
amount of P1,167,181.45 to the prejudice of petitioners. Hence, she should

not be granted separation pay. To rule otherwise would be to reward

respondent for her negligent acts instead of punishing her for her offense.
As we held in Reno Foods, Inc. v. NagkakaisangLakasngManggagawa (NLM)Katipunan,"separation pay is only warranted when the cause for termination
is not attributable to the employee's fault, such as those provided in Articles
283 and 284 of the Labor Code, as well as in cases of illegal dismissal in
which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause."
As to whether respondents length of service with petitioners justifies the
award of separation pay, we rule in the negative. Respondents 12 years of
service and clean employment record cannot simply erase her gross and
habitual negligence in her duties. Length of service is not a bargaining chip
that can simply be stacked against the employer. As we held in Central
Pangasinan Electric Cooperative, Inc. v. NLRC, although long years of
service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination, this
case is not the appropriate instance for generosity. The fact that private
respondent served petitioner for more than twenty years with no negative
record prior to his dismissal, in our view of this case, does not call for such
award of benefits, since his violation reflects a regrettable lack of loyalty and
worse, betrayal of the company. If an employees length of service is to be
regarded as a justification for moderating the penalty of dismissal, such
gesture will actually become a prize for disloyalty, distorting the meaning of
social justice and undermining the efforts of labor to cleanse its ranks of
undesirables.

Topic: Jurisdiction
Ponente: DEL CASTILLO, J..
Amecos Innovations, Inc. and Antonio F. Mateov. Eliza R. Lopez, G.R.
No. 178055, July 2, 2014
Facts: Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly
incorporated under Philippine laws engaged in the business of selling
assorted products created by its President Antonio F. Mateo (Mateo). On May
30, 2003, Amecos received a Subpoena from the Office of the City Prosecutor
in connection with a complaint filed by the Social Security System (SSS) for
alleged delinquency in the remittance of SSS contributions.
Amecos settled its obligations with the SSS; consequently, SSS filed a Motion
to Withdraw Complaintwhich was approved by the Office of the City
Prosecutor.
Thereafter, petitioners sent a demand letter to respondent for P27,791.65
representing her share in the SSS contributions and expenses for processing,

but to no avail. Thus, petitioners filed the instant Complaint for sum of
money and damages against respondent.
Respondent filed her Answer with Motion to Dismiss claiming,among others,
that the regular courts do not have jurisdiction over the instant case as it
arose out of their employer-employee relationship.
The petitioner argued that their Complaint is one for recovery of a sum of
money and damages based on Articles 19, 22, and 2154 of the Civil Code;
that their cause of action is based on solutioindebitior unjust enrichment,
which arose from respondents misrepresentation that there was no need to
enroll her with the SSS as she was concurrently employed by another outfit,
Triple A Glass and Aluminum Company, and that she was self-employed as
well. They argue that the employer-employee relationship between Amecos
and respondent is merely incidental, and does not necessarily place their
dispute within the exclusive jurisdiction of the labor tribunals; the true source
of respondents obligation is derived from Articles 19, 22, and 2154 of the
Civil Code. They add that by reason of their payment of respondents
counterpart or share in the SSS premiums even as it was not their legal
obligation to do so, respondent was unjustly enriched, for which reason she
must return what petitioners paid to the SSS. Thus, the regular courts have
jurisdiction over the case.
Respondent, on the other hand, maintains that jurisdiction over petitioners
case lies with the Labor Arbiter, as their cause of action remains necessarily
connected to and arose from their employer-employee relationship. At any
rate, respondent insists that petitioners, as employers, have the legal duty to
enroll her with the SSS as their employee and to pay or remit the necessary
contributions.
Issue: Whether the regular civil court and not the Labor Arbiter has
jurisdiction over claims for reimbursement and claims for damages for
misrepresentation arising from employer-employee relations.
Ruling: The Court denies the Petition.
This Court holds that as between the parties, Article 217(a)(4) of the Labor
Code is applicable. Said provision bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from employeremployee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the

parties shared by the lower courts and the CA is correct; thus, petitioners
claims should have been referred to the labor tribunals. In this connection, it
is noteworthy to state that "the Labor Arbiter has jurisdiction to award not
only the reliefs provided by Labor Laws, but also damages governed by the
Civil Code."

Topic: Disability Compensation in relation to fit to work

declaration of an in-house physician against the declaration of
unfit for further work by a physician of choice of the claimant
Ponente: BRION, J.
BAHIA SHIPPING SERVICES, INC. and FRED OLSEN CRUISE LINES
LIMITED v.CRISANTE C. CONSTANTINO, G.R. No. 180343, July 9, 2014

Facts: On February 27, 2002, respondent Crisante C. Constantino

(Constantino) entered into a nine-month contract of employment as utility
with petitioners. The contract had been verified and approved by the
Philippine Overseas Employment Administration (POEA).
Sometime in April 2002 while at work on-board the vessel, Constantino
complained of low back pain radiating to his right thigh after allegedly lifting
several pieces of heavy luggage. The ship doctor gave him medications and
advised him to rest. When the vessel arrived at the Barbados, he was
referred to a shore-based physician, orthopaedic surgeon Dr. Jerry A.W.
Thorne, for examination and Magnetic Resonance Imaging (MRI). Dr. Thorne
diagnosed Constantino to besuffering from an acute exacerbation of a preexisting lumbar disc syndromeand declared him unfit to work for 10 days.
On April 25, 2002, Constantino was repatriated and referred to petitioners
physician, Dr. Robert D. Lim (Dr. Lim) of the Metropolitan Hospital, who
placed him under the care of an orthopaedic surgeon. Constantino
underwentseveral medical examinations until he was pronounced by Dr. Lim
to be fit-for-work.
However, he was not rehired by the company. Constantinoengaged the
services of a lawyer to claim disability compensation from the
petitioners. The claim was grounded on the declaration of Dr. Marciano
Almeda (Dr.Almeda), physician of choice of Constantino, that the latter is
unfit for further sea duties contrary to the declaration of Dr. Lim. The
petitioners denied the claim, prompting Constantino to file a complaint for
disability benefits, illness allowance, reimbursement of medical expenses,
damages and attorneys fees against them.
Issue: Is Constantino entitled to receive disability compensation?
Ruling: No.
First. The employment relationship between Constantino and the petitioners
is governed by the POEA-SEC, otherwise known as the Amended Standard
Terms and Conditions Governing the Employment of Filipino Seafarers OnBoard Ocean-Going Vessels. Thus, when the seafarer enters into an
individual contract with the employer, as Constantino did, the terms and
conditions of the contract must be in accordance with the POEA-SEC and
shall be strictly and faithfully observed. It is customary therefore that the
individual contract between the seafarer and the employer is verified and

approved by the POEA. Ashad been declared by the Court in an earlier ruling,
the POEA-SEC is the law between the parties, together with their CBA, if
there any.
Under the POEA-SEC, it is the company-designated physician who declares
the fitness to work of a seafarer who sustains a work-related injury/illness or
the degree of the seafarers disability. Section 20 (B) 3 of the POEA-SEC
provides:
Upon sign-off from the vessel for medical treatment, the seafarer shall
be entitled to sickness allowance equivalent to his basic wage until he
is declared fit to work or the degree of his permanent disability has
been assessed by the company-designated physician but in no case
shall this period exceed one hundredtwenty (120 days)
Dr. Lim, the company-designated physician, declared Constantino fit to work
after almost six months of extensive examination, treatment and
rehabilitation (therapy sessions) by the company-accredited specialists,
including an orthopaedic surgeon, upon his repatriation.
Second. There is no dispute that under the POEA-SEC, Constantino was not
precluded from seeking a second opinionon his medical condition or
disability. The third paragraph of the Section 20 (B)3 of the POEA-SEC states
that:
If a doctor appointed by the seafarer disagrees with the assessment
(of the company-designated physician), a third doctor may be agreed
jointly between the Employer and the seafarer. The third doctors
decision shall be final and binding on both parties.
Constantino did consult Dr.Almeda whose assessment of his medical
condition and disability disagreed with that of Dr. Lim. Dr.Almeda found
Constantino unfit to work, he gave him a POEA-SEC Grade 11 impediment
equivalent to permanent partial disability as compared with the fit-to-work
assessment of Dr. Lim who managed the petitioners medical team handling
Constantinos treatment and rehabilitation.
The disagreement should have been referred to a third doctor for final
determination, jointly by Constantino and the petitioners. There was no such
referral. To our mind, the non-referral cannot be blamed on the petitioners.
Since Constantino consulted with Dr.Almeda without informing the

petitioners, he should have actively requestedthat the disagreement

between his doctors assessment and that of Dr. Lim be referred to a final
and binding third opinion.
In the absence of any request from Constantino (as shown by the records of
the case), the employer-company cannot be expected to respond. As the
party seeking to impugn the certification that the law itself recognizes as
prevailing, Constantino bears the burden of positive action to prove that his
doctors findings are correct, as well as the burden to notify the company
that a contrary finding had been madeby his own physician.
In the absence of a third doctor resolution of the conflicting assessments
between Dr. Lim and Dr.Almeda, Dr. Lims assessment of Constantinos
health should stand.

Topics: (1) 120 days inability to work in relation to permanent and

total disability; (2) Disability Compensation in relation to fit to
work declaration of an in-house physician against the declaration
of unfit for further work by a physician of choice of the claimant
Ponente: BRION, J.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE AND
NORWEGIAN CRUISE LINEv. HENRY M. SIMBAJON,G.R. No. 203472,
July 09, 2014
Facts:Norwegian Cruise Line (NCL) hired respondent Henry M. Simbajon as a
cook on board its vessel, the Norwegian Star (Hotel), under a Philippine
Overseas Employment Administration Standard Employment Contract (POEASEC). Simbajons employment contract was coursed through petitioner
Magsaysay Maritime Corporation (Magsaysay), the authorized manning
agent of NCL in the Philippines.This was already the fourth time that NCL
hired Simbajon through Magsaysay.
Before hiring, Simbajon was required to undergo and pass the mandatory
Pre-Employment Medical Examination (PEME). Simbajon medical tests
confirmed this claim and he was given a clean bill of health and declared fit
for employment or fit for sea service.
Only six days after embarkation, he complained of increased urination and
having a constant feeling of thirst. He consulted the doctor on board and
was initially diagnosed with possible Diabetes mellitus Type II (DM Type II).
For more than 120 days from embarkation, he was not able to work. He

underwent several test and medication until he was finally declared fit to
work by the company-designated physician.
Despite the fit to work declaration of Magsaysays designated physician,
Simbajon was not rehired by petitioners. Dissatisfied with the companydesignated physicians medical opinion, Simbajon sought a second opinion
from Dr.Efren R. Vicaldo, an internal medicine doctor from the Philippine
Heart Center. After conducting a series of tests, Dr.Vicaldo opined that
Simbajons DM Type II was work-aggravated/related and that he is
now unfit to resume work as a seaman in any capacity. Based on this
medical assessmentSimbajon filed with the LA a complaint for disability
benefits, illness allowance, reimbursement of medical expenses, damages,
and attorneys fees, against the petitioners.
Issues: (1) Did Simbajon suffer a permanent and total disability because he
was not able to work for 120 days?
(2) Is Simbajon entitled to receive disability compensation?
Ruling: No.
(1) On Simbajons claim that his inability to resume his usual work as a cook
for a period exceeding 120 days, automatically entitles him to permanent
and total disability benefits based on a Grade I (120%) impediment rating.
The Court had the occasion to clarify when a seafarer becomes entitled to
permanent and total disability benefits:
As these provisions operate, the seafarer, upon sign-off from his vessel,
must report to the company-designated physician within three (3) days
from arrival for diagnosis and treatment. For the duration of the
treatment but in no case to exceed 120 days, the seaman is
on temporary total disability as he is totally unable to work. He receives
his basic wage during this period until he is declared fit to work or his
temporary disability is acknowledged by the company to be permanent,
either partially or totally, as his condition is defined under the POEA
Standard Employment Contract and by applicable Philippine laws. If the
120 days initial period is exceeded and no such declaration is
made because the seafarer requires further medical attention,
then the temporary total disability period may be extended up to
a maximum of 240 days, subject to the right of the employer to
declare within this period that a permanent partial or total
disability already exists. The seaman may of course also be declared

fit to work at any time such declaration is justified by his medical

condition.
Under this ruling, a finding by the company-designated doctor that
the seafarer needs further treatment beyond the initial 120-day
period results in the extension of the period for the declaration of
the existence of a permanent partial or total disability to 240 days.
Thus, contrary to Simbajons claim, his inability to resume work after the
lapse of more than 120 days from the time he suffered his illness does not by
itself automatically entitle him to permanent and total disability benefits.
The Court enumerated the following instances when a seafarer may claim for
permanent and total disability benefits:
(a) the company-designated physician failed to issue a declaration as to his
fitness to engage in sea duty or disability even after the lapse of the 120day period and there is no indication that further medical treatment
would address his temporary total disability, hence, justify an extension
of the period to 240 days;
(b) 240 days had lapsed without any certification being issued by the
company-designated physician;
(c) the company-designated physician declared that he is fit for sea duty
within the 120-day or 240-day period, as the case may be, but his
physician of choice and the doctor chosen under Section 20-B(3) of the
POEA-SEC are of a contrary opinion;
(d) the company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own
and jointly with his employer, believed that his disability is not only
permanent but total as well;
(e) the company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) the company-designated physician determined that his medical condition
is not compensable or work-related under the POEA-SEC but his doctorof-choice and the third doctor selected under Section 20-B(3) of the
POEA-SEC found otherwise and declared him unfit to work;
(g) the company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits;
and
(h) the company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he
remains incapacitated to perform his usual sea duties after the lapse of
the said periods.
Thus, even assuming that Simbajons illness is work-related, he is still not

entitled to permanent and total disability benefits because his situation does
not fall in any of the foregoing circumstances.
(2) We now resolve the issue of the conflicting findings of the petitioners
designated physicians and Simbajons own physician. The companydesignated physicians have declared Simbajon as fit to work after 172
days of treatment from his disembarkation. On the other hand, Simbajons
chosen physician, Dr.Vicaldo, came out with the findings that Simbajons
illness had rendered him unfit to resume work as a seaman in any
capacity, with a Grade VI (50%) disability rating.
Under the POEA-SEC, the applicable provision to resolve the issue of
conflicting medical findings is Section 20-B (3), which states:
Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until he is
declared fit to work or the degree of permanent disability has been
assessed by the company-designated physician but in no case shall
this period exceed one hundred twenty (120) days.
xxx
If a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctors decision shall be
final and binding on both parties.
The glaring disparity between the findings of the petitioners designated
physicians and Dr.Vicaldo calls for the intervention of a third independent
doctor, agreed upon by petitioners and Simbajon. In this case, no such thirdparty physician was ever consulted to settle the conflicting findings of the
first two sets of doctors. After being informed of Dr.Vicaldos unfit-to-work
findings, Simbajon proceeded to file his complaint for disability benefits with
the LA. This move totally disregarded the mandated procedure under the
POEA-SEC requiring the referral of the conflicting medical opinions to a third
independent doctor for final determination.
The Supreme Court ruled that the duty to secure the opinion of a third doctor
belongs to the employee asking for disability benefits.
The obligation to comply with the requirement of securing the opinion of a
neutral, third-party physician rested on Simbajons shoulders. By failing to
observe the required procedure under the POEA-SEC, he clearly violated its
terms, i.e., the law between the parties. And without a binding third-party

opinion, the fit-to-work certification of petitioners designated physicians

prevails over that of Dr.Vicaldos unfit-to-return-to-work finding.
Lastly, we have observed that Dr.Vicaldo only examined Simbajon once. We
take this is in comparison with the series of tests and treatments made by
Magsaysays designated physicians to Simbajon. Between the two, the
latters medical opinion deserves more credence for being more thorough
and exhaustive.

Topic: Claim for Permanent Disability Benefits

Ponente: MENDOZA, J.:
ALONE AMAR P. TAGLE v. ANGLO-EASTERN CREW MANAGEMENT,
PHILS., INC., ANGLO-EASTERN CREW MANAGEMENT (ASIA) AND
CAPT. GREGORIO B. SIALSA, G.R. No. 209302, July 09, 2014

Facts: Petitioner was hired by Anglo-Eastern Crew Management, Phils., Inc.

for Anglo-Eastern Crew Management (Asia) and was assigned to work on
board the vessel NV Al Ishaa as 3rd Engineer. Just two days after boarding
the vessel, petitioner was found unconscious inside the engine room of the
vessel. He was diagnosed to be suffering from cervical spondylosis and heat
exhaustion. He was thereafter repatriated.
A day after his return to the country, petitioner was admitted at the
Metropolitan Medical Center. There, petitioner was diagnosed to be suffering
from cervical and lumbar spondylosis, chronic L5 spondylosis and Grade 1
spondylolisthesis. Following orders from the company-designated physician,
petitioner continued his treatment and rehabilitation and had regular checkups. While his back improved, he continued to suffer from on and off bouts of
pain on his neck.
The company-designated physician conducted a repeat study on petitioner
and found that he was suffering from L5 riduculopathy. As a result,
petitioner was advised to continue the rehabilitation and to return after three
(3) weeks,11 suggesting at the same time the following disability grading:
Suggested disability grading is Grade 12 (neck) slight stiffness of the neck
and Grade 11 (chest-trunk-spine) slight rigidity or 1/3 loss of motion or
lifting power of the trunk.
Per suggestion, petitioner reported for his check-up and, thereafter, was
advised to continue with his medication.
On January 6, 2009, petitioner again complained of back pains. He was again
examined by the company-designated physician. Petitioner was advised to
continue his physical therapy and medication and to report back on February
3, 2009 for re-evaluation. This time, however, petitioner no longer reported
back to the company-designated physician. Instead, he sought the opinion of
his own physician, Dr. Nicanor F. Escutin (Dr. Escutin). During the
consultation, petitioner informed Dr. Escutin that he is given a (sic)
PERMANENT DISABILITY. HE IS UNFIT TO BE A SEAMAN (sic) ON WHATEVER
CAPACITY.
Acting on petitioners request for compensation, respondents offered a
settlement based on the disability grading given by the company-designated
physician. Petitioner refused and insisted that he be paid the benefits
corresponding to that given to those suffering from permanent total
disability.
Petitioner filed his complaint before the LA claiming permanent total
disability benefits.

Respondents sought the dismissal of the complaint for lack of merit, or, in
the alternative, the limitation of the award of disability benefits to Grade 11
and/or 12 as suggested by its company-designated physician. According to
respondents, rather than upholding the findings of Dr. Escutin that petitioner
suffered from permanent disability, the disability gradings suggested by
the company-designated physicians should prevail considering that they
thoroughly examined and treated petitioner from August 2008 to January
2009.
The LA ruled in favor of the petitioner. The NLRC and CA ruled in favor of the
respondent.
Issue: Whether or
benefits

not the petitioner is entitled to permanent disability

Ruling: NO.
The rule is that, a seafarer may have basis to pursue an action for total and
permanent disability benefits only if any of the following conditions are
present:
(a) The company-designated physician failed to issue a declaration as to his
fitness to engage in sea duty or disability even after the lapse of the 120-day
period and there is no indication that further medical treatment would
address his temporary total disability, hence, justify an extension of the
period to 240 days;
(b) 240 days had lapsed without any certification issued by the company
designated physician;
(c) The company-designated physician declared that he is fit for sea duty
within the 120-day or 240-day period, as the case may be, but his physician
of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are
of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially
permanently disabled but other doctors who he consulted, on his own and
jointly with his employer, believed that his disability is not only permanent
but total as well;
(e) The company-designated physician recognized that he is totally and
permanently disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition
is not compensable or work-related under the POEA-SEC but his doctor-of-

choice and the third doctor selected under Section 20-B(3) of the POEA-SEC
found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and permanently
disabled but the employer refuses to pay him the corresponding benefits;
and
(h) The company-designated physician declared him partially and
permanently disabled within the 120-day or 240-day period but he remains
incapacitated to perform his usual sea duties after the lapse of said
periods.37
After an assiduous assessment of the evidence, however, the Court finds that
petitioners claim for permanent disability benefits is without basis at all.
First. Petitioners complaint is premature. When petitioner decided to seek
the opinion of Dr. Escutin, it was yet to be established by the companydesignated physicians whether he was totally or partially disabled, as the
disability grading was tentatively given and only as a suggestion, from the
results of the various examinations conducted on him as of that time. To be
sure, the findings of the company-designated physicians are worth
reiterating to wit, suggested disability grading is Grade 12. In fact, he was
still required to return for re evaluation but instead of returning, he went to
Dr. Escutin.
At this juncture, noteworthy, is the observation of the CA that from the time
petitioner sustained his injury until a disability grading of Grade 11 (for the
chest-trunk-spine) and Grade 12 (for the neck), only 110 days had lapsed. At
the time he instituted his labor complaint on February 11, 2009, only 196
days had lapsed. Clearly, respondents were deprived of the opportunity to
determine whether his claim for permanent total disability benefits had any
merit.
Second. Even assuming ex gratia argumenti that the company-designated
physicians had arrived at a final conclusion of Grade 11/12 disability,
petitioners evidence would still cast doubt on such findings. In stark contrast
to the detailed medical reports by the company-designated physicians, a
reading of the medical report of Dr. Escutin shows that it was not supported
by any diagnostic tests and/or procedures sufficient to refute the results of
those administered to petitioner by the company-designated physicians. Dr.
Escutins assessment of permanent disability for petitioner merely hinged
on general impressions.
Moreover, Dr. Escutins conclusion that petitioner suffered from permanent
disability and that he was unfit to serve as a seaman in any capacity was
anchored primarily on petitioners own narration.

Third. Assuming that petitioner indeed suffered the most severe of back
injuries, in addition to his neck injury, he could still not be entitled to his
claim for permanent total disability benefits. It should be remembered that
under the terms of the POEA-SEC, for an illness suffered by a seafarer to be
compensable, it must first fall within the definition of the term work-related
illness, that is, any sickness as a result of an occupational disease listed
under Section 32-A with the conditions set therein satisfied.
Thus, for disability to be compensable under Section 20 (B)(4) of the POEASEC, two elements must concur: (1) the injury or illness must be workrelated; and (2) the work-related injury or illness must have existed during
the term of the seafarers employment contract. In other words, to be
entitled to compensation and benefits under this provision, it is not sufficient
to simply establish that the seafarers illness or injury has rendered him
permanently or partially disabled; it must also be shown that there is a
causal connection between the seafarers illness or injury and the work for
which he had been contracted. In this case, the record is bereft of any
evidence to prove satisfaction of the said conditions.

Topic: Serious Misconduct as a just cause in termination

Ponente: PEREZ, J.:
COLEGIO DE SAN JUAN DE LETRAN-CALAMBA v. ENGR. DEBORAH P.
TARDEO, G.R. No. 190303, July 9, 2014
Facts: Petitioner is an educational institution created and existing under
Philippine laws. Respondent, on the other hand, was employed as a full-time
faculty member of the petitioner since 1985. In August 2006, respondentwas
elected as Union President of Letran-Calamba Faculty and Employees
Association (LECFEA) and served in such capacity until she was suspended
from work in 2008.
Respondents suspension arose from her request for Faculty Development
Program and Fund Assistance submitted for consideration of petitioner. In a
Letter dated 25 March 2008, addressed to Vice-President for Academic Affairs
Dr. Rhodora Odejar, respondent manifested her intention to participate in the
30th National Physics Seminar Workshop Convention in Siquijor State
College. In connection therewith, she requested for fund assistance in the
amount of P17,000.00. Attached to her request was a two-page invitation
allegedly downloaded from Philippine Physics Societys (PPS) website which
detailed the supposed expenses in the upcoming convention. The foregoing
request was recommended for approval by the Dean for College of
Engineering, Engr. Delfin Jacob (Jacob) and the Human Resource Director,
Prof. Dulce Corazon T. Barraquio. During pre-audit, the Vice-Presidentfor
Finance and concurrently Letrans Controller Rodolfo Ondevilla (Ondevilla)
noted that the supporting document appended to respondents request was
altered. While the documents appeared to have been taken from the PPS
website, significant portions thereof were missing which led him to conclude
that the said parts were deliberately omitted by respondent.

Consequently, Ondevilla disapproved respondents request for fund

assistance on the ground that her fund request was significantly higher
compared to the amount requested byanother faculty member who also
wanted to participate in the same convention. While respondent requested
for the disbursement of the amount of P17,000.00, a certain Delorino only
asked for P11,000.00. It was noted that after the convention, Delorinos
actual expense was only P10,754.00.9
After investigation, the Committee of Discipline found that respondent is
guilty of dishonesty and serious misconduct and meted out the penalty of
suspension for one semester starting 19 August 2008 up to 20 December
2008. The Committee of Discipline found that respondents guilt was
established by her own admission that she deleted certain portions from the
invitation before attaching it to her fund request, and by the apparent
disparity between the amount requestedby the respondent from that of
another faculty member who also applied for fund assistance for the same
purpose.
Feeling aggrieved, respondent assailed the adverse decision of the
Committee of Discipline to the Office ofthe Voluntary Arbitrator arguing that
she was denied of her right to dueprocess when she was not allowed to
confront Ondevilla in person during the hearing.
The Office of the Voluntary Arbitrator and the CA declared the suspension of
respondent from employment illegal.
Issue: Whether or not [respondent] committed dishonesty and serious
misconduct in knowingly submitting a materially altered document to
support her funding request;
Ruling: NO.
Misconduct is defined as improper and wrongful conduct. It is the
transgression of some established and definite rule of action, a forbidden act,
a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. Of course, ordinary misconduct would not justify the
termination of the services of an employee. The law is explicit that the
misconduct should be serious. It is settled that in order for misconduct to be
serious, it must be of such grave and aggravated character and not merely
trivial or unimportant. As amplified by jurisprudence, the misconduct must
(1) be serious; (2) relate to the performance of the employees duties; and
(3) show thatthe employee has become unfit to continue working for the
employer.
Under Article 282 of the labor Code, the misconduct, to be just cause for
termination, must be serious. This implies that it must be of such grave and

aggravated character and not merely trivial or unimportant. Examples of

serious misconduct justifying termination, as held in some of our decisions,
include: sexual harassment (the managers acts of fondling the hands,
massaging the shoulder and caressing the nape of the secretary); fighting
within company premises, uttering obscene, insulting or offensive words
against a superior; misrepresenting that a student is his nephew and
pressuring and intimidating a co-teacher to change a students failing grade
to passing.
Although respondent was not terminated from employment but was merely
suspended from work for one semester or equivalent to 101 days school
days, her infraction should still be measured against the foregoing standards
considering that the charge leveled against her is serious misconduct.
As correctly pointed out by the appellate court, there is no substantial
evidence to prove that in not including a portion of the invitation to her fund
request, respondent acted in malicious and contemptuous manner with the
intent to cause damage to the petitioner. In other words, there is no basis for
the allegation that respondents actconstituted serious misconduct that
warrants the imposition of penalty of suspension. Indeed, considering the
fact that before the act complained of, respondent has been rendering
service untarnished for 23 years, it is not easy to conclude that for P600.00,
respondent would willfully and for wrongful intentions omit portions of the
documents taken from the PPS website. In other words, as found by the
Voluntary Arbitrator and the Court of Appeals, there is no substantial proof of
petitioner's allegation of malicious conduct against respondent.

Topic: Illegal Constructive dismissal

Ponente: DEL CASTILLO, J.:
GIRLY G. ICO v. SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V.
JACOB and PETER K. FERNANDEZ, G.R. No. 185100, July 9, 2014
Facts: Respondent Systems Technology Institute, Inc. (STI) is an educational
institution duly existing under Philippine laws. Respondents Monico V. Jacob
(Jacob) and Peter K. Fernandez (Fernandez) are STI officers, the former being
the President and Chief Executive Officer (CEO) and the latter Senior VicePresident. Petitioner Girly G. Ico, a masteral degree holder with doctorate
units earned, was hired as Faculty Member by STI College Makati (Inc.),
which operates STI College-Makati (STI-Makati). STI College Makati (Inc.) is a
wholly-owned subsidiary of STI.
At STI, petitioner served under contract from June 1997 to March 1998. In
April 1998, she was recalled to STIs Makati Central Office orHeadquarters
(STIHQ) and promoted to the position of Dean of STI College-Paraaque (STI
Paraaque). In November 1999, she was again recalled to STI-HQ and STI
appointed her as Full-Time Assistant Professor I reporting directly to STIs
Academic Services Division (ASD).

In June 2000, petitioner was promoted to the position of Dean under ASD,
and assigned to STI College-Guadalupe (STI-Guadalupe), where she served
as Dean from June 5, 2000 up to October 28, 2002. Meanwhile, petitioners
position as Dean was reclassified from "Job Grade 4" to "Job Grade Manager
B" with a monthly salary of P37,483.58 effective April 1, 2002, up from the
P27,000.00 salary petitioner was then receiving.
After petitioners stint as Dean of STI-Guadalupe, she was promoted to the
position of Chief Operating Officer (COO) of STI-Makati, under the same
position classification and salary level of "Job Grade Manager B". She
concurrently served as STI-Makati School Administrator.
Sometime in July 2003, or during petitioners stint as COO and School
Administrator of STI-Makati, a Plan of Merger was executed between STI and
STI College Makati (Inc.), whereby the latter would be absorbed by STI. The
merger was approved by the Securities and Exchange Commission on
November 12, 2003. STI College Makati (Inc.) thus ceased to exist, and STIMakati was placed under STIs Education Management Division (EMD).
In a March 12, 2004 Memorandum, STI "[i]n line with the recently approved
organizational structure effective August 1, 2003" updated petitioners
appointment as COO, "Job Grade Manager B" with a gross monthly salary of
P37,483.58. She was re-appointed as COO of STI-Makati, under the
supervision of the AcademicServices Group of the EMD and reporting directly
to the Head thereof, herein respondent Fernandez. However, petitioner was
not given the salary commensurate to her position as COO, which by this
time appeared to be pegged at P120,000.00. It likewise appears that she was
not given benefits and privileges which holders of equivalent positions were
entitled to, such as a car plan.
Two months after confirming petitioners appointment as STI-Makati COO,
another Memorandum dated May 18, 2004 was issued by STI Human
Resources Division Head, Yolanda Briones (Briones), signed and approved by
STI Senior Vice-President for Corporate Services Division Jeanette B. Fabul
(Fabul), and noted by respondent Jacob
a) Cancelling, effective May 20, 2004, petitioners COO assignment at STIMakati, citing managements decision to undertake an "organizational
restructuring" in line with the merger of STI and STI-Makati;
b) Ordering petitioner to report to STI-HQ on May 20, 2004 and to turn over
her work to one Victoria Luz (Luz), who shall function as STI-Makatis School
Administrator; and

c) Appointing petitioner, effective May 20, 2004, as STIs Compliance

Manager with the same "Job Grade Manager B" rank and salary level,
reporting directly to SchoolCompliance Group Head Armand Paraiso (Paraiso).
According to STI, the "organizational re-structuring" was undertaken "in order
to streamline operations. In the process, the positions of Chief Executive
Officer and Chief Operating Officer of STI Makati were abolished."
On May 20, 2004, petitioner reported to her new office at STIs School
Compliance Group, only to find out that all members ofthe department had
gone to Baguio City for a planning session. Petitioner, who was not apprised
of the official trip, was thus left behind. That same day, an official
communication was disseminated throughout STI, announcing Jacobs
appointment as the new STI President and CEO, Fernandez as the new COO
of STI-Makati,and Luz as the new STI-Makati School Administrator; however,
petitioners appointment as Compliance Manager was left out.
In a May 24, 2004 letter to Jacob, petitioner took exception to the incidents
of May 18 and 20, 2004, claiming that she became the victim of a series of
discriminatory acts and objecting to the manner by which she was
transferred, asserting that she was illegally demoted and that her name was
tarnished as a result of the demotion and transfer. Jacob replied through a
June 7, 2004 letter advising petitioner that her letter was forwarded to
Fernandez for comment.
Prior to that, on May 25, 2004, during the 17th STI Leaders Convention held
in Panglao, Bohol, petitioners achievement as a Silver Awardee for the 2004
STI Winners Circle Awards was announced, but she did not attend, claiming
that she was too embarrassed to attend owing to the events leading to her
transfer, which to her was a demotion. STI withheld petitioners prize a
South Korea trip termed "Travel Incentive Award" for the Winners Circle for
STI fiscal year 2003-2004 "pending the final result of the investigations
being conducted" by STI relative to irregularities and violations of company
policies allegedly committed by petitioner.
On June 24, 2004, petitioner received another Memorandum from Briones
dated June 23, 2004, this time stating that charges for the alleged violations
have already been filed against her allegedly "based on the Audit Findings",
yet making reference to the June 21, 2004 Memorandum and without
informing petitioner of the particulars of the charges or the results of the
audit. Nor was a copy of the said audit findings attached to the
memorandum.
In a June 28, 2004 demand letter29 addressed to Jacob,petitioner protested
anew her alleged maltreatment, claiming illegal constructive dismissal and
demanding immediate reinstatement to her COO position and the payment
of actual and other damages, under pain of suit.

The Labor Arbiter found that the petitioner had been illegally constructively
and in bad faith dismissed. The NLRC and CA reversed the decision of the LA.
Issue: Whether or not petitioner is illegally constructively dismissed
Ruling: YES.
Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a diminution in pay and other
benefits. Aptly called a dismissal in disguise or anact amounting to dismissal
but made to appear as if it were not, constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose
any choice by him except to forego his continued employment. In cases of a
transfer of an employee, the rule is settled that the employer is charged with
the burden of proving that its conduct and action are for valid and legitimate
grounds such as genuine business necessity and that the transfer is not
unreasonable, inconvenient or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal.
There is no doubt that petitioner was subjected to indignities and humiliated
by the respondents. As correctly observed by the Labor Arbiter, she was
bullied, threatened, shouted at, and treated insolently by Fernandez on May
18, 2004 inside the latters own office. She was shamed when, on her very
first day at the School Compliance Group, all of the employees of the
department have gone on an official out-of-town event without her and, as a
result, she was left alone at the office for several days. Respondents did not
even have the courtesy to offer her the opportunity to catch up with the
group sothat she could makeit to the event, even if belatedly. Then again, on
May 20, 2004, STI made an official companywide announcement of Jacobs
appointment as new STI President and CEO, Fernandez as new STI-Makati
COO, and Luz asnew STI-Makati School Administrator, but petitioners
appointment as new Compliance Manager was inconsiderately excluded.
Respondents made her go through the rigors of a contrived investigation,
causing her to incur unnecessary legal expenses as a result of her hiring the
services of counsel. Her well-deserved awards and distinctions were unduly
withheld in the guise of continuing investigation which obviously was taking
too long to conclude; investigation began formally on May 28, 2004 (start of
audit), yet by August 17 (date of memorandum informing petitioner of the
withholding of Korea travel award), the investigation was still allegedly
ongoing. She was deprived of the privilege to attend company events where
she would have received her well-deserved awards with pride and honor, and
her colleagues would have been inspired by her in return. Certainly,

respondents made sure that petitioner suffered a humiliating fate and

consigned to oblivion.
Indeed, petitioner could not be faulted for taking an indefinite leave of
absence, and for altogether failing to report for work after August 9, 2004.
Human nature dictates that petitioner should refuse to subject herself to
further embarrassment and indignitiesfrom the respondents and her
colleagues. All told, petitioner was deemed constructively dismissed as of
May 18, 2004. Finally, since the position of STI-Makati COO was never
abolished, it follows that petitioner should bereinstated to the very same
position, and there to receive exactly what Fernandez gets by way of
salaries, benefits, privileges and emoluments, without diminution in amount
and extent. Petitioner, multi-awarded, deserving and loyal, is entitled to what
Fernandez receives, and is deemed merely to take over the office from him;
moreover, the position of Chief Operations Officer is not merely an ordinary
managerial position, asit is a senior managerial office. In turn, Fernandez or
anyone who currently occupies the position of STIMakati COO must
vacatethe office and hand over the same to petitioner.
Nonetheless, the Court failsto discern any bad faithor negligence on the part
of respondent Jacob. The principal character that figures prominently in this
case is Fernandez; he alone relentlessly caused petitioners hardships and
suffering. He alone is guilty of persecuting petitioner. Indeed, some of his
actions were without sanction of STI itself, and were committedoutside of the
authority given to him by the school; they bordered on the personal, rather
than official. His superior, Jacob, may have been, for the most part, clueless
of what Fernandez was doing to petitioner. After all, Fernandez was the Head
of the Academic Services Group of the EMD, and petitioner directly reported
to him at the time; his position enabled him to pursue a course of action with
petitioner that Jacob was largely unaware of.
A corporation, as a juridical entity, may act only through its directors, officers
and employees. Obligations incurred as a result of the directors and officers
acts as corporate agents, are nottheir personal liability but the direct
responsibility of the corporation they represent. As a rule, they are only
solidarily liable with the corporation for the illegal termination of servicesof
employees if they acted with malice or bad faith.
To hold a director or officer personally liable for corporate obligations, two
requisites must concur: (1) it must be alleged in the complaint that the
director or officer assented to patently unlawful acts of the corporation or
that the officer was guilty of gross negligence or bad faith; and (2) there
must be proof that the officer acted in bad faith.

Topic: Illegal Dismissal, Money Claims

Ponente: Mariano C. Del Castillo
Angeles v. Bucad, G.R. No. 196249, July 21, 2014
Facts: The Labor Arbiter rendered a Decision adjudging Petitioners guilty of
illegal dismissal and ordered to them to pay the Respondents their respective
money claims. Petitioners appealed to the National Labor Relations
Commission (NLRC) flatly denying the charges against them. The NLRC held
that the respondents failed to submit sufficient evidence to warrant the
reversal of the findings of the Labor Arbiter. The best evidence of payment is
the payroll, whereas in this case, respondents merely allege payment.
The CA held that there is no proof that respondent Ducusin abandoned his
employment. Ducusins immediate filing of the labor complaint indicated that
he did not abandon his employment; it characterizes him as one who deeply
felt wronged by his employer.
With regard to respondents Benitez and Reynante, the CA believed that they
voluntarily left their jobs when they were caught by management having an
illicit affair. This showed that they abandoned their employment, which does
not entitle Benitez to an award of backwages and separation pay.
The CA further held that petitioners did not commit illegal dismissal with
respect to respondent Berdin, since Berdin resigned from his position after
management caught him sneaking food out for his girlfriend. There is thus no
ground for awarding Berdin backwages and separation pay as well.
On the issue of money claims, the CA ruled that apart from bare allegations
of payment, petitioners have not satisfactorily shown by adequate
documentary evidence which should be in its custody and possession that
the salaries, benefits and other claims due to the respondents have been
accordingly paid; that petitioners failed to discharge the burden of proving
payment; that their defense that the relevant payroll and daily time records
were stolen constitutes a lame excuse which cannot excuse them from
proving that they have paid what they owed respondents.
Issues:
1. Whether Ducusin was illegally terminated.
2. Whether petitioners failed to discharge the burden of proving that
respondents have been paidt heir monetary claims.
Ruling:

1. YES.
This Court is not a trier of facts. The findings of fact of the CA are
conclusive and binding. This principle applies with greater force in labor
cases, where this Court has consistently held that findings of fact of the
NLRC are accorded great respect and even finality, especially if they
coincide with those of the Labor Arbiter and are supported by substantial
evidence.
2. YES.
There exists serious doubt with respect to petitioners proffered evidence,
considering that the relevant payroll and daily time records are missing as
they were, according to petitioners, stolen. It would be difficult if not
impossible to validate and reconcile petitioners documentary evidence
and unilateral claims of payment, if the official payroll and daily time
records are not taken into account. Without them, there could be no
sufficient basis for this Court to overturn the assailed Decision; the Court
can only rely on the findings of the Labor Arbiter, the NLRC, and the CA.
The purpose of a time record is to show an employees attendance in
office for work and to be paid accordingly, taking into account the policy
of "no work, no pay". A daily time record is primarily intended to prevent
damage or loss to the employer, which could result in instances where it
pays an employee for no work done; it is a mandatory requirement for
inclusion in the payroll, and in the absence of an employment agreement,
it constitutes evidence of employment.
The punching of time card is undoubtedly work related. It signifies and
records the commencement of one's work for the day. It is from that
moment that an employee dons the cape of duties and responsibilities
attached to his position in the workplace. It is the reckoning point of the
employer's corresponding obligation to him - to pay his salary and provide
his occupational and welfare protection or benefits.
What "daily time records" petitioners refer to in this Petition pertain to the
supposed attendance record of several of the respondents, which
however do not contain the latter's respective signatures and those of
their superiors. They appear to be incomplete as well; indeed, some are
barely readable. They can hardly be considered proof sufficient enough for
this Court to consider.
If petitioners believe that they have been prejudiced, then they only have
themselves to blame, for not offering sufficient proof to prove their case.
For their blunder, they may not expect this Court to resort to unnecessary
factual nitpicking in an attempt to forestall the effects of an adverse
judgment.

The Petition is DENIED.

Topic: Illegal Dismissal

Ponente: Martin S. Villarama, Jr.

St. Lukes Medical Center v. Quebral, G.R. No. 193324, July 23, 2014

Facts: As part of its customer service, petitioner provides free and/or

discounted parking privileges to its patients. Wellness Center Assistants,
such as Respondent Quebral, are tasked with claiming pre-approved parking
tickets from the hospitals Information and Concierge Section on behalf of the
patients.

Quebrals parking records show that he used the discounted parking

privilege reserved for patients and their representatives for his personal use
at least 20 times. The Employee and Labor Relations Department (ELRD)
issued a Notice to Explain and Invitation to Conference to Quebral. Quebral
stated that he did not know that employees and staff were prohibited to get
a validation ticket and all that he knew was that, to be able to get a discount
on their expensive parking, he needed to get a validation.

The ELRD rendered a decision terminating Quebrals employment. Quebral,

through SLMCEA-AFW, appealed his dismissal. Thus, as part ofthe auxiliary
review, the management looked into the finer details of Quebrals
performance for the past 12 months preceding his dismissal and noted other
violations he committed. Petitioner reply stated that these incidents are
already indicators that the Management has already extended its utmost
consideration to Quebral not only on one occasion but in several incidents
and thus, Quebrals dismissal is final and irrevocable.

Issue: Whether Quebral was illegally dismissed.

Ruling: NO.
Quebral cannot feign ignorance of the policy limiting to patients the privilege
of the use of validated parking tickets. First, it is written on the parking ticket
itself. It was incumbent upon him to read the terms and conditions stated
thereon. And second, even assuming he was not able to read said policy, this
only serves as a testament of his inefficiency in his job as he is not aware of
his employers policies despite being employed for 7 years. Moreover, as
Wellness Center Assistant whose task is to extend all needed assistance to
the ECU patients, it is expected that he is aware of all matters relating to
patient rights and privileges.

The CAs conclusion that he has been a dependable and reliable employee
and thus deserving of petitioners compassion is without basis. The auxiliary
review of Quebrals employment record revealed violations of company rules
he committed for the preceding twelve months prior to his dismissal. And for
said violations, petitioner extended consideration to Quebral by lowering the
penalty imposed on him. Had Quebral valued the considerations extended to
him by his employer in the past, he would have have been more careful in
his actions. Moreover, this Court recognizes the prerogative of an employer
to prescribe rules and regulations in its business operations and its right to
exact compliance with them by its employees.

The record of an employee is a relevant consideration in determining the

penalty that should be meted out on him. Thus, petitioner cannot be obliged
to disregard altogether Quebrals previous violations when determining the
penalty to be imposed on him for his latest offense as if it was the first time
he violated company rules. Quebral has no vested right to petitioners
compassion. Just because petitioner was compassionate to him numerous
times in the past when he violated company rules does not give him the right
to demand the same compassion this time on the ground of social justice.
Social justice and equity are not magical formulas to erase the unjust acts
committed by the employee against his employer.

Also, respondents failed to prove that the violation of the policy on validation
of tickets is tolerated by petitioner as they failed to present any evidence
that other employees were being issued validated tickets.

A company has the right to dismiss its employees as a measure of selfprotection. It need not wait for it to suffer actual damage or loss before it can
rightfully dismiss an employee who it has already found to have been
dishonest. The fact that petitioner did not suffer losses from the dishonesty
of the respondent does not excuse the latter from any culpability. Whether
he has already settled the amount he was supposed to pay for parking if not
for the validated parking tickets is of no consequence. The fact remains that
he was dishonest in the performance of his duties which is a valid ground for
termination of employment.

The petition is GRANTED.

Topic: Reinstatement, Quitclaim

Ponente: Lucas P. Bersamin

Castro v. Ateneo de Naga University, G.R. No. 175293, July 23, 2014

Facts: Petitioner was a regular and full-time faculty member of the

University's Accountancy Department in the College of Commerce. The
University President informed him that his contract would no longer be
renewed. Thus, he brought this complaint for illegal dismissal.

The Labor Arbiter (LA) ruled that the dismissal of complainant is illegal, and
ordered respondents to reinstate complainant and to pay his money claims.

Respondents appealed to the NLRC. Simultaneously, they submitted a

manifestation stating that neither actual nor payroll reinstatement of the
petitioner could be effected because he had meanwhile been employed as a
Presidential Assistant for Southern Luzon Affairs with the position of
Undersecretary; and that his reinstatement would result in dual employment
and double compensation which were prohibited by existing civil service
rules and regulations.

Petitioner elevated the matter to the CA. In the interim, petitioner executed a
receipt and quitclaim in favor of the University respecting his claim for
benefits. Meanwhile, the NLRC rendered its decision affirming with
modification the ruling of the LA. On motion for reconsideration, the NLRC
reversed its ruling. In justifying its reversal of its decision, the NLRC held that
his execution of the receipt and quitclaim respecting his benefits under the

Plan estopped the petitioner from pursuing other claims arising from his
employer-employee relationship with the University.

The CA dismissed the petitioner's petition for certiorari on the ground of its
having been rendered moot and academic by the decision of the NLRC.

Issue:
1. Whether the petitioner's claim for the payment of accrued salaries and
benefits for the period that he was not reinstated was rendered moot
and academic by his receipt of the retirement benefits and execution
of the corresponding receipt and quitclaim in favor of the respondents;

2. Whether the petitioner's claim for accrued salaries from the time of the
issuance of the order of reinstatement by the LA until his actual
reinstatement was rendered moot and academic by the reversal of the
decision of the LA.

Ruling:
1. NO.
The execution of the receipt and quitclaim was not a settlement of the
petitioner's claim for accrued salaries. The payment petitioner had
received in protest pertained only to his retirement benefits. The text of
the receipt and quitclaim was clear and straightforward, and it was to the
effect that the sum received by the petitioner represented ''full payment
of benefits ... pursuant to the Employee's retirement plan." As such, both
the NLRC and the CA should have easily seen that the quitclaim related
only to the settlement of the retirement benefits, which benefits could not
be confused with the reliefs related to the complaint for illegal dismissal.

Retirement is of a different species from the reliefs awarded to an illegally

dismissed employee. Retirement is a form of reward for an employee's
loyalty and service to the employer, and is intended to help the employee
enjoy the remaining years of his life, and to lessen the burden of worrying
about his financial support or upkeep. In contrast, the reliefs awarded to
an illegally dismissed employee are in recognition of the continuing
employer-employee relationship that has been severed by the employer
without just or authorized cause, or without compliance with due process.

Article 279 of the Labor Code, as amended, entitles an illegally dismissed

employee to reinstatement. In Pioneer Texturizing Corporation v. National
Labor Relations Commission:

x x x The provision of Article 223 is clear that an award for

reinstatement shall be immediately executory even pending appeal
and the posting of a bond by the employer shall not stay the execution
for reinstatement. To require the application for and issuance of a wit of
execution as prerequisites for the execution of a reinstatement award
would betray and run counter to the very object and intent of Article
223. The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons. A mere continuance
of postponement of a scheduled hearing, for instance, or an inaction on
the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and
noble purpose envisioned by Article 223. If the requirements of Article
224 were to govern, then the executory nature of a reinstatement
order or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its
specific purpose.

Furthermore, the rule is that all doubts in the interpretation and

implementation of labor laws should be resolved in favor of labor.
Henceforth, we rule that an award or order for reinstatement is self-

executory. After receipt of the decision or resolution ordering the

employee's reinstatement, the employer has the right to choose whether
to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll.
In either instance, the employer has to inform the employee of his choice.
The notification is based on practical considerations for without notice,
the employee has no way of knowing if he has to report for work or not.

Hence, for as long as the employer continuously fails to actually

implement the reinstatement aspect of the decision of the LA, the
employer's obligation to the employee for his accrued backwages and
other benefits continues to accumulate.

2. NO. The order of reinstatement of the petitioner was not rendered moot
and academic. He remained entitled to accrued salaries from notice of the
LA's order of reinstatement until reversal thereof. In Islriz Trading v.
Capada, the employee could be barred from claiming accrued salaries
only when the failure to reinstate him was without the fault of the
employer.

Considering that the respondents reinstated the petitioner only in

November 2002, and that their inability to reinstate him was without valid
ground, they were liable to pay his salaries accruing from the time of the
decision of the LA (September 3, 2001) until his reinstatement in
November 2002. It did not matter that the respondents had yet to
exercise their option to choose between actual or payroll reinstatement at
that point because the order of reinstatement was immediately executory.

Topic: claim for death benefits

Ponente: Reyes, J.
Esmarialino v. Employees Compensation Commission, G.R. No.
192352, July 23, 2014
Facts: Rosemaries husband, Edwin C. Esmarialino , with SS No. 33-1555504,
worked as a Security Guard for Jimenez Protective and Security Agency since
May, 1993. For the years 2002, 2003 and 2004, Edwin was assigned at the
Mercury Drug Store-Gagalangin Branch.
In May, 2004, Edwin was diagnosed through biopsy with Acute Myelogenous
Leukemiaat the Chinese General Hospital. In September, 2004, Edwin was
also admitted at the Jose Reyes Memorial Hospital because of persistent
petechial rash, malaise and anorexia. In October, 2004, he was again
hospitalized at the Chinese General Hospital. On March 20, 2005, he
succumbed to Sepsis secondary to Pneumonia. Edwins death certificate
indicates that the immediate cause of his death is Cardiopulmonary Arrest.
Antecedent cause is Sepsis secondary to Pneumonia and the underlying
cause of which is Pneumonia. Other significant condition contributing to his
death is Acute Myelogenous Leukemia.

Edwin made his last premium contribution in May, 2004. On account of his
ailment, Edwin was granted the following medical benefits under the SSS
law: a) SSS Temporary Total Disability (TTD) benefits of 120 days effective
September 19, 2004; b) SSS Permanent Partial Disability (PPD) benefits of
twenty-three (23) months effective February 11, 2005; and c) SSS Death with
Funeral Benefits effective March 20, 2005 granted to his beneficiaries.
The SSS, however, denied the claim for EC death benefits on the ground that
"there is no causal relationship between Acute Myelogenous Leukemiato the
members job as a security guard." Rosemarie appealed the SSS decision to
the ECC. The ECC likewise dismissed the claim.
Thereafter, Rosemarie filed before the CA a petition for review under Rule 43
of the Rules of Court. Rosemarie ascribed grave error on the part of the ECC
when it concluded that leukemia, which significantly contributed to Edwins
death, had no causal relation with the work of a security guard. On
November 10, 2009, the CA rendered a Decision affirming the ECCs ruling.
Rosemarie filed a Motion for Reconsideration, but it was denied.
Hence, this petition.
Issues: Did the Ca err in sustaining the Decision of the ECC which denied
the claim for Edwins death benefits? Is the illness which caused the death of
Edwin work related?
Ruling:
It is settled that Rule 45 limits the Court to the review of questions of law
raised against the assailed CA decision. The Court is generally bound by the
CAs factual findings, except only in some instances, among which is, when
the said findings are contrary to those of the trial court or administrative
body exercising quasi-judicial functions from which the action originated.
In the case at bar, the issues are beyond the ambit of a petition filed under
Rule 45 of the Rules of Court since they are factual in nature, essentially
revolving on the alleged increased risk for Edwin to contract leukemia as a
result of hardships incidental to his employment as a security guard. The CA,
ECC and SSS uniformly found that Rosemarie cannot be granted death
benefits as she had failed to offer substantial evidence to prove her claims.
Besides, even if this Court were to exercise leniency and resort to re-

evaluating the factual findings below, still, the instant petition is susceptible
to denial. The SSS, ECC and CA decisions are amply supported, hence, the
Court finds no compelling reason to order their reversal.
The law, as it now stands requires the claimant to prove a positive thing the
illness was caused by employment and the risk of contracting the disease is
increased by the working conditions. To say that since the proof is not
available, therefore, the trust fund has the obligation to pay is contrary to
the legal requirement that proof must be adduced. The existence of
otherwise non-existent proof cannot be presumed.
It is well to stress that the principles of "presumption of compensability" and
"aggravation" found in the old Workmens Compensation Act is expressly
discarded under the present compensation scheme. As illustrated in the said
Raro case, the new principle being applied is a system based on social
security principle; thus, the introduction of "proof of increased risk." As
further declared therein:
The present system is also administered by social insurance agencies - the
Government Service Insurance System and Social Security System - under
the Employees Compensation Commission. The intent was to restore a
sensible equilibrium between the employer's obligation to pay workmen's
compensation and the employee's right to receive reparation for workconnected death or disability.
Compassion for the victims of diseases not covered by the law ignores the
need to show a greater concern for the trust fund to which the tens of
millions of workers and their families look to for compensation whenever
covered accidents, diseases and deaths occur.
It is worth noting that in an attempt to prove that Edwin's employment
increased his chances of contracting leukemia, Rosemarie presented copies
of her husband's daily time records. However, even if the Court were to corelate these to the medical abstract submitted by Rosemarie, there is
nothing in the documents from which the Court can infer or conclude that
indeed, Edwin's risk of contracting leukemia increased by reason of his work
conditions.

Topic: certification election

Ponente: Bersamin, J.
The Heritage Hotel Manila v. Secretary of Labor, G.R. No. 172132,
July 23, 2014
Facts:
On October 11, 1995, respondent National Union of Workers in Hotel
Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter
(NUWHRAIN-HHMSC) filed a petition for certification election, seeking to
represent all the supervisory employees of Heritage Hotel Manila. The
petitioner filed its opposition, but the opposition was deemed denied on
February 14, 1996 when Med-Arbiter Napoleon V. Fernando issued his order
for
the
conduct
of
the
certification
election.
The petitioner appealed the order of Med-Arbiter Fernando, but the appeal
was also denied. A pre-election conference was then scheduled. On February
20, 1998, however, the pre-election conference was suspended until further
notice because of the repeated non-appearance of NUWHRAIN-HHMSC.
On January 29, 2000, NUWHRAIN-HHMSC moved for the conduct of the preelection conference. The petitioner primarily filed its comment on the list of
employees submitted by NUWHRAIN-HHMSC, and simultaneously sought the
exclusion of some from the list of employees for occupying either
confidential or managerial positions. The petitioner filed a motion to dismiss
on April 17, 2000,raising the prolonged lack of interest of NUWHRAIN-HHMSC
to
pursue
its
petition
for
certification
election.
On May 12, 2000, the petitioner filed a petition for the cancellation of
NUWHRAIN-HHMSCs registration as a labor union for failing to submit its
annual financial reports and an updated list of members as required by
Article 238 and Article 239 of the Labor Code, docketed as Case No. NCR-OD0005-004-IRD entitled The Heritage Hotel Manila, acting through its owner,
Grand Plaza Hotel Corporation v. National Union of Workers in the Hotel,
Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter
(NUWHRAIN-HHSMC). It filed another motion on June 1, 2000 to seek either
the dismissal or the suspension of the proceedings on the basis of its
pending
petition
for
the
cancellation
of
union
registration.
The following day, however, the Department of Labor and Employment
(DOLE) issued a notice scheduling the certification elections on June 23,
2000.

Dissatisfied, the petitioner commenced in the CA on June 14, 2000 a special

civil action forcertiorari, alleging that the DOLE gravely abused its discretion
in not suspending the certification election proceedings. On June 23, 2000,
the CA dismissed the petition for certiorari for non-exhaustion of
administrative
remedies.
The certification election proceeded as scheduled, and NUWHRAIN-HHMSC
obtained the majority vote of the bargaining unit. The petitioner filed a
protest (with motion to defer the certification of the election results and the
winner), insisting on the illegitimacy of NUWHRAIN-HHMSC.
The Med Arbiter ruled that the petition for the cancellation of union
registration was not a bar to the holding of the certification election.
An appeal was then filed before the DOLE Secretary. The DOLE Secretary
denied the appeal and affirmed the ruling of the med arbiter. A motion for
reconsideration was filed but the same was denied. The DOLE Secretary
declared that the mixture or co-mingling of employees in a union was not a
ground for dismissing a petition for the certification election under Section
11, par. II, Rule XI of Department Order No. 9; that the appropriate remedy
was to exclude the ineligible employees from the bargaining unit during the
inclusion-exclusion proceedings; that the dismissal of the petition for the
certification election based on the legitimacy of the petitioning union would
be inappropriate because it would effectively allow a collateral attack against
the unions legal personality; and that a collateral attack against the
personality of the labor organization was prohibited under Section 5, Rule V
of Department Order No. 9, Series of 1997.
The matter was elevated before the CA. The CA dismissed the petition. The
fact that the cancellation proceeding has not yet been resolved makes it
obvious that the legal personality of the respondent union is still very much
in force. The DOLE has thus every reason to proceed with the certification
election and commits no grave abuse of discretion in allowing it to prosper
because the right to be certified as collective bargaining agent is one of the
legitimate privileges of a registered union. It is for the petitioner to expedite
the cancellation case if it wants to put an end to the certification case, but it
cannot place the issue of the unions legitimacy in the certification case, for
that would be tantamount to making the collateral attack the DOLE has
staunchly
argued
to
be
impermissible.
Hence, this petition.
Issue: Will the certification election prosper?
Ruling: YES.

Basic in the realm of labor union rights is that the certification election is the
sole concern of the workers, and the employer is deemed an intruder as far
as the certification election is concerned. Thus, the petitioner lacked the
legal personality to assail the proceedings for the certification election, and
should stand aside as a mere bystander who could not oppose the petition,
or even appeal the Med-Arbiters orders relative to the conduct of the
certification election.
Except when it is requested to bargain collectively, an employer is a mere
bystander to any petition for certification election; such proceeding is nonadversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer. The choice of their representative is the exclusive concern
of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to
dismiss or an appeal from it; not even a mere allegation that some
employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the
certification election. The employer's only right in the proceeding is to be
notified or informed thereof.
The petitioners meddling in the conduct of the certification election among
its employees unduly gave rise to the suspicion that it intended to establish
a company union. For that reason, the challenges it posed against the
certification
election
proceedings
were
rightly
denied.
Under the long established rule, too, the filing of the petition for the
cancellation of NUWHRAIN-HHMSCs registration should not bar the
conduct of the certification election. In that respect, only a final
order for the cancellation of the registration would have prevented
NUWHRAIN-HHMSC from continuing to enjoy all the rights conferred
on it as a legitimate labor union, including the right to the petition
for the certification election. This rule is now enshrined in Article 238-A of
the Labor Code, as amended by Republic Act No. 9481,which reads:
Article 238-A. Effect of a Petition for Cancellation of Registration. A
petition for cancellation of union registration shall not suspend the
proceedings for certification election nor shall it prevent the filing of a
petition
for
certification
election.
Thus, R.A. No. 9481 amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union Registration.--The
following may constitute grounds for cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the

adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the
ratification;
(b) Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides:
ART. 242-A. Reportorial Requirements.--The following are documents
required to be submitted to the Bureau by the legitimate labor organization
concerned:
(a) Its constitution and by-laws, or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification of the
constitution and by-laws within thirty (30) days from adoption or ratification
of
the
constitution
and
by-laws
or
amendments
thereto;
(b) Its list of officers, minutes of the election of officers, and list of voters
within
thirty
(30)
days
from
election;
(c) Its annual financial report within thirty (30) days after the close of every
fiscal
year;
and
(d) Its list of members at least once a year or whenever required by the
Bureau.
Failure to comply with the above requirements shall not be a ground
for cancellation of union registration but shall subject the erring
officers or members to suspension, expulsion from membership, or
any
appropriate
penalty.
The ruling thereby wrote finis to the challenge being posed by the petitioner
against
the
illegitimacy
of
NUWHRAIN-HHMSC.

Topic: Service Charges, Negotiated Contracts, Special Rates

Ponente: Justice Arturo D. Brion
NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED
INDUSTRIES (NUWHRAIN-APL-IUF), PHILIPPINE PLAZA CHAPTER v.
PHILIPPINE PLAZA HOLDINGS, INC., G.R. No. 177524, July 23, 2014
Facts:The Union is the collective bargaining agent of the rank-and-file
employees of respondent Philippine Plaza Holdings, Inc. (PPHI). The PPHI and
the Union executed the Third Rank-and-File Collective Bargaining
Agreement as Amended (CBA). The CBA provided, among others, for the
collection, by the PPHI, of a ten percent (10%) service charge on the sale of
food, beverage, transportation, laundry and rooms. The CBA provisions
merely reiterated similar provisions found in the PPHI-Unions earlier
collective bargaining agreement executed.
The Unions Service Charge Committee informed the Union President,
through an audit report (1st audit report), of uncollected service charges for
the last quarter of 1998 amounting to P2,952,467.61. Specifically, the audit
report referred to the service charges from the following items: (1) Journal
Vouchers; (2) Banquet Other Revenue; and (3) Staff and Promo. The
Union presented this audit report to the PPHIs management during the
Labor Management Cooperation Meeting (LMCM). The PPHIs management
responded that the Hotel Financial Controller would need to verify the audit
report.
Through a letter, the PPHI admitted liability for P80,063.88 out of the
P2,952,467.61 that the Union claimed as uncollected service charges. The
PPHI denied the rest of the Unions claims because: (1) they were exempted
from the service charge being revenues from special promotions (revenue
from the Westin Gold Card sales) or negotiated contracts (alleged revenue
from the Maxi-Media contract); (2) the revenues did not belong to the PPHI
but to third-party suppliers; and (3) no revenue was realized from these

transactions as they were actually expenses incurred for the benefit of

executives or by way of good-will to clients and government officials.
During the LMCM, the Union maintained its position on uncollected service
charges so that a deadlock on the issue ensued. The parties agreed to refer
the matter to a third party for the solution. They considered two options
voluntary arbitration or court action and promised to get back to each
other on their chosen option. In its formal reply (to the PPHIs letter) (2nd
audit report), the Union modified its claims. It claimed uncollected service
charges from: (1) Journal Vouchers - Westin Gold Revenue and Maxi-Media
(F&B and Rooms Barter); (2) Banquet and Other Revenue; and (3) Staff
and Promo.
The Unions Service Charge Committee made another service charge audit
report for the years 1997, 1998 and 1999 (3rd audit report). This 3rd audit
report reflected total uncollected service charges of P5,566,007.62 from the
following entries: (1) Journal Vouchers; (2) Guaranteed No Show; (3)
Promotions; and (4) F & B Revenue. The Union President presented the
3rd audit report to the PPHI.
When the parties failed to reach an agreement, the Union, filed before the LA
(Regional Arbitration Branch of the NLRC) a complaint for non-payment of
specified service charges and unfair labor practice. LA dismissed the Unions
complaint for lack of merit. NLRC reversed the LAs decision and considered
the specified entries/transactions as service chargeable. The PHHI went to
the CA on a petition for certiorari after the NLRC denied its motion for
reconsideration. The CA granted the PPHIs petition. It affirmed the LAs
decision. The Union filed the present petition after the CA denied its motion
for reconsideration in the CAs resolution.
Issue: Whether or not service charges should have been collected (and
distributed to the covered employees) for the specified entries/transactions.
Ruling: No.
No service charges were due from the specified entries/transactions; they
either fall within the CBA-excepted Negotiated Contracts and Special
Rates or did not involve a sale of food, beverage, etc.
The Union anchors its claim for services charges on Sections 68 and 69
of the CBA, in relation with Article 96 of the Labor Code. Section 68
states that the sale of food, beverage, transportation, laundry and rooms are
subject to service charge at the rate of ten percent (10%).Excepted
from the coverage of the 10% service charge are the so-called negotiated
contracts and special rates.

Following the wordings of Section 68 of the CBA, three requisites must be

present for the provisions on service charges to operate: (1) the transaction
from which service charge is sought to be collected is a sale; (2) the sale
transaction covers food, beverage, transportation, laundry and rooms;and (3)
the sale does not result from negotiated contracts and/or at special rates.
In plain terms, all transactions involving a sale of food, beverage,
transportation, laundry and rooms are generally covered.
Excepted from the coverage are, first, non-sale transactions or transactions
that do not involve any sale even though they involve food, beverage, etc.
Second, transactions that involve a sale but do not involve food, beverage,
etc. And third, transactions involving negotiated contracts and special
rates i.e., a sale of food, beverage, etc. resulting from negotiated
contracts or at special rates; non-sale transactions involving food,
beverage, etc. resulting from negotiated contracts and/or special rates;
and sale transactions, but not involving food, beverage, etc., resulting from
negotiated contracts and special rates.
Notably, the CBA does not specifically define the terms negotiated
contracts and special rates. Nonetheless, the CBA likewise does not
explicitly limit the use of these terms to specified transactions. With
particular reference to negotiated contracts, the CBA does not confine its
application to airline contracts as argued by the Union. Thus, as correctly
declared by the CA, the term negotiated contracts should be read as
applying to all types of negotiated contracts and not to airlines contracts
only. This is in line with the basic rule of construction that when the terms
are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall prevail. A
constricted interpretation of this term, i.e., as applicable to airlines
contracts only, must be positively shown either by the wordings of the CBA
or by sufficient evidence of the parties intention to limit its application. The
Union completely failed to provide support for its constricted
reading of the term negotiated contracts, either from the wordings of
the CBA or from the evidence.
In reversing the NLRCs ruling and denying the Unions claim, the CA found
the specified entries/transactions as either falling under the excepted
negotiated contracts and/or special rates or not involving a sale of food,
beverage, etc. Specifically, it considered the entries Westin Gold Cards
Revenue and Maxi Media Barter to be negotiated contracts or contracts
under special rates, and the entries Business Promotions and Gift
Certificates as contracts that did not involve a sale of food, beverage, etc.
The CA also found no factual and evidentiary basis to support the Unions
claim for service charges on the entries Guaranteed No show and F & B
Revenue.

Topic: Entitlement to Death Benefits

Ponente: Chief Justice Maria Lourdes P.A. Sereno
JORAINA DRAGON TALOSIG v. UNITED PHILIPPINE LINES, INC., G.R.
No. 198388, July 28, 2014
Facts: Petitioner is the widow of Vladimir Talosig, a seafarer hired as an
assistant butcher in the ship MS Zuiderdam. The vessel is owned by
respondent Holland American Line Wastours, Inc. through its local manning
agent, United Philippine Line, Inc. Talosig and respondent executed a
Contract of Employment incorporating the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going
Vessels (Standard Employment Contract) as prescribed by the Philippine
Overseas Employment Administration (POEA). The duration of the contract
was twelve (12) months. Talosig underwent the required Pre-Employment
Medical Examination (PEME) prior to his deployment. He passed the PEME
and was declared "fit to work." He boarded MS Zuiderdamon 26 August
2005.

During his employment with respondent, he was confined in the South Miami
Hospital sometime after suffering a month of rectal bleeding and lower
abdominal pain. He was then diagnosed with a "malignant neoplasm
infiltrating colonic mucosa." Subsequently, he was medically repatriated.
Upon arrival in the Philippines, he was immediately confined at the Asian
Hospital. There he was diagnosed to be suffering from Stage IV colon cancer.
Thereafter, he passed away as a result of cardiopulmonary arrest secondary
to sepsis and multiple organ failure secondary to colon cancer, Stage IV
(bone metastasis).
Petitioner thereafter filed a Complaint with the NLRC for death benefits,
damages and attorneys fees. The labor arbiter rendered a Decision in favor
of petitioner and ordered respondents to pay USD 50,000 as death benefits,
USD 7,000 as entitlement of one minorchild, and USD 1,000 as burial
benefits. The LA held that petitioner had failed to establish that Talosigs
death was reasonably connected to his work; however, it took judicial notice
of the fact that the diet of the ships crew seldomcontained vegetables and
high-fiber foods, likely contributing to the worsening of petitioners condition.
Upon appeal, the NLRC reversed the ruling of the LA. It ruled that the LA
erred when it formed its own scenarios, surmises and conclusions on what
could have caused petitioners colon cancer on board the vessel.
Furthermore, the NLRC found that his death occurred after the termination of
his contract, a fact that should have been the ground for the outright
dismissal of petitioners claim.
A Petition for Certiorari was filed by petitioner with the CA. The appellate
court affirmed the NLRC and held that the death of a seafarer is
compensable only if it occurs during the term of his contract of employment.
Upon Talosigs medical repatriation, the obligation to pay the death benefits
ceased in accordance with the partiesemployment contract. The CA further
held that Talosigs illness was not one of the occupational diseases
enumeratedin the POEA Standard Employment Contract for seafarers. It also
stated that petitioner failed to provide sufficient proof that the illness was
reasonably connected to Talosigs work, or that colon cancer was an
accepted occupational disease.
Issue: Whether or not the petitioner is entitled to the death benefits as
claimed.
Ruling: No. Petitioner is not entitled to the death benefits based on two
grounds: (1) that at the time of his death, Talosig was no longer under the
employment of respondents; and (2) that there was neither any showing that
the cause of his death was one of those covered by the POEA Standard
Employment Contract, nor was there any proof that it was work-related. It is

undeniable that the death of a seafarer must have occurred during the term
of his contract of employment for it to be compensable.
Records show that the contract of Talosig was for the duration of 12 months
commencing on the date of his actual departure from point of hire. He was,
however, repatriated for medical reasons on 24 December 2005. The CA
ruled that upon his repatriation, his employment was effectively terminated
pursuant to Section 18 B(1)of the POEA Standard Employment Contract.
Colon cancer is not one of those types of cancer that are compensable under
Section 32 of the POEA Standard Employment Contract. Under Section 32-A
of the POEA Standard Contract, only two types of cancers are listed as
occupational diseases (1) Cancer of the epithelial lining of the bladder
(papilloma of the bladder); and (2) cancer, epithellematous or ulceration
ofthe skin or of the corneal surface of the eye due to tar, pitch, bitumen,
mineral oil or paraffin, or compound products or residues of these
substances. Section 20 of the same Contract also states that those illnesses
not listed under Section 32 are disputably presumed as work-related. Section
20 should, however, be read together with Section 32-A on the conditions to
be satisfied for an illness to be compensable.
For an occupational disease and the resulting disability or death to be
compensable, all the following conditions must be established:
1. The seafarers work must involve the risk described herein;
2. The disease was contracted as a result of the seafarers exposure to the
described risks;
3. The disease was contracted within a period of exposure and under such
other factors necessary to contract it;
4. There was no notorious negligence on the part of the seafarer.
Further, the claimant must not merely rely on the disputable presumption,
but must be able to present no less than substantial evidence to support her
claim. Substantial evidence ismore than a mere scintilla. It must reach the
level of relevant evidence that a reasonable mind might accept as sufficient
to support a conclusion. The petitioner did not present any proof of a causal
connection or at least a work relation between the employment of Talosig
and his colon cancer. Petitioner merely relied on presumption of causality.
She failed either to establish or even to mention the risks that could have
caused or, at the very least,contributed to the disease contracted by Talosig.
Absent of any substantial proof of the causal connection between the disease
of Talosig and his work, the Court cannot grant death benefits to his heirs
based on mere presumptions.

Topic: Valid / Just Cause for Dismissal

Ponente: Diosdado M. Peralta, J.
FLP ENTERPRISES INC. - FRANCESCO SHOES v. MA. JOERALYN D.
DELA CRUZ and VILMA MALUNES, G.R. No. 198093, July 28, 2014

Facts: Petitioner FLPE hired respondent Dela Cruz in 1991 and respondent
Malunes in 1998 as sales ladies and assigned them both at its Alabang Town
Center store in Muntinlupa City. Because of the several previous incidents of
theft in its retail outlets, petitioner formulated a policy requiring its sales staff
to keep the sales proceeds in the stockroom instead of the cash register.
Petitioner alleged that said policy was properly announced, posted, and
implemented in all its retail outlets, particularly in Alabang Town Center.
On March 10, 2008, it was discovered that the stores sales proceeds for
March 7 to March 9, 2008, amounting to 26,372.75, were missing. The
investigating authorities found that it resulted from an "inside job" since the
cash register remained closed and there was no indication of forced entry
into the store. FLPE thus required respondents to explain in writing why they
should not be terminated. It contended that respondents clearly violated its
company policy prohibiting sales proceeds from being stored in the cash
register. Accordingly, Dela Cruz and Malunes submitted their respective
written explanations. They both denied the existence of such company policy
and having knowledge thereof.
FLPE thereafter removed respondents from service. Aggrieved, respondents
filed a complaint for illegal dismissal with money claims against the
company. The LA dismissed respondents claim and held that FLPE was able
to sufficiently prove that respondents were guilty of habitually violating the
company standard procedure on safekeeping of cash collection.
Upon appeal, the NLRC affirmed the LA Decision in its entirety. Subsequently,
respondents elevated the case to the CA, imputing grave abuse of discretion
on the NLRCs part. The CA set aside the NLRC ruling and pronounced
respondents as having been illegally dismissed by FLPE.
Issue: Whether or not Dela Cruz and Malunes were illegally dismissed by
FLPE.
Ruling: Yes. It is a fundamental rule that an employee can be discharged
from employment only for a valid cause. Here, both the LA and the NLRC
found that respondents have been validly terminated for gross and habitual
neglect of duties, constituting just cause for termination under Article 282 of
the Labor Code. As a valid ground for dismissal under said provision, neglect
of duty must be both gross and habitual. Gross negligence entails want of
care in the performance of ones duties, while habitual neglect imparts
repeated failure to perform such duties for a period of time, depending on
the circumstances.
Substantial evidence is also necessary for an employer to effectuate any
dismissal. Uncorroborated assertions and accusations by the employer would

not suffice, otherwise, the constitutional guaranty of security of tenure would

be put in jeopardy. In this case, as the CA correctly ruled, in order to sustain
herein respondents dismissal, FLPE must show, by substantial evidence, that
the following are extant:
1) the existence of the subject company policy;
2) the dismissed employee must have been properly informed of said policy;
3) actions or omissions on the part of the dismissed employee manifesting
deliberate refusal or wilfuldisregard of said company policy; and
4) such actions or omissions have occurred repeatedly.
FLPE claims that its company policy that requires its sales managers and
staff to keep the sales proceeds in a shoebox in the stockroom and not inside
the cash register, have been in existence since October 23, 2003. However,
FLPE failed to establish that such a company policy actually exists, and if it
does truly exist, that it was, in fact, posted and/or disseminated accordingly.
Neither is there anything in the records which reveals that the dismissed
respondents were informed of said policy. The company vehemently insists
that it posted, announced, and implemented the subject Safekeeping Policy
in all its retail stores, especially the one in Alabang Town Center. It, however,
failed to substantiate said claim. It could have easily produced a copy of said
memorandum bearing the signatures of Dela Cruz and Malunes to show that,
indeed, they have been notified of the existence of said company rule and
that they have received, read, and understood the same. FLPE could likewise
have simply called some of its employees to testify on the rules existence,
dissemination, and strict implementation. But aside from its self-serving and
uncorroborated declaration, and a copy of the supposed policy, FLPE
adduced nothing more.
In termination cases, the burden of proof rests on the employer to show that
the dismissal is for a just cause. The one who alleges a fact has the burden of
proving it; thus, FLPE should prove its allegation that it terminated
respondents for a valid and just cause. It must be stressed that the evidence
to prove this fact must be clear, positive, and convincing. When there is no
showing of a clear, valid, and legal cause for the termination of employment,
the law considers the matter a case of illegal dismissal. Unfortunately, FLPE
miserably failed to discharge this burden. To rule otherwise and simply allow
the presumption as to the existence and dissemination of the supposed
company policy would lead to a proliferation of fabricated notices, and entice
further abuse by unscrupulous persons. Workers could then be arbitrarily
terminated without much of an effort, running afoul of the States clear duty
to show compassion and afford the utmost protection to laborers.

True, an employer has the discretion to regulate all aspects of employment

and the workers have the corresponding obligation to obey company rules
and regulations. Deliberately disregarding or disobeying the rules cannot be
countenanced, and any justification that the disobedient employee might put
forth is deemed inconsequential. However, the Court must emphasize that
the prerogative of an employer to dismiss an employee on the ground of
willful disobedience to company policies must be exercised in good faith and
with due regard to the rights of labor
For lack of any clear, valid, and just cause in terminating respondents'
employment, FLPE is indubitably guilty of illegal dismissal.

Topic: Existence of Employer - Employee Relationship

Ponente: Mariano C. del Castillo, J.
ROYALE HOMES MARKETING CORPORATION v. FIDEL P. ALCANTARA,
G.R. No. 195190 July 28, 2014
Facts: Royale Homes, a corporation engaged in marketing real estates,
appointed Alcantara as its Marketing Director for a fixed period of one year.
His work consisted mainly of marketing Royale Homes real estate
inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years, the last of which covered the period January 1 to
December 31, 2003 where he held the position of Division 5 Vice-PresidentSales.
Alcantara filed a Complaint for Illegal Dismissal against Royale Homes and its
Executives. Alcantara alleged that he is a regular employee of Royale Homes
since he is performing tasks that are necessary and desirable to its business;
and that the acts of the executive officers of Royale Homes amounted to his
dismissal from work without any valid or just cause and in gross disregard of
the proper procedure for dismissing employees. He prayed to be reinstated
to his former position without loss of seniority rights and other privileges, as
well as to be paid backwages, moral and exemplary damages.
Royale Homes, on the other hand, vehemently denied that Alcantara is its
employee. It argued that the appointment paper of Alcantara is clear that it
engaged his services as an independent sales contractor for a fixed term of
one year only. He never received any salary, 13th month pay, overtime pay
or holiday pay from Royale Homes as he was paid purely on commission
basis. In addition, Royale Homes had no control on how Alcantara would
accomplish his tasks and responsibilities as he was free to solicit sales at any
time and by any manner which he may deem appropriate and necessary. He
is even free to recruit his own sales personnel to assist him in pursuance of
his sales target.
The Labor Arbiter rendered a Decision holding that Alcantara is an employee
of Royale Homes with a fixed-term employment period from January 1 to
December 31, 2003 and that the pre-termination of his contract was against
the law.
Upon appeal, the NLRC ruled that Alcantara is not an employee but a mere
independent contractor of Royale Homes. It based its ruling mainly on the
contract which does not require Alcantara to observe regular working hours.
He was also free to adopt the selling methods he deemed most effective and
can even recruit sales agents to assist him in marketing the inventories of

Royale Homes. The NLRC also considered the fact that Alcantara was not
receiving monthly salary, but was being paid on commission basis as
stipulated in the contract. Being an independent contractor, the NLRC
concluded that Alcantaras Complaint is cognizable by the regular courts.
Alcantara thus filed a Petition for Certiorari with the CA which granted said
petition and reversed the NLRCs Decision. Applying the four-fold and
economic reality tests, it held that Alcantara is an employee of Royale
Homes. Royale Homes exercised some degree of control over Alcantara since
his job, as observed by the CA, is subject to company rules, regulations, and
periodic evaluations. He was also bound by the company code of ethics.
Issue: Whether or not Alcantara is an employee of Royale Homes.
Ruling: No. Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The determination of whether a party who renders
services to another is an employee or an independent contractor involves an
evaluation of factual matters which, ordinarily, is not within the province of
the Supreme Court. However, in view of the conflicting findings of the
tribunals below, the Court is constrained to go over the factual matters
involved in this case.
In determining the existence of an employer-employee relationship, the
Court has generally relied on the four-fold test, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employers power to control the employee with respect
to the means and methods by which the work is to be accomplished. Among
the four, the most determinative factor in ascertaining the existence of
employer-employee relationship is the right of control test. It is deemed to
be such an important factor that the other requisites may even be
disregarded. This holds true where the issues to be resolved is whether a
person who performs work for another is the latters employee or is an
independent contractor, as in this case. For where the person for whom the
services are performed reserves the right to control not only the end to be
achieved, but also the means by which such end is reached, employeremployee relationship is deemed to exist.
However, not every form of control is indicative of employer-employee
relationship. A person who performs work for another and is subjected to its
rules, regulations, and code of ethics does not necessarily become an
employee. As long as the level of control does not interfere with the means
and methods of accomplishing the assigned tasks, the rules imposed by the
hiring party on the hired party do not amount to the labor law concept of
control that is indicative of employer-employee relationship.

The primary evidence of the nature of the parties relationship in this case is
the written contract that they signed and executed in pursuance of their
mutual agreement. While the existence of employer-employee relationship is
a matter of law, the characterization made by the parties in their contract as
to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties written contract unequivocally
states their intention at the time they entered into it.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.), Inc., it was held
that: "To be sure, the Agreements legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts; x xx the
characterization of the juridical relationship the Agreement embodied is a
matter of law that is for the courts to determine. At the same time, though,
the characterization the parties gave to their relationship in the Agreement
cannot simply be brushed aside because it embodies their intent at the time
they entered the Agreement, and they were governed by this understanding
throughout their relationship. At the very least, the provision on the absence
of employer-employee relationship between the parties can be an aid in
considering the Agreement and its implementation, and in appreciating the
other evidence on record."
In this case, the contract, duly signed and not disputed by the parties,
conspicuously provides that no employer-employee relationship exists
between Royale Homes and Alcantara, as well as his sales agents. It is clear
that they did not want to be bound by employer-employee relationship at the
time of the signing of the contract.
Likewise, the repeated hiring of Alcantara does not prove the existence of
employer-employee relationship. The absence of control over the means and
methods disproves employer-employee relationship. The continuous rehiring
of Alcantara simply signifies the renewal of his contract with Royale Homes,
and highlights his satisfactory services warranting the renewal of such
contract.
The element of payment of wages is also absent in this case. As provided in
the contract, Alcantaras remunerations consist only of commission override
of 0.5%, budget allocation, sales incentive and other forms of company
support. There is no proof that he received fixed monthly salary.

Topic: Termination due to trust and confidence

Ponente: PRESBITERO J. VELASCO, JR.
Wesleyan University-Philippines v. Nowella Reyes G.R. No. 208321,
July 30, 2014
Facts: On March 16, 2004, respondent Nowella Reyes was appointed as
WUP's University Treasurer on probationary basis. A little over a year after,
she was appointed as full time University Treasurer. A new WUP Board of
Trustees was constituted. Among its first acts was to engage the services of
Nepomuceno Suner & Associates Accounting Firm (External Auditor) to
investigate circulating rumors on alleged anomalies in the contracts entered
into by petitioner and in its finances.
Discovered following an audit were irregularities in the handling of
petitioners finances, mainly, the encashment by its Treasury Department of
checks issued to WUP personnel, a practice purportedly in violation of the
imprest system of cash management, and the encashment of various
crossed checks payable to the University Treasurer by Chinabank despite
managements intention to merely have the funds covered thereby
transferred from one of petitioners bank accounts to another. Respondent
submitted her Explanation. Following which, WUPs Human Resources
Development Office (HRDO) conducted an investigation. Finding
respondents Explanation unsatisfactory, the HRDO, submitted an
Investigation Report to the University President containing its findings and
recommending respondents dismissal as University Treasurer.

Upon receipt of her notice of termination, respondent post-haste filed a

complaint for illegal dismissal with the Arbitration Branch of the National
Labor Relations Commission. She contended that her dismissal was illegal,
void and unjust. Labor Arbiter Reynaldo V. Abdon rendered a Decision finding
that complainant was illegally dismissed by respondent Wesleyan University
Philippines. Petitioner filed an appeal with the National Labor Relations
Commission (NLRC) which was granted in the tribunals Decision, declaring
that respondent was legally dismissed. The CA, through its assailed Decision
found the NLRCs ruling tainted with grave abuse of discretion and reinstated
the Decision of the Labor Arbiter. Hence, the instant petition.

Issue: Whether respondent Nowella Reyes' termination as University

Treasurer of petitioner Wesleyan University - Philippines (WUP) on the ground
of loss of trust and confidence was valid.

Ruling: Yes.

Article 282. Termination by employer. An employer may terminate an

employment for any of the following causes:
xxxx

c. Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

The first requisite is that the employee concerned must be one holding a
position of trust and confidence, thus, one who is either: (1) a managerial
employee; or (2) a fiduciary rank-and-file employee, who, in the normal
exercise of his or her functions, regularly handles significant amounts of
money or property of the employer. The second requisite is that the loss of
confidence must be based on a willful breach of trust and founded on clearly
established facts.

The presence of the first requisite is certain. So is as regards the second

requisite. Indeed, the Court finds that petitioner adequately proved
respondents dismissal was for a just cause, based on a willful breach of trust
and founded on clearly established facts as required by jurisprudence. At the
end of the day, the question of whether she was a managerial or rank-and
file employee does not matter in this case because not only is there basis for
believing that she breached the trust of her employer, her involvement in the
irregularities attending to petitioners finances has also been proved.

Here, there was an admitted, actual and real breach of duty committed by
respondent, which translates into a breach of trust and confidence in her. As
it were, respondent did not deny, in fact admitted, the encashment of the
three hundred thousand peso (PhP 300,000) crossed check payable to the
University Treasurer which covered the total amount of the "love gift" for
administrative and academic officials of WUP.

Jurisprudence has pronounced that the crossing of a check means that the
check may not be encashed but only deposited in the bank. As Treasurer,
respondent knew or is at least expected to be aware of and abide by this
basic banking practice and commercial custom. Clearly, the issuance of a
crossed check reflects managements intention to safeguard the funds
covered thereby, its special instruction to have the same deposited to
another account and its restriction on its encashment.

Here, respondent, as aptly detailed in the auditors report, disregarded

managements intentions and ignored the measures in place to secure the
handling of WUPs funds. By encashing the crossed checks, respondent put
the funds covered thereby under the risk of being lost, stolen, co-mingled
with other funds or spent for other purposes. Furthermore, the
accommodation and encashment by the Treasury Department of checks
issued to WUP personnel were highly irregular. First, WUP, not being a bank,
had no business encashing the checks of its personnel. More importantly, in
encashing the said checks, the Treasury Department made disbursements

contrary to the wishes of management because, in issuing said checks,

management has made clear its intention that monies therefor would be
sourced from petitioners deposit with Chinabank, under a specific account,
and not from the cash available in the Treasury Department.

That the encashment of crossed checks and payment of checks directly to

WUP personnel had been the practice of the previous and present
administration of petitioner is of no moment. This was simply respondents
convenient excuse, a poorly disguised afterthought, when her unbecoming
carelessness in managing WUPs finances was exposed. Moreover, the
prevalence of this practice could have been contained if only respondent
consistently observed the regular procedure for encashing crossed checks
and properly handled requests for accommodation of checks issued to the
WUP personnel.

In employer cannot be compelled to retain an employee who is guilty of acts

inimical to the interests of the employer. A company has the right to dismiss
its employees if only as a measure of self-protection. This is all the more true
in the case of supervisors or personnel occupying positions of
responsibility. In this case, let it be remembered that respondent was not an
ordinary rank-and-file employee as she was no less the Treasurer who was in
charge of the coffers of the University. It would be oppressive to require
petitioner to retain in their management an officer who has admitted to
knowingly and intentionally committing acts which jeopardized its finances
and who was untrustworthy in the handling and custody of University funds.

Topic: Grievance Procedure

Ponente: ANTONIO T. CARPIO
University of Santo Tomas Faculty Union v. University of Sto. Tomas,
G.R. No. 203957, July 30, 2014
Facts: In a letter dated February 6, 2007, University of Santo Tomas Faculty
Union (USTFU) demanded from University of Sto. Tomas (UST), through its
Rector, Fr. Ernesto M. Arceo, O.P. ("Fr. Arceo"), remittance of the total amount
of P65,000,000.00 plus legal interest thereon, representing deficiency in its
contribution to the medical and hospitalization fund ("fund") of USTs faculty
members. USTFU also sent UST a letter accompanied by a summary of its
claims pursuant to their 1996-2001 CBA.
Fr. Arceo informed USTFU that the aforesaid benefits were not meant to be
given annually but rather as a one-time allocation or contribution to the fund.
USTFU then sent UST another demand letter reiterating its position that UST
is obliged to remit to the fund, its contributions not only for the years 19961997 but also for the subsequent years, but to no avail. Thus, USTFU filed
against UST, a complaint for unfair labor practice before the arbitration
branch of the NLRC.
UST sought the dismissal of the complaint on the ground of lack of
jurisdiction. It contended that the case falls within the exclusive jurisdiction
of the voluntary arbitrator or panel of voluntary arbitrators because it
involves the interpretation and implementation of the provisions of the CBA;
and the conflict between the herein parties must be resolved as grievance
under the CBA and not as unfair labor practice. USTs motion to dismiss was

denied by the LA in its August 8, 2008 order. UST appealed the Order to the
NLRC. The NLRC Seventh Division, however, dismissed the appeal and
remanded the case to the LA.
The LA ruled in favor of USTFU. The NLRC granted USTFUs appeal and
denied USTs appeal for lack of merit. UST filed a motion for reconsideration
of the NLRC decision. UST again claimed that the Voluntary Arbitrator, and
not LA, had jurisdiction over the interpretation of the CBA;
the P80,000,000.00 award had no basis; and the fund should be remitted to
the Hospital and Medical Benefits Committee, not to USTFU, as stated in the
CBA.
In a Resolution, the NLRC denied USTs motion for reconsideration for lack of
merit. The CA disposed of the present case by agreeing with USTs argument
that the LA and the NLRC did not have jurisdiction to hear and decide the
present case. The CA stated that since USTFUs ultimate objective is to clarify
the relevant items in the CBA, then USTFUs complaint should have been
filed with the voluntary arbitrator or panel of voluntary arbitrators.
Issue: Whether the Court of Appeals departed from the usual course of
judicial proceedings in holding that the Labor Arbiter and the NLRC have no
jurisdiction over the complaint for unfair labor practice (ULP) filed by USTFU.
Ruling: No.
The SC affirmed with modification the ruling of the CA. The Labor Arbiter has
no jurisdiction over the present case. We see that UST and USTFUs
misunderstanding arose solely from their differing interpretations of the
CBAs provisions on economic benefits, specifically those concerning the
fund. Therefore, it was clearly error for the LA to assume jurisdiction over the
present case. The case should have been resolved through the voluntary
arbitrator or panel of voluntary arbitrators.
Article 217(c) of the Labor Code provides that the Labor Arbiter shall refer to
the grievance machinery and voluntary arbitration as provided in the CBA
those cases that involve the interpretation of said agreements. Article 261 of
the Labor Code further provides that all unresolved grievances arising from
the interpretation or implementation of the CBA, including violations of said
agreement, are under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. Excluded from this original and
exclusive jurisdiction is gross violation of the CBA, which is defined in Article
261 as "flagrant and/or malicious refusal to comply with the economic
provisions" of the CBA.
Despite the allegation that UST refused to comply with the economic
provisions of the 1996-2001 CBA, we cannot characterize USTs refusal as

"flagrant and/or malicious." Indeed, USTs literal interpretation of the CBA

was, in fact, what led USTFU to file its complaint. To our mind, USTFU actually
went beyond the text of the 1996-2001 CBA when it claimed that the
integrated tuition fee increase as described in Section 1D(2) is the basis for
USTs alleged deficiency.
We cannot subscribe to USTFUs view that the 1996-2001 CBAs Article X:
Grievance Machinery is not applicable to the present case. When the issue is
about the grievance procedure, USTFU insists on a literal interpretation of
the 1996-2001 CBA. Indeed, the present case falls under Section 1s
definition of grievance:"any misunderstanding concerning policies and
practices directly affecting faculty members covered by this collective
bargaining agreement or their working conditions in the UNIVERSITY or any
dispute arising as to the meaning, application or violation of any provisions
of this Agreement or any complaint that a covered faculty member may have
against the UNIVERSITY." Section 2 excludes only termination and preventive
suspension from the grievance procedure.
USTFUs focus is on the 1996-2001 CBAs provisions about the grievance
process rather than the provision about the subject matters covered by the
grievance process. Despite USTs alleged violation of the economic
provisions of the CBA by its insufficient remittances to the fund, a dispute
arising as to the meaning, application or violation of the CBA, USTFU used
Step I in Section 3, and ignored Steps III and IV, to rule out any referral to
voluntary arbitration. USTFU concludes that the 1996-2001 CBAs provisions
on grievance machinery only refer to a grievance of a faculty member
against UST, and that said provisions do not contemplate a situation where
USTFU itself has a grievance against UST.
USTFU argues that the PUUC is the proper forum to resolve the issue, and
that the filing of a complaint before the LA is proper in the absence of a
voluntary arbitration clause in the 1996-2001 CBAs Article XXII: Permanent
University-Union Committee. However, as provided in the 1996-2001 CBA,
PUUC is established for "continuing problems and irritants which will require
the continuing attention" of UST and USTFU. Clearly, the PUUC addresses
matters not covered by the CBA. USTFUs adamant refusal to consider
voluntary arbitration ignores Articles 261 to 262-A of the Labor Code, as well
as Steps III and IV of Section 3 of the 1996-2001 CBA.

Topic: Permanent disability benefits and sickness allowance

Ponente: BIENVENIDO L. REYES
Status Maritime Corp. v. Spouses Delalamon G.R. No. 198097, July
30, 2014
Facts: Margarito was hired by Status Maritime Corporation (Status
Maritime), for and in behalf of its principal, Fairdeal Group Management S.A.
(Fairdeal), as Chief Engineer with a monthly basic salary of US$1,300.00. The
employment contract was originally for a period of nine (9) months from July

26, 2005 to April 26, 2006 but Margarito later on requested for, and was
granted, extension until October 2006.
Margarito left Manila to join the vessel, M/T Fair Jolly, on July 26, 2005 and
forthwith discharged his duties. In September 2006, while the vessel was in
United Arab Emirates (UAE), Margarito complained of loss of appetite. He
was sent to the National Medical Center at the Port of Fujairah, UAE, for
diagnosis and treatment. In a Medical Report, Margarito was diagnosed with
"Renal Insufficiency: Diabetes Mellitus; IHD Blood+CBC+Anemia." He was
medically repatriated.
Margarito and his wife Priscila (respondents) filed a complaint before the
Labor Arbiter (LA) for the payment of permanent disability benefits, sickness
allowance, damages and attorneys fees against Fairdeal, M/T Fair Jolly,
Status Maritime and its President, Loma B. Aguiman (petitioners). According
to the respondents, Margarito was physically weak when he arrived in the
Philippines. He thus sought to rest athome and failed to report to the
petitioners. Priscilla nonetheless notified the petitioners of Margaritos
condition through a certain Allan Lopez.
When Margaritos medical condition worsened, he was brought to Las Pias
Doctors Hospital where he underwent a series of clinical and laboratory
tests. He was again hospitalized. Based on the medical certificate issued by
Dr. Elizabeth B. Salazar-Montemayor dated January 17, 2007, Margarito was
found to be sufferingfrom "End Stage Renal Disease 2 Diabetic Nephropathy."
The respondents averred that the petitioners failed to provide any medical
assistance the entire time that Margarito was undergoing medical treatments
for an illness he acquired while in their employ.
According to the petitioners, Margaritos illness is not compensable based on
the medical report dated May 17, 2007 of Dr. Wilanie Romero Dacanay of the
Marine Medical Services of Metropolitan Medical Center stating that "Chronic
Kidney Disease secondary to Diabetic Nephropathy" is NOT work-related.
Based thereon, the petitioners argued that Margarito concealed his illness
when he was subjected to a Pre-Employment Medical Examination (PEME)
hence disqualified from claiming disability benefits.
Pending the decision of the LA, Margarito died on September 11, 2007. His
cause of death was "CVA" or Cardiovascular Accident. The LA found no merit
in the respondents complaint for the reason that Margaritos illness is not
work-related. The NLRC affirmed the LAs ruling and added that Margarito did

not even bother to comply with the mandatory requirement of reporting to

the petitioners office within three (3) days from his disembarkation for postemployment medical examination pursuant to Section 20 (B)[3] of the POEASEC.
The respondents elevated the case to the CA and, in support of their position
that Margaritos illness is work-related by a medical evaluation. The CA
reversed the findings of the labor tribunals. The CA held that Margarito was
exempt from complying with the 3-day mandatory reporting requirement
because when he arrived in the Philippines, his physical condition was
already deteriorating and was in need of urgent medical attention. Thus, it
could not be expected of him to prioritize the reporting requirement before
attending to his medical needs. Also, his wife actually notified the petitioners
of his medical condition, through Allan Lopez. The petitioners moved for
reconsideration but the motion was denied in the CA Resolution. Hence, the
present appeal.
Issue: Whether the CA erred in finding grave abuse of discretion on the part
of the NLRC when the latter affirmed the LA's dismissal of Margarito's
complaint for permanent disability benefits and sickness allowance
Ruling: Yes.
SECTION 20. COMPENSATION AND BENEFITS
xxxx
E. A seafarer who knowingly conceals and does not disclose past medical
condition, disability and history in the pre-employment medical examination
constitutes fraudulent misrepresentation and shall disqualify him from any
compensation and benefits. This may also be a valid ground for termination
of employment and imposition of the appropriate administrative and legal
sanctions. (Emphasis ours)
The fact that Margarito passed his PEME cannot excuse his willful
concealment nor can it preclude the petitioners from rejecting his disability
claims. PEME is not exploratory and does not allow the employer to discover
any and all pre-existing medical condition with which the seafarer is suffering
and for which he may be presently taking medication. The PEME is nothing
more than a summary examination of the seafarers physiological
condition; it merely determines whether one is "fit to work" at sea or "fit for

sea service" and it does not state the real state of health of an applicant. The
"fit to work" declaration in the PEME cannot be a conclusive proof to show
that he was free from any ailment prior to his deployment.
Thus, for knowingly concealing his diabetes during the PEME, Margarito
committed fraudulent misrepresentation which under the POEA-SEC
unconditionally barred his right to receive any disability compensation or
illness benefit.
This finding renders any issue on work-relatedness irrelevant since the
premise
which
bars
disability
compensation
is
the
fraudulent
misrepresentation of a pre-existing disease and not the fact that it was preexisting. Even if we were to disregard Margaritos fraudulent
misrepresentation, his claim will still fail.
It is evident from the foregoing medical reports of Drs. Dacanay and Vicaldo
that when Margarito applied for and was given employment by the
petitioners on July 26, 2005, he was already afflicted with diabetes. This
means that he did not acquire his illness while working in the petitioners
vessel and thus his diabetes is not work-related.
Disability compensation cannot rest on mere allegations couched in
conjectures and baseless inferences from which work aggravation or
relatedness cannot be presumed. "[B]are allegations do not suffice to
discharge the required quantum of proof of compensability. Awards of
compensation cannot rest on speculations or presumptions. The beneficiaries
must present evidence to prove a positive proposition."
In as much as we commiserate with Margarito's widow, the Court's
commitment to the cause of labor is not a lopsided undertaking. It cannot
and does not prevent us from sustaining the employer when it is in the right.
The constitutional policy to provide full protection to labor is not meant to be
a sword to oppress employers. Justice, is, in every case for the deserving,
and it must be dispensed with in the light of established facts, the applicable
law, and existing jurisprudence.