1. G.R. No.

198225

G.R. No. 198225, September 27, 2017 - TSM SHIPPING (PHILS.), INC., AND MST MARINE SERVICES PHILS.,
INC., Petitioners, v. SHIRLEY G. DE CHAVEZ,1 Respondent.

G.R. No. 198225, September 27, 2017 - TSM SHIPPING (PHILS.), INC., AND MST MARINE
SERVICES PHILS., INC., Petitioners, v. SHIRLEY G. DE CHAVEZ,1 Respondent.

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

G.R. No. 198225, September 27, 2017

TSM SHIPPING (PHILS.), INC., AND MST MARINE SERVICES PHILS., INC., Petitioners, v. SHIRLEY G. DE
CHAVEZ,1 Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari2 assails the January 31, 2011 Decision3 and the August 8, 2011
Resolution4 of the Court of Appeals (CA) in CA-GR SP No. 112898. The CA granted the Petition for
Certiorari filed therewith and reversed and set aside the December 16, 2009 Decision5 of the National
Labor Relations Commission (NLRC) in NLRC LAC OFW (M) 09-000540-09, which affirmed the July 18,
2009 Decision6 of the Labor Arbiter (LA) dismissing the complaint for payment of death benefits in
NLRC-NCR OFW (M) 12-17395-08 for lack of merit.

Factual Antecedents

On August 23, 2005, petitioners hired Ryan Pableo De Chavez7 (Ryan) as chief cook on board the oil
tanker vessel Haruna Express for period of nine months.8 However, on February 26, 2006, Ryan was
found dead inside his cabin bathroom hanging by the shower cord and covered with blood.9 Thus,
Ryan's surviving spouse, Shirley De Chavez (Shirley), filed complaint10 for death benefits.
In her Position Paper,11 Reply,12 and Rejoinder,13 Shirley alleged that Ryan did not commit suicide
considering that Ryan even submitted himself to medical check up at hospital in Ulsan, Korea day prior to
his death; that during their telephone conversation two days before his alleged suicide, Ryan informed
her that the vessel would be discharging crude oil in Batangas and that they might see each other; that
no suicide note was found; that Ryan died during the effectivity of his contract and while on board the
vessel, hence, his heirs are entitled to death benefits; that petitioners did not clarify how Ryan could
have committed suicide; that the presumption of regularity in the performance of duties is not accorded
to foreign nationals, such as the Ulsan police authorities; that no evidence was adduced that the Ulsan
Maritime Police indeed conducted an investigation into Ryan's death; that the imputation that Ryan took
his own life because he was pressured by his mother to obtain a loan for new house flies in the face of
the fact that Ryan was recently married and about to start family, that he had acquired new house and
that he was recently promoted as chief cook; and, that the pictures taken when Ryan was found dead
which tended to show that he was murdered was not at all explained in the Medical Certificate of Death
issued by the Ulsan City Hospital of Korea.

On the other hand, petitioners claimed in their Position Paper,14 Reply,15 and Rejoinder16 that Shirley is
not entitled to death benefits under the Philippine Overseas Employment Administration-Standard
Employment Contract (POEA�SEC) because the Medical Certif1cate of Death the written statements of
the Chief Mate, the Ship Master, and Messman Benjamin Melendres (Messman Melendres), and the
investigation report prepared by International Inspection and Testing Corporation (INTECO), uniformly
found Ryan's cause of death as suicide; that the Personnel Manager of Thome Ship Management Pte.
Ltd. (Thome Ltd.) submitted an Investigation Report indicating that the possible reason for the suicide
was Ryan's loss of direction or overwhelming despair after his mother virtually pushed him to take huge
loan to purchase house; that the Ulsan Maritime police who investigated the incident did not notice any
foul play; that Messman Melendres, who was the first person to break into Ryan's locked room, likewise
observed that there was nothing in Ryan's cabin to suggest that there had been fight or struggle; that the
examination of Ryan's corpse revealed no signs of trauma; and, that Shirley could not testify on how
Ryan died because she was not on board the vessel when the incident transpired.

Ruling of the Labor Arbiter

In Decision dated July 18, 2009,17 the LA dismissed the complaint on the ground that the evidence
convincingly showed that Ryan's death was authored by Ryan himself, viz.:
A careful perusal of [INTECO's Investigation Report] and [the] medical certificate reveals that the direct
cause of [Ryan's death,] based on the autopsy findings of the Ulsan City Hospital, showed that the cause
of death x x x was 'excessive bleeding from [Ryan's] cut wrist apparently by scissors', [even] the Medical
Certificate of Death issued by the Ulsan City Hospital certified that the cause of death of the deceased
was by 'Hanging, strangulation and suffocation'.18

Ruling of the National Labor Relations Commission

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

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

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

Ruling of the Court of Appeals

Shirley instituted before the appellate court Petition for Certiorari,22 contending that petitioners had not
presented substantial evidence to support the conclusion that Ryan indeed committed suicide and
insisting that his death was compensable.

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

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The assailed Decision, dated
December 16, 2009, and Resolution, dated September 30, 2009, in NLRC LAC OFW (M) 09 000540-09
(NLRC-NCR OFW (M) 12-17395-08) are hereby ANNULLED and SET ASIDE. The records of this case are
remanded to the National Labor Relations Commission tor the computation of the death benefits to be
awarded to [respondent] Shirley De Chavez in behalf of [her] deceased husband Ryan Pableo De Chavez.
SO ORDERED.24

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

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

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

'Cause of death

1. Direct Cause of Death.

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

2. Intermedicate Predisposing Cause of Death.

3. Predisposing Cause of Death.

BLOOD LOSS' (emphasis supplied)

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

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

The autopsy on the corpse of [Ryan] was performed at the Ulsan City Hospital x x x [witnessed by] all
parties concerned including us Mr. Leow Ai Hin, Senior Shipping Executive of Thome Ship Management
Pte. Ltd., Singapore x x x and x x x the cause of death of [Ryan] was excessive bleeding from the cut wrist
of [Ryan] apparently by scissors. The Ulsan Maritime Police requested handwritten statements of all
remaining crews of "HARUNA EXPRESS" in the evening hours of Feb. 27th which were prepared
submitted to the Police in the morning hours of Feb. 28 and then "HARUNA EXPRESS" sailed off Ulsan
Port at 12:30 hrs. of Feb. 28th. (Emphasis supplied)

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

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

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

Hence, the instant Petition raising the following issue:

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

Petitioners'Arguments
In their Petition,28 Reply,29 and Memorandum,30 petitioners contend that under the governing POEA-
SEC, seafarer's death during the term of his contract is not automatically compensable particularly if the
same was due to his willful act; that the LA's findings of fact, which were upheld by the NLRC, should not
have been disregarded by the CA because Shirley herself, whose duty was to establish her entitlement to
the death benefits, has utterly failed to adduce any evidence to substantiate her bare allegation that
Ryan was not responsible for his own death; that apart from her absolutely empty and hollow claim,
Shirley presented no proof that Ryan was victim of foul play; that the purported contradictory
information about the cause of Ryan's death, whether he chose to hang himself or slash his wrist with
scissors, did not negate the fact that his death was self-inflicted; that the Medical Certificate of Death31
prepared by Dr. Sung Yeoul Hung of the Ulsan City Hospital, which listed "Intentional Self Harm by
[Hanging], Strangulation and Suffocation" as the direct cause of death, and the INTECO's Report32 which
declared Ryan's death as "suicide," effectively meant the same thing; that although no official autopsy
report was issued by the Ulsan Maritime Police, the latter allowed the vessel to sail on February 28, 2006
only after they had verified and were satisfied that there was no foul play in Ryan's death; that Lapid v.
National Labor Relations Commission33 is not applicable because the coroner's report therein was
incomplete, whereas the Medical Certificate of Death of the Ulsan City Hospital and INTECO Report, gave
detailed account that Ryan was found hanging by rope or cord while sitting on the toilet bowl with his
wrist slashed and pair of scissors nearby; that incumbent upon the Supreme Court to resolve this case
because the CA's findings are not only diametrically opposed to the findings of both the LA and the.
NLRC, but the CA's findings are grounded entirely on speculation, surmises or conjectures; that it was
Shirley's duty to prove by substantial evidence her entitlement to death benefits; that the CA erred ill not
giving credence to INTECO's. Report as well as the Medical.Certificate of Death issued by the Ulsan City
Hospital; and that they have proven by substantial evidence that Ryan's death was self-inflicted, thus
Shirley is not entitled to death compensation benefits pursuant Section 20(D) of the governing POEA-
SEC.

Respondent Arguments

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

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

Our Ruling

The Petition is meritorious.

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

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

SECTION 20. COMPENSATION AND BENEFITS

A COMPENSATION AND BENEFITS FOR DEATH

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

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

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

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

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

The first document is the Ulsan City Hospital's Medical Certificate of Death43 which was signed by one
Dr. Sung Yeoul Hung with License No. 25028. It reads:
xxxx

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

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

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

ON THE SEA 15km FROM ULSAN

� Cause of death

1. Direct Cause of Death.

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

2. Intermedicate Predisposing Cause of Death.

3. Predisposing Cause of Death.

BLOOD LOSS

THE ABOVE STATEMENT IS TRUE TO BEST OF MY KNOWLEDGE44

The second document is the INTECO Report45 signed by one "S.M. Han, Rep. Director." It pertinently
stated:

I) General Information:

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

xxxx

IV) Circumstance/Cause of Accident:

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

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

xxxx

08:45 hrs. of Feb. 26th:

x x x [T]he mess boy went up the Chief Cook's cabin to inform that he would leave the galley x x x he
called the Chief Cook before opening the cabin door, but no response, and therefore, he opened the
cabin door, but there was no Chief Cook in his cabin, and the bathroom door was closed and very quiet.
The mess boy knocked [at] the bathroom door calling the Chief Cook's name, but no response, and the
mess boy tried to open the bathroom door, but it was locked, and so, the mess boy opened the
bathroom door using his (messboy's) key. Upon opening the bathroom door, considerable blood was
found on the floor, and part of the Chief Cook's feet was seen with the shower curtain partly closed.

09:00 hrs. of Feb. 26th:

The mess boy immediately notified x x x the Chief Officer [what he saw], and both mess boy Chief Officer
rushed to the Chief Cook's cabin and upon opening the shower curtain, they found the shower hose
around the neck of the Chief Cook, and the Chief Officer instructed the mess boy not to touch anyt[h]ing.
09:01 hrs. of Feb. 26th:

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

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

xxxx

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

xxxx

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

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

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

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

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

VI) Cause of Death of Mr. Dechavez:

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

Indeed, it is settled that:

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

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

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

xxxx

Based on x x x all [information] available as reported herein, the cause of death of [Ryan] was concluded
to be suicide.49
Elaborating on the foregoing, Leow Ai Hin, Marine Personnel Manager of the Thome Ltd., stated in
Attachment No. 4:

xxxx

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

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

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

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

The CA also asked the rhetorical question:

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

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

Apparent from the foregoing, the report of the Italian Medical Examiner, which stated that Hernani
committed suicide is more categorical and definite than the uncertain findings of the PNP Crime
Laboratory and the NBI that homicide cannot be totally ruled out. Excerpts from the PNP and NBI reports
would disclose that both agencies were unsure if homicide or suicide was the underlying cause of
Hernani's death. Hence, the Court agrees with the findings of the LA and his judgment to give weight and
credence to the evidence submitted by the petitioners proving that Hernani committed suicide.56

The CA also asked another rhetorical question:

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

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

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

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

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

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

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

In Sasan, Sr. v. National Labor Relations Commission 4th Division, We held that our jurisprudence is
replete with cases allowing the NLRC to admit evidence, not presented before the Labor Arbiter, and
submitted to the NLRC for the first time on appeal. The submission of additional evidence before the
NLRC is not prohibited by its New Rules of Procedure considering that rules of evidence prevailing in
courts of law or equity are not controlling in labor cases. The NLRC and Labor Arbiters are directed to use
every and all reasonable means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law and procedure all in the interest of substantial justice. In keeping with this
directive, it has been held that the NLRC may consider evidence, such as documents and affidavits,
submitted by the parties for the first time on appeal.

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

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

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

The result of the above investigations is even bolstered by the Medical Report issued by Dr. Sajeed
Aboobaker who diagnosed sean1an Glicerio with musculoskeletal pain and emotional trauma due to
family problems, when the latter complained of chest pains and palpitations on December 10, 2008.
Second, both the Medico-Legal Report and Death certificate indicate that the actual cause of death of
seaman Glicerio is 'suicidal asphyxia due to hanging.'

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

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

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

A) External Examination:

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

B) Opinion:

Based on the above, I decide the following:

1)

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

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

3)

The time of death synchronizes with the given date.

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

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

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

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

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

xxxx

B. COMPENSATION AND BENEFITS FOR DEATH

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

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

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

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

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

SO ORDERED.

2. G.R. Nos. 224308-09

G.R. Nos. 224308-09, September 27, 2017 - FABRICATOR PHILIPPINES, INC., Petitioner, v. JEANIE ROSE Q.
ESTOLAS, Respondent.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. Nos. 224308-09, September 27, 2017

FABRICATOR PHILIPPINES, INC., Petitioner, v. JEANIE ROSE Q. ESTOLAS,* Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated September 14, 2015 and the
Resolution3 dated May 2, 2016 of the Court of Appeals (CA) in CA-G.R. SP Nos. 133794 and 133833,
which, inter alia, ruled that petitioner Fabricator Philippines, Inc. (petitioner) illegally dismissed
respondent Jeanie Rose Q. Estolas (respondent).

The Facts

The instant case arose from a complaint4 for illegal dismissal with claims for moral damages, exemplary
damages, and attorney's fees filed before the National Labor Relations Commission (NLRC) by
respondent against petitioner, a domestic corporation engaged in the manufacture and sale of
motorcycle parts,5 and its President, Victor Lim (Lim).

Respondent alleged that petitioner hired her as a welder.6 Before break time of July 2, 2011, while
waiting for a replacement part she requested to be installed on the welding machine she was using,
respondent took a seat and rested.7 At that time, another employee, Rosario Banayad (Banayad), passed
by and saw her sitting, then uttered "Ayos ka ha." The matter was brought to the attention of Assembly
Action Team Leader, Warlito Abaya (Abaya), who confronted respondent about the said incident.8
Thereafter, while Abaya and Banayad were talking to each other, respondent told the latter in the
vernacular "Ang kitid ng utak mo[.] [B]akit hindi mo muna ako tinanong kung bakit ako nakaupo[?]
[B]akit hindi mo muna tinanong kung ano [ang] nasa likod ng nakita mo?" Banayad retorted, saying,
"Matapang ka ha! Matapang ka!" Respondent replied, "Candy, ikaw pa naman ang nagdadasal araw-
araw, tapos ganyan ang ugali mo!"9

Consequently, Abaya directed respondent to see Lim in his office. During their meeting, the latter
allegedly asked what she would feel if he would hit her ear, then proceeded to hit her ear.10 Respondent
reasoned out that she did not hit Banayad's ear and that it was the latter who provoked her. However,
Lim insisted that respondent was rude towards Banayad.11 Thus, on July 13, 2011, respondent was
issued a suspension order effective the following day for a period of three (3) days. While she was in the
locker area, the company guard on duty informed respondent to report for work the following day.12

A few months later, or on October 17, 2011, Lim told respondent to resign and that his lawyer will see
her on October 19, 2011.13 On November 25, 2011, respondent was again instructed not to report for
work until she and Lim have talked. On November 28, 2011, Lim directed respondent to sign a paper,
which she refused as it pertained to the promotion of Banayad as Strategy and Control Group-Senior
Assistant 1. On November 30, 2011, respondent received a letter14 from Lim directing her to seek the
assistance of a lawyer for the hearing on December 7, 2011. At the scheduled hearing, respondent was
required to sign the statements of Banayad and other witnesses, which she refused to follow.15
Thereafter, on December 16, 2011, respondent was served a notice16 of termination effective December
17, 2011, finding her guilty of serious misconduct. Hence, respondent filed the aforementioned
complaint.17

For their part,18 petitioner and Lim maintained that respondent was validly dismissed for gross
misconduct, as: (a) she was caught sitting down during office hours; and (b) she insulted and uttered
offensive language towards her superior, Banayad.19 They further pointed out that they sent respondent
various memoranda regarding the incident, but the latter refused to receive the same. Thus, they were
constrained to terminate her employment.20

The Labor Arbiter's Ruling

In a Decision21 dated September 17, 2012, the Labor Arbiter (LA) ruled in favor of respondent, and
accordingly, ordered petitioner and Lim to pay her separation pay with full backwages in the total
amount of P167,324.29.22
The LA found that while respondent may have indeed committed acts of misconduct, the same were not
willful and intentional in character. The LA added that there was no wrongful intent, but a mere spur of
the moment incident prompted by a simple miscommunication among workmates.23 As such, the
penalty meted on respondent, i.e., dismissal, was not commensurate to the offense charged against
her.24

Aggrieved, petitioner and Lim appealed25 to the NLRC.

The NLRC Ruling

Initially, the NLRC issued a Resolution26 dated January 31, 2013 dismissing the appeal on technical
grounds. Upon reconsideration, however, the NLRC promulgated a Decision27 dated August 30, 2013
modifying the LA ruling by deleting the award of separation pay and backwages, and in lieu thereof,
ordered respondent's reinstatement to her former position without loss of seniority rights.28

The NLRC agreed with the LA's finding that while respondent indeed committed an act of misconduct,
the same was not of a serious and grave character so as to warrant respondent's dismissal for a just
cause.29 However, the NLRC found it appropriate to delete the award of backwages in respondent's
favor, opining that this is a commensurate penalty for the latter's act of professional misconduct.30

Both parties moved for reconsideration,31 which were, however, denied in a Resolution32 dated
November 29, 2013. Dissatisfied, they elevated the matter to the CA via their respective petitions for
certiorari.33

The CA Ruling

In a Decision34 dated September 14, 2015, the CA reinstated the LA ruling with modifications: (a)
ordering petitioner to pay respondent backwages from the time she was illegally dismissed until finality
of the ruling less her salary for fifteen (15) days corresponding to her suspension, and separation pay
computed from the time respondent was hired until finality of the decision, plus legal interest of six
percent (6%) per annum from finality of the decision until fully paid; (b) absolving Lim from any personal
liability arising from respondent's illegal dismissal; and (c) ordering the LA to make a recomputation of
the total monetary benefits awarded and due respondent.35

Agreeing with the findings of the labor tribunals a quo, the CA held that respondent's acts did not
amount to gross misconduct that would have justified her termination from work.36 In this regard, it
found that the NLRC gravely abused its discretion in deleting the award of backwages, pointing out that
respondent was already suspended for three (3) days for her misconduct, and thus, a second disciplinary
proceeding, which resulted in her dismissal, as well as the consequent filing of the instant case, was no
longer warranted.37 Nonetheless, the CA opined that respondent's infraction was minor, for which a
fifteen (15)-day suspension would have sufficed.38

Anent respondent's claim for moral damages, exemplary damages, and attorney's fees, the CA pointed
out that she never appealed the LA ruling which did not grant her such monetary awards, rendering the
same final as to her.39 Moreover, she failed to present competent evidence to support her claims.40

Finally, the CA absolved Lim from any personal liability as it was not shown that he acted with malice and
bad faith in dismissing respondent from service.41

Undaunted, petitioner moved for reconsideration,42 but the same was denied in a Resolution43 dated
May 2, 2016; hence, this petition.44

The Issue Before the Court

The issue for the Court's Resolution is whether or not the CA correctly ruled that respondent was illegally
dismissed.

The Court's Ruling

The petition is without merit.

Article 297 (formerly Article 282)45 of the Labor Code,46 as amended, lists serious misconduct as one of
the just causes for an employee's dismissal from work, pertinent portions of which read:

Article 297 [282]. Termination by Employer. � An employer may terminate an employment for any of
the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

xxxx

Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and

definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. To constitute a valid cause for the dismissal within the text and
meaning of the foregoing provision, the following elements must concur: (a) the misconduct must be
serious; (b) it must relate to the performance of the employee's duties, showing that the employee has
become unfit to continue working for the employer; and (c) it must have been performed with wrongful
intent.47

In this case, the tribunals a quo aptly observed that while respondent indeed committed some sort of
misconduct when she engaged in a verbal tussle with Banayad during work hours and in front of their
superior, Abaya, the same was not serious enough to warrant respondent's dismissal. Neither was it
shown that respondent performed such act of misconduct with wrongful intent nor did the same render
her unfit to continue working for petitioner. As such, the tribunals a quo correctly concluded that
petitioner illegally dismissed respondent. It is settled that "where the factual findings of the labor
tribunals or agencies conform to, and are affirmed by the CA, the same are accorded respect and finality
and are binding upon this Court,"48 as in this case.

Moreover, it is well to stress that on July 13, 2011, petitioner already issued an order suspending
respondent for a period of three (3) days on account of her misconduct.49 Thus, petitioner could no
longer subject respondent to another disciplinary proceeding based on the same act of misconduct.
Clearly, respondent could not have been validly terminated from work.

As the fact of illegal dismissal has already been established, respondent is entitled to two (2) separate
and distinct reliefs, namely: (a) backwages; and (b) reinstatement or the payment of separation pay if the
reinstatement is no longer viable.50
As to backwages, the Court upholds the CA's award of the same in respondent's favor, as "the payment
of backwages is a form of relief that restores the income that was lost by reason of the unlawful
dismissal.51 However, the CA erred in imposing on respondent a fifteen (15)-day suspension for the
latter's acts, with the equivalent monetary value corresponding to such suspension to be deducted from
respondent's award of backwages. To reiterate, respondent was already meted a three (3)-day
suspension for her act of misconduct and hence could no longer be further penalized for the same,52
which thus renders such further penalty from the CA without any legal basis. In this light, the Court
deems it appropriate to delete the aforesaid erroneous imposition, and consequently, award full
backwages to respondent.

Anent the issue of reinstatement or payment of separation pay, it must be stressed that "[r]einstatement
is a restoration to a state from which one has been removed or separated."53 However, "[u]nder the
doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment
liberates the employee from what could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it
could no longer trust."54 In this case, while the LA and the CA did not discuss the basis for awarding
separation pay in lieu of reinstatement, the Court nonetheless deems such award proper, considering
that the underlying circumstances which led to respondent's unlawful termination, which had certainly
created an atmosphere of animosity and antagonism between the employer and the employee, and
hence, warrants the application of the doctrine of strained relations.

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated September 14, 2015 and the
Resolution dated May 2, 2016 of the Court of Appeals (CA) in CA-G.R. SP Nos. 133794 and 133833 are
hereby AFFIRMED with MODIFICATION, deleting the deduction of salary/wages for fifteen (15) days from
the award of backwages in favor of respondent Jeanie Rose Q. Estolas. The rest of the CA ruling STANDS.

SO ORDERED.

3. G.R. No. 226766

Philippine Supreme Court Jurisprudence > Year 2017 > September 2017 Decisions > G.R. No. 226766,
September 27, 2017 - ORIENTAL SHIPMANAGEMENT CO., INC. AND/OR MOL TANKSHIP MANAGEMENT
(EUROPE) LTD. AND/OR RAMON S. HERRERA, Petitioners, v. WILLIAM DAVID P. OCANGAS, Respondent.:
G.R. No. 226766, September 27, 2017 - ORIENTAL SHIPMANAGEMENT CO., INC. AND/OR MOL TANKSHIP
MANAGEMENT (EUROPE) LTD. AND/OR RAMON S. HERRERA, Petitioners, v. WILLIAM DAVID P. OCANGAS,
Respondent.

G.R. No. 226766, September 27, 2017 - ORIENTAL SHIPMANAGEMENT CO., INC. AND/OR MOL
TANKSHIP MANAGEMENT (EUROPE) LTD. AND/OR RAMON S. HERRERA, Petitioners, v. WILLIAM DAVID P.
OCANGAS, Respondent.

PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 226766, September 27, 2017

ORIENTAL SHIPMANAGEMENT CO., INC. AND/OR MOL TANKSHIP MANAGEMENT (EUROPE) LTD. AND/OR
RAMON S. HERRERA, Petitioners, v. WILLIAM DAVID P. OCANGAS, Respondent.

DECISION

REYES, JR., J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 135103 dated March 9,
2016, and its and Resolution2 dated August 31, 2016, denying the motion for reconsideration thereof.
The assailed decision granted the petition for certiorari filed by the petitioners, reversed and set aside
the Decision3 dated January 15, 2014 of the National Labor Relations Commission (NLRC) in NLRC LAC
No. (OFW-M) 09-000805-13, and reinstated the Decision4 dated July 23, 2013 issued by the Labor
Arbiter (LA) in NLRC NCR Case No. (M) 01-01253-13.

The Antecedent Facts

Respondent William David P. Ocangas was hired by Petitioner MOL Tankship Management (Europe) Ltd.,
through its local manning agency in the Philippines- Petitioner Oriental Shipmanagement Co., Inc.

Under the employment contract, Respondent was hired as a Pumpman on board the vessel M/T Phoenix
Admiral, for a period of nine (9) months, with a basic monthly salary of US$599.00.5

Prior to his employment, Respondent underwent a pre-employment medical examination (PEME) and
was declared fit to work.6

Respondent was deployed on November 29, 2011. His tasks on board include the rebuild and repair of
the valves, pumps, and leaks within the cargo system and extended to the maintenance and lubrication
of all parts therein, such as glands, bearing, and the breach rods.7

On July 12, 2012, while on duty, Respondent suffered a broken spine and felt extreme pain on his lower
back and numbness on his lower extremities, as a result of him having to lift the cover of the ballast
pump manually, which he is then preparing for inspection and maintenance.8 He was then advised to
rest and given pain relievers.9

On August 16, 2012, Respondent was brought to Kozmino, Russia where he was diagnosed to be
suffering from "Osteochondrosis, Regiolumbalis." He was then given proper medication and was advised
to seek medical treatment in his home country.10

Respondent's condition did not improve despite medical attention. Thus, on August 20, 2012,
Respondent was recommended to be repatriated to obtain further medical treatment.11

Upon his repatriation on September 4, 2012, Respondent immediately reported to Petitioner Oriental
Shipmanagement Co., Inc., which then referred him to the company's accredited physician at the Marine
Medical Services of the Metropolitan Medical Center. After a series of tests, Respondent was found to be
suffering from "Central Disc Protrusions L4-L5 and L5-S1, and Minimal Osteophytes, Lumbar
vertebrae."12 Respondent then underwent a series of treatments supervised by company-designated
physicians.
On January 23, 2013, Respondent was declared by Dr. William Chuasuan, a company-designated and
accredited physician, to have reached the maximum medical cure with Grade 11 disability impediment
for 1/3 loss of lifting power and per the Philippine Overseas Employment Agency Standard Employment
Contract (POEA-SEC) Schedule of Benefits, entitled to US$7,465.13

On January 24, 2013, Respondent filed a Complaint against Petitioner for recovery of permanent total
disability benefits, refund of medical expenses, sickness allowance, and claim for damages.14

On March 25, 2013, Respondent sought the medical opinion of Dr. Marcelino Cadag, orthopedic surgeon
of the Loyola International Multi Specialty Clinics. Dr. Cadag recommended that the Respondent undergo
further therapy and diagnosed him to be suffering from "Herniated Nucleus Pulposus L4-L5, L5-S1 with
Nerve Root Compression; Lumbar Spondylosis,"15 and as such no longer fit for sea duty or for any work
aboard seafaring vessel given his medical condition.

The LA's Decision

On July 23, 2013, the LA rendered his Decision16 granting the Complaint, to wit:

WHEREFORE, premises considered, judgment is hereby rendered declaring the Complainant entitled to
permanent and total disability benefit, and, therefore, holding all the Respondents jointly and severally
liable to pay the Complainant his full disability benefit in the amount of US$100,000.00 or their peso
equivalent at the time of payment plus attorney's fee equivalent to 10% of the total judgment award.

All other claims are dismissed for lack of merit.

SO ORDERED..17

In his Decision, the LA held that contrary to the allegation of the Petitioners, the company-designated
physician does not have the exclusive prerogative in the determination and assessment of the illness
and/or injury of the seafarer. As such, the findings of the company-designated physician should not be
taken as the only primary consideration, especially where there is a contrary opinion as in the instant
case.18

All told, the LA ruled that the Respondent was rendered unfit to work as seaman for more than 120 days,
by itself, already constitutes permanent total disability and entitles the latter to US$ 100,000.00 pursuant
to their collective bargaining agreement (CBA).19

However, the LA denied the Respondent's claim for medical expenses for failure to substantiate the
same. Likewise, finding that the petitioners merely relied on the certification issued by the company-
designated physician, the LA denied the claim for moral and exemplary damages.20

Petitioners appealed the July 23, 2013 Decision of the LA to the NLRC, asserting that while they admit
liability for Respondent's disability, the latter is entitled only to benefits corresponding to permanent
partial disability (Grade 11) as determined by the company-designated physician.21

Petitioners insisted that under the POEA-SEC, the company-designated physician has the primary if not
the exclusive authority to assess the seafarer's disability.22

The NLRC's Decision

On January 15, 2014, the NLRC rendered its Decision23 granting the appeal, and accordingly reversed
and set aside the July 23, 2013 Decision of the LA.

The NLRC stated that initially, the Respondent's complaint for permanent and total disability should have
been dismissed for lack of cause of action as at the time it was filed the only assessment that was
existing was that of permanent partial disability (Grade 11) as determined by the company-designated
physician. It noted that the Respondent secured a certification from Dr. Marcelino Cadag attesting to his
permanent total disability two (2) months after the filing of the Complaint.24

Furthermore, the NLRC claimed that even if it considers the medical certificate issued by the
Respondent's doctor, it is still bound to uphold the Grade 11 disability assessment of the company-
designated physician, as the latter is in a far better position to assess the Respondent who has been
under his care and treatment from the time of the latter was repatriated on September 4, 2012 until
January 23, 2012 when the assessment was issued.25

The NLRC also ruled that contrary to the LA's determination, the mere fact that more than 120 days
elapsed since the Respondent's repatriation without him resuming from work as a seafarer does not
automatically warrant the award of permanent total (Grade 1) disability benefits.26

Respondent filed motion for reconsideration of the said Decision but the same was denied by the NLRC
in its March 24, 2014 Resolution27

Respondent then filed a petition for certiorari with the CA alleging that the NLRC committed grave abuse
of discretion in ruling that he has no cause of action, in finding that he is merely entitled to Grade 11
disability benefits, and in not awarding attorney's fees and damages.

The CA's Decision

On March 9, 2016, the CA rendered the herein assailed Decision28 which granted the petition for
certiorari filed by the Respondent. The CA held that the primordial consideration in determining whether
the disability is total and permanent rests on evidence establishing that the seafarer's continuous
inability to work due to a work-related illness is for a period of more than 120 days.29

According to the CA, the NLRC closed its eyes to the fact that since Respondent was repatriated on
September 4, 2012 up to the time he filed his complaint on January 24, 2013, more than 120 days has
elapsed during which the Respondent was medically treated and unable to perform his duties as
pumpman on board any sea vessel.30

Moreover, the CA declared that the NLRC erred in relying fully with the company-designated physician's
assessment, as it is settled that the latter's findings are not binding on the labor tribunals and the
courts.31
Petitioners sought a reconsideration of the March 9, 2016 Decision but the CA denied it in its
Resolution32 dated August 31, 2016.

Issues

In the instant petition, Petitioners submit the following issues for this Court's resolution:

DID THE COURT OF APPEALS COMMIT SERIOUS, GRAVE AND PATENT ERRORS IN REVERSING AND
SETTING ASIDE THE DECISION OF THE NLRC AND REINSTATING THE LA'S ERRONEOUS AWARD IN FAVOR
OF RESPONDENT OCANGAS OF FULL DISABILITY BENEFITS, CONTRARY TO THE RELEVANT LAW, RULE AND
JURISPRUDENCE?33

The Court's Ruling

The petition is meritorious.

It bears to stress at the outset that there is no issue as to the compensability of Respondent's injury as
the parties do not dispute that the same is work-related. What remains to be resolved in the instant
petition is whether Respondent is entitled to the payment of permanent total disability benefits or to
that which corresponds to Grade 11 disability in accordance with the assessment of the company-
designated physician.

The CA, in ruling that the Respondent suffered permanent total disability relied primarily on the cases of
Crystal Shipping, Inc. v. Natividad,34Philimare, Inc. v. Suganob,35Micronesia Resources v. Cantomayor,36
and United Philippine Lines, Inc. and/or Holland America Line, Inc. v. Beseril.37 The last three cases were
decided within the purview of the doctrine laid down in Crystal Shipping that permanent and total
disability consists mainly in the inability of the seafarer to perform his customary work for more than
120 days.
Notably, as elucidated in the case of Splash Philippines Inc., et al. v. Ruizo,38 the ruling in Crystal Shipping
has already been modified in that the doctrine laid down therein cannot simply be lifted and applied as a
general rule for all cases in all contexts.

Thus, the Court clarified and delineated in Kestrel Shipping Co. Inc. v. Munar,39 that if the complaint for
maritime disability compensation was filed prior to October 6, 2008, the 120-day rule enunciated in
Crystal Shipping applies. However, if such complaint was filed from October 6, 2008 onwards, as in the
case at bar where the Complaint was filed by the Respondent on January 24, 2013, the 240-day rule
provided in the case of Splash Philippines, Inc. and clarified in the case of Vergara v. Hammonia Maritime
Services Inc., 40 applies.

Insofar as cases covered by the 240-day rule, the Court has repeatedly emphasized that the
determination of the rights of seafarers to compensation for disability benefits depends not solely on the
provisions of the POEA-SEC but likewise by the parties' contractual obligations set forth under their CBA,
the attendant medical findings, and relevant Philippine laws and rules.41

Pertinent to the entitlement of a seafarer to permanent and total disability benefits, Section 20(A) of the
POEA-SEC provides:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of
his contract are as follows:

xxxx

3. In addition to the above obligation of the employer to provide medical attention, the seafarer shall
also receive sickness allowance from his employer in an amount equivalent to his basic wage computed
from the time he signed off until he is declared fit to work or the degree of disability has been assessed
by the company-designated physician. The period within which the seafarer shall be entitled to his
sickness allowance shall not exceed 120 days. Payment of the sickness allowance shall be made on a
regular basis, but not less than once a month.

xxxx

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed
as compliance. In the course of the treatment, the seafarer shall also report regularly to the company-
designated physician specifically on the dates as prescribed by the company-designated physician and
agreed to by the seafarer. Failure of the seafarer to comply with the mandatory reporting requirement
shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer
disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the
seafarer. The third doctor's decision shall be final and binding on both parties.

xxxx

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the
seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 32 of
his Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates
and the rules of compensation applicable at the time the illness or disease was contracted.

The disability shall be based solely on the disability gradings provided under Section 32 of this Contract,
and shall not be measured or determined by the number of days a seafarer is under treatment or the
number of days in which sickness allowance is paid. (Emphasis supplied)

The provisions of the POEA-SEC notwithstanding, in light of the definition provided for under Article
19242 of the Labor Code as well as that under Rule X, Section 243 of the Amended Rules on Employees
Compensation, the Court clarified in Alpha Shipmanagement Corporation v. Calo,44 that apart from
illnesses that are classified as Grade 1 under the POEA-SEC, an illness may be considered as permanent
and total, thus:
[W]hen so declared by the company-designated physician, or, in case of absence of such a declaration
either of fitness or permanent total disability, upon the lapse of the 120 or 240-day treatment period,
while the employee's disability continues and he is unable to engage in gainful employment during such
period, and the company-designated physician fails to arrive at a definite assessment of the employee's
fitness or disability. This is true "regardless of whether the employee loses the use of any part of his
body."45 (Citations omitted)

Harmonizing the provisions of the POEA-SEC, Labor Code, and the Rules on Employee Compensation, the
Court discussed in the case of Vergara v. Hammonia Maritime Services, Inc.46 that:

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.47 (Citations Omitted)

From the foregoing, it can be deduced that upon repatriation, the seafarer is regarded to be on
temporary total disability, which then becomes permanent when a) it so declared by the company-
designated physician; or b) when 120 days has elapsed from the onset of disability and there is no need
for further medical treatment, and the company-designated physician fails to make a declaration either
of fitness or permanent partial or total disability; or c) when even after the 120-day period further
medical attention becomes necessary and continues after the maximum 240-day medical treatment
period without any declaration of fitness or permanent disability.

Simply stated, a seafarer is conclusively presumed to be totally and permanently disabled when the
company-designated physician fails to make a declaration regarding the seafarer's fitness or status of
disability within the specified 120 or 240-day periods. "On the other hand, if the company-designated
physician declares the seaman fit to work within the said periods, such declaration should be respected
unless the physician chosen by the seaman and the doctor selected by both the seaman and his
employer declare otherwise."48
In this case, immediately after he was medically repatriated on September 4, 2012, Respondent reported
to Petitioner Oriental Shipmanagement, which then referred him to the company-designated and
accredited physicians. Thereupon, he was subjected to a series of tests and was initially diagnosed to be
suffering from "Central Disc Protrusions L4-L5 and L5-S1, and Minimal Osteophytes, Lumbar vertebrae"
for which he underwent medication, therapy sessions, and medical consultations, all of which under the
supervision of company-designated physicians, until he reached maximum medical cure and was
diagnosed a final disability impediment Grade 11 per Medical Report dated January 23, 2013. Clearly,
from the time of repatriation, Respondent was diagnosed within the 240-day period of treatment, as
only 141 days has lapsed.

The Court is bound by the Grade 11 disability grading and assessment by the company-designated
physician rendered within the specified period, as Respondent never questioned such diagnosis in
accordance with the procedure set forth under the POEA-SEC nor contested the company-designated
physician's competence.49

Here, instead of expressing his disagreement to the findings of the company-designated physician, the
Respondent filed a Complaint for permanent total disability benefits, without any corresponding medical
certificate in support thereof but that of the Grade 11 disability assessment by the company-designated
physician. In fact, it took Respondent two (2) months after the filing of the Complaint before he
submitted himself for examination by a physician of his choice, who then issued a permanent and total
disability (Grade 1) rating.

The POEA-SEC clearly provides that when the seafarer disagrees with the findings of the company-
designated physician, he has the opportunity to seek a second opinion from the physician of his choice.
If the physician appointed by the seafarer disagrees with the assessment of the company-designated
physician, the parties may agree to jointly refer the matter to a third doctor, whose decision shall be
binding between them. Ultimately, the failure of the Respondent to follow this procedure is fatal and
renders conclusive disability rating issued by the company-designated physician.50

While it is true that the provisions of the POEA-SEC must be construed logically and liberally in favor of
Filipino seamen in pursuit of their employment on board ocean-going vessels51 consistent with the
State's policy to afford full protection to labor,52 the same must be weighed in accordance with the
prescribed laws, procedure, and provisions of contract freely agreed upon by the parties, and with
utmost regard as well of the rights of the employers.
In the instant case, compelling the Court to consider the opinion rendered by Respondent's physician of
choice, submitted two (2) months after the filing of the complaint, would undermine the right of the
Petitioners to refute the findings and avail of the option to jointly refer with the Respondent the
disputed diagnosis to a third doctor of the parties' choice, as agreed upon by the parties under the
POEA-SEC.

Furthermore, the NLRC's reliance on the assessment of the company-designated physician was justified
not only by the law governing the parties under the contract, but as well by the time and resources
spent as well as the effort exerted by the company-designated physician in the examination and
treatment of the Respondent while still on board and as soon as he was repatriated in the Philippines.53

The Court's ruling in the fairly similar case of Vergara v. Hammonia Maritime Services, Inc.,54 is
enlightening. The Court therein stated:

Thus, while petitioner had the right to seek a second and even a third opinion, the final determination of
whose decision must prevail must be done in accordance with an agreed procedure. Unfortunately, the
petitioner did not avail of this procedure; hence, we have no option but to declare that the company-
designated doctor's certification is the final determination that must prevail. We do so mindful that the
company had exerted real effort to provide the petitioner with medical assistance, such that the
petitioner finally ended with a 20/20 vision. The company-designated physician, too, monitored the
petitioner's case from the beginning and we cannot simply throw out his certification, as the petitioner
suggested, because he has no expertise in ophthalmology. Under the facts of this case, it was the
company-designated doctor who referred the petitioner's case to the proper medical specialist whose
medical results are not essentially disputed; who monitored the petitioner's case during its progress; and
who issued his certification on the basis of the medical records available and the results obtained. This
led the NLRC in its own ruling to note that:

xxx more weight should be given to the assessment of degree of disability made by the company doctors
because they were the ones who attended and treated petitioner Vergara for a period of almost five (5)
months from the time of his repatriation to the Philippines on September 5, 2000 to the time of his
declaration as fit to resume sea duties on January 31, 2001, and they were privy to petitioner Vergara's
case from the very beginning, which enabled the company-designated doctors to acquire a detailed
knowledge and familiarity with petitioner Vergara's medical condition which thus enabled them to reach
a more accurate evaluation of the degree of any disability which petitioner Vergara might have
sustained. These are not mere company doctors. These doctors are independent medical practitioners
who passed the rigorous requirements of the employer and are more likely to protect the interest of the
employer against fraud.

Moreover, as between those who had actually attended to petitioner Vergara throughout the duration of
his illness and those who had merely examined him later upon his recovery for the purpose of
determining disability benefits, the former must prevail.55 (Emphasis supplied)

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition for review on certiorari
is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 135103 dated March 9, 2016, and its
Resolution dated August 31, 2016, are hereby REVERSED and SET ASIDE. The Decision dated January 15,
2014 of the National Labor Relations Commission in NLRC LAC No. (OFW-M) 09-000805-13 is hereby
REINSTATED.

SO ORDERED.

4. G.R. No. 206826

CAREER PHILIPPINES SHIPMANAGEMENT, INC. and COLUMBIAN SHIPMANAGEMENT, LTD., Petitioners

vs.
EDUARDO* J. GODINEZ, Respondent

x-----------------------x

G.R. No. 206828

EDUARDO J. GODINEZ, Petitioners,

vs.

CAREER PHILIPPINES SHIPMANAGEMENT, INC.and COLUMBIAN SHIPMANAGEMENT, LTD., Respondents

DECISION

DEL CASTILLO, J.:

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

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

Factual Antecedents

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

Godinez was 20 years old at the time.

Prior to his employment, Godinez underwent a pre-employment medical examination (PEME) consisting
of a physical medical examination and psychological evaluation, involving an intelligence and personality
test, after which he was declared fit to work. Particularly, Godinez's Psychological Evaluation revealed
"no significant manifestation of personality and mental disturbances noted at the time of evaluation."

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

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

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

3. Assist in deck preventive maintenance;

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

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

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

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

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

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

Subj: Update for Deck Cadet Eduard SJ. Godinez

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

At abt 1030 hrs. he came up to Master cabin to take the Bond store key and open it for he want[ed] to
take beer, fanta and cigarettes for he said he [was] very thirsty. But then I didn't give anything. Instead,
he ask[ed] chief officer [for] a packet of cigarettes when in fact for this month he got already 3 cartons.

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

Before lunch he [came] up to 2/o and asked for his declared beer and cigarette. When 2/o asked him ifhe
had [a] problem he said no. When 2/0 ask him if he had taste[d] marijuana and shabu before, he
admitted YES it taste[d] very good. He said he taste[d] marijuana during his high school days and shabu
during his college days.

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

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

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

Yours truly,

Capt. Vicente A. Capero

Master

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

Subject: UPDATE OF DCD1 GODINEZ- CONDITION

xxxx

The condition now [was getting worse]. He [didn't] want to listen anymore to the officer on duty.

Today 25 Dec. 2003 at 0255 lt second officer woke me up and told me that deck cadet GODINEZ [was] in
the focsle railings doing sight seeing again with binocular[s]. Upon arrival on the bridge I switch[ed] on
the foremast light and [saw] him [in the] same position as I mention[ed] before. I call[ed] him thru the
compass deck external speaker or public address system to come back here in the accommodation. As
per second officer info he [came] up to the bridge at about 0235 and [took] the binocular[s] and
[brought] it down w[h]ere the escort [was] also following him. When he [didn't] listen to his escort and
to [the] second officer on duty, he [rang] me up for it also near to [sic] the mark on chart as per my
instruction to be [woken] up. At that time we [were] about to enter the TSS in [the] Gulf of Suez w[h]ere
there [was] so [much] traffic. When he [came] up on the bridge I asked him why he [did] that, he just
answer[ed] that he want[ed] to see the light if it [was] a tug boat. So, I told him just go down in the
messroom or dayroom and he obey[ed]. I call[ed] another crew for escort.

At 0400lt, IAE called me up on bridge that Deck cadet [was] forcing to open engine room door coz he
want[ed] to see the engine. But then he didn't let him in.

At about 0445hrs it was noticed that he [was] walking on deck again. The escort inform[ed] the bridge
that he [didn't] want to sleep, he want[ed] to see the lights. Then I shout[ed] again in [the] public
address system to let him come back inside coz [it was] still too dark.

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

In this condition of him of which everyday is getting wors[e], I strongly oppose his presence on board. I
want him to be dis-embarked immediately on arrival. He is now resisting orders, he [doesn't] listen to
the officers and to his escort. This endanger[s] the safety of all crew on board and the vessel especially
during transit and maneuvering. All my patience is over now.

Yours truly,

Capt. V. A. Capero

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

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

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

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

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

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

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

That very same day, or on March 12, 2004, Godinez was made to sign a prepared form/document
entitled "Certificate of Fitness for Work" whose particulars were mechanically filled out. Godinez signed
this document as the declarant, and, interestingly, Sachly's Medical Coordinator, Dr. Salvador, signed as
witness. The document was likewise notarized. It reads as follows:

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

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

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

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

(signed)

EDUARD GODINEZ

Name of Vessel: M/V NORVIKEN

Nature of Illness or Injury: BIPOLAR MOOD

DISORDER, TYPE II, IMPROVED

Date of III/Inj.: 25 December 2003

(signed)

Witness: SUSANNAH O. SALVADOR MEDICAL COORDINATOR

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

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

(signed)

EDUARD GODINEZ

(jurat and notarization)

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

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

On February 26, 2006, Godinez consulted an independent specialist, Dr. Randy Dellosa (Dellosa), who
diagnosed him to be suffering from bipolar disorder, per Dellosa's handwritten Medical
Certificate/Psychiatric Report dated February 27, 2006. Godinez was declared "unfit to work as a
seaman," placed on "maintenance medication," and advised to undergo "regular counseling and
psychotherapy" as he was "prone to relapses due to emotional triggers."

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

Ruling of the Labor Arbiter

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

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

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

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

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

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

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

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

In their joint Position Paper, Career, Columbian, and Cannelino argued that Godinez should have filed his
case before the Voluntary Arbitrator as it involved a dispute regarding a collective bargaining agreement
and the interpretation of the POEA-Standard Employment Contract; that his illness is not compensable
and work-related, since bipolar disorder is "chiefly rooted in gene defects" and in heredity; therefore, he
could not have contracted bipolar disorder during his employment on board Columbian's vessel, and his
work did not expose him to any risk of contracting the illness; that he was nonetheless declared fit to
work, and he did not dispute this, as he, in fact, executed a Certificate of Fitness for Work; that Godinez's
failure to declare in his pre-employment medical examination that he previously suffered from insomnia
and paranoia amounted to fraudulent concealment under Section 20(E) of the POEA contract which
states that "a seafarer who knowingly conceals and does not disclose past medical condition, disability
and history in the pre-employment medical examination constitutes fraudulent misrepresentation and
shall disqualify him from any compensation and benefits. This may also be a valid ground for termination
of employment and imposition of the appropriate administrative and legal sanctions;" that Godinez has
been paid his illness allowance; and that for lack of merit, Godinez is not entitled to his claim of damages
and attorney's fees. Thus, they prayed for dismissal of the case.

In their joint Reply, Career, Columbian, and Cannelino also argued that it was not possible for Godinez to
have been maltreated by Dayo during the period from December 17 to 25, 2003, since the latter was
repatriated on November 29, 2003 due to chronic gastritis, hyperlipidemia and hypercholesteremia; and
that Dellosa' s findings actually indicated that Godinez was fit to work, although he was required to
continue medication in order to avoid relapse.
On May 16, 2007, Labor Arbiter Thelma M. Concepcion issued her Decision declaring that her office had
jurisdiction over the case; that Godinez's bipolar disorder was work-connected and thus compensable,
pursuant to Section 20(B)(4) of the POEA Standard Employment Contract; and that based on substantial
evidence, the nature of Godinez's work and/or his working conditions on board "M/V Norviken," as well
as Dayo's harsh treatment, which caused trauma and anxiety, increased the risk of contracting his illness.

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

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

On the defense that following Section 20(E) of the POEA contract, Godinez should be barred from
claiming benefits in view of his concealment of and failure to disclose during the PEME that he consulted
medically for insomnia and paranoia when he was 15 years old, the Labor Arbiter held that Godinez's
failure to disclose this fact was not intentional and did not amount to intentional concealment; that the
fact simply "slipped his mind considering the passage of time;" and that when he underwent the PEME,
he was only 20 years old and could not have known the consequences of the PEME except that it was a
simple prerequisite to employment.
Regarding monetary claims, the Labor Arbiter held that, having found permanent and total disability,
Godinez was entitled to US$60,000.00 as disability benefit; sickness allowance, less what he already
received; medical expenses; moral and exemplary damages since malice and bad faith attended the
denial of his claims and for presenting forged documentary evidence; and attorney's fees. The Decision
thus decreed:

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

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

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

2. Sickness allowance amounting to US$475.00;

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

4. Moral damages in the amount ofUS$10,000.00; and Exemplary damages in the amount
ofUS$5,000.00; and

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

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

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

SO ORDERED.

Ruling of the National Labor Relations Commission

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

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

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

1. In ruling that the Labor Arbiter has jurisdiction over the complaint a quo;

2. In awarding disability benefits to appellee;

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

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

5. In awarding moral and exemplary damages; and,

6. In holding individual appellant personally liable.

WE MODIFY.

xxxx

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

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

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

xxxx

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

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

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

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

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

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

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

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

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

WHEREFORE, premises considered, the appealed Decision is hereby, AFFIRMED with MODIFICATION
only, insofar as Our order for individual respondent-appellant to be deleted from the dispositive portion.

SO ORDERED.

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

Ruling of the Court of Appeals

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

As gleaned from the above-cited issues, petitioners anchor this Petition on procedural and substantive
grounds. Anent the procedural matter, petitioners question the assumption of jurisdiction by the Labor
Arbiter in this case on the supposition that the case should have been lodged with the Voluntary
Arbitrator, in accordance with Section 29 of POEA Standard Contract. As to substantive matters, on the
other hand, petitioners bewail the common decision of the Labor Arbiter and the NLRC to grant disability
benefits and other monetary awards to private respondent on the theory that their decisions are bereft
of factual basis and were done in utter disregard of evidence as well as applicable laws and
jurisprudence.
Resolving the issue of jurisdiction, We are of the considered view that petitioners cannot fault the Labor
Arbiter for taking cognizance of this case. Section 29 of the POEA Standard Contract is explicit that the
voluntary arbitrator or panel of arbitrators have jurisdiction only when the claim or dispute arises from
employment. In the instant case, the Labor Arbiter was correct that there was no longer an employer-
employee relationship existing between the parties when private respondent filed the Complaint.
Consequently, We agree with the Labor Arbiter that Section 31 of the POEA Standard Contract, and not
Section 29 thereof, should apply in this case. As said provision states:

'SECTION 31. APPLICABLE LAW

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

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

xxxx

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

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

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

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

To be sure, this Court agrees that '[f]or disability to be compensable under Section 20(B) of the 2000
POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-
related injury or illness must have existed during the term of the seafarer's employment contract. In
other words, to be entitled to compensation and benefits under this provision, it is not sufficient to
establish that the seafarer's illness or injury has rendered him permanently or partially disabled; it must
also be shown that there is a causal connection between the seafarer's illness or injury and the work for
which he had been contracted. The 2000 POEA-SEC defines 'work-related injury' as 'injury[ies] resulting
in disability or death arising out of and in the course of employment' and 'work-related illness' as 'any
sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of
this contract with the conditions set therein satisfied.'

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

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

Our assiduous assessment of the records leads Us to answer in the affmnative. Indeed, like the Labor
Arbiter and the NLRC, We too are convinced that private respondent was able to prove by substantial
evidence that his risk of contracting such illness was aggravated by his working conditions on board
petitioners' 'MV Norviken', specially taking into consideration the inhumane treatment he suffered from
Second Officer Dayo which ultimately led private respondent to snap. And as aptly pointed out by the
Labor Arbiter, the degree of proof required in this case is merely substantial evidence and a reasonable
workconnection; not a direct causal relation. 'It is enough that the hypothesis on which the workmen's
claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is
some [basis 7 in the facts {Or interring a work connection. Probability, not certainty, is the touchstone. x
x x.' Furthermore, under the POEA Standard Contract, private respondent is disputably presumed work-
related [sic] and, therefore, it is incumbent for petitioners to contradict it by their own substantial
evidence. As the records would reveal, however, petitioner miserably failed to discharge this burden
since, as found by the Labor Arbiter, and affirmed by the NLRC, the pieces of evidence, which petitioners
presented were either of dubious character or bereft of probative value.

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

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

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

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

xxxx

In the instant case, however, We found that the pieces of evidence submitted by private respondent are
not sufficient enough for him to successfully claim reimbursement of x x x [₱70,475.90]. To be sure, most
of the documents submitted by private respondent are not official receipts but are actually mere
itemization of the medicines supposedly procured by private respondent as well as the price of each
medicine prescribed by his doctor. 'Jurisprudence instructs that the award of actual damages must be
duly substantiated by receipts.' Verily, '[a] list of expenses cannot replace receipts when the latter should
have been issued as a matter of course in business transactions.' For this reason, the award for
reimbursement of medical expenses should be reduced appropriately. Based on this Court's
computation, private respondent should be entitled only to a reimbursement of x x x [₱16,647.85], as
this is only the amount duly substantiated by receipts.

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

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

xxxx

Consequently, we hold respondents Career Phils. and Columbia and individual respondent Verlou
Carmelina guilty of 'misrepresentation for having falsely claimed that 2nd Officer Daya was no longer on
board MN NORVIKEN at the time complainant was allegedly subjected to 'verbal and psychological
harassment' x xx .

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

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

However, while We affirm the Labor Arbiter's award of moral damages and exemplary damages, We are
convinced that the amount of moral damages and the exemplary damages a warded are far too
excessive, if not unconscionable. As it is always stressed in jurispmdence, ' [ m ]oral damages are
recoverable only if the defendant has acted fraudulently or in bad faith, or is guilty of gross negligence
amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be
wanton, reckless, malicious, or in bad faith, oppressive or abusive.' Similarly. 'x x x [e]xemplary
[d]amages are imposed not to enrich one party or impoverish another but to serve as a de1errent
against or as a negative incentive to curb socially deleterious actions.' In line with prevailing
jurisprudence, We hereby reduce the moral damages and exemplary damages to the more equitable
level of One Thousand US Dollars (US$1,000.00) each.

Finally, regarding the award of attorney's fees to private respondent, We found the same to be
warranted based on the facts of this case and prevailing jurisprudence. As it is oft-said, '[t]he law allows
the award of attorney's fees when exemplary damages are awarded, and when the party to a suit was
compelled to incur expenses to protect his interest.'

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

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

1. Reimbursement of medical expenses is REDUCED to Sixteen Thousand Six Hundred Forty-Seven Pesos
and 85/100 (₱16,647.85);

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

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

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

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

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

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

Issues

The following issues are raised by the parties in their respective Petition:

By Career and Columbian as petitioners in G.R. No. 206826

A. THE HONORABLE COURT OF APPEALS COMMITTED CLEAR ERROR OF LAW AND IN ITS APPRECIATION
OF THE FACTS AND EVIDENCE WHEN IT AFFIRMED THE AWARD OF TOTAL AND PERMANENT DISABILITY
BENEFITS, SICKNESS ALLOWANCE, AND REIMBURSEMENT OF MEDICAL EXPENSES DESPITE THE
FOLLOWING:

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

a.2 Work-relation must be proved by substantial evidence.1âwphi1 Convenient allegations cannot justify
a claim for disability benefits. In the present case, respondent's allegations that his mental breakdown
was due to the maltreatment of Second Officer Dayo is a falsity as the latter had already been signed-off
prior to the material period. Work-relation is therefore absent and the claim is not compensable.

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

B. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN AFFIRMING THE
AWARD OF DAMAGES AND ATTORNEY'S FEES DESPITE ABSENCE OF ANY FINDING OR DISCUSSION
SHOWING BAD FAITH OR MALICE ON THE PART OF PETITIONERS.

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

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

The Parties' Respective Arguments

In G.R. No. 206826. In their Petition and Reply,39 Career and Columbian ms1st that Godinez's failure to
disclose his past medical record amounts to fraudulent concealment which disqualifies him from
receiving the benefits and claims he seeks; that it was erroneous for the CA to simply assume that this
fact merely slipped Godinez's mind during the PEME: that the PEME itself contained a certification,
which Godinez read and signed, that any false statement made therein shall disqualify him from any
benefits and claims; that Godinez's condition is not work-related; that Dayo' s alleged maltreatment is
not supported by any other evidence, such as written statements of other crewmembers; that on the
contrary, it has been sufficiently shown that Dayo was no longer aboard the vessel during the period that
Godinez claims Dayo maltreated him; that it has been opined and certified by the company-designated
medical facility in a February 6, 2004 medical report that Godinez's illness is not an occupational disease,
but a mere symptom of genetic defects, developmental problems, and psychological stresses; that even
assuming that Godinez's misrepresentation is excusable and his illness is work-related, he was
nonetheless afforded full medical treatment and was cured and declared fit for work by the company-
designated medical facility in a March 12, 2004 medical progress report; that Godinez himself declared
that he was cured and fit for work by way of his March 12, 2004 Certificate of Fitness for Work; and, that
Dellosa's February 27, 2006 Medical Certificate/Psychiatric Report actually declared that Godinez was fit
for work.

As for the other monetary awards, Career and Columbian argue that moral and exemplary damages may
not be awarded to Godinez, absent malice and bad faith on their part. On the award of attorney's fees,
they claim that this must be deleted as well, since they are not at fault and did not conduct themselves
in bad faith and with malice. Thus, they pray that the assailed CA dispositions be reversed and set aside;
that Godinez's labor case be ordered dismissed; and that he be ordered to return the amount of
₱4,105,276.07 which was advanced to him by virtue of a premature execution of the judgment award.

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

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

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

Our Ruling

We find for Godinez.

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

Defense of Fraudulent Concealment

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

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

We find that the handwritten listing and unsigned computer print-outs were unauthenticated and,
hence, unreliable.1awp++i1 Mere self-serving evidence of which the listing and print-outs are of that
nature should be rejected as evidence without any rational probative value even in administrative
proceedings. x x x (Emphasis supplied)

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

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

Nature and Cause of Godinez's Illness

On the other hand, the Cmut believes that Godinez was unjustifiably maltreated by his superior, 2nd
Officer Dayo, who, according to the former in his Position Paper below-

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

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

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

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

In this condition of him which x x x is getting [worse everyday], I strongly oppose his presence on board. I
want him to be dis-embarked immediately on arrival. He is now resisting orders, he [doesn't] listen to
the officers and to his escort. This endanger[s] the safety of all crew on board and the vessel especially
during transit and maneuvering. All my patience is over now. (Emphasis supplied)

The confluence of all these, the inhumane treatment inflicted upon this green, fragile, and innocent
fledgling; the harsh environment and conditions of work he was exposed to for the very first time in his
young life; the indifference of his superiors despite realizing what was happening to him; and the utter
lack of a professional and medical response to the boy's progressing medical condition, led to the
complete breakdown of Godinez's body, mind, and spirit.

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

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

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

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

3. An examination of Salvador's signature affixed on the February 3, 2004 medical report would indeed
lead Us to the conclusion that it is materially different from her customary signature affixed on the five
medical reports she issued in this case and on the Certificate of Fitness for Work executed by Godinez,
where she signed as witness.

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

In Cabuyoc v. Inter-On"ent Navigation Shipmanagement, Inc.,the Court declared that work-connected

mental illnesses or disorders are compensable, thus:

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

xxx

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

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

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

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

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

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

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

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

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

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

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

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

Permanent and Total Disability, Benefits and Medical Expenses

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

The defense that Godiriez was cured and became fit for work is founded on an unsigned March 12, 2004
Medical Progress Report (Annex "M" of Career and Columbian's Position Paper stating that Godinez was
"asymptomatic and doing well with no recurrence of depressive episodes;" that Godinez "verbalized a
feeling of wellness;" that his "[v]ital signs were stable;" that he was in a "euthymic mood, and ~s able to
sleep and eat well;" and that he was "found to be functionally stable at present." Being unsigned, it has
no evidentiary value as well, just like the January 10, 2004 Initial Medical Report containing Godinez's
supposed admission to a past history of mental illness. Indeed, even the Labor Arbiter must have noted
that this January 10, 2004 medical report was unsigned, as it was not considered in the comparison of
Salvador's customary signature and that appearing on the Initial Medical Report dated February 3, 2004
utilized by Career and Columbian to prove Dayo's alleged repatriation on November 29, 2003.

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

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

Fabricated Evidence and Underhanded Tactics

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

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

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

Indeed, the impression generated by the absence of Salvador’s signature on the March 12, 2004 Medical
Progress Report, and her consenting to sign as witness to Godinez’s Certificate of Fitness for Work
instead, is that Salvador refused to certify that Godinez’s condition had been cured or had improved. But
somehow, she was prevailed upon to affix her signature just the same, but only as witness to Godinez’s
Certificate of Fitness for Work, which must have been the final concession she was willing to make, but
an unethical and unprofessional one nonetheless. By what she did, she was hiding, as witness, under the
cloak of Godinez's own admission that he was already well, hoping and expecting that any tribunal,
including this Court, possibly gullible or unthinking, might be duped into believing that her signature
should lend credibility to Godinez's certification.

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

Evident Malice and Bad Faith

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

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

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

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENO

Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate Justice FRANCIS H. JARDELEZA

Associate Justice

NOEL GIMENEZ TIJAM

Associate Justice

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer of the opinion of
the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

5. G.R. No. 222816

ALLAN JOHN UY REYES, Petitioner vs. GLOBAL BEER BELOW ZERO,INC., Respondent

DECISION

PERALTA, J.:

This is to resolve the Petition for Review on Certiorariunder Rule 45 of the Rules of Court dated March
22, 2016 of petitioner Allan John Uy Reyes (Reyes) that seeks to reverse and set aside the Decision dated
August 27, 2015 of the Court of Appeals (CA) reversing the Decision dated July 31, 2013 of the National
Labor Relations Commission in NLRC LAC No. 01- 000289-13 that found petitioner to be illegally
dismissed by respondent Global Beer Below Zero, Inc. (Global).

The facts follow.

Petitioner Reyes was an employee of respondent Global as Operations Manager from January 2009 until
January 2012. On January 18, 2012, petitioner Reyes, in accordance with his duties, reported to the main
office of respondent Global in Makati instead of going to the Pasig warehouse in order to request for
budget because there was a scheduled delivery the following day. The following day, January 19, 2012,
petitioner Reyes ran late because according to him, his three-year-old son was sick. Around 10:30 a.m. of
the same day, respondent Global's Vice-President for Operations, Vinson Co Say (Co Say), petitioner
Reyes' immediate and direct superior at that time, called petitioner Reyes and asked him why he was not
yet at the office. Petitioner Reyes apologized and said that he was on his way. According to petitioner
Reyes, he tried to explain why he was late, but Co Say did not listen and the latter shouted at the other
end of the line and told petitioner Reyes not to report for work anymore. Petitioner Reyes further
claimed that Co Say angrily retorted that he will talk to him the following week before Co Say hung up
the phone. As instructed, petitioner did not report for work on the following days and waited for further
instructions from Co Say. On January 24, 2012, petitioner Reyes received a text message from Co Say
stating the following, "Allan, let's meet thu, puno aka today, bukas." Around 1:28 p.m. of January 26,
2012, petitioner Reyes received a text message from Co Say which says, "Allan, let's meet in Starbucks
Waltermart around 3:00." During the said meeting, Co Say told petitioner Reyes to no longer report for
work and insisted that he file a resignation letter which petitioner Reyes refused to do because he
believed that he had not done anything that would warrant his dismissal from the company. Thus,
petitioner Reyes instituted a complaint for constructive dismissal on February 22, 2012 and amended the
same complaint on March 29, 2012, changing his cause of action to illegal dismissal.

Respondent Global, on the other hand, claimed that petitioner Reyes was not dismissed from service,
but the latter stopped reporting for work on his own volition after repeatedly violating company rules
and regulations. According to respondent Global, the following are petitioner Reyes' violations:

5. However, during his tenure as operations manager, complainant Reyes proved unequal to the
responsibilities imposed upon him as operations manager. On the month of January 2012 alone, he has
incurred a total of six (6) days of absences.

5.1 Without informing respondent GBZ and without its prior consent, complainant Reyes was absent on
02 and 03 January 2012. In violation of company policy and to the utter detriment of respondent GBZ,
complainant Reyes only filed his leave application form on 04 January 2012 or after he has incurred the
said absences. xxx

5.2 On 05 and 06 of January 2012, he was again absent from work and filed the leave application form
on 04 January 2012. This is in violation of the company policy which requires seven (7) days prior written
notice before the date of absence.
5.3 On 09 and 10 of January 2012, complainant Reyes was again absent. As before, he filed the necessary
leave application form only after he has incurred the said absences. xxx

5.3 (sic) To make matters worse, he failed to comply with the company procedure as provided in the
Company Personnel Policy in the filing of vacation leave. xxx

5.4 As a result of the use of unearned leaves, he was overpaid for a total of five (5) days worth of salary.
xxx

6. Furthermore, complainant Reyes incurred a total balance of Seven Thousand Nine Hundred and
Seventy-Seven Pesos and Ten Centavos [PhP7 ,977.10] for personal use of WAP services.

7. As a result of his frequent absences, several work has remained undone. A defective freezer that
needed repair was not properly attended to by complainant Reyes. Furthermore, complainant Reyes lied
about the true status of the work as well as the fact that he never supervised the repair being
conducted. Respondent Co Say then reprimanded complainant Reyes on 19 January 2012 for such
unfinished work as well as his untruthful statement.

7.1 To make matters worse, on 18 January 2012, complainant Reyes intentionally lied to respondent Co
Say to try to conceal his misdeeds. He knowingly and deliberately told respondent Co Say that he was
presently at the warehouse supervising the repair of a freezer that needed work, where in truth, he was
not.

7.2 On 19 January 2012, respondent Co Say learned from Mr. Arman. Valiente, warehouseman of GBZ,
not from complainant Reyes, that the freezer was not ready.1âwphi1 As operations manager,
complainant Reyes had the duty to ensure that [the] deadline should be met, he also had the
responsibility to inform respondent Co Say about the true status of pending works.

7.3 Furthermore, complainant Reyes was supposed to leave for Pampanga on 19 January 2012 at 10
a.m., but failed to do so. Upon inquiry of respondent· Co Say, complainant Reyes admitted that he woke
up late. Respondent Co Say was then forced to send someone else.

8. On 20 January 2012, complainant Reyes failed and neglected to report for work despite the pending
work that needed his attention.

9. On 26 January 2012, upon the initiative of complainant Reyes, respondent Co Say met with
complainant Reyes.

10. In the said meeting, complainant Reyes explained and apologize (sic) to respondent Co Say about the
lies and violation of company policies as well as the unfinished works. Upon hearing all this, respondent.
Co Say asked complainant Reyes to report back to work and reasonably explain his dishonesty, serious
violation of company policies and absences.

11. Complainant Reyes failed to heed this request of respondent Co Say. In fact, 18 January 2012 was the
last time he took steps on the premises of GBZ, despite notice to report for work.
12. On 22 February 2012, complainant Reyes, feeling perhaps that his work will soon be terminated by
respondent, "jumped the gun," so to speak, and 'prematurely filed a Complaint for Constructive
Dismissal for no apparentreason at all.

The Labor Arbiter, on November 28, 2012, ruled in favor of petitioner Reyes. The dispositive portion of
the decision reads as follows:

WHEREFORE, respondent Global Beer Zero, Inc. is hereby ordered to pay the complainant the following
amounts:

1. Full backwages

(P18,000.00/mo. from

1-19-12 to 10-31-12) ₱180,950.00

2. Separation pay (one month's

Salary per year from 1-12-09

to 10-31-12) ₱60,000.00

3. Ten percent (10%) attorney's fees ₱24,095.00

TOTAL JUDGMENT AWARD ₱265,045.00

The computation of the judgment awards attached to this decision is hereby adopted as an integral part
thereof.

SO ORDERED.

According to the Labor Arbiter, petitioner Reyes had no intention of quitting his job as seen from his
filing of applications of leaves of absences days before he supposedly abandoned his job and his texting
Co Say about his work on the day he supposedly abandoned his job. It also found that the accusation
that petitioner Reyes committed serious misconduct and was negligent in the performance of his duty is
more consistent with a finding that there was dismissal than with a finding that there was an
abandonment of employment. The Labor Arbiter further ruled that the word "turnover" in Co Say's last
text message to petitioner Reyes indicates that on the date that it was sent, the latter was already
expected to turnover his duties to his replacement and belies the claim of Co Say that he asked
petitioner Reyes to return to work in order to possibly explain his numerous absences, negligence in
performing his duties and serious misconduct.

On appeal, the NLRC affirmed the decision of the Labor Arbiter, thus:

WHEREFORE, the appeal filed by the respondents is hereby DISMISSED for lack of merit.

Accordingly, the Decision of Labor Arbiter Cherry M. Ampil dated November 28, 2012 is AFFIRMED.
SO ORDERED.

The NLRC ruled that petitioner Reyes sufficiently alleged the surrounding circumstances of his dismissal
and was able to state, with the required particularities how he was terminated from his employment;
thus, respondent Global should have proven that the dismissal was legally done. According to the NLRC,
respondent Global failed to disprove petitioner Reyes' allegation that he was verbally dismissed twice by
Co Say, hence, there is no evidence showing that petitioner Reyes was dismissed from his job for cause
and that he was afforded procedural due process.

Respondent filed with the CA a petition for certiorari under Rule 65 and the latter reversed the decision
of the NLRC, disposing the case as follows:

WHEREFORE, in light of all the foregoing, the decision dated July 31, 2013 and resolution dated October
31, 2013 of public respondent National Labor Relations Commission NLRC, First Division, in NLRC LAC No.
01-000289-13 are hereby ANNULLED and SET ASIDE. RESULTANTLY, private respondent's complaint for
illegal dismissal from employment is hereby DISMISSED.

SO ORDERED.

In finding merit to respondent Global's petition, the CA ruled that the "text" messages allegedly sent by
Co Say and Tet Manares to petitioner could hardly meet the standard of clear, positive and convincing
evidence to prove petitioner's dismissal from employment. It also held that aside from petitioner Reyes'
bare assertion that he was verbally terminated from employment by Co Say, no corroborative and
competent evidence was adduced by petitioner Reyes to substantiate his claim that he was illegally
dismissed. The CA, instead, found that there was no overt or positive act on the part of respondent
Global proving that it had dismissed petitioner. Hence, the present petition, after the denial of petitioner
Reyes' motion for reconsideration.

Petitioner Reyes assigns the following errors:

(A)

WHETHER OR NOT RESPONDENT ILLEGALLY DISMISSED PETITIONER.

(B)

THE COURT OF APPEALS GRIEVOUSLY ERRED IN ANNULLING AND SETTING ASIDE THE DECISION OF THE
NA TI ON AL LABOR RELATIONS COMMISSION WHICH AFFIRMED THE LABOR ARBITER IN FINDING THAT
ILLEGAL DISMISSAL EXISTS

(C)

THE COURT OF APPEALS GRIEVOUSLY ERRED IN DECIDING THE PETITION FOR CERTIORARI UNDER RULE
65, A SPECIAL CIVIL ACTION, BASED ON QUESTIONS OF FACT AND NOT OF LAW.

(D)
THE COURT OF APPEALS GRIEVOUSLY ERRED IN FINDING THAT THERE WAS GRAVE ABUSE OF
DISCRETION ON THE PART OF THE NATIONAL LABOR RELATIONS COMMISSION IN AFFIRMING THE
DECISION OF THE LABOR ARBITER THAT ILLEGAL DISMISSAL WAS APPARENT ON THE PART OF HEREIN
RESPONDENT.

(E)

THE COURT OF APPEALS ERRED WHEN IT FOUND THAT THE NATIONAL LABOR RELATIONS COMMISSION
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN
IT ACCEPTED SPECULATIONS AND POSTULATIONS BASED ON FACT AND NOT OF LAW TO IRREGULARLY
RESOLVE THAT THERE WAS NO ILLEGAL TERMINATION BY HEREIN RESPONDENT.

(F)

THE COURT OF APPEALS [GRIEVOUSLY] ERRED IN FINDING THAT THE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION BY ALLOWING HEREIN RESPONDENT TO RAISE THE ISSUE ABOUT THE WORD "TURNOVER"
A FINDING OF FACT AND OUTSIDE RESPONDENT'S PETITION FOR CERTIORARI AND BEYOND THE NATURE
OF RULE 65

(G)

THE COURT OF APPEALS GRIEVOUSLY ERRED IN FINDING THAT THE NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT BELIED THE FACTUAL FINDING OF THE ADMINISTRATIVE AGENCIES A QUO AND
INSTEAD MADE ITS OWN FACTUAL FINDING IN A PETITION FOR CERTIORARI UNDER RULE 65.

(H)

THE COURT OF APPEALS [GRIEVOUSLY] ERRED IN MAKING ITS OWN FINDING OF FACT AND IN FINDING
THAT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN THE LATTER CORRECTLY AFFIRMED IN TOTO,
BASED INF ACT AND IN LAW, THE DECISION OF THE LABOR ARBITER IN A WARDING BACKWAGES,
SEPARATION PAY, AND ATTORNEYS FEES.

(I)

THE COURT OF APPEALS GRIEVOUSLY ERRED IN FINDING THAT THE NATIONAL LABOR RELATIONS
COMMISSION [COMMITTED] GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION WHEN IT INCLUDED HEREIN RESPONDENT'S OFFICER CO SAY AS.LIABLE TO PETITIONER.

In its Comment/Opposition dated June 27, 2016, respondent Global enumerates the following counter-
arguments:

A.
PETITIONER REYES WAS COMPLETELY IN ERROR WHEN HE ALLEGED THAT THE PETITION FOR CERTIORARI
DATED 30 NOVEMBER 2013 ("PETITION FOR CERTIORARI") FILED BY RESPONDENT GBZI IN THE COURT OF
APPEALS WAS A MERE REHASH OF THE ARGUMENTS ALREADY ALLEGED IN THE POSITION PAPER BEFORE
THE LABOR ARBITER.

B.

THE COURT OF APPEALS CORRECTLY RULED THAT THE "TEXT" MESSAGES AND THE OTHER FINDINGS OF
FACTS TAKEN AL TOGETHER DO NOT CONSTITUTE EVIDENCE TO ESTABLISH THAT THERE WAS ILLEGAL
DISMISSAL.

C.

THE COURT OF APPEALS WAS CORRECT WHEN IT RULED THAT PETITIONER [REYES HAS] UTTERLY FAILED
TO PRESENT AND ESTABLISH CLEAR, POSITIVE AND CONVINCING EVIDENCE THAT HEW AS DISMISSED.

D.

THE COURT OF APPEALS WAS CORRECT WHEN IT RULED THAT THERE WAS NO ILLEGAL DISMISSAL OF
PETITIONER REYES FROM HIS EMPLOYMENT WITH RESPONDENT GBZI.

The petition is meritorious.

As a general rule, only questions of law raised via a petition for review under Rule 45 of the Rules of
Court are reviewable by this Court. Factual findings of administrative or quasi-judicial bodies, including
labor tribunals, are accorded much respect by this Court as they are specialized to rule on matters falling
within their jurisdiction especially when these are supported by substantial evidence. However, a
relaxation of this rule is made permissible by this Court whenever any of the following circumstances is
present:

1. [W]hen the findings are grounded entirely on speculations, surmises or conjectures;

2. when the inference made is manifestly mistaken, absurd or impossible;

3. when there is grave abuse of discretion;

4. when the judgment is based on a misapprehension of facts;

5. when the findings of fact are conflicting;

6. when in making its findings[,] the Court of Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee;

7. when the findings are contrary to that of the trial court;

8. when the findings are conclusions without citation of specific evidence on which they are based;
9. when the facts set forth in the petition[,] as well as in the petitioner's main and reply briefs[,] are not
disputed by the respondent;'

10. when the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; [and]

11. when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion.

Since the factual findings of the Labor Arbiter and the NLRC are completely different from that of the CA,
this case falls under one of the exceptions, therefore, this Court may now resolve the issues presented
before it.

Before the employer must bear the burden of proving that the dismissal was legal, the employee must
first establish by substantial evidence the fact of his dismissal from service. The CA ruled that petitioner
Reyes was not able to prove by substantial evidence the fact that he was illegally dismissed. After a
review of the records, this Court finds otherwise. It must be remembered that the degree of proof in
labor cases is less than that of criminal cases as in the former; it is enough that substantial evidence is
proven. As aptly found by the Labor Arbiter and the NLRC, petitioner was able to prove his dismissal
from service. As held by the NLRC:

In this case, the complainant sufficiently alleged the surrounding circumstances of his dismissal. He was
able to state, with the required particularities how he was terminated from his employment. He stated in
detail that on January 19, 2012, he was not able to report for work early due to his son's illness. He also
alleged that respondent Co Say called him and angrily told him not to report for work anymore and that
they will have to talk in a week's time. During their meeting held at Starbucks Waltermart, the
complainant was detailed enough when he recounted how respondent Co Say reiterated that he can no
longer return to his job and even sought his resignation which he refused. While the allegations of the
complainant may not be taken as gospel truths at this point, the complainant was able to establish that
he was dismissed from his employment contrary to the denials of the respondents. Thus, it is now
incumbent upon the respondents to prove that the complainant was validly dismissed from his job in the
light of the detailed and straightforward narration of the complainant.

Verbal notice of termination can hardly be considered as valid or legal. To constitute valid dismissal from
employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and
(2) the employee must be afforded an opportunity to be heard and to defend himself. In justifying that
such verbal command not to report for work from respondent Global' s Vice-President for Operations Co
Say as not enough to be construed as overt acts of dismissal, the CA cited the case of . Noblejas v. Italian
Maritime Academy Phils., Jnc. In the said case, an employee filed an illegal dismissal case after the
secretary of the company's Managing Director told him, "No, you better pack up all your things now and
go, you are now dismissed and you are no longer part of this office - clearly, you are terminated from this
day on." This Court then ruled in that case that there was no dismissal to speak of because the
secretary's words were not enough to be construed as overt acts of dismissal. Be that as it may, the
factual antecedents of that case is different in this case. In the present case, the one who verbally
directed petitioner to no longer report for work was his immediate or direct supervisor, the Vice-
President for Operations, who has the capacity and authority to terminate petitioner's services, while in
Noblejas, the one who gave the instruction was merely the secretary of the company's Managing
Director. Hence, in Noblejas, this Court found it necessary that the employee should have clarified the
statement of the secretary from his superiors before the same employee instituted an illegal dismissal
case. In the present case, Co Say's verbal instruction, being petitioner Reyes' immediate supervisor, was
authoritative, therefore, petitioner Reyes was not amiss in thinking that his employment has indeed
already been terminated.

Furthermore, the "text" messages petitioner Reyes presented in evidence were corroborative. The CA,
however, held that those "text" messages could hardly meet the standard of clear, positive and
convincing evidence to prove petitioner Reyes' dismissal from employment. It added that those
conversations transpired more than ten (10) days after petitioner Reyes stopped reporting for work and
that the Labor Arbiter and the NLRC took those messages out of context, the same having been lumped
together for the purpose of supporting petitioner Reyes' claim of dismissal from employment. Such
observation of the CA is more conjectural rather than factual. As rightly concluded by the NLRC, those
"text" messages, viewed in connection with the factual antecedents and the narration of the petitioner,
prove that there was indeed a dismissal from employment. As held by the NLRC:

In weighing the arguments of the parties in this case, it is important to examine the evidence presented.
In support of his claim that he was illegally dismissed, the complainant submitted machine copies of the
purported text messages he received from the respondents. These text messages tend to show that the
complainant was actually dismissed from his work. The text message purportedly sent by respondent Co
Say that: "Tet will contact you plus turnover" was clear enough. A literal interpretation of said text
message leaves no doubt that the complainant's days with the respondent company was numbered. The
wor[d] "turnover" simply connotes "to transfer", "to yield" or "to return." In employment parlance, the
wor[d] "turnover" is associated with severance of employment. An employee makes proper "turnover"
of pending work before he leaves his employment.

Interestingly, the text message of respondent Co Say was followed by another message from Ms. Tet
Manares which stated that: "Kuya, pinaayos ko na kay gen salary mo." This is consistent with the first
message that Tet will contact the complainant. True enough, Ms. Tet Manares contacted the complainant
informing him that his salary was already being prepared. The two (2) text messages, when taken
together, support complainant's insistence that he was actually dismissed from his work. Respondent Co
Say's text message regarding "turnover" and Ms. Manares' text message regarding the preparation of the
complainant's salary were quite consistent with the complainant's allegation that he was dismissed by
respondent Co [Say] during their telephone conversation and during their meeting at Starbucks
Waltermart.

The respondents' assertion that the purported text messages submitted by the complainant should not
be given ·credence as the complainant failed to authenticate the same in accordance with the Rules of
Court, deserves scant consideration. It must be emphasized that in labor cases, the strict adherence to
the rules of evidence may be relaxed consistent with the higher interest of substantial justice. In labor
cases, rules of procedure should not be applied in a very rigid and technical sense. They are merely tools
designed to facilitate the attainment of justice, and where their strict application would result in the
frustration rather than promotion of substantial justice, technicalities must be avoided. Technicalities
should not be permitted to stand in the way of equitably and completely resolving the rights and
obligations of the parties. Where the ends of substantial justice shall be better served, the application of
technical rules of procedure may be relaxed. (Tres Reyes v. Maxim's Tea House, G.R. No. 140853,
February 27, 2003, 398 SCRA 288)

It is well settled that the application of technical rules of procedure may be relaxed to serve the demands
of substantial justice, particularly in labor cases. Thus, the "text" messages may be given credence
especially if they corroborate the other pieces of evidence presented. Again, while as a rule, the Court
strictly adheres to the rules of procedure, it may take exception to such general rule when a strict
implementation of the rules would cause substantial injustice to the parties.

Having thus proven the fact of being dismissed, the burden to prove that such dismissal was not done
illegally is now shifted to the employer. In illegal dismissal cases, the burden of proof is upon the
employer to show by substantial evidence that the employee's termination from service is for a just and
valid cause. In this case, respondent Global asserts that there was no dismissal; instead, there was an
abandonment on the part of petitioner Reyes of his employment. The Labor Arbiter, however, found that
on the days that petitioner Reyes supposedly abandoned his employment according to respondent
Global, no such indication was found as petitioner filed applications for leave and even sent "text"
messages to his immediate or direct superior regarding his work, thus:

The applications for leaves filed by the complainant disclose the following information:

Date Filed Dates of Leave Reason for Leave No. of unused leave

1-4-12 Jan. 2, 3, 5, 6 (blank) 8

1-12-12 Jan. 9,10 (blank) 6

Outgoing text messages on the complainant's mobile phone show that on January 1, 2012 he sent Tet
(Maria Teresa) Manares, the respondent corporation's Administrative and Human Resources Officer, a
text message informing her that he would be absent on January 2 and January 3 because "Yuan" was sick
and had no nanny, and that on January 9, 2012, he sent her another text message to inform her that he
would be absent that day. Other messages recorded on the complainant's mobile phone reveal that on
January 18 and 19, 2012, he sent respondent Co Say, the VP for Operations of the respondent
corporation, five (5) text messages regarding his work; that on January 24, 2012, respondent Co Say sent
him a text message asking him to meet him on January 26, 2012; that on January 26, 2012, respondent
Co Say sent him a text message telling him to meet him at Starbucks Waltermart at 3:00; and, that on
January 30, 2012, respondent Co Say sent him the following text message: "Tet will contact you plus the
turnover." It is significant that respondent Co Say's last text message was discussed in the complainant's
second affidavit, and that the respondents never impugned the genuineness and due execution of the
text messages adduced in evidence by the complainant.
The complainant's actuations - filing applications for leaves of absence days before he supposedly
abandoned his job and texting respondent Co Say about his work on the day he supposedly abandoned
his job - are more consistent with the theory that his services were terminated by respondent Co Say
than with the theory that he abandoned his job. Evidently, he had no intention of quitting his job.

Abandonment requires the deliberate, unjustified refusal of the employee to resume his employment,
without any intention of returning. For abandonment to exist, two factors must be present: (1) the
failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second element as the more determinative factor being
manifested by some overt acts. In this case, no such abandonment was proven by respondent Global. In
fact, petitioner Reyes would not have filed a case for illegal dismissal if he really intended to abandon his
work. Employees who take steps to protest their dismissal cannot logically be said to have abandoned
their work.

WHEREFORE, The Petition for Review on Certiorari under Rule 45 of the Rules of Court, dated March 22,
2016, of petitioner Allan John Uy Reyes is GRANTED. Consequently, the Decision dated August 27, 2015
of the Court of Appeals is REVERSED and SET ASIDE, and the Decision dated July 31, 2013 of the National
Labor Relations Commission in NLRC LAC No. 01-000289-13 is AFFIRMED and REINSTATED.

SO ORDERED.

6. G.R. No. 200499

SAN FERNANDO COCA-COLA RANK-AND-FILE UNION (SACORU), represented by its President, ALFREDO R.
MARAÑON, Petitioner
vs.
COCA-COLA BOTTLERS PHILIPPINES, INC. (CCBPI), Respondent

DECISION

CAGUIOA, J.:

Petitioner San Fernando Coca-Cola Rank and File Union (SACORU) filed a petition for review assailing the
Decision dated July 21, 2011 and Resolution dated February 2, 2012 of the Court of Appeals (CA). The CA
affirmed the Resolution dated March 16, 2010 of the National Labor Relations Commission (NLRC), Second
Division, which dismissed SACORU's complaint against respondent Coca-Cola Bottlers Philippines, Inc. (CCBPI)
for unfair labor practice and declared the dismissal of 27 members of SACORU for redundancy as valid.

Facts

The facts, as found by the CA, are:

On May 29, 2009, the private respondent company, Coca-Cola Bottlers Philippines., Inc. ("CCBPI")issued
notices of termination to twenty seven (27) rank-and-file, regular employees and members of the San
Fernando Rank-and-File Union ("SACORU'), collectively referred to as "union members", on the ground of
redundancy due to the ceding out of two selling and distribution systems, the Conventional Route
System ("CRS') and Mini Bodega System ("MB") to the Market Execution Partners ("MEPS''), better known
as "Dealership System". The termination of employment was made effective on June 30, 2009, but the union
members were no longer required to report for work as they were put on leave of absence with pay until the
effectivity date of their termination. The union members were also granted individual separation packages,
which twenty-two (22) of them accepted, but under protest.

To SACORU, the new, reorganized selling and distribution systems adopted and implemented by CCBPI would
result in the diminution of the union membership amounting to union busting and to a violation of the
Collective Bargaining Agreement (CBA) provision against contracting out of services or outsourcing of regular
positions; hence, they filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) on
June 3, 2009 on the ground of unfair labor practice, among others. On June 11, 2009, SACORU conducted a
strike vote where a majority decided on conducting a strike.

On June 23, 2009, the then Secretary of the Department of Labor and Employment (DOLE), Marianito D.
Roque, assumed jurisdiction over the labor dispute by certifying for compulsory arbitration the issues raised
in the notice of strike. He ordered,

"WHEREFORE, premises considered, and pursuant to Article 263 (g) of the Labor Code of the Philippines, as
amended, this Office hereby CERTIFIES the labor dispute at COCA-COLA BOTTLERS PHILIPPINES, INC. to the
National Labor Relations Commission for compulsory arbitration.

Accordingly, any intended strike or lockout or any concerted action is automatically enjoined. If one has
already taken place, all striking and locked out employees shall, within twenty-four (24) hours from receipt of
this Order, immediately return to work and the employer shall immediately resume operations and re-admit
all workers under the same terms and conditions prevailing before the strike. The parties are likewise
enjoined from committing any act that may further exacerbate the situation."

Meanwhile, pending hearing of the certified case, SACORU filed a motion for execution of the dispositive
portion of the certification order praying that the dismissal of the union members not be pushed through
because it would violate the order of the DOLE Secretary not to commit any act that would exacerbate the
situation.

On August 26, 2009, however, the resolution of the motion for execution was ordered deferred and
suspended; instead, the issue was treated as an item to be resolved jointly with the main labor dispute.

CCBPI, for its part, argued that the new business scheme is basically a management prerogative designed to
improve the system of selling and distributing products in order to reach more consumers at a lesser cost with
fewer manpower complement, but resulting in greater returns to investment. CCBPI also contended that
there was a need to improve its distribution system if it wanted to remain viable and competitive in the
business; that after a careful review and study of the existing system of selling and distributing its products, it
decided that the existing CRS and MB systems be ceded out to the MEPs or better known as "Dealership
System" because the enhanced MEPs is a cost-effective and simplified scheme of distribution and selling
company products; that CCBPI, through the simplied system, would derive benefits such as: (a) lower cost to
serve; (b) fewer assets to manage; (c) zero capital infusion.

SACORU maintained that the termination of the 27 union members is a circumvention of the CBA against the
contracting out of regular job positions, and that the theory of redundancy as a ground for termination is
belied by the fact that the job positions are contracted out to a "third party provider"; that the termination
will seriously affect the union membership because out of 250 members, only 120 members will be left upon
plan implementation that there is no redundancy because the sales department still exists except that job
positions will be contracted out to a sales contractor using company equipment for the purpose of minimizing
labor costs because contractual employees do not enjoy CBA benefits; that the contractualization program of
the company is illegal because it will render the union inutile in protecting the rights of its members as there
will be more contractual employees than regular employees; and that the redundancy program will result in
the displacement of regular employees which is a clear case of union busting.

Further, CCBPI argued that in the new scheme of selling and distributing products through MEPs
or "Dealership [System]", which is a contract of sale arrangement, the ownership of the products is
transferred to the MEPs upon consummation of the sale and payment of the products; thus, the jobs of the
terminated union members will become redundant and they will have to be terminated as a consequence;
that the termination on the ground of redundancy was made in good faith, and fair and reasonable criteria
were determined to ascertain what positions were to be phased out being an inherent management
prerogative; that the terminated union members were in fact paid their separation pay benefits when they
were terminated; that they executed quitclaims and release; and that the quitclaims and release being
voluntarily signed by the terminated union members should be declared valid and binding against them. 5

The NLRC dismissed the complaint for unfair labor practice and declared as valid the dismissal of the
employees due to redundancy. The dispositive portion of the NLRC Resolution states:

WHEREFORE, in view of the foregoing, a Decision is hereby rendered ordering the dismissal of the labor
dispute between the Union and Coca-Cola Bottlers Company, Inc.

Accordingly, the charge of Unfair Labor Practice against the company is DISMISSED for lack of merit and the
dismissal of the twenty seven (27)

complainants due to redundancy is hereby declared valid. Likewise, the Union's Motion for Writ of Execution
is Denied for lack of merit.

SO ORDERED. 6

With the NLRC's denial of its motion for reconsideration, SACO RU filed a petition for certiorari under Rule 65
of the Rules of Court before the CA. The CA, however, dismissed the petition and found that the NLRC did not
commit grave abuse of discretion. The dispositive portion of the CA Decision states:

WHEREFORE, the instant petition is DISMISSED.

IT IS SO ORDERED. 7

SACORU moved for reconsideration of the CA Decision but this was denied. Hence, this petition.

Issues

a. Whether CCBPI validly implemented its redundancy program;

b. Whether CCBPI's implementation of the redundancy program was an unfair labor practice; and

c. Whether CCBPI should have enjoined the effectivity of the termination of the employment of the 27
affected union members when the DOLE Secretary assumed jurisdiction over their labor dispute.

The Court's Ruling

The petition is partly granted.

Although SACORU claims that its petition raises only questions of law, a careful examination of the issues on
the validity of the redundancy program and whether it constituted an unfair labor practice shows that in
resolving the issue, the Court would have to reexamine the NLRC and CA's evaluation of the evidence that the
parties presented, thus raising questions of fact. This cannot be done following Montoya v. Trans med Manila
Corp. that only questions of law may be raised against the CA decision and that the CA decision will be
examined only using the prism of whether it correctly determined the existence of grave abuse of discretion.
thus:

Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In
ruling for legal correctness, we have to view the CA decision in the same context that the petition
for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of
whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision
before it, not on the basis of whether the NLRC decision on the merits of the case was correct.xxx 10

"[G]rave abuse of discretion may arise when a lower court or tribunal violates or contravenes the
Constitution, the law or existing jurisprudence." The Court further held in Banal III v. Panganiban that:
11

By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to
an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in
contemplation of law. 12

The reason for this limited review is anchored on the fact that the petition before the CA was
a certiorari petition under Rule 65; thus, even the CA did not have to assess and weigh the sufficiency of
evidence on which the NLRC based its decision. The CA only had to determine the existence of grave abuse of
discretion. As the Court held in Soriano, Jr. v. National Labor Relations Commission:13

As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate court does not
assess and weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC based their
conclusion. The query in this proceeding is limited to the determination of whether or not the NLRC acted
without or in excess of its jurisdiction or with grave abuse of discretion in rendering its decision. However, as
an exception, the appellate court may examine and measure the factual findings of the NLRC if the same are
not supported by substantial evidence. 14

Here, the Court finds that the CA was correct in its determination that the NLRC did not commit grave abuse
of discretion.

CCBPI's redundancy program is valid.

For there to be a valid implementation of a redundancy program, the following should be present:

(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. 15

The NLRC found the presence of all the foregoing when it ruled that the termination was due to a scheme
that CCBPI adopted and implemented which was an exercise of management prerogative, and that there was
16

no proof that it was exercised in a malicious or arbitrary manner. Thus:

17

It appears that the termination was due to the scheme adopted and implemented by respondent company in
distributing and selling its products, to reach consumers at greater length with greater profits, through MEPs
or dealership system is basically an exercise of management prerogative. The adoption of the scheme is
basically a management prerogative and even if it cause the termination of some twenty seven regular
employees, it was not in violation of their right to self-organization much more in violation of their right to
security of tenure because the essential freedom to manage business remains with management. x x x

Prior to the termination of the herein individual complainants, respondent company has made a careful study
of how to be more cost effective in operations and competitive in the business recognizing in the process that
its multi-layered distribution system has to be simplified. Thus, it was determined that compared to other
distribution schemes, the company incurs the lowest cost-to-serve through Market Execution Partners
(ME[P]s) or Dealership system. The CRS and Mini-Bodega systems posted the highest in terms of cost-to-
serve. Thus, the phasing out of the CRS and MB is necessary which, however, resulted in the termination of
the complainants as their positions have become redundant. Be that as it may, respondent company complied
with granting them benefits that is more than what the law prescribes. They were duly notified of their
termination from employment thirty days prior to actual termination. x x x 18

On the issue of CCBPI's violation of the CBA because of its engagement of an independent contractor, the
NLRC ruled that the implementation of a redundancy program is not destroyed by the employer availing itself
of the services of an independent contractor, thus:

In resolving this issue, We find the ruling in Asian Alcohol vs. NLRC, 305 SCRA 416, in parallel application,
where it was held that an employer's good faith in implementing a redundancy program is not necessarily
destroyed by availment of services of an independent contractor to replace the services of the terminated
employees. We have held previously that the reduction of the number of workers in a company made
necessary by the introduction of the services of an independent contractor is justified when the latter is
undertaken in order to effectuate more economic and efficient methods of production. Likewise, in Maya
Farms Employees Organization vs. NLRC, 239 SCRA 508, it was held that labor laws discourage interference
with employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. As long as the company's exercise of the same is in good faith to advance its interest and not for
the purpose of circumventing the rights of employees under the law or valid agreements, such exercise will
be upheld. For while this right is not absolute, the employees right to security of tenure does not give him the
vested right in his position as would deprive an employer of its prerogative to exercise his right to maximize
profits. (Abbot Laboratories, Phils. Inc. vs. NLRC, 154 SCRA 713).
19

For its part, the CA ruled that the NLRC did not commit grave abuse of discretion, even as it still reviewed the
factual findings of the NLRC and arrived at the same conclusion as the NLRC. On whether redundancy existed
and the validity of CCBPI's implementation, the CA ruled that CCBPI had valid grounds for implementing the
redundancy program:

In the case at hand, CCBPI was able to prove its case that from the study it conducted, the previous CRS and
MB selling and distribution schemes generated the lowest volume contribution which thus called for the
redesigning and enhancement of the existing selling and distribution strategy; that such study called for
maximizing the use of the MEPs if the company is to retain its market competitiveness and viability; that
furthermore, based on the study, the company determined that the MEPs will enable the CCBPI to "reach
more" with fewer manpower and assets to manage; that it is but a consequence of the new scheme that
CCBPI had to implement a redundancy program structured to downsize its manpower complement. 20

The CA also agreed with the NLRC that CCBPI complied with the notice requirements for the dismissal of the
employees. 21

Given the limited review in this petition, the Court cannot now reexamine the foregoing factual findings of
both the NLRC and CA that the redundancy program was valid.

As the CA found, the NLRC's factual findings were supported by substantial evidence and are in fact in
compliance with the law and jurisprudence. The CA therefore correctly determined that there was no grave
abuse of discretion on the part of the NLRC.

As stated earlier, the CA, even if it had no duty to re-examine the factual findings of the NLRC, still reviewed
them and, in doing so, arrived at the very same conclusion. These factual findings are accorded not only great
respect but also finality, and are therefore binding on the Court.
22

CCBPI did not commit an unfair labor practice.

The same principle of according finality to the factual findings of the NLRC and CA applies to the
determination of whether CCBPI committed an unfair labor practice. Again, the CA also correctly ruled that
the NLRC, with its findings supported by law and jurisprudence, did not commit grave abuse of discretion.

In Zambrano v. Philippine Carpet Manufacturing Corp., the Court stated:

23

Unfair labor practice refers to acts that violate the workers' right to organize. There should be no dispute that
all the prohibited acts constituting unfair labor practice in essence relate to the workers' right to self-
organization. Thus, an employer may only be held liable for unfair labor practice if it can be shown that his
acts affect in whatever manner the right of his employees to self-organize. 24

To prove the existence of unfair labor practice, substantial evidence has to be presented. 25
Here, the NLRC found that SACORU failed to provide the required substantial evidence, thus:

The union's charge of ULP against respondent company cannot be upheld. The union's mere allegation of ULP
is not evidence, it must be supported by substantial evidence.

Thus, the consequent dismissal of twenty seven (27) regular members of the complainant's union due to
redundancy is not per se an act of unfair labor practice amounting to union busting. For while, the number of
union membership was diminished due to the termination of herein union members, it cannot safely be said
that respondent company acted in bad faith in terminating their services because the termination was not
without a valid reason.26

The CA ruled similarly and found that SACORU failed to support its allegation that CCBPI committed an unfair
labor practice:

SACORU failed to proffer any proof that CCBPI acted in a malicious or arbitrarily manner in implementing the
redundancy program which· resulted in the dismissal of the 27 employees, and that CCBPI engaged instead
the services of independent contractors. As no credible, countervailing evidence had been put forth by
SACORU with which to challenge the validity of the redundancy program implemented by CCBPI, the alleged
unfair labor practice acts allegedly perpetrated against union members may not be simply swallowed.
SACORU was unable to prove its charge of unfair labor practice and support its allegations that the
termination of the union members was done with the end-in-view of weakening union leadership and
representation. There was no showing that the redundancy program was motivated by ill will, bad faith or
malice, or that it was conceived for the purpose of interfering with the employees' right to self-organize.
27

The Court accordingly affirms these findings of the NLRC and the CA that SACORU failed to present any
evidence to prove that the redundancy program interfered with their right to self-organize.

CCBPI violated the return-to-work order.

SACORU claims that CCBPI violated the doctrine in Metrolab Industries, Inc. v. Roldan-Confesor, when it
28

dismissed the employees after the DOLE Secretary assumed jurisdiction over the dispute. SACO RU argues
that CCBPI should have enjoined the termination of the employees which took effect on July 1, 2009 because
the DOLE Secretary enjoined further acts that could exacerbate the situation. On the other hand, CCBPI
29

argued that the termination of the employment was a certainty, from the time the notices of termination
were issued, and the status quo prior to the issuance of the assumption order included the impending
30

termination of the employment of the 27 employees. 31

Both the NLRC and CA ruled that Metrolab did not apply to the dispute because the employees received the
32 33

notice of dismissal prior to the assumption order of the DOLE Secretary, thus CCBPI did not commit an act
that exacerbated the dispute.

To the Court, the issue really is this: whether the status quo to be maintained after the DOLE Secretary
assumed jurisdiction means that the effectivity of the termination of employment of the 27 employees should
have been enjoined. The Court rules in favor of SACO RU.

Pertinent to the resolution of this issue is Article 263 (g) of the Labor Code, which provides the conditions
34

for, and the effects of, the DOLE Secretary's assumption of jurisdiction over a dispute:

ARTICLE 263. Strikes, picketing, and lockouts. x x x

xxxx

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or certification order. If one has already taken place at the
time of assumption or certification, all striking or locked out employees shall immediately return to work and
the employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission
may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with
such orders as he may issue to enforce the same. (Emphasis and underscoring supplied.)

The powers given to the DOLE Secretary under Article 263 (g) is an exercise of police power with the aim of
promoting public good. In fact, the scope of the powers is limited to an industry indispensable to the
35

national interest as determined by the DOLE Secretary. Industries that are indispensable to the national
36

interest are those essential industries such as the generation or distribution of energy, or those undertaken by
banks, hospitals, and export-oriented industries. And following Article 263 (g), the effects of the assumption
37

of jurisdiction are the following:

(a) the enjoining of an impending strike or lockout or its lifting, and

(b) an order for the workers to return to work immediately and for the employer to readmit all workers under
the same terms and conditions prevailing before the strike or lockout, or the return-to-work order.
38

As the Court ruled in Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor
Union (TASLI-ALU) v. Court of Appeals : 39

When the Secretary exercises these powers, he is granted "great breadth of discretion" in order to find a
solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending
1âwphi1

strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor
dispute, or as in this case the certification of the same to the NLRC for compulsory arbitration, always co-
exists with an order for workers to return to work immediately and for employers to readmit all workers
under the same terms and conditions prevailing before the strike or lockout. 40

Of important consideration in this case is the return-to-work order, which the Court characterized
in Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telephone Co., Inc., as 41

"interlocutory in nature, and is merely meant to maintain status quo while the main issue is being threshed
out in the proper forum." The status quo is simply the status of the employment of the employees the day
42

before the occurrence of the strike or lockout. 43

Based on the foregoing, from the date the DOLE Secretary assumes jurisdiction over a dispute until its
resolution, the parties have the obligation to maintain the status quo while the main issue is being threshed
out in the proper forum - which could be with the DOLE Secretary or with the NLRC. This is to avoid any
disruption to the economy and to the industry of the employer - as this is the potential effect of a strike or
lockout in an industry indispensable to the national interest - while the DOLE Secretary or the NLRC is
resolving the dispute.
Since the union voted for the conduct of a strike on June 11, 2009, when the DOLE Secretary issued the
return-to-work order dated June 23, 2009, this means that the status quo was the employment status of the
44

employees on June 10, 2009. This status quo should have been maintained until the NLRC resolved the
dispute in its Resolution dated March 16, 2010, where the NLRC ruled that CCBPI did not commit unfair labor
practice and that the redundancy program was valid. This Resolution then took the place of the return-to-
work order of the DOLE Secretary and CCBPI no longer had the duty to maintain the status quo after March
16, 2010.

Given this, the 27 employees are therefore entitled to backwages and other benefits from July 1, 2009 until
March 16, 2010, and CCBPI should re-compute the separation pay that the 27 employees are entitled taking
into consideration that the termination of their employment shall be effective beginning March 16, 2010.

WHEREFORE, premises considered, the petition for review is hereby PARTLY GRANTED. The Decision of the
Court of Appeals dated July 21, 2011 and Resolution dated February 2, 2012 are hereby AFFIRMED as to the
finding that respondent did not commit unfair labor practice and that the redundancy program is valid.
Respondent, however, is directed to pay the 27 employees backwages from July 1, 2009 until March 16, 2010,
and to re-compute their separation pay taking into consideration that the termination of their employment is
effective March 16, 2010.

SO ORDERED.

7. G.R. No. 201622

ANGELITO L. CRISTOBAL, Petitioner

vs.
PHILIPPINE AIRLINES, INC., AND LUCIO TAN,, Respondents

DECISION

LEONEN, J.:

Where a tribunal renders a decision substantially reversing itself on a matter, a motion for reconsideration
seeking reconsideration of this reversal, for the first time, is not a prohibited second motion for
reconsideration.

This is a Petition for Review on Certiorari, assailing the Court of Appeals Resolutions dated January 10,
2012 and April 18, 2012 in CA-GR. SP No. 12.2034 dismissing petitioner Angelito L. Cristobal's (Cristobal)
2
Petition for Certiorari for having been filed out of time.

Cristobal became a pilot for respondent Philippine Airlines, Inc. (PAL) on October 16, 1971. In May 1998, in
line with a downsizing program of PAL, Cristobal applied for leave without pay from PAL to enter into a four
(4)-year contract with EVA Air. PAL approved the application and advised him that he would continue to
accrue seniority during his leave and that he could opt to retire from PAL during this period. In a letter dated
March 10, 1999, Cristobal advised PAL of his intent to retire. In response, PAL advised him that he was
deemed to have lost his employment status on June 9, 1998. Thus, on May 12, 1999, Cristobal filed a
complaint with the National Labor Relations Commission.

In a Decision dated December 1, 1999, the Labor Arbiter found Cristobal's dismissal illegal. On the matter of
retirement benefits, the Labor Arbiter noted PAL's claim that Cristobal could only be entitled to a retirement
pay of ₱5,000,00 per year, pursuant to the Philippine Airlines, Inc.-Airline Pilots Association of the Philippines
(PAL-ALPAP) Retirement Plan of 1967. However, he found that Cristobal's retirement benefits should not be
less than the amount provided under the law. Thus, the Labor Arbiter found him entitled to an amount
computed pursuant to Article 287 of the Labor Code. The dispositive portion of the Labor Arbiter Decision
read:

WHEREFORE, judgment is hereby rendered finding the dismissal of the complainant illegal.

The respondent is further ordered to pay the complainant:

1. Retirement pay in the amount of ₱1,575,964.30;

2. Moral damages in the amount of ₱500,000.00;

3. Exemplary damages in the amount of ₱500,000.00;

4. Attorney's fees in an amount equivalent to ten percent (10%) of the total award in favor of the
complainant.

Respondent is likewise ordered to give and grant to complainant all other benefits he is entitled to under the
law and existing Collective Bargaining Agreement.

SO ORDERED. 13

In a Decision dated September 30, 2010, the National Labor Relations Commission affim1ed the Labor Arbiter
Decision but reduced the award of moral and exemplary damages to ₱l00,000.00 each. On Cristobal's
retirement pay, it noted PAL's argument that any retirement benefits should be pursuant to the terms of the
Collective Bargaining Agreement and affirmed the Labor Arbiter's computation. The dispositive portion of the
National Labor Relations Commission Decision read:

WHEREFORE, the assailed Decision is, hereby, AFFIRMED with MODIFICATION to the effect that the award for
moral and exemplary damages is hereby reduced to ₱l00,000.00 each.

SO ORDERED. 16

Cristobal filed a Motion for Partial Reconsideration on November 12, 2010, raising the following assignment
of errors:
1. Since the Honorable Commission found that Respondents· Appellants acted in bad faith, the award of
Php 500,000.00 each for Moral and Exemplary Damages should be reinstated, instead of the reduced amount
of Php 100,000.00

2. The monetary award should include a legal interest considering the long delay.

3. Respondents-Appellants should be jointly and severally be (sic) liable in view of the bad faith, as per
findings of this Honorable Commission. 18

PAL also filed a motion for reconsideration, claiming that it was error to find that Cristobal was illegally
dismissed and to base his retirement benefits on Article 287 of the Labor Code.

The National Labor Relations Commission resolved both motions in its Decision dated May 31, 2011, deleting
the award of moral and exemplary damages and reducing the amount of Cristobal's retirement benefits. It
agreed that Cristobal's retirement benefits should not be computed in accordance with Article 287 of the
Labor Code as Cristobal was not yet 60 years old when he retired on March 10, 1999. The National Labor
Relations Commission cited Philippine Airlines, Inc. vs. Airline PilotsAssociation of the Philippines to support
this position and held that Cristobal was entitled to receive only ₱5,000.00 per year of service, under the
1967 PAL-ALPAP Retirement Plan:

Nevertheless, the contention of respondents that complainant's retirement benefits should not be computed
in accordance with Article 287 of the Labor Code, as amended by Republic Act No. 7641, the New Retirement
Law, is meritorious. In their motion, the respondents cite the Supreme Court's decision in Philippine Airlines,
Inc. vs. Airline Pilots Association of the Philippines (G.R. No. 143686, 15 January 2002). In said case, the
Supreme Court categorically sustained respondent PAL's position and ruled that Article 287 of the Labor Code
does not apply to PAL pilots who, without reaching the age of sixty (60), retire pursuant to the provisions of
the 1967 PAL-ALP AP Retirement Plan. We have noted that complainant never refuted respondents' allegation
that he has not reached the age of sixty (60) years when he opted to retire on 10 March 1999.

...

Hence, PAL pilots who retire without reaching the age of 60 are entitled to claim retirement benefits from two
(2) retirement plans: a) 1967 PAL-ALPAP Retirement Plan of 1967, and b) PAL Pilot[s'] Retirement Benefit Plan.
The amount of ₱5,000.00 for every year of service provided under the 1967 PAL-.ALPAP Retirement Plan
would be in addition to the retirement benefits provided by the PAL Pilot[s '] Retirement Benefit Plan.

In their supplement to motion for reconsideration, respondents submit copies of the acknowledgment receipt
for ₱5,530,214.67 signed by Ma. Pilar M. Cristobal on 29 June 1999 as well as Cashier's Checks issued by
Metro bank all dated 28 June 1999 to complainant Angelito L. Cristobal in the amount of PS,346,085.23,
P93,579.68 and P90,549.76. These amounts were acknowledged to have been paid by and received from the
PAL PILOT[S'] RETIREMENT BOARD.

Accordingly, complainant is only entitled to receive retirement benefits from the 1967 PAL-ALPAP Retirement
Plan in an amount equal to ₱5,000.00 for every year of service. In this connection, the moral and exemplary
damages awarded to complainant has (sic) no legal and factual basis and must be deleted. 23

The dispositive portion of this May 31, 2011 Decision read:

CONSIDERING THE FOREGOING the motion for partial reconsideration filed by complainant is DENIED. The
motion for reconsideration filed by respondents is partially GRANTED.

The award of moral and exemplary damages is DELETED.

The respondents are directed to pay complainant the retirement benefits pursuant only to the 1967 PAL-
ALPAP Retirement Plan in the amount of one hundred forty thousand pesos (₱140,000.00).

The other findings are reiterated.

SO ORDERED.

On June 24, 2011, Cristobal filed his Motion for Reconsideration, seeking reconsideration of the reduction of
retirement benefits. He pointed out that the PAL Pilots Retirement Benefit Plan is different from the PAL
ALPAP Retirement Plan, and that it is an investment plan:

It would appear that in reaching its Decision, the Honorable Commission took into consideration the fact that
the complainant already received ₱5,530,214,67 paid for and received from the PAL PILOTS RETIREMENT
BENEFIT PLAN. Complainant begs [to] submit that this Honorable Commission committed serious error in
taking into consideration in reducing the retirement benefits from the PAL-ALPAP Retirement Plan. The PAL
PILOTS RETIREMENT BENEFIT PLAN is totally different from the PAL-ALP AP Retirement Plan.

Moreover, the PAL PILOTS RETIREMENT BENEFIT PLAN is a misnomer. It is not really a retirement plan but
rather it[']s an investment plan where the funds come from the contributions of each pilot deducted from
their monthly gross pay and upon retirement the pilot receives the full amount of his contribution. Thus, it is
a mistake [to] reduce the retirement benefits of the complainant from the PAL-ALP AP Retirement Plan
because the complainant already received his supposed retirement benefits (which should be investment)
from the PAL PILOTS RETIREMENT BENEFIT PLAN. 26

In its Resolution dated August 24, 2011, the National Labor Relations Commission denied Cristobal's Motion
for Reconsideration, deeming it a second motion for reconsideration of its May 31, 2011 Decision. The
dispositive portion of this Resolution read:

PREMISES CONSIDERED, complainant's motion for reconsideration which we treat as a second motion for
reconsideration is hereby DISMISSED. Let this case be dropped from the calendar of the Commission.

SO ORDERED. 29

On November 14, 2011, Cristobal filed his Petition for Certiorari before the Court of Appeals, which was
dismissed in the Court of Appeals January 10, 2012 Resolution. The Court of Appeals accepted the National
Labor Relations Commission's premise that petitioner's June 24, 2011 Motion for Reconsideration was a
second motion for reconsideration. Thus, it did not toll petitioners period to file a petition
for certiorari assailing the May 31, 2011 Decision. Consequently, the petition for certiorari was filed out of
time. The Court of Appeals also held that the petition did not contain copies of the pertinent supporting
documents. The dispositive portion of this Resolution read:

IN VIEW of all the foregoing patent infirmities, the petition is DISMISSED.

SO ORDERED. 31
Thus, on June 13, 2012, petitioner filed his Petition for Review on Certiorari before this Court. Thereafter,
there was an exchange of pleadings.

Petitioner points out that his November 12, 2010 Partial Motion for Reconsideration only assailed the
National Labor Relations Commission May 31, 2011 Decision, which reduced the award of moral and
exemplary damages. On the other hand, his June 24, 2011 11otion for Reconsideration assailed the reduction
of his retirement benefits. Moreover, the filing of a motion for reconsideration to afford the National Labor
34

Relations Commission an opportunity to correct itself on the matter of retirement benefits was a
condition sine qua non in instituting a petition for certiorari before the Court of Appeals. As for the
35

attachment of relevant records, petitioner argues ti11at the main issue in his petition was whether or not the
National Labor Relations Commission committed grave abuse of discretion in treating his motion for
reconsideration as a prohibited second motion for reconsideration. Likewise, he adds that the Court of
Appeals should have been more liberal and should have ordered him to submit documents, instead of
dismissing his motion out right. Petitioner further discussed how the National Labor Relations Commission
committed grave abuse of discretion in reducing his retirement benefits. 36

Respondents insist that petitioner's June 24, 2011 Motion for Reconsideration is a prohibited second motion
for reconsideration, which did not toll his period to question the May 31, 2011 Decision. Thus, petitioner's
petition for certiorari with the Court of Appeals was filed out of time. Respondents call attention to the fact
that the National Labor Relations Commission already rejected petitioner's arguments against the reduction
of retirement benefits and claim that petitioner's June 24, 2011 Motion for Reconsideration repeated his
arguments in his Opposition. 37

The sole issue for this Court's resolution is whether or not the June 24, 2011 Motion for Reconsideration filed
by petitioner Angelito L. Cristobal assailing the National Labor Relations Commission May 31, 2011 Decision
was a prohibited second motion for reconsideration.

This Court grants the petition.

Rule VII, Section 15 of the National Labor Relations Commission Rules of Procedure provides:

Section 15. Motions for Reconsideration. - Motion for reconsideration of any decision, resolution or order of
the Commission shall not be entertained except when based on palpable or patent errors; provided that the
motion is under oath and filed within ten (10) calendar days from receipt of decision, resolution or order, with
proof of service that a copy of the same has been furnished, within the reglementary period, the adverse
party; and provided further, that only one such motion from the same party shall be entertained.

The National Labor Relations Commission Rules of Procedure prohibits a party from questioning a decision,
resolution, or order, twice. In other words, this rule prohibits the same party from assailing the same
judgment. However, a decision substantially reversing a determination in a prior decision is a discrete decision
from the earlier one. Thus, in Poliand Industrial Ltd. v. National Development Co., this Court held:
38

Ordinarily, no second motion for reconsideration of a judgment or final resolution by the same party shall be
entertained. Essentially, however, the instant motion is not a second motion for reconsideration since the
1âwphi1

viable relief it seeks calls for the review, not of the Decision dated August 22, 2005, but the November 23,
2005 Resolution which delved for the first time on the issue of the reckoning date of the computation of
interest ... (Citation omitted)
This Court ruled similarly in Solidbank Corp. v. Court of Appeals, where the Labor Arbiter dismissed a labor
39

complaint but awarded the employee separation pay, compensatory benefit, Christmas bonus, and moral and
exemplary damages. This was appealed to the National Labor Relations Commission by both parties. The
National Labor Relations Commission rendered a Decision affirming the Labor Arbiter Decision but modifying
it by deleting the award of moral and exemplary damages. On appeal, the Court of Appeals ruled that the
employee had been illegally dismissed and, considering the cessation of the employer’s operations, awarded
the employee separation pay, backwages, compensatory benefit, Christmas bonus, unpaid salary, moral and
exemplary damages, and attorneys fees. Then, the employer bank filed a Motion for Reconsideration and a
Supplemental Motion for Reconsideration, while the employee filed a Motion for Clarification and/or Partial
Motion for Reconsideration. The Court of Appeals then issued an Amended Decision, modifying the amount
awarded as separation pay, backwages, and unpaid salary. Afterwards, the employee filed another Motion for
Reconsideration/Clarification, and the Court of Appeals again corrected the amounts awarded as separation
pay, backwages, and unpaid salary. In its petition assailing the Court of Appeals Resolution, the employer
bank claimed that the Court of Appeals erred in granting the employee's second motion for reconsideration, a
prohibited pleading. This Court held:

The Amended Decision is an entirely new decision which supersedes the original decision, for which a new
motion for reconsideration may he filed again.

Anent the issue of Lazaro’s "second" motion for reconsideration, we disagree with the bank''3 contention that
it is disallowed by the Rules of Court. Upon thorough examination of the procedural history of this case, the
1âwphi1

"second" motion does not partake the nature of a prohibited pleading because the Amended Decision is an
entirely new decision which supersedes the original, for which a new motion for reconsideration may be filed
again.40

In Barba v. Licea De Cagayan University, where the Court of Appeals denied a motion for reconsideration
41

from an amended decision on the ground that it was a prohibited second motion for reconsideration, this
Court held that the prohibition againgt a second motion for reconsideration contemplates the same party
assailing the same judgment:

Prefatorily, we first discuss the procedural matter raised by respondent that the present petition is filed out of
time. Respondent clai.ms that petitioner's motion for reconsideration from the Amended Decision is a second
motion for reconsideration which is a prohibited pleading. Respondent's assertion, h0wever, is misplaced for
it should be noted that the CA's Amended Decision totally reversed and set aside its previous ruling. Section
2, Rule 52 of the 1997 Rules of Civil Procedure, as amended, provides that no second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained. This contemplates a
situation where a second motion for reconsideration is filed by the same party assailing the same judgment or
final resolution. Here, the motion for reconsideration of petitioner was filed after the appellate court
rendered an Amended Decision totally reversing and setting aside its previous ruling. Hence, petitioner is not
precluded from filing another motion for reconsideration from the Amended Decision which held that the
labor tribunals lacked jurisdiction over petitioner's complaint for constructive dismissal. The period to file an
appeal should be reckoned not from the denial of her motion for reconsideration of the original decision, but
from the date of petitioner's receipt of the notice of denial of her motion for reconsideration from the
Amended Decision. And as petitioner received notice of the denial of her motion for reconsideration from the
Amended Decision on September 23, 2010 and filed her petition on November 8, 2010, or within the
extension period granted by the Court to file the petition,her petition was filed on time.42

Here, the National Labor Relations Commission May 31, 2011 Decision substantially modified its September
30, 2010 Decision. Thus, petitioner was not precluded from seeking reconsideration of the new decision of
the National Labor Relations Commission, and it was clearly an error for the Court of Appeals to find that
petitioner's petition for certiorari was filed out of time on that ground.

As for the purported failure to attach the records necessary to resolve the petition, in Wack Wack
Golf & Country Club v. National Labor Relations Commission, this Court held:
43

In Novelty Philippines, Inc. v. Court of Appeals, the Court recognized the authority of the general manager to
sue on behalf of the corporation and to sign the requisite verification and certification of non-forum
shopping. The general manager is also one person who is in the best position to know ti1e state of affairs of
the corporation. It was also error for the CA not to admit the requisite proof of authority when in
the Novelty case, the Court ruled that the subsequent submission of the requisite documents constituted
substantial compliance with procedural rules. There is ample jurisprudence holding that the subsequent and
substantial compliance of an appellant may call for the relaxation of the rules of procedure in the interest of
justice. While it is true that rules of procedure are intended to promote rather than frustrate the ends of
justice, and while the swift unclogging of court dockets is a laudable objective, it nevertheless must not be
met at the expense of substantial justice. It was, therefore, reversible error for the CA to have dismissed the
petition for certiorari before it. The ordinary recourse for us to take is to remand the case to the CA for proper
disposition on the merits; however, considering that the records are now before us, we deem it necessary to
resolve the instant case in order to ensure harmony in the rulings and expediency. 44

Thus, this Court finds that the Court of Appeals committed reversible error in dismissing the petition outright,
considering the circumstances of this case. 1âwphi1

Petitioner raises in issue whether or not the PAL Pilots Retirement Benefit Plan is part of the retirement
benefits that should be computed in comparing the retirement benefits accorded to him under the Labor
Code as against what he is entitled to under PAL policy. However, the matter of retirement benefits is not
addressed in respondent's memorandum. It would better serve the interest of substantial justice to remand
this case to the Court of Appeals to allow the parties to folly discuss this issue.

WHEREFORE, the assailed January 10, 2012 and April 18, 2012 Resolutions of the Court of Appeals
are REVERSED and SET ASIDE. The Court of Appeals is directed to REINSTATE the petition for certiorari,
docketed as CA-G.R. SP. No. 122034, for further proceedings.

No costs.

SO ORDERED.
8. G.R. No. 223730

DOHLE PHILMAN MANNING AGENCY, INC., DOHLE (IOM) LIMITED and/or CAPT. MANOLO T.
GACUTAN,Petitioners
vs.
JULIUS REY QUINAL DOBLE, Respondent

x-----------------------x

G.R. No, 223782

JULIUS REY QUINAL DOBLE, Petitioner,

vs.
DOHLE PHILMAN MANNING AGENCY, INC., DOHLE (IOM) LIMITED and/or CAPT. MANOLO T.
GACUTAN,Respondents.
DECISION

REYES, JR., J.:

It has been oft-repeated that overseas Filipino workers are the Philippines' modern-day heroes. They brave
the waters of the seas to provide for their families and to help boost the country's economy. However, while
this is so, they are not immune from the provisions of the POEA-SEC; in fact, the same contract was designed
precisely for their protection. Thus, when any seafarer fails to adhere to the requirements of the contract as
properly interpreted by the Court, the Court will not shirk from the responsibility of exacting enforcement of
the same, even if it would mean finding for the employer and against the seafarer.

The Case

Consolidated in this case are the Petitions for Review on Certiorari under Rule 45 of the Rules of Court filed
(1) by DOI-ILE PhiIman Manning Agency, Inc., DOI-ILE (IOM), Ltd. and Capt. Manolo T. Gacutan (hereinafter
collectively referred to as the "petitioners") against Julius Rey Quinal Doble (hereinafter referred to as the
"respondent") in G.R. No. 223730, and (2) by herein respondent against the petitioners in G.R. No. 223782.

The petitions challenge before the Court the Decision of the Court of Appeals (CA) in CA G.R. SP No. 141199,
1

promulgated on October 8, 2015, which affirmed with modification the National Labor Relations Commission
(NLRC) Resolution dated March 18, 2015 in NLRC NCR Case No. (M) 02- 02128-14/NLRC LAC No. 02-000109-
2

15.

Likewise challenged is the subsequent Resolution of the CA, promulgated on March 9, 2016, which upheld
3

the earlier decision.

The Antecedent Facts

The respondent is a Filipino seafarer, who signed a Contract of Employment for the position of Ordinary
Seaman with petitioner DOHLE Penned by Associate Justice (IOM) Ltd., through its manning agent in the
Philippines, DOHLE Philman Manning Agency, Inc. The duration of the contract was for nine months, with a
basic monthly salary of US$350.00. The contract specified a 44-hour work week with overtime and vacation
leave with pay.

On August 22, 2012, the respondent departed the Philippines on board the vessel "MVTS JAKARTA."

According to the respondent, on December of the same year, and while the vessel was approaching the port
of Hong Kong, he accidentally stepped on the mooring line while preparing to heave the same. As a result,
he "twisted his right foot and he immediately fell on the floor." He reported to the ship doctor, and was
declared fit to return to work.

A few months after, and, this time, while the vessel was docked at the port of Karachi, Pakistan, the
respondent alleged another incident. He stated that while he was pulling on the tug line, it suddenly moved
causing his hands to get pulled, hitting the bitts boliard. Thereafter, he was referred for a medical consult
upon arriving again at the port of Hong Kong.

On April 11, 2013, he was repatriated back to the Philippines for medical reasons.
A day after his arrival, medical tests were conducted upon the respondent, who was then eventually
diagnosed with "Right ankle sprain; Carpal Tunnel Syndrome, Bilateral; and Osteochondral Defect Femoral
Trochlea, Right Knee." He likewise underwent surgery for the injury, and physical therapy thereafter.

After a series of consultation, therapy, and treatment, the company-designated physician issued an interim
disability grade in relation to the respondent's "Carpal Tunnel Syndrome" of both hands, which is "2x(30% of
Grade 10) due to ankylosed wrist in normal position."

On November 8, 2013, the company-designated physician eventually issued a medical report stating that,
according to the respondent's surgeons, he is fit to work in relation to both his "Carpal Tunnel Syndrome" and
his ankle sprain.

Unsatisfied by this diagnosis, the respondent consulted his own medical expert and sought another opinion
on his condition. Upon due examination and evaluation, Dr. Manuel Fidel Magtira issued a medical report,
1âwphi1

stating that the respondent "has lost his [pre-injury] capacity and is no longer capable of working on his
previous occupation because of the injuries sustained and the permanent sequelae of said injury," and thus,
he "is now permanently disabled and is therefore now permanently UNFIT in any capacity to resume his usual
sea duties."

Considering that the petitioners have already terminated the respondent's treatment, and in light of the
findings of his personal physician, the respondent insisted on his disability benefits, including expenses for
medical treatment and transportation. The respondents refused.

Thus, the filing of the case before the Labur Arbiter (LA).

After due consideration, the LA rendered a Decision dated November 27, 2014 in favor of the respondent,
finding him to be permanently and totally disabled and thus entitled to disability compensation. The
dispositive portion of the LA decision reads:

WHEREFORE, premises considered, respondents DOHLE PHILMAN MANNING AGENCY INC., DOI-ILE (IOM)
LIMITED, and CAPT. MANOLO T. GACUTAN are hereby ordered to pay. jointly and severally, complainant
JULIUS REY (JUINAL DOBLE the su111 of US$90,882.00, by way of permanent total disability compensation
benefit under the parties' CBA, plus 10% thereof as attorneys fees, or its peso equivalent at the time of
payment.

All other claims are dismissed for lack of merit.

SO ORDERED. 13

Aggrieved, herein petitioners appealed to the NLRC, which eventually affirmed in toto the LA decision. The
fallo of the NLRC decision states:

WHEREFORE, foregoing premises considered, the decision appealed from is hereby AFFIRMED in toto (sic).

SO ORDERED. 14
The petitioners elevated the case to the CA via a Petition for Certiorari under Rule 65 of the Rules of Court.
Once again, the case moved in favor of the respondent. The CA affirmed the NLRC decision, but modified the
basis of the award of damages from the Collective Bargaining Agreement to the POEA-SEC, to wit:

WHEREFORE, in view of the foregoing, the instant Petition is hereby DENIED. Consequently, the assailed
Resolutions dated March 18, 2015 and May 25, 2015 rendered by public respondent NLRC (Third Division) in
NLRC NCR Case No. (M) 02-02128-14/NLRC LAC No. 02- 000109-15 are hereby AFFIRMED with MODIFICATION
by ordering petitioners to jointly and severally pay private respondent the following: a) permanent total
disability benefits of US$60,000.00 at its peso equivalent at the time of actual payment; and b) attorney's fees
of ten percent (10%) of the total monetary award at its peso equivalent at the time of actual payment.

SO ORDERED. 15

Both parties filed their respective motions for reconsideration, which were both denied by the CA via a
Resolution dated March 9, 2016.

Hence, this petition.

The Issues

The petitioners allege that the CA committed serious, reversible, and gross error in law and in fact based on
the following grounds:

1. IN ADJUDGING THE PETITIONERS LIABLE FOR PAYMENT OF DISABILITY BENEFITS-(A) WHEN THE
EVIDENCE PRIMARILY RECOGNIZED UNDER THE POEA SEC AS THE BASIS OF THE SEAFARER'S CLAIM
FOR COMPENSATION EXPRESSLY DECLARES THAT RESPONDENT IS ALREADY CLEARED FROM HIS
CONDITION, HENCE, NOT SUFFERING FROM DISABILITY; AND (B) NOTWITHSTANDING THE FACT THAT
SUCH PRIMARY EVIDENCE HAS NOT BEEN EFFECTIVELY CONTROVERTED IN ACCORDANCE WITH THE
MANNER PRESCRIBED UNDER THE RULES.

2. IN HOLDING THE RESPONDENT ENTITLED TO PERMANENT TOT AL DISABILITY BENEFITS ON THE

BASIS OF HIS ALLEGED INABILITY TO RESUME EMPLOYMENT FOR A PERIOD OF 120 DAYS, WHICH
BASED ON EXISTING RULES AND THE POEA SEC, IS NO LONGER RECOGNIZED AS A VALID MEASURE OF
A SEAFARER'S DEGREE OF DISABILITY.

3. THE COURT OF APPEALS COMMITTED A SERIOUS AND REVERSIBLE ERROR OF LAW AND OF FACT IN
AWARDING ATTORNEY'S FEES TO THE RESPONDENT ABSENT ANY FACTUAL OR LEGAL SUB ST ANTIA
TION THEREFOR. 17

For his part, the respondent anchors his plea for the reversal of the assailed CA decision on the following
ground:

8.1 WHETHER THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHEN IT
MODIFIED THE DECISION AND RESOLUTION OF [HEREIN PETITIONERS] DECLARING [HEREIN RESPONDENT]
NOT ENTITLED [TO] THE BETTER DISABILITY BENEFIT UNDER THE APPLICABLE COLLECTIVE BARGAINING
AGREEMENT. 18

After a reading of the foregoing arguments, the issues presented before the Court could be summarized thus:
(1) whether or not the respondent is fit to work, and thus, entitled to the disability benefits claimed; (2)
whether or not the basis of the award of damages should be the CBA and not the POEA-SEC; and (3) whether
or not the respondent is entitled to attorney's fees.

Ruling of the Court

The petitioners' contentions are impressed with merit.

As a general rule, only questions of law raised via a petition for review on certiorari under Rule 45 of the Rules
of Court are reviewable by the Court. Factual findings of administrative or quasi-judicial bodies, including
labor tribunals, are accorded much respect by the Court as they are specialized to rule on matters falling
within their jurisdiction especially when these are supported by substantial evidence. According to Andrada
19

v. Age mar Manning Agency, Inc et al., this doctrine applies with greater force in labor case as questions of
20

fact in labor cases are for the labor tribunals to resolve. Even more so, findings of fact of quasi-judicial bodies
like the NLRC, as affirmed by the CA, are generally conclusive on the Court. 21

In exceptional cases, however, the Court may be urged to probe and resolve factual issues. This relaxation of
the rule is made permissible by the Court whenever any of the following circumstances is present:

1.) when the findings are grounded entirely on speculations, surmises or conjectures;

2.) when the inference made is manifestly mistaken, absurd or impossible;

3.) when there is grave abuse of discretion;

4.) when the judgment is based on a misapprehension of facts;

5.) when the findings of fact are conflicting;

6.) when in making its findings, the Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellant and the appellee;

7.) when the findings are contrary to that of the trial court;

8.) when the findings are conclusions without citation of specific evidence on which they are based;

9.) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs, arc not
disputed by the respondent:

10.) when the findings of fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; or

11.) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion.22

While the first issue identified above-the issue of the relation of respondent's illness to his work as an
ordinary seaman-is essentially factual, the Court herein exercises its power of review considering that the CA
issued the assailed decision with grave abuse of discretion: (1) by failing to consider the mandatory procedure
of referring conflicting medical assessments to a third doctor; and (2) by relying on the 120-day rule, and not
on the findings of the company-designated physician, in declaring the respondent's permanent and total
disability.

To be sure, the appellate court disregarded settled jurisprudence on the matter.

To elaborate, according to Andrada, the issue of whether the petitioner can legally demand and claim
disability benefits from the respondents for an illness suffered is best addressed by the provisions of the
POEA-SEC which incorporated the 2000 Amended Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean-Going Vessels. Section 20 thereof provides:

Section 20 [B]. Compensation and Benefits for Injury or Illness

xxxx

2. x x x

However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he
shall be so provided at cost to the employer until such time as he is declared fit or the degree of his disability
has been established by the company-designated physician.

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

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

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly
between the Employer and the seafarer. The third doctor's decision shall be final and binding on both
parties. (Emphasis Ours)
23

Thus, while it is the company-designated physician who is entrusted with the task of assessing the seaman's
disability, whether total or partial, due to either injury or illness, during the term of the latter's
employment, the same is not automatically final, binding or conclusive.
24 25

According to Andrada, should the seafarer disagree with the assessment, he/she may dispute the same by
seasonably exercising his/her prerogative to seek a second opinion and consult a doctor of his/her choice. In 26

case of disagreement between the findings of the company-designated physician and the seafarer's doctor of
choice, the employer and the seafarer may agree jointly to refer the latter to a third doctor whose decision
shall be final and binding on them. This is explicitly stated in Section 20 of the POEA-SEC.

In the seminal case of Philippine Hammonia Ship Agency, et al. Inc. v. Dumadag, the Court had the
27

opportunity to further elaborate on this method of dispute resolution between two competing opinions of
medical experts.
In asking how the foregoing should be resolved, the Court looked into the POEA-SEC and the Collecting
Bargaining Agreement (CBA) of the parties as the binding documents which govern the employment
relationship between them. The Court said that, while there is nothing inherently wrong in seeking a second
opinion on the medical assessment of the seafarer, the latter should not pre-empt the mandated procedure
provided for in Section 20 of the POEA-SEC "by filing a complaint for permanent disability compensation on
the strength of his chosen physicians' opinions, without referring the conflicting opinions to a third doctor for
final determination."28

In Formerly INC Shipmanagement, Inc. v. Rosales, the Court further clarified the ruling in Philippine
29

Hammonia Ship Agency, Inc. by categorically saying that the referral to a third doctor is mandatory, and
30

should the seafarer fail to abide by this method, he/she would be in breach of the POEA-SEC, and the
assessment of the company designated physician shall be final and binding. Thus, the Court said:

This referral to a third doctor has been held by this Court to be a mandatory procedure as a consequence of
the provision that it is the company-designated doctor whose assessment should prevail. In other words, the
company can insist on its disability rating even against a contrary opinion by another doctor, unless the
seafarer expresses his disagreement by asking for the referral to a third doctor who shall make his or her
determination and whose decision is final and binding on the parties. We have followed this rule in a string of
cases x x x. (Emphasis Ours)
31

This is reiterated by the Court in the recent case of Silagan v. Southfield Agencies, Inc., to wit:
32

Second, petitioner failed to comply with the procedure laid down under Section 20 (B) (3) of the 2000 POEA-
SEC with regard to the joint appointment by the parties of a third doctor whose decision shall be final and
binding on them in case the seafarer's personal doctor disagrees with the company-designated physician's fit-
to-work assessment. This referral to a third doctor has been held by this Court to be a mandatory procedure
as a consequence of the provision that it is the company-designated doctor whose assessment should prevail.
In other words, the company can insist on its disability rating even against the contrary opinion by another
doctor, unless the seafarer expresses his disagreement by asking for a referral to a third doctor who shall
make his or her determination and whose decision is final and binding on the parties. (Citations omitted and
emphasis Ours)

Thus, it is on the basis of the foregoing cases that the Court hereby reverses the ruling of the CA.

In the case at hand, there is no question that the company-designated physician and the respondent's
personal physician had two very different assessment of the respondent's illness. On the one hand, the
respondent was declared ''fit to work" by the petitioners' doctor. Thus, the medical report dated November 8,
2013 said that:

Patient was previously declared fit to work by the Hand Surgeon with regards to his bilateral Carpal Tunnel
Syndrome.

Patient was seen by the Orthopedic Surgeon who opines patient is now declared fit to work as of November
8, 2013.33

On the other hand, upon examination and evaluation of the respondent's own medical expert, Dr. Magtira
opined that:
On physical examination, the patient is conscious, coherent and oriented to time, place and person. There is
atrophy of the thenar and hypothenar muscles of both hands with post-operative scar noted. There is
limitation of motion of the digits of the hands. There is pain and tenderness of both hands noted. Numbness
of both hands was noted. Swelling of his right ankle joint was also noted. There are no neurologic deficits, and
range of motion is full. Manual muscle testing showed 4-5/5 muscle strength. He is unable to squat and can
stand on tiptoe for a very limited period only.

xxxx

Mr. Doble has lost his pre injury (sic) capacity and is no longer capable of working on his previous occupation
because of the injuries sustained and the permanent sequelae of said injury. It will be to his best interest to
refrain from heavy labor as this is likely to cause him more harm than good. Mr. Doble is now permanently
disabled and is therefore now permanently UNFIT in any capacity to resume his usual sea duties. 34

However, contrary to the mandatory proceedings identified by the Court, the respondent herein did not
demand for his re-examination by a third doctor, and instead opted to initiate the instant case.

This, as the Court already ruled, is a fatal defect that militates against his claims. To reiterate, the referral to a
third doctor is now a mandatory procedure, and that the failure to abide thereby is a breach of the POEASEC,
and has the effect of consolidating the finding of the company designated physician as final and binding.

Meanwhile, the CA, instead of reversing and setting aside the NLRC Decision in light of the foregoing
pronouncements by the Court, upheld the same. This is grave abuse of discretion amounting to lack of
jurisdiction. Thus, said the Court in Philippine Hammonia Ship Agency, Inc.: 35

We find the rulings of the labor authorities seriously flawed as they were rendered in total disregard of the
law between the parties - the POEA-SEC and the CBA - on the prescribed procedure for the determination of
disability compensation claims, particularly with respect to the resolution of conflicting disability assessments
of the companydesignated physician and Dumadag's physicians, without saying why it was disregarded or
ignored; it was as if the POEA-SEC and the CBA did not exist. This is grave abuse of discretion, considering
that, as labor dispute adjudicators, the LA and the NLRC are expected to uphold the law. For affirming the
labor tribunals, the CA committed the same jurisdictional error. 36

Finally, the CA also anchored its decision on the assertion that the respondent was "incapable of discharging
his usual functions and he was not able to return to the job that he was trained to do for more than 120 days
already," and as such, he was already considered totally and permanently disabled.
37

Again, the Court disagrees and finds for the petitioners.

In the recent case of Jebsens Maritime, Inc. v. Rapiz, the Court had occasion to discuss that the company-
38

designated physician is given an additional 120 days, or a total of 240 days from repatriation, to give the
seafarer further treatment and, thereafter, make a declaration as to the nature of the latter's
disability. Jebsens even cited the case of Ace Navigation Company v. Garcia, where the Court ruled that:
39

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 [(SEC)] and by applicable Philippine laws. If the 120
days (sic) 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.

xxxx

As we outlined above, a temporary total disability only becomes permanent when so declared by the
company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240-day
medical treatment period without a declaration of either fitness to work or the existence of a permanent
disability. In the present case, while the initial 120-day treatment or temporary total disability period was
exceeded, the company-designated doctor duly made a declaration well within the extended 240-day period
that the petitioner was fit to work. (Citations omitted and emphasis Ours)
40

In the present case, while the company-designated physician did indeed exceed 120 days in declaring the
respondent fit to work, the former made the final diagnosis prior to the expiration of the 240-day limit. Thus,
the CA found:

In the case at bench, records show that private respondent was given a fit to work clearance by the company-
designated physicians on November 8, 2013 based on the respective declarations of Dr. Lao and Dr. Chuasuan,
Jr. The pronouncement that private respondent is already fit to work was made 210 days after he was first
seen by company-designated physician on April 12, 2013. Meanwhile, private respondent consulted his
physician of choice on November 14, 2013 and was declared permanently disabled as his present condition
renders him incapable of discharging his previous occupation. (Emphasis Ours)
41

Two things must be said of this factual finding: first, the company-designated physician complied with the
requirements of the law when the respondent's medical status was assessed with finality prior to the
expiration of the 240-day rule; and second, the 240-day rule applies only to the assessment provided by the
company-designated physician, and not to the assessment of the seafarer's personal physician, such that,
even if the latter found the seafarer unfit to work after the 240-day period, the law would not automatically
transform the temporary total disability of the seafarer to a permanent total disability.

This is especially more pronounced in this case considering that the respondent was declared by the
company-designated physician as fit to work within 210 days from his initial medical attention, and, as earlier
discussed, the respondent failed to avail of the mandatory procedure of referring the case to a third doctor.

Hence, for the foregoing reasons, the Court hereby reverses the appellate court's decision and declares the
assessment of the company-designated physician as final and binding. Consequently, the respondent is
considered fit to work, and thus not entitled to disability benefits.

On the basis of the discourse above, the other issues raised by the parties herein need not be discussed
further.

WHEREFORE, premises considered, the Petition in G.R. No. 223730 is hereby GRANTED, while the Petition in
G.R. No. 223782 is hereby DISMISSED. The Decision dated October 8, 2015, and the Resolution dated March
9, 2016 of the Court of Appeals, in CA-G.R. SP No. 141199, are hereby REVERSED and SET ASIDE, and a new
judgment is rendered DISMISSING the Complaint in NLRC NCR Case No. (M) 02- 02128-14.
SO ORDERED.

9. G.R. No. 229746

ABBOTT LABO RA TORIES (PHILIPPINES), INC. and STEPHANE LANGEVIN, Petitioners

vs.
MANUEL F. TORRALBA, ROSELLE P. ALMAZAR, and REDEL ULYSSES M. NAVARRO, Respondents

DECISION

VELASCO,JR., J.:

Nature of the Case

For consideration is the Petition for Review on Certiorari under Rule 45 of the Rules of Court, filed by Abbott
Laboratories (Philippines), Inc. (Abbott), and Stephane Langevin (Langevin), seeking to nullify the April 26,
2016 Decision and the partial reversal of the January 25, 2017 Resolution of the Court of Appeals (CA) in CA-
1 2
G.R. SP No. 136213. The challenged rulings held that petitioners' redundancy program was invalid, and that
respondents were illegally dismissed from employment.

The Facts

Respondent Roselle P. Almazar (Almazar) was employed by Abbott as the National Sales Manager of its
PediaSure Division, while respondents Redel Ulysses M. Navarro (Navarro) and Manuel F. Torralba
(Torralba) were Regional Sales Managers of the same department. The further details of their
employment can be summarized as follows:

Employee Date of Hiring Mothly Salary

Roselle P. Almazar June 1, 1992 Php98,938.28
Manuel F. Torralba July 4, 1988 Php109,645.34
Redel Ulysses M. Navarro June 1, 1993 Php87 ,092.78

Sometime in November 2012, Abbott decided to integrate into one sales unit its PediaSure Division and its
Medical Nutrition Division, both under the Specialty Nutrition Group. The decision was made after a study,
entitled "Specialty Nutrition Group Sales Force Restructure Philippines," (Study) revealed that both
departments have similar business models and sales execution methods. As a result of the merger,
respondents' positions were declared redundant.

On February 18, 2013, Abbott informed both the Department of Labor and Employment (DOLE) and
respondents of the latter's termination effective March 22, 2013 due to redundancy. Thereafter, the company
offered respondents the District Sales Manager positions, with a lower job rate and with duties and
responsibilities different from that of a National or Regional Sales Manager.

Respondents rejected the offer and, on May 10, 2013, signed their respective Deeds of Waiver, Release, and
Quitclaim (Deeds) after receiving the following amounts:

a. Torralba - PhP4,111,700.25 as separation pay and PhP549,022.33 as his last pay;

b. Navarro - PhP2,612,783.40 as separation pay and PhP440,070.62 as his last pay; and

c. Almazar - PhP3,l 16,555.82 as separation pay.

On September 20, 2013, respondents filed a complaint for illegal dismissal on the ground that Abbott
allegedly did not observe the criteria of preference of status, efficiency, and seniority in determining who
among its redundant employees are to be retained. They also filed a claim for underpayment of separation
pay and discrimination because other former employees who were terminated due to redundancy allegedly
received 250% of their monthly salaries per year of service as separation pay, while they only received 150o/o
thereof. Likewise included in the complaint was a claim for moral and exemplary damages and attorney's fees.

Abbott maintained that respondents were terminated for authorized cause; that respondents' functions as
sales managers were redundant because they were already being performed by the Medical Nutrition
Division; that respondents' separation pays were equivalent to one-and-a-half month pay for every year of
service plus three (3) months gratuity, which is more than what the Labor Code requires; that in addition to
their separation pays, respondents were able to acquire their service vehicles at a big discount; and that
respondents voluntarily signed the Deeds.

Ruling of the Labor Arbiter

On February 4, 2014, Labor Arbiter Madjayran H. Ajan rendered a Decision holding that respondents were
illegally dismissed, and granted the complaint thusly:

WHEREFORE, premises considered, complainants were illegally terminated and respondent Abbott
Laboratories is hereby directed as follows:

1. To reinstate complainants to their former positions without loss of seniority rights and benefits within ten
(10) days from receipt hereof and to full backwages from the time they were dismissed until finality of this
decision, which as of this date, [are] computed as follows:

Backwages:

a. Roselle P. Almazar- ₱990,000.00

b. Manuel F. Torralba- ₱l,096,453.40

c. Redel Ulysses M. Navarro -₱870,927.80

2. To pay moral damages of ₱500,000.00 and exemplary damages of ₱200,000.00 or a total of ₱800,000.00
(sic) to each complainants (sic);

3. To pay attorney's fees in the amount equivalent to 10% of the total judgment award.

Other claims are dismissed for lack of merits (sic).

SO ORDERED. 6

According to the Labor Arbiter, Abbott failed to overcome the burden of proving that the adoption and
implementation of the redundancy program was not in violation of law, and that it was not attended by
malice or arbitrariness. The Labor Arbiter found wanting the evidence presented to establish that Abbott
followed the required preference criteria of status, efficiency, and proficiency in determining who among the
employees are going to be retained. There being no job evaluation conducted to gauge how the allegedly
redundant employees would fare against the criteria, the Labor Arbiter deemed that respondents were
arbitrarily and illegally dismissed. Moreover, the Labor Arbiter ruled that the execution of the Deeds did not
bar respondents from contesting the validity of their termination.

Aggrieved, Abbott appealed the Labor Arbiter's Decision to the National Labor Relations Commission (NLRC).
Simultaneously therewith, and in compliance with the Labor Arbiter's order of reinstatement, petitioners
furnished respondents with Return to Work Notices7 directing them to personally appear for work. In the
same month, respondents discussed with petitioners the terms of the employment that the former would be
returning to. However, respondents rejected the offer of reinstatement on the ground that the proposed
positions were not equivalent to the ones they were previously occupying. It also appears that the offer was
preconditioned on the respondents' returning the amounts they previously received when they executed the
Deeds.
Ruling of the NLRC

On May 20, 2014, the NLRC promulgated its Decision reversing the Labor Arbiter's findings in the following
wise:

WHEREFORE, upon the premises, the appealed Decision dated 4 February 2014 of Labor Arbiter Madjayran H.
Ajan is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered DISMISSING the Complaint for
lack of merit.

SO ORDERED. 9

The NLRC was in agreement with the Labor Arbiter that Abbott failed to prove that respondents' positions
were superfluous or unnecessary. However, the NLRC nevertheless ruled that the Deeds precluded them from
claiming that they were illegally dismissed. It then affirmed its Decision through its June 23, 2014
Resolution denying petitioners' motion for reconsideration therefrom. Thus, respondents elevated the case
10

to the CA on certiorari.

Ruling of the CA

On April 26, 2016, the appellate court rendered the assailed Decision reinstating, with modification, the ruling
of the Labor Arbiter, viz:

WHEREFORE, premises considered, the instant Petition for Certiorari is hereby GRANTED. Accordingly, the
assailed Decision dated 20 May 2014 and RESOLUTION dated 23 June 2014 of the National Labor Relations
Commission are hereby ANNULLED and SET ASIDE and the Decision of the Labor Arbiter dated 04 February
2014 is REINSTATED, with the MODIFICATION that backwages are to be computed from the time the
petitioners were illegally dismissed up to their actual reinstatement.

In consonance with the prevailing jurisprudence, the monetary judgment due to the petitioners shall earn
legal interest at the rate of six percent (6%) per annum from finality of the Decision until fully satisfied.

SO ORDERED. 11

In justifying its ruling, the CA noted first that the Labor Arbiter and the NLRC are in concurrence that there
was no valid redundancy program because Abbott failed to prove one of its requisites - that it used a fair and
reasonable criteria in the selection of the employees who will be dismissed. Thus, as the ground for
termination of employment was illegal, the Deeds signed by respondents could not also be valid, vitiated as
they were by either mistake or fraud. With the annulment of the Deeds, respondents are then entitled to
reinstatement, so the CA held.

Petitioners timely moved for reconsideration, assailing the consistent findings that the records are bereft of
any evidence to prove that Abbott adopted a fair and reasonable criteria in the implementation of the
redundancy program. They argued, on the main, that the criteria to be used in determining who among the
employees are to be retained is part of management prerogative, and that they are not constrained to resolve
the issue on retention based solely on its employees' status, efficiency, and proficiency.

A second set of Return to Work Notices, dated June 9, 2016, was also furnished by petitioners to
12

respondents, appointing them to positions equivalent to their old ones and allowing them to maintain their
ranks in the company and receive the same salaries and benefits that they were previously receiving. In the
letter addressed to Torralba, petitioner stated that his "district assignment shall be determined on the basis of
a territory deliberation to be conducted by management on July 1, 2016, following the product refresher
modules and evaluation that [Torralba] will undergo until June 30, 2016." 13

The improved offers, however, were also flatly refused by Torralba and Navarro on July 12, 2016, and by
Almazar on July 18, 2016. Respondents deemed the offer of reinstatement to be violative of the ruling of the
14

Labor Arbiter, as upheld by the CA. They averred that the District Sales Manager positions are not equivalent
15

to their former ones and, hence, could not be considered as a valid offer of reinstatement. Payroll
reinstatement should have then been carried out.

Petitioner, for its part, advised respondents that they can no longer be reinstated to their original posts since
those were already abolished effective March 22, 2013. The company admitted that the Regional Sales
Manager positions no longer exist, which is why it offered respondents the posts of District Sales Manager in
lieu thereof. Petitioner added that respondents would have realized that they are equivalents had they
pen1sed the onboarding plan that it prepared upon their return to work. And anent respondents' claim of
payroll reinstatement, petitioner claimed that, although the award of reinstatement is self-executory, the
option to exercise actual reinstatement or payroll reinstatement belongs to the employer. 16

On account of petitioners' earnest efforts to reinstate respondents to their former positions, albeit futile, they
filed a Manifestation with Motion on July 27, 2016 praying that respondents' entitlement to backwages be
17

tolled up until the date of respondents' refusal.

Subsequently, on January 25, 2017, the CA resolved the pending incidents thusly:

WHEREFORE, premises considered, private respondents' Motion for Reconsideration is hereby DENIED.

As to the Manifestation with Motion filed by private respondents, the same is GRANTED. Accordingly, the
award of back.wages of Torralba and Navarro is computed from 22 March 2013 to 12 July 2016, while the
backwages of Almazar is computed from 22 March 2013 to 18 July 2016.

SO ORDERED. 18

Hence, the instant recourse.

The Issues

In arguing for the reversal of the challenged rulings, petitioners assign to the CA the following errors:

I. THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDING OF THE LABOR ARBITER AND THE NLRC THAT
THE REDUNDANCY IMPLEMENTED BY PETITIONERS WAS INVALID.

II. THE COURT OF APPEALS ERRED IN REVERSING THE NLRC'S FINDING THAT PRIVATE RESPONDENTS VALIDLY
EXECUTED QUITCLAIMS AFTER THEY WERE REDUNDATED.

III. THE COURT OF APPEALS ERRED IN AFFIRMING THE LABOR ARBITER'S AW ARD OF FULL BACKWAGES TO
PRIVATE RESPONDENTS.

IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE LABOR ARBITER'S AWARD OF DAMAGES TO PRIVATE
RESPONDENTS. 19
Petitioners argue that the conclusion of the courts a quo - that the company allegedly did not utilize a
substantive criteria in deciding who among its employees would be retained following its restructuring - is not
supported by evidence on record. On the contrary, petitioners point to the Study, which recommended the
streamlining of its processes to improve the delivery of its services and to save Php4,000,000.00 per annum.
The company also insisted that determining who to redundate and who to retain are within the sphere of
management prerogative that the Court cannot encroach on. Lastly, petitioners also maintain that the Deeds
executed by respondents are valid, precluding the latter from filing a complaint for illegal dismissal.

Respondents filed their Comment to the petition, reiterating, on the main, the discussions of the Labor
Arbiter and the CA.

The Court's Ruling

We deny the petition.

No fair and reasonable criteria was utilized in determining who among the employees are to be redundated

The burden of proving that the dismissal of the employees was for a valid and authorized cause rests on the
employer. It is incumbent upon the petitioners to show by substantial evidence that the terminations of the
employment of the respondents were validly made. Failure to discharge this duty would mean that the
dismissal is illegal.
20

In the controversy before Us, Abbott attempts to persuade the Court that the respondents' dismissal is
justified under its redundancy program. Indeed, redundancy is a recognized authorized cause for validly
terminating employment. This much is clear under Art. 298 (formerly Art. 283) of the Labor Code, viz:

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
preventlosses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service; whichever is higher.

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the
actual requirement of the enterprise. For a valid implementation of a redundancy program, the employer
21

must comply with the following requisites: (1) written notice served on both the employee and the DOLE at
least one month prior to the intended date of termination; (2) payment of separation pay equivalent to at
least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in
abolishing the redundant position; and (4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant. The burden is on the employer to prove by substantial evidence the factual and legal
22

basis for the dismissal of its employees on the ground of redundancy. Substantial evidence, in turn, is
23

defined as that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.24

The Labor Arbiter, NLRC, and the CA are in unison in declaring that petitioner failed to establish compliance
with the fourth requirement since Abbott did not gauge the redundant employees against the preference
criteria of status, efficiency, and proficiency as required in Golden Thread Knitting Industries, Inc. v. NLRC
(Golden Thread). However, petitioners are correct in pointing out that the list of indices in Golden Thread is
25

not exhaustive. Quoting the pertinent portion of the case:

Furthermore, we have laid down the principle in selecting the employees to be dismissed, a fair and
reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g., temporary
employee), (b) efficiency, and (c) seniority. (emphasis added)
26

It was then erroneous for the courts a quo to have harped on the three indices as the basis for ruling that
petitioner failed to comply with the fourth requirement. An integral portion of management prerogative is the
adoption of the criteria against which the employees will be measured for purposes of implementing a
redundancy program. Abbott may then resort to using otherindicators in determining who will remain with
the company upon downsizing its payroll.

In this case, Abbott attempted to justify the terminations based on the 2013 Study recommending the
restructuring of the Sales Force of the Specialty Nutrition Group under which the PediaSure and Medical
Nutrition Divisions used to belong. Based on the study, the Medical Nutrition Group sells six (6) products and
accounts for 63% of the combined sales of the two divisions, whereas PediaSure only markets one (1) product
with its sales comprising 37% of the total. Thus, petitioner claims that "[the Medical Nutrition Group] clearly
generates a larger share in the market in the Philippines, both for number of brands and sales, as compared
to [the PediaSure Division]. Hence, if the two divisions under [the Specialty Nutrition Group] would be merged
into one, it is both logical and reasonable for the structure of [the Medical Nutrition Group} to be retained by
Abbott. "27

On this point, We disagree with petitioner.

The data presented in the Study, by itself, does not satisfy the evidentiary requirement to prove that
respondents' positions should be redundated. As found by the NLRC and the CA, the graphical presentations
in the Study "are mere allegations and conclusions not supported by other evidence" that do not explain in
detail why it considered respondents' positions superfluous or unnecessary. 28

And while there may be basis for integrating the PediaSure Division and Medical Nutrition Division into one
unit as demonstrated in the Study, there is no sufficient basis offered for retaining all the employees in one
unit while dismissing those from the other. It may be that there are similarities in the functions and
responsibilities attached to the positions in both divisions that resulted in superfluity, but determining who
will occupy the newlymerged position is a different matter altogether. This required, on the part of the
employer, an evaluation of not just the performance of the divisions, but of the individual employees who
may be affected by the redundancy program.

Evidence that this job appraisal was actually conducted is severely wanting in the records of this case. Rather,
1âwphi1

Abbott relied on general averments about logic and reason to justify its choice of division to retain. Absent
substantial evidence tending to prove that the employees that would have been affected by the merger of the
two departments were measured against specific criteria, the termination of the redundated employees
cannot be sustained. On the contrary, such terminations are products of caprice andwhimsy, and do not
constitute a valid exercise of management prerogative beyond the Court's power of review.

Bad faith in implementing the redundancy program and the consequence thereof
To dispel any lingering doubt, we have invariably held in a plethora of cases that the employer's subsequent
act of hiring additional employees is inconsistent with the termination on the ground of redundancy. In this
29

light, We find the observation of the Labor Arbiter quite telling:

What puzzled this office is that respondents claimed that they offered complainants to apply for job openings
for the opposition of district sales manager. Such offer only puts cloud to the wisdom and validity of the
redundancy program as the essence of redundancy is that the existing manpower exceeds more than what is
necessary in their operation, why did they open new jobs for sales manager. 30

In the notice furnished by Abbott to the DOLE, the company declared that the reason for the redundancy
program, affecting four (4) of its employees, is to reduce the company's manpower by eliminating positions
31

that were allegedly superfluous. However, this proffered justification is readily contradicted by the fact that
the affected employees were offered newly-created District Sales Manager positions that were entitled to
lower pay and benefits. To Our mind, the redundancy program is then a mere subterfuge to circumvent
respondents' right to security of tenure. Hence, just as uniformly found by the Labor Arbiter, NLRC, and the
CA, the redundancy program cannot be considered lawful.

Consequently, the Deeds signed by the respondents could not therefore be deemed valid, premised as they
were on an invalid termination. The case of Philippine Carpet Manufacturing Corporation v. Tagyamon
(Philippine Carpet) is illustrative on this point.
32

In the said case, the Court listed three specific instances wherein a waiver cannot estop a terminated
employee from questioning the validity of his or her dismissal, to wit: (1) the employer used fraud or deceit in
obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the
terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a
third person with a right recognized by law. Verily, before the Court can even consider the validity of the
33

waiver, the legality of the termination itself should be able to withstand judicial scrutiny. Should the Court
find that either of the carved exceptions is attendant, the dismissed employee cannot be deemed barred from
contesting the validity of the termination.

In the extant case, Abbott's bad faith in implementing the redundancy program places it squarely under the
first recognized exception. For perspective, Abbott had already decided to sever respondents' employment
with the company. Faced with no other option than to sign the Deeds, respondents acceded to the terms of
petitioners' proposal. The Deeds, however, could not automatically be taken at face value to preclude
respondents from asserting their right to security of tenure, and neither would their acceptance of the
benefits thereunder automatically operate as the full satisfaction of their claims. To elucidate:

As the ground for termination of employment was illegal, the quitclaims are deemed illegal as the employees'
consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by
employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. The
circumstances show that petitioner's misrepresentation led its employees, specifically respondents herein, to
believe that the company was suffering losses which necessitated the implementation of the voluntary
retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and
quitclaim. (emphasis added)
34

That the respondents are educated individuals who were occupying supervisory positions is immaterial. The
Court has allowed supervisory employees to seek payment of benefits and a manager to sue for illegal
dismissal even though, for a consideration, they executed deeds of quitclaims releasing their employers from
liability. Such circumstance does not make them any less susceptible to financial offers, faced as they were
35
with the prospect of unemployment. Economic necessity constrained them to accept petitioners' monetary
offer and sign the deeds of release, waiver and quitclaim. 36

Respondents' entitlement to monetary awards

The right of employees to security of tenure, as enshrined under Art. XIII, Sec. 3 of the Constitution, is further
guarded by Art. 294 (formerly Art. 279) of the Labor Code, which states:

Art. 294. Security of tenure. In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement.

As can be gleaned, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, computed from the time their actual compensation was withheld from them
up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality of the decision. 37

Nevertheless, jurisprudence extrapolated from this provision instructs that separation pay may be awarded to
an illegally dismissed employee in lieu of reinstatement. Over time, the following reasons have been
advanced by the Court for allowing this alternative remedy: that reinstatement can no longer be effected in
view of the long passage of time or because of the realities of the situation; or that it would be 'inimical to the
employer's 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. 38

Here, the CA tolled the respondents' entitlement to backwages up until the date respondents refused
Abbott's offer to return to work in July 2016. To the CA, respondents had effectively foregone their right to
1âwphi1

be restored to their former posts when they chose to retain the sums they received upon execution of the
Deeds, despite the order of reinstatement from the courts.

Regrettably, this Court cannot sustain the CA's finding.

Respondents' rejection of Abbott's offer of reinstatement cannot be treated as a waiver of the right to be so
reinstated nor as opting to receive separation pay in lieu thereof, simply because the positions offered to
them are different from those they previously occupied. It is, therefore, not the "actual reinstatement"
contemplated under the Labor Code. A perusal of the second set of Return to Work Orders addressed to the
respondents readily evinces that, although the respondents would be receiving the same compensations as
before, they would be performing functions different from their prior posts. This was even admitted by the
company when it attempted to justify placing them as District Sales Managers by saying that their erstwhile
positions have already been abolished.

Such feeble attempt must necessarily fail. Although the Return to Work Orders state that respondents would
be entitled to the same benefits they used to receive, there was no proof that the functions they will be
performing are the equivalents of what they used to perform. Petitioners' reply to the respondents' rejection
mentioned an onboarding plan that would have established the similarities between the two posts, but no
copy of the supposed plan was ever attached to the records of this case. There is then no basis for this Court
to rule that the District Sales Manager jobs offered to respondents are so substantially similar to the National
and Regional Sales Manager positions they previously occupied, that the rejection of the offer could have
tolled the accrual of backwages. Following the general rule, backwages shall be computed from the time of
their illegal termination up to actual reinstatement, which have not yet been effected in this case.

It does not escape the Court's attention, however, that the rulings of the tribunals a quo are silent as to the
treatment of the amount of separation pay respondents already received. Hence, We rule herein that such
amounts should be considered as partial satisfaction of the award for backwages, and should consequently be
credited therefrom. 39

Anent the award of moral and exemplary damages to each respondent in the amounts of PhP500,000.00 and
PhP200,000.00, respectively, the Court deems such sums to be excessive. A downward modification of the
award for moral and exemplary damages to PhPl00,000.00 and P50,000.00, respectively, for every respondent
is therefore proper. Meanwhile, the award of attorney's fees at ten percent (10%) of the total monetary award
and the imposition of the six percent (6%) legal interest computed from finality of judgment are hereby
sustained.

WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit. The April 26, 2016
Decision and the January 25, 2017 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 136213 are
hereby AFFIRMED with MODIFICATION as follows:

1. Petitioners are hereby ordered to reinstate respondents to their former positions without loss of seniority
rights and benefits within ten (10) days from receipt hereof and to full backwages from the time they were
dismissed until actual reinstatement;

2. To pay moral damages of ₱l00,000.00 and exemplary damages of ₱50,000.00 or a total of ₱150,000:oo to
each respondent;

3. To pay attorney's fees in the amount equivalent to ten percent (10%) of the total judgment award; and

4. To pay legal interest at the rate of six percent (6%) per annum of the total monetary award computed from
finality of this Decision until full satisfaction thereof.

The case is hereby REMANDED to the National Labor Relations Commission for proper computation of the
monetary awards, with the instruction that the amounts received by the respondents from petitioner as
separation pay are to be deducted before determining the award for attorney's fees and the legal interest
due.

SO ORDERED.
10. G.R. No. 214059

SECOND DIVISION

G.R. No. 214059, October 11, 2017

OSG SHIP MANAGEMENT MANILA, INC., OSG SHIP MANAGEMENT (UK) LTD., AND/OR JOSEPHINE M. AQUINO , Petitioners, v. ARIS
WENDEL R. MONJE, Respondent.

DECISION

REYES, JR., J.:

While the Court commiserates with the plight of the Filipino work force who continuously braves the rigors of overseas work, the Court
could not blindly rule in their favor absent any evidence that would warrant the imposition of liability on the employer. The favor
granted upon labor must not be abused, and the Court will not hesitate to deviate from the general rule if only to prevent these kinds of
excesses.

The Case
Challenged before this Court via this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision 1 of the Court
of Appeals (CA) in CA G.R. SP No. 131100 dated April 8, 2014, which reversed and set aside the Decision 2 and Resolution3 dated March
21, 2013 and May 20, 2013, respectively, of the National Labor Relations Commission (NLRC). Likewise challenged is the subsequent
Resolution4 of the CA promulgated on August 27, 2014, which upheld the earlier Decision.

The Antecedent Facts

As borne by the records, the following are the undisputed facts:

Aris Wendel R. Monje (respondent), is a Filipino seafarer, who signed a Contract of Employment with petitioner OSG Ship Management
(UK) Ltd. (OSG UK), through its manning agent in the Philippines, OSG Ship Management Manila, Inc. (OSG Manila). He was accepted as
an Ordinary-Seaman for eight (8) months, with a 40-hour work week, a basic monthly salary of USD437.00, and an allowance of
USD210.00, in addition to overtime pay and vacation leave with pay.

On February 11, 2011, the respondent boarded the vessel "Overseas Sifnos." Sometime in June of the same year, and while on board
the vessel, the respondent complained of severe pain on his left knee, which prompted him to seek medical consult in the United States
of America on June 23, 2011. He was repatriated back to the Philippines two (2) days later for further treatment. Upon his arrival, OSG
Manila referred the respondent for medical treatment. On June 28, 2011, Dr. Raymund Jay Sugay (Dr. Sugay) of the Physician's
Diagnostic Services Center, Inc. issued a medical evaluation certificate, indicating therein a working diagnosis of "left knee pain, etiology
unknown." This was followed by another medical evaluation certificate dated August 1, 2011, this time with a working diagnosis of
"Lytic expansile lesion, proximal tibia, left knee etiology unknown, tatus post surgical open biopsy" Per Dr. Sugay's September 9, 2011
medical report, the respondent underwent surgery on September 6, 2011. Eventually, on April 17, 2012, Dr. Sugay had the following
final diagnosis:
Giant cell tumor, proximal tibia, left knee; Status post surgical open biopsy (07/28/2011); Status post total knee replacement with tibial
reconstruction and resection of tumor, left tibia (09/06/2011). 1
Also included in this report was Dr. Sugay's opinion that the respondent's illness was not work-related. He said:
Giant cell tumors are benign growths in the bone characterized by the presence of multinucleated giant cells. As of the present time,
the exact cause of Giant cell tumors is still unknown.

In our opinion, we may consider Mr. Monje's condition as not work-related.

On January 5, 2012, the respondent filed the complaint before the Labor Arbiter seeking the payment of total and permanent disability
benefits, damages and attorney's fees. In support thereof, he submitted a Medical Certificate dated April 27, 2012 issued by an
independent physician, Dr. Misael Jonathan Ticman (Dr. Ticman), finding that the former's illness rendered him permanently disabled
and unfit to work as a seaman in any capacity.

The Decision of the Labor Arbiter

On August 27, 2012, the Labor Arbiter issued a Decision in favor of herein respondent, the dispositive portion of which stated that:
WHEREFORE, premises considered, judgment is hereby rendered finding respondents [herein petitioners] jointly and solidarity liable to
pay: (a) permanent total disability benefits the amount of US$125,000.00 under the CBA at its peso equivalent at the time of payment;
(b) attorney's fees often percent (10%) of the total monetary award at its peso equivalent at the time of payment.

SO ORDERED.13
The Decision of the NLRC

Herein petitioners appealed the decision of the Labor Arbiter to the NLRC, which found the case in their favor and subsequently
reversed the Labor Arbiter ruling. The dispositive portion of the NLRC decision states:
WHEREFORE, the Appeal is GRANTED and the Decision of the Labor Arbiter dated 27 August 2012 is SET ASIDE and a new one entered
into DISMISSING the instant case for lack of merit.

SO ORDERED.14
The Decision of the Court of Appeals

Aggrieved, the respondent appealed the case to the CA. Once more, the decision was reversed. The NLRC decision was set aside and
the Decision of the Labor Arbiter was reinstated. The fallo of the CA decision reads:
WHEREFORE, the foregoing considered, the present petition is hereby GRANTED and the assailed Decision dated 21 March 2013 and
Resolution dated 20 May 2013 REVERSED and SET ASIDE. The Labor Arbiter Decision dated 27 August 2012, insofar as it declared
petitioner's disability as permanent and total and the grant of petitioner's monetary award are concerned, is REINSTATED.

SO ORDERED.15
Thereafter, herein petitioners' motion for reconsideration was denied. 16 Hence, this petition for review on certiorari.
The Issues

Petitioners anchor their plea for the reversal of the assailed Decision on the following arguments:

1. THE COMPANY DOCTOR'S OPINION ON THE NON-WORK RELATION� OF� SEAFARER'S� ILLNESS� WAS� NOT REBUTTED
BY THE PERSONAL DOCTOR OF SEAFARER. IN FACT, THE PERSONAL DOCTOR OF SEAFARER EVEN MENTIONED THAT THE
ILLNESS WAS ACQUIRED AFTER THE LATTER� PLAYED BASKETBALL. IN THE MAGSAYSAY V. CEDOL CASE, THE SUPREME
COURT HELD THAT IF THE SEAFARER'S PERSONAL DOCTOR DID NOT CONTRADICT THE COMPANY'S DOCTOR (SIC) OPINION
THAT THE ILLNESS IS NOT WORK-RELATED THE LATTER'S OPINION IS CONCLUSIVE.

2. THE PRESUMPTION OF WORK-RELATION IN THE POEA CONTRACT IS NOT AN IRON-CLAD RULE. IN FACT, IN RECENT
JURISPRUDENCE, THE SUPREME COURT HELD THAT THE SEAFARER HAD THE BURDEN TO PROVE THE WORK-RELATION OF HIS
ILLNESS. IT NOW SEEMS THAT THE FACT THAT SEAFARER WAS CONTINUOUSLY REHIRED OR THE FACT THAT HIS WORK ON
BOARD IS STRESSFUL IS NOT SUFFICIENT TO SUPPORT A CONCLUSION THAT THE ILLNESS IS WORK-RELATED.

3. THE CBA INVOKED BY SEAFARER APPLIES TO ACCIDENTS ONLY AND NOT TO ILLNESSES LIKE THE CANCER THAT SEAFARER
SUFFERED.

4. THE AWARD OF 10% ATTORNEY'S FEES IS ERRONEOUS.17

After a reading of the foregoing, the issues presented before the Court could be summarized into the following: (1) whether or not the
illness suffered by the respondent is work-related; (2) whether or not the Collective Bargaining Agreement between the parties is
applicable in this case; and (3) whether or not attorney's fees are properly awarded.

The Court's Ruling

under Rule 45 of the Rules of Court are

As a general rule, only questions of law raised via a petition for review on certiorari
reviewable by the Court. Factual findings of administrative or quasi-judicial bodies, including labor
tribunals, are accorded much respect by the Court as they are specialized to rule on matters failing
within their jurisdiction especially when these are supported by substantial evidence.

However, a relaxation of this rule is made permissible by the Court whenever any of the following
circumstances is present:
1.) when the findings are grounded entirely on speculations, surmises or conjectures;
2.) when the inference made is manifestly mistaken, absurd or impossible;
3.) when there is grave abuse of discretion;
4.) when the judgment is based on a misapprehension of facts;
5.) when the findings of fact are conflicting;
6.) when in making its findings, the Court of Appeals went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee;
7.) when the findings are contrary to that of the trial court;
8.) when the findings are conclusions without citation of specific evidence on which they are
based;
9.) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs,
are not disputed by the respondent;
10.) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs,
 are not disputed by the respondent;
11.) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or
12.) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion. 19
The first issue raised by herein petitioners, whether or not the illness sustained by the respondent is work-related, is essentially a
factual issue, and therefore, not generally within the scope of review by the Court. However, considering that the NLRC and the CA have
conflicting findings of facts, and in light of circumstance no. 5 quoted above, the Court can and will be justified in delving into the
question of fact now presented.

Time and again, the Court has ruled that the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-
SEC) is the law between the parties and, as such, its provisions bind both of them. In a long line of cases, the Court has oft-repeated
that for an illness or injury to be compensable, Section 20(B) of the 2000 POEA-SEC, now Section 20(A) of the 2010 POEA-SEC, requires
that two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury or illness must have
existed during the term of the seafarer's employment contract.

According to the POEA-SEC, a work-related injury 22 are those "injury(ies) resulting in disability or death arising out of and in the course
of employment" and a work-related illness 23 is "any sickness resulting to disability or death as a result of an occupational disease listed
under Section 32-A of this Contract with the conditions set therein satisfied."24 For illnesses not mentioned under Section 32, the POEA-
SEC creates a disputable presumption in favor of the seafarer that these illnesses are work-related. 25

In applying the foregoing pronouncements in this case, therefore, and considering that the diagnosis of the respondent's illness, " Giant
cell tumor, proximal tibia, left knee," is not among those listed in Section 32 of the POEA-SEC, the main query is whether or not the
petitioners have presented evidence sufficient to overcome the disputable presumption provided for by the POEA-SEC that the same is
work-related.

In the pleadings submitted, the petitioners presented the letter of Dr. Sugay, the company designated physician, who opined that the
respondent's condition is not work-related. To reiterate, Dr, Sugay's opinion was worded thus:
Giant cell tumors are benign growths in the bone characterized by the presence of multinucleated giant cells. As of the present time,
the exact cause of Giant cell tumors is unknown.

In our opinion, we may consider Mr. Monje's condition as not work-related. 26

It must also be remembered that Dr. Sugay was the attending physician who provided the medical history of the respondent, and who
conducted the medical examination of and provided the diagnosis for the respondent from the moment that the latter was repatriated
back to the Philippines. In fact, the petitioners presented several medical examination certificates, dated June 28, 2011, 27 August 1,
2011,28and September 9, 201129-all providing for the medical treatment accorded by the petitioners to the respondent.

The Court once again emphasizes that, according to the case of Andrada v. Agemar Manning Agency, Inc.,30 jurisprudence is replete
with pronouncements that it is the company-designated physician who is entrusted with the task of assessing the seaman's disability,
whether total or partial, due to either injury or illness, during the term of the latter's employment. It is his findings and evaluations
which should form the basis of the seafarer's disabilitv claim.

This is so in the instant case.

On the other hand, the respondent presented the April 27, 2012 Disability Report issued by his personal physician, Dr. Ticman. 31 In the
report, Dr. Ticman indicated: (1) the medical history of the respondent; (2) the results of the physical examination that was conducted
on the respondent; (3) the diagnosis; and (4) the disability rating. 32

It must be pointed out, however, that while the Medical Report stated the same diagnosis as the report of the company designated
physician, "Giant Cell Tumor Proximal Tibia Status post total knee replacement using mega prosthesis," nowhere is there a refutation,
or even a mention, of the relation of the illness to the work of the respondent.

In fact, it was only in the assertions of the respondent in his pleadings where it was stated that the illness is work-related. In his
Comment dated January 28, 2015, the respondent said that:
29. As Ordinary Seaman, indeed Respondent's duties and responsibilities includes (sic) manual and hard labor, the same were
strenuous and stressful as he is needed to stay at work for a long period of time everyday and even the early morning hours.

30. It bears stressing that illnesses sustained by Respondent supervened while Respondent was at the deck of the Ship performing his
duties and Responsibilities (sic). It is to be noted that as a seaman. Respondent was invariably exposed to the pollutants, various
chemicals and toxic materials on a constant basis and the hot and humid conditions of his work station, the very stressful demands of
his duties and responsibilities, the rigors at sea and the stress and strain while being away from home and his family.

31. Moreover, the foods provided on board the vessels were mostly meat, high in fat and high in cholesterol and Respondent had no
choice but to eat what is being serve (sic) on the mess hall and these consisted mainly of high-fat, high-cholesterol, and low-fiber
foods.33
According to the case of De Leon v. Maunlad Trans, Inc.,34 while the POEA-SEC creates a presumption that illnesses not mentioned in
Section 32 thereof are disputably presumed to be work-related, still, the Court has held that on due process grounds, the claimant-
seafarer must still prove by substantial evidence that his work conditions caused or, at least, increased the risk of contracting the
disease. This is because awards of compensation cannot rest entirely on bare assertions and presumptions.

In Cagatin v. Magsaysay Maritime Corporation,35 the Court ruled that substantial evidence is not one that establishes certainty beyond
reasonable doubt, but only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if
other minds, equally reasonable, might conceivably opine otherwise. It is more than a mere scintilla of evidence. 36

Further, De Leon37 stated that, in order to establish compensability of a non-occupational disease, reasonable proof of work-connection
is sufficient�direct causal relation is not required. Thus, probability, not the ultimate degree of certainty, is the test of proof in
compensation proceedings.

To be sure, the assertions made by the respondent in his pleadings are neither backed by the expert testimony/affidavit of any
competent physician, nor are they supported by any evidence or testimony other than the mere allegations of the respondent.

In paragraphs 29-31 of the respondent's Comment as cited above, the respondent enumerated the harsh conditions that a Filipino
seafarer undoubtedly experiences during the course of his/her duty aboard an ocean�going vessel. He related that a seafarer's work
was both stressful and strenuous, that a seafarer could be exposed to pollutants, various chemicals, and toxic materials on a constant
basis, and that there is "stress and strain" while being away from home and his family. He even mentioned that a seafarer's diet consists
mostly of meat, which is high in fat, high in cholesterol, and low in fiber.

But the Court must point out that the diagnosed illness of the respondent was "Giant cell tumor, proximal tibia, left knee." How the
foregoing harsh conditions caused the illness, or even how they aggravated the same, was never explained. Indeed, it is as if the
respondent merely enumerated the difficult conditions experienced by a seafarer, and just Left it to the Court to infer any connection
that the conditions may have to the diagnosed illness. In fact, by the way that the respondent argued his case, it would appear that the
same conditions could cause any and all conceivable illness that a seafarer may contract.

The respondent made a litany of factors that were attendant in his work as an ordinary seaman, but none proves any reasonable
connection between the illness and the factors mentioned. It is not hard to conclude then that these are self-serving assertions that
deserve scant consideration.

While the Court is wary of the principle that provisions of the POEA-SEC must be applied with liberality in favor of the seafarers, the
Court has not hesitated in the past to deny a seafarer's disability claims when the same were anchored on flimsy grounds and
unfounded allegations. According to Cagatin:38
"[c]laims for compensation based on surmises cannot be allowed; liberal construction is not a license to disregard the evidence on
record or to misapply the laws. This Court abides by the principle that justice is in every case for the deserving, to be dispensed with in
the light of established facts, the applicable law, and existing jurisprudence." 39
In the case at hand, the Court finds that no substantial evidence of work relation has been proven to exist between the diagnosed
illness and the respondent's work. As such, on the strength of Section 20(A) of the 2010 POEA-SEC, the petitioners herein could not be
made liable.

Consequently, the other issues raised by the petitioners need not be discussed further.

WHEREFORE, premises considered, the petition for review is GRANTED. The Decision dated April 8, 2014 of the Court of Appeals in CA-
G.R. SP No. 131100 is hereby REVERSED and SET ASIDE, and the Decision of the National Labor Relations Commission in NLRC-
LAC(OFW-M) 10-000860-12 and NLRC Case No. NCR. (M) 01-00226-12 is REINSTATED.

SO ORDERED.
11. G.R. No. 208053

MEATWORLD INTERNATIONAL, INC., Petitioner

vs.
DOMINIQUE A. HECHANOVA, Respondent

DECISION

DEL CASTILLO, J.:

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

Before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court assailing the
2

September 12, 2012 and July 3, 2013 Resolutions of the Court of Appeals (CA) in CA-G.R SP No. 125953.
3 4

Factual Antecedents

On September 6, 2006, petitioner Meatworld International, Inc., a corporation engaged in the business of
selling fresh meat under the brand name of "Mrs. Garcia's Meats" in different outlets located in different
malls or markets, hired respondent Dominique A. Hechanova as a head btitcher. At the time of termination;
respondent was assigned at the outlet of Robinsons Place Mall, Ermita, Manila (Robinsons Place Manila), with
a salary of ₱l0,600 a month.

On March 2, 2011, respondent filed a Complaint for Illegal Dismissal with claim for reinstatement and
backwages against petitioner and/or Joyce Alcoreza (Alcoreza), Vice-President of petitioner. Respondent
alleged that on November 10-19, 2010, he was suspended for violating the regulation of SM Hypermarket,
Muntinlupa, prohibiting employees of concessionaires from tasting food peddled by some promodizers; that
after his suspension, he reported to the office of petitioner for his reassignment but he was informed by the
Employee Relation Supervisor Junel Romadia (Romadia), that there was no available outlet yet; that on
December 9, 2010, respondent was assigned at Robinsons Place Manila; that on January 5, 2011, he was
relieved from his assignment and was told to report to the office on January 6, 2011 for his performance
evaluation; that when he reported to the office on January 6, 2011, he was told to come back on January 10,
2011; that on January 10, 2011, Romadia asked him to leave his cellphone number so she could text him
when to come back; that on January 12, 2011, respondent viatext message asked Romadia when he could
report for work; that Romadia replied that he could report for work anytime; that on January 13, 2011,
respondent reported to the office at around 1 PM but was scolded by Alcoreza for not arriving in the
morning; that respondent explained to Alcoreza that he came in the afternoon because he knew the office
personnel were very busy in the morning; that Alcoreza retorted, "Magresign ka, na Zang or tanggalin ka,
namin;" that respondent pleaded to her but she left without saying a word; that Romadia approached him
and told him to wait for her text; that on January 17, 2011, he decided to ask the help of Mr. Raffy Tulfo
(Tulfo) since he had not received any text message from petitioner; that Tulfo gave him a referral letter to the
Department of Labor and Employment (DOLE) - CAMANAVA; that on the same day, he went to the DOLE-
CAM.ANA VA and filled-out a Single-Entry Approach (SENA) Form for illegal constructive dismissal alleging
that he was not given any work assignment and was being forced to resign; and that the case was forwarded
to the National Labor Relations Commission (NLRC).
In response, petitioner claimed that it did not dismiss respondent as he was the one who failed to report for
work. Petitioner alleged that in April 2010, respondent was banned from working at all Puregold outlets
because a personnel of Puregold BF caught him urinating in the storage room where fresh food items were
kept; that respondent was suspended from November 18-25, 2010 for leaving his workplace without
permission on November 5, 2010 and for being under time for the dates October 31 and November 1,
2010; that respondent was placed on preventive suspension on November 27-30, 2010 for eating food
30

products or sample items of another concessionaire in the cold room storage area; that respondent was
31

banned from working at the SM Hypermarket Muntinlupa branch because of the incident; that respondent
32

was temporarily assigned at that Robinsons Place Manila; that his assignment ended on January 5,
33

2011; that respondent was told to report to the office on January 6, 2011 for his new assignment but since
34

he arrived late he was told by his supervisor to return the following day as there was a long queue at the
Human Resources (HR) Department; that since respondent failed to report on January 6, 2011, the vacancy
35

which he was supposed to fill was no longer available; that on January 10, 2011, respondent barged in at the
36

HR Department and made a demand for his new assignment; that he was told to return in the morning of
37

January 13, 2011; that on said date, he arrived late giving Romadia the impression that he was no longer
38

interested to work; that on the same day, he received a Memorandum asking him to explain in writing why
39

no disciplinary action should be taken against him for failing to report to the HR Department as
scheduled; that after the said date, he never reported back to work; and that on January 18, 2011,
40 41

petitioner sent a Memorandum dated January 17, 2011, asking respondent to submit a written explanation
and to report to the HR Department on January 24, 2011at 3:00 PM. 42

Ruling of the Labor Arbiter

On January 10, 2012, the Labor Arbiter rendered a Decision declaring respondent to have been illegally
dismissed. The Labor Arbiter gave no credence to petitioner's theory, that respondent failed to return to work
for fear of being investigated for his violations of company rules and regulations, for lack of evidence. The
44

Labor Arbiter also found petitioner's accusations against respondent to be untrue and without
basis. However, considering that the work environment would no longer be healthy, the Labor Arbiter
45

ordered the payment of separation pay in lieu of reinstatement. In the absence of any factual or legal basis,
46

the Labor Arbiter relieved Alcoreza of any liability. Thus:

47

WHEREFORE, a decision is hereby rendered declaring [respondent] to have been illegally

dismissed. [Petitioner] Meatworld International is directed to pay complainant ₱l16,600.00 as backwages and
1âwphi1

₱42,400.00 as separation pay. Other claims are dismissed. SO ORDERED. 48

Ruling of the National Labor Relations Commission

Petitioner appealed the case to the NLRC.

On March 30, 2012, the NLRC rendered a Decision, affirming the findings of the Labor Arbiter that respondent
was illegally dismissed and thus entitled to backwages and separation pay. The NLRC ruled that petitioner's
allegation that it was respondent who refused to report for work was belied by the latter's "immediate action
to seek help from Raffy Tulfo." As to the alleged infraction of respondent of urinating in the storage room,
50

the NLRC considered it as a fabricated infraction as no document was presented to support this. The NLRC
51

even considered the two previous suspensions of respondent as proof that petitioner was giving respondent a
hard time. It also gave credence to the statement of respondent that he was told to resign by Alcoreza. All
52 53

these taken together led the NLRC to conclude that respondent was illegally dismissed.

Petitioner moved for reconsideration but the· NLRC denied the same in its June 15, 2012 Resolution. 54
Ruling of the Court of Appeals

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

Court.

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

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

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

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

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

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

A. THE FINDING OF THE [CA] THAT THERE WAS NO COMPETENT EVIDENCE OF IDENTITY AND BOARD
RESOLUTION AUTHORIZING THE VICE PRESIDENT OF PETITIONER COMPANY TO FILE THE PETITION IS
CONTRARY TO FACTS.

B. THE [CA] ERRED IN DECLARING THAT A COPY OF THE BOARD RESOLUTION ITSELF, AUTHORIZING THE
PERSON ACTING IN ITS BEHALF SHOULD BE APPENDED TO THE PETITION.

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

2. UPHOLDING THE FINDING OF THE NLRC IN AWARDING BACKWAGES AND SEPARATION PAY IN
FAVOR OF RESPONDENT. 59

Petitioner's Arguments

Petitioner contends that the CA erred in insisting that a copy of the Board Resolution is required to be
attached to the Petition for Certiorari. It claims that under prevailing jurisprudence, a copy of the Secretary's
60

Certificate, attesting that petitioner authorized Alcoreza to file the said Petition
for Certiorari suffices. Moreover, contrary to the findings of the CA, Alcoreza submitted competent proof
61

ofidentity before the notary public. In any case, even if there were defects in Petition for Certiorari, these
62

were excusable, and thus, the CA still should have resolved the case on the merits. 63

As to the merits of the case, petitioner insists that it did not dismiss respondent from employment. Rather, it
64

was respondent who failed to report for work because he erroneously assumed that he was being
terminated. Petitioner likewise puts in question the CA's reliance on respondent's act of seeking help from
65

Tulfo as proof of dismissal. 66

Respondent's Arguments

Respondent, however, argues that the instant case has been rendered moot as the judgment has been
satisfied by the release of the appeal bond by the NLRC Cashier to the respondent. In any case, respondent
67

maintains that the CA did not err in dismissing the Petition for Certiorari due to technicalities. Respondent
68

likewise asserts that the factual findings of the Labor Arbiter and the NLRC are in accord with the facts and
evidence on record. 69

Ruling

The Petition must fail.

There were no procedural defects in the Petition for Certiorari

Under the Corporation Code, a corporation exercises its powers and transacts its business through its board
of directors or trustees. Its corporate officers and agents, therefore, cannot exercise any corporate power
70

pertaining to the corporation without authority from the board of directors. Corollarily, in order for a person
71

to represent a corporation in a suit, a board resolution authorizing the former to represent the latter is
necessary. In several instances, however, the Court has considered a Secretary's Certificate sufficient proof of
authority for a person named in it to represent a corporation in a suit.
72

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

In addition, contrary to the CA's finding, Alcoreza presented "competent evidence of identity" as she
presented before the notary public her valid Philippine Passport. 73
In view of the foregoing, the Court agrees with petitioner that there were no procedural defects to warrant
the dismissal of the Petition for Certiorari by the CA. However, while there were no procedural defects, the
Court finds that the instant petition is still dismissible on the merits.

Respondent was illegally dismissed.

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

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

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

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

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

impossible, unreasonable or unlikely." Similarly, there is constructive dismissal "when an act of clear
76

discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving
him with no option but to forego with his continued employment." Simply put, it is a "dismissal in disguise or
77

an act amounting to dismissal but made to appear as if it were not." 78

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

The Court finds petitioner's justification unacceptable.

It bears stressing that "[d]ue to the grim economic consequences to the employee, the employer should bear
the burden of proving that there are no posts available to which the employee temporarily out of work can be
assigned." Thus, in this case, it was incumbent upon petitioner to prove that respondent was banned at SM
79

Hypermarket Muntinlupa, Market Market, and all Puregold supermarkets, and that there was no available
branch for respondent. Unfortunately, petitioner failed to prove both. Except for a Memorandum from SM
Hypermarket stating that respondent was no longer allowed to be assigned at the Muntinlupa branch, no
other evidence was presented by petitioner to show that respondent was also banned at Market Market and
at all Puregold supermarkets and that all posts were indeed taken. Petitioner could have easily asked its HR
Department for a list of all its branches together with the list of all its employees assigned thereat to prove its
allegation that there are no available posts for respondent. But it did not. Instead, it argued that respondent's
various infractions made it difficult for petitioner to assign respondent to a new assignment. As evidence,
petitioner submitted several memoranda it issued against respondent. These, however, do not prove
petitioner's allegation that there are no available posts for respondent. If at all, it only shows that petitioner
considered respondent an undesirable employee due to his various infractions. Such infractions, however, are
not sufficient to prove that there are no available posts for respondent.

Moreover, contrary to the claim of petitioner, respondent's act of seeking help from Tulfo was not the primary
consideration of the NLRC in finding the existence of illegal dismissal. It was only one of the many
circumstances, which the NLRC took into consideration. Petitioner's failure to assign respondent to an outlet
without any justifiable reason, as well as the apparent disdain of petitioner towards respondent as can be
seen through the acts of Alcoreza, the immediate response of respondent to seek help from Tulfo, and the
antecedent events, were all considered in determining the existence of illegal dismissal. Accordingly, the
Court finds no error on the part of the Labor Arbiter and the NLRC in ruling that respondent was illegally
dismissed, and thus entitled to backwages and separation pay.

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

WHEREFORE, the Petition is hereby DENIED.

SO ORDERED.
12. G.R. No. 206113

SHARPE SEA PERSONNEL, INC., MONTE CARLO SHIPPING, and MOISES R. FLOREM, JR., Petitioners
vs.
MACARIO MABUNAY, JR., Respondent

DECISION

LEONEN, J.:

The company-designated physicians' failure to arrive at a final and definite assessment of a seafarer's fitness
to work or level of disability within the prescribed periods means that the seafarer shall be deemed to be
totally and permanently disabled.

This resolves the Petition for Review on Certiorari filed by petitioners Sharpe Sea Personnel, Inc. (Sharpe Sea),
Monte Carlo Shipping (Monte Carlo) and Moises R. Florem, Jr. (Florem) assailing the Court of Appeals October
24, 2012 Decision and March 8, 2013 Resolution in CA-G.R. SP No. 123318. The Court of Appeals reversed the
2

National Labor Relations Commission November 29, 2011 Resolution in NLRC NCR Case No. OFW(M) 11-
4

01153-10 (NLRC LAC No. OFW(M) 11-000929-10).

On March 23, 2009, Macario G. Mabunay, Jr. (Mabunay) entered into a contract of employment with Sharpe
Sea, an agent for C.F. Sharp & Company Pte. Ltd/Monte Carlo. Sharpe Sea was represented by its fleet
manager, Florem. Mabunay was hired as an oiler for a period of nine (9) months aboard M/V Larisa, with a
total monthly salary of US$1,083.00. On April 14, 2009, Mabunay boarded M/V Larisa.
The following day, Mabunay ·slipped and hit his back on the purifier, while he was cleaning the second floor of
the engine room. He lost consciousness when he fell and when he awoke, his back was numb and he had
difficulty getting up. That night, Mabunay informed a certain 2nd Engineer Castro of his accident. However,
2nd Engineer Castro directed him to continue with his assigned duties.

Despite the persistent pain in his back and numbness in his legs, Mabunay continued working· from April 16,
2009 to April 18, 2009, until Chief Engineer Manuel De Leon allowed him to have a medical checkup when the
ship docked in Nanjing, China.

On April 23, 2009, Mabunay was brought to Nanjing Hospital for a medical checkup and he was diagnosed
with chest and spinal column bone damage. He was declared unfit to work by his attending physician.

On April 29, 2009, Mabunay was medically repatriated to Manila.

On April 30, 2009, Mabunay reported to Sharpe Sea's office and was told to report to Dr. Nicomedes G. Cruz
(Dr. Cruz), a company-designated physician.

From April 30, 2009 to June 3, 2009, Mabunay was confined at Manila Doctors Hospital. He was diagnosed
with "Cervical Spondylosis, C4C5; Thoracolumbar Spondylosis; and Mild chronic compression fracture of T12
& LI vertebral bodies." He was provided with a cervical collar and lumbosacral corset, told to continue his
physical therapy, and advised to come back on July 7, 2009 for further checkup.

On August 14, 2009, after it was noted that Mabunay was not responding to physical therapy, Dr. Cruz
recommended that Mabunay undergo a discectomy "for decompression of cervical area with fusion and bone
grafting and fixation of cervical plates and screws."

On November 24, 2009, Mabunay underwent surgery and Dr. Cruz observed that Mabunay "tolerated the
procedure well."

On December 5, 2009, Mahunay was discharged from the hospital. 21

On January 21, 2010, Mabunay filed a complaint against Sharpe Sea, Monte Carlo, and Florem for the
payment of his medical expenses, total disability benefits, damages, and attorney's fees.

On June 3, 2010, Mabunay sought the opinion of Dr. Alan Leonardo R. Raymundo (Dr. Raymundo), an
orthopedic surgeon, who diagnosed him with "herniated disc, C4-C5" and opined that he was unfit to work as
a seaman in his present condition:

DIAGNOSIS; HERNIATED DISC, C4-C5

RECOMMENDATION:

I have advised the patient that to this present orthopedic condition, he is not fit to return to work as a
seaman. 25

On July 2, 2010, Mabunay sought the opinion of another orthopedic surgeon, Dr. Rommel F. Fernando (Dr,
Fen1ando) who also found him unfit to work:

This is to certify that MACARIO MABUNAY 32M is under my care for:

Cervical Steμosis s/p C4 partial corpectomy, C3-C5 anterior fusion

(Nov 2009)

Rule out Adjacent Segment Cervical Stenosis

Lumbar Stenosis with Neurogenic Claudication (LS nerve root)

His current condition and predicament makes him UNFIT TO WORK until such time as further work ups (MRI,
repeat xrays, etc) can be done to better establish the cause of his symptoms and treat him accordingly. On
September 14, 20 l 0, the Labor Arbiter ruled in Mabunay's favor and directed Sharpe Sea to pay him
permanent and total disability benefits.

The Labor Arbiter concluded that the company-designated physicians and Mabunay's personal physicians
found that he was unfit for sea duty because he still needed regular medical checkups and treatment.28

The Labor Arbiter rejected Sharpe Sea's claim that its company-designated physicians assessed Mabunay with
a disability rating of Grade 8 since it was not supported by the records.29

The Labor Arbiter emphasized that from April 23, 2009, when Mabunay was found unable 'to work by his
attending physician in Nanjing Hpspital, up to July 2, 20 l 0, when Dr. Fernando examined him and still found
him unable to work, more than 240 days had already elapsed. Nonetheless, the Labor Arbiter pointed out
30

that even if Mabunay's personal physicians' assessment were disregarded, Mabunay had proven that he was
unable to perform his function as an oiler for more than 120 days. This already constituted permanent
disability, which would merit the award of total and permanent disability benefits. However, the Labor
31

Arbiter denied Mabunay's claims for medical expenses and future medical expenses for being bereft of factual
bases.32

The Labor Arbiter also dismissed Sharpe Sea's argument that it should no longer be held liable for any claims
against it in light of the Affidavit of Assumption of Responsibility it executed with Benhur Shipping
33

Corporation (Benhur). The Labor Arbiter stated that Mabunay was not privy to the agreement between
Sharpe Sea and Benhur, which happened after Mabunay signed his contract of employment; hence, Sharpe
Sea should still be held liable for the award in Mabunay's favor.
34

The dispositive portion of the Labor Arbiter Decision read:

WHEREFORE, in light of the foregoing, judgment is hereby rendered ordering respondent SHARPE SEA
PERSONNEL, INC. to pay complqinant Macario G. Mabunay, Jr. the amount of SIXTY THOUSAND US DOLLARS
(US$60,000,00) for permanent and total disability benefits plus ten percent (10%) thereof as attorney's fees.

Other claims herein sought and prayed for are hereby denied for lack of legal and factual bases.

SO ORDERED. (Emphasis in the original)

35

Both Sharpe Sea and Mabunay filed their respective memoranda on appeal to the Labor Arbiter Decision.
36

On June 22, 2011, the National Labor Relations Commission (NLRC) affirmed with modification the Labor
Arbiter Decision by deleting the award for attorney's fees.
The NLRC upheld the Labor Arbiter's finding that the records were bereft of evidence to support Sharpe Sea's
claim that its company-designated physicians gave Mabunay a disability rating of Grade 8. In contrast,
38

Mabunay adequately proved that his private physicians both assessed him to be unfit for work.39

However, the NLRC dismissed Mabunay's claims for reimbursement of medical expenses and future medical
expenses because, aside from the computations he himself or his private physicians prepared, he was unable
to substantially corroborate his claim of medical expenses. The NLRC likewise dismissed Mabunay's claims
40

for moral damages and attorney's fees. 41

Finally, the NLRC ruled that Florem, Sharpe Sea's fleet manager, cannot be held personally liable in the
absence of evidence that he had a direct hand in denying Mabunay's disability claims.

The fallo of the NLRC Decision read:

WHEREFORE, the instant appeal of the respondents is PARTLY GRANTED and complainant's partial appeal is
DISMISSED. Accordingly, the Decision of the Labor Arbiter dated September 14, 2010 is AFFIRMED but
modified insofar as that the attorney's fees [are] deleted for lack of merit.

SO ORDERED. 41

Both Sharpe Sea and Mabunay moved to reconsider the NLRC Decision.
44

On November 29, 2011, the NLRC modified its June 22, 2011 decision by reducing the award of
45

US$60,000.00 it earlier granted to Mabunay, to US$16,795.00, corresponding to a Grade 8 disability rating.

46

The NLRC noted that Sharpe Sea attached a medical report dated August 18, 2009 from Dr. Cruz, which
supported its claim that a company-designated physician had diagnosed Mabunay with a Grade 8 disability. 47

The NLRC pointed out that while Dr. Cruz's medical report might not have been presented before the Labor
Arbiter, it was not disputed that Mabunay was under the care of Dr. Cruz from the time he was medically
repatriated.
48

The NLRC likewise stated that NYK-Fil Ship A1anagement. Inc. v. Talavera upheld the award of a Grade 8
disability benefit for a spinal injury similar to Mabunay’s.
49

The fallo of the NLRC Resolution read:

WHEREFORE, premises considered, the Decision of this Commission is MODIFIED. Complainant Macario
Mabunay, Jr. is declared to be entitled only to US$16,795.00 corresponding to Grade 8 disability grading
under the POEA Standard Employment Contract. Complainant is likewise awarded attorney's fees
corresponding to ten percent (10%) of said award.

SO ORDERED. (Emphasis in the original)

50

Mabunay filed a Petition for Certiorari with the Court of Appeals, assailing the June 22, 2011 Decision and
51

November 29, 2011 Resolution of theNLRC.

On October 24, 2012, the Court of Appeals partially granted Mabunay's Petition. The Court of Appeals ruled
that Sharpe Sea failed to adequately explain why it only submitted the medical report with the Grade 8
disability rating in its Motion for Reconsideration of the NLRC Decision. It rebuked the NLRC for failing to rule
on the admissibility of the belatedly filed evidence.

The Court of Appeals also n1led that Mabunay was entitled to attorney's fees, moral, and exemplary damages
since Sharpe Sea acted with bad faith in belatedly submitting a Grade 8 disability rating. Finally, it granted
54

Mabunay's claim for actual expenses in the form of transportation expenses, magnetic resonance imafsing,
and doctor's fees since they were adequately supported with receipts. 55

The fallo of the Court of Appeals Decision read:

ACCORDINGLY, the petitfon is PARTLY GRANTED. The Decision dated September 14, 2010 of Labor Arbiter
Lutricia Quitevis-Alconcel in NLRC NCR Case No. OFW (M)-01-01153-10 is REINSTATED with MODIFICATION
AWARDING petitioner Macario Mabunay, Jr. ₱50,000.00 as moral damages, P50,000.00 as exemplary
damages, ₱36,305.00 as transportation expenses, and ₱7,300.00 as MRI expenses.

SO ORDERED. (Emphasis in the original)

56

On March 8, 2013, the Court of Appeals denied Sharpe Sea's Motion for Reconsideration.

On April 12, 2013, petitioners filed their Petition for Review on Certiorari before this Court. 59

In the Petition, petitioner Sharpe Sea states that its co-petitioner Monte Carlo is no longer its principal and
that the other co-petitioner Florem is no longer its employee. 60

Petitioners claim that under the Philippine Overseas Employment Administration-Standard Employment
Contract (POEA-SEC), for a disability compensation to be validly awarded, the illness or injury must have been
suffered during the seafarer's employment, with a company- designated physician determining his disability
rating. They point out that respondent has signed this contract.
61

Petitioners insist that the Court of Appeals erred in disregarding the Grade 8 disability rating given to
respondent by Dr. Cruz, since this had the effect of disregarding the terms and conditions of the POEA-SEC. 62

Petitioners assert that a seafarer's inability to perform his job for more than 120 days cannot be found in the
POEA-SEC, the law between the contracting parties. Instead, it is the POEA-SEC. itself that provides the
requisites for the determination and award of disability compensation. Petitioners posit that Article 192(c)(i)
63

of the Labor Code, which provides for total and permanent disability if the worker is unable to perform his job
for more than 120 days, is only applicable to claims before the Employees Compensation Commission and not
to claims covered by the POEA-SEC. 64

Furthermore, petitioners likewise assert that the POEA-SEC mandates a company-designated physician to
conduct the medical evaluation and provide the disability grading, if applicable. The POEA-SEC provides a
procedure for resolution should the seafarer disagree with the company-designated physician's assessment.
However, respondent failed to comply with this established procedure; thus, he should be bound by the
company-designated physician's assessment of a Grade 8 disability rating. 65

Petitioners stress that the disability compensation scheme for seafarers is governed by a special law, the
POEA-SEC, in recognition of the reality that "seafarers belong to a class of their own"; hence, the POEA-SEC
provisions on disability compensation should be applied by the courts. 66
Petitioners likewise claim that they are not guilty of bad faith since they shouldered respondent's treatment
and rehabilitation expenses; therefore, the award of damages and attorney's fees was baseless. 67

Petitioners state that the belated submission of the medical certificate with Grade 8 rating was because
respondent's medical treatment was extended due to his back operation. Petitioners aver that they never
intended to conceal respondent's medical condition. 68

As directed by this Court, the parties exchanged pleadings.

69 70

After giving due course to the petition, this Court directed the parties to file their respective memoranda.
71

In respondent's Memorandum, he insists that he repeatedly requested Dr. Cruz and Dr. Leonida Castillo (Dr.
72

Castillo), the company-designated physicians, to assess the degree of his disability but they refused to do so.
Left with no other choice, he consulted with Dr. Raymundo and Dr. Fernando, who both concluded that he
was unfit to work as a seaman. 73

Respondent contends that Dr. C1uz abdicated the duty imposed on him by the POEA-SEC when he refused to
timely issue an assessment of respondent's disability grading. 74

Respondent also points out that it was impossible to engage the opinion of a third doctor jointly agreed upon
by the parties, as required by the POEA-SEC, since 240 days had already lapsed since his repatriation, without
Dr. Cruz issuing a disability assessment. 75

Respondent emphasizes that petitioners failed to adequately explain their belated submission of Dr. Cruz's
medical report with an interim assessment of Grade 8. The medical report was dated August 18, 2009, yet it
was only submitted on July 19, 2011. 76

To support his claims for damages, respondent adopts the findings of the Court of Appeals and also refers to
the inhuman treatment he experienced aboard M/V Larisa, where he was expected to continue working
despite informing his superior that he was under extreme pain. Furthermore, his medical treatment was
stopped even if he had not yet fully recuperated. 77

In their Memorandum, petitioners continue to assert that the Grade 8 disability rating issued by Dr. Cruz
78

should enjoy primacy over the findings of respondent's private physicians. 79

Petitioners also deny that they acted in bad faith or in an oppressive or malicious manner against respondent,
since they shouldered all his medical expenses and were merely acting within the rights provided them by the
POEA-SEC. 80

This Court resolves the following issues:

First, whether or not the Grade 8 disability rating of the company-designated physician should be upheld over
the contrary findings of respondent's private physicians; and

Second, whether or not there is sufficient basis for the award of damages and attorney's fees.

I
As part of a seafarer's deployment for overseas work, he and the vessel owner or its representative local
manning agency are required to execute the POEA-SEC. Containing the standard terms and conditions of
seafarers' employment, the POEA-SEC is deemed included in their contracts o f employment in foreign ocean-
going vessels.81

Petitioner Sharpe Sea and respondent Mabunay entered into a contract of employment on March 23,
2009; hence, the 2000 POEA-SEC is the applicable version.
82

Section 20(B) provides the two (2) requisites of compensable disability:

SECTION 20. COMPENSATION AND BENEFITS. –

....

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his
contract are as follows: (Emphasis supplied)
83

It is not disputed that respondent encountered an accident a day after he boarded M/V Larisa. Upon 84

repatriation and after careful monitoring, Dr. Cruz recommended that he undergo "dis6ectomy for
decompression of cervical area with fusion and pone grafting and fixation of cervical plates and screws." In 85

other words, respondent underwent spine surgery and had cervical plates and screws attached on parts of his
cervical discs to remove the pressure on his nerve root or spinal cord.
86

Petitioners insist that the Grade 8 disability rating issued by Dr. Cruz should be adhered to; as provided for
under Section 20(B)(3) of the POEASEC, the governing law between the parties. Section 20(B)(3) reads:

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

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

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

Petitioners fault respondent for not consulting a third doctor when his private physicians disagreed with the
Grade 8 disability assessment of the company-designated physician.

Petitioners fail to convince.

Petitioners repeatedly claimed before the proceedings in the labor tribunals that Dr. Cruz gave respondent a
Grade 8 disability assessment, yet the records show that petitioners failed to substantiate their claim. The
Labor Arbiter stated:

A perusal over the records shows that respondents' allegation that their company-designated physicians'
assessment of complainant's disability Grading 8, was not submitted. It is not in the records. (Emphasis 87

supplied)

The NLRC then affirmed the Labor Arbiter's findings that petitioners failed to support their claim of
respondent's Grade 8 disability assessment:

Despite the company[-]designated doctor's finding that complainant was suffering from the aforequoted
illness, there is no evidence on record that complainant was given a disability grading of grade 8 as claimed by
the respondents. The record of the case does not show any proof of such disability grading given by the
company[-] designated physician. (Emphasis supplied)
88

However, petitioners somehow managed to produce proof of Dr. Cruz's Grade 8 medical report with the
disability assessment and attached it to their Motion for Reconsideration of the NLRC Decision. Furthermore,
89

petitioners did not explain in its Motion why Dr. Cruz's medical report dated August 18, 2009 was only
90

submitted into evidence two (2) years after, or on July 19, 2011.

While it is true that technical rules of evidence are not binding in labor cases and the NLRC is not precluded
from receiving evidence for the first time on appeal, the delay in the submission of evidence must be
adequately explained. 91

Petitioners half-heartedly tried to explain the belated filing of the medical certificate in its Petition:

Petitioners submitted with their Motion for Reconsideration that was filed with the NLRC, the medical
certificate of Respondent stating forth therein that his disability grading is a Grade 8. However, the fact that
Respondent was given a Grade 8 disability rating was earlier mentioned by Petitioners in their Comment
On/Opposition to the Partial Appeal of Respondent that was also filed with the NLRC. The belated submission
of the medical certificate is due to the fact that Respondents medical treatment was extended since
Respondent needed the aforecited procedure, discectomy, in order to treat his spondylosis. (Emphasis 92

supplied)

Respondent filed his complaint on January 21, 2010. When mediation proceedings before the Labor Arbiter
93

failed, the parties were directed to file their respective position papers. On July 8, 2010, petitioners filed their
Position Paper, to which they could have attached the medical report with the disability rating. However,
94

they failed to do so.

Petitioners could have also attached the medical report in their Memorandum on Appeal dated October 26,
95

2010, or in their Comment dated November 5, 2010 to respondent's appeal. Again, they failed to do so.
96

Petitioners failed to clarify why a document available as early as August 18, 2009 was only submitted into
evidence on July 19, 2011, giving rise to a reasonable suspicion that it was nonexistent on the date indicated
in the medical report.

Manning and shipping companies are always in a better position than their employees in accessing,
preserving, and presenting· their evidence. In this case, despite the uncontested disability of the employee,
he presented all his evidence, even going to the extent of consulting two (2) other doctors after the company-
designated physicians refused to provide a disability rating.

This Court notes that petitioners' actuation on the belated presentation of a suspiciously ante-dated medical
certificate borders on a contemptuous act that, under ordinary circumstances, may amount to disciplinary
charges against counsel.

Nonetheless, even if this Court accepted petitioners' explanation on the belated submission of the disability
rating into evidence, it is worthy to note that Dr. Cruz only issued an interim disability rating:

The interim disability grading under the POEA schedule of disabilities is Grade 8 total stiffness of the neck due
to fracture or dislocation of the cervical spines. (Emphasis supplied)
97

Magsaysay Maritime Corp. v. Cruz emphasized that a company-designated physician is expected to come up
98

with a definite assessment of a seafarer's fitness or lack of fitness to work or to determine the seafarer's
degree of disability within a period of 120 or 240 days from repatriation. Magsaysay Maritime Corp. stated
99

that an interim disability grading is merely an initial prognosis and does not provide sufficient basis for an
award of disability benefits, thus:

Notably, the September 5, 2008 Report provides: "Interim Disability Grade: If a disability grading will be made
today[,] our patient falls under 'Moderate rigidity of two thirds loss of motion or lifting power' - Grade (8)
eight." Being an interim disability grade, this declaration is an initial determination ofrespondent’s condition
for the time being. It is only an initial prognosis of the health status of respondent because after its issuance,
respondent was still required to return for reevaluation, and to continue therapy and medication; as such, it
does not fully assess respondent’scondition and cannot provide sufficient basis for the award of disability
benefits in his favor.

Moreover, in Carcedo v. A1aine Marine Philippines, Inc., the Court did not give credence to the disability
assessment given by the company-designated doctor as the same was merely interim and not definite. This is
because after its issuance, Dario A. Carcedo (seafarer therein) still continued to require medical attention.
Similarly, herein respondent needed further treatment and physical therapy even after the Interim Disability
Grade was given by the company-designated doctor on September 5, 2008. (Emphasis supplied, citations
100

omitted)

After Dr. Cruz issued the interim disability rating of Grade 8, respondent underwent a discectomy where Dr.
Cruz's only feedback was that respondent "tolerated the procedure well." This is not the "definite and
101

conclusive assessment of the seafarer’s disability or fitness to return to work'' required by law from the
102

company-designated physician or appointed third-party physician that would have the effect of binding the
parties.
103

Clearly, Dr. Cruz, Dr. Castillo, or any other company-designated physician failed to issue respondent either a
fit-to work certification or a final disability rating after his operation and before the lapse of 240 days from his
repatriation. Thus, the Court of Appeals did not err when it considered respondent to be permanently and
totally disabled. This follows the ruling in Kestrel Shipping v. Munar where this Court explained:
104

Indeed under Section 32 of the PO EA-SEC, only those injuries or disabilities that are classified as Grade 1 may
be considered as total and permanent. However, if those injuries or disabilities with a disability grading from
1avvphi1

2 to 14, hence, partial and permanent, would incapacitate a seafarer fromperforming his usual sea duties for
a period of more than 120 or 240 days, depending on the need for further medical treatment, then he is,
under legal contemplation, totally and permanently disabled. In other words, an impediment should be
characterized as partial and permanent not only under the Schedule of Disabilities found in Section 32 of the
POEA-SEC but should be so under the relevant provisions of the Labor Code and the Amended Rules on
Employee Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the seafarer is
partially injured or disabled, he is not precluded from earning doing the same work he had before his injury or
disability or that he is accustomed or trained to do. Otherwise, if his illness or injury prevents him from
engaging in gainful employment for more than 120 or 240 days, as the case may be, he shall be deemed
totally and permanently disabled.

Moreover, the company-designated physician is expected to arrive at a definite assessment of the seafarers
fitness to work or permanent disability within the period of 120 or 240 days. That should he fail to do so and
the seafarer s medical condition remains unresolved, the seafarer shall be deemed totally and permanently
disabled. (Emphasis supplied)
105

With the company-designated physicians' failure to issue either a fit-to-work certification or a final disability
rating within the prescribed periods, respondent's disability was rightfully deemed to be total and permanent.

II

Respondent justifies his claim for damages by alleging the inhuman treatment he received aboard M/V Larisa,
where he was made to continue working even after he reported his accident and the excruciating pain in his
back. Respondent also points to the arbitrary stoppage of his medical treatment to substantiate his claim for
damages. 106

The Court of Appeals, in tun1, awarded respondent moral and exemplary damages because of petitioners'
bad faith in belatedly submitting the disability rating.
107

This Court sees no reason to reverse the findings of the Court of Appeals.

Bad faith is not simply bad judgment or negligence. "[I]t imports a dishonest purpose or some moral obliquity
and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill-will
that partakes of the nature of fraud."108

By not timely releasing Dr. Cruz's interim disability grading, petitioners revealed their intention to leave
respondent in the dark regarding his future as a seafarer and forced him to seek diagnosis from private
physicians. Petitioners' bad faith was further exacerbated when they tried to invalidate the findings of
respondent's private physicians, for his supposed failure to move for the appointment of a third-party
physician as required by the POEA-SEC, despite their own deliberate concealment of their physician's interim
diagnosis from respondent and the labor tribunals. Thus, this Court concurs with the Court of Appeals when it
stated:

We also grant petitioner's prayer for moral and exemplary damages. Private respondents acted in bad faith
when they belatedly submitted petitioner's Grade 8 disability rating only via their motion for reconsideration
before the NLRC. By withholding such disability rating from petitioner, the latter was compelled to seek out
opinion from his private doctors thereby causing him mental anguish, serious anxiety, and wounded feelings,
thus, entitling him to moral damages of ₱50,000.00. Too, by way of example or correction for the public good,
exemplary damages of ₱50,000.00 is awarded. 109
Nonetheless, in light of petitioners' patently malicious act in belatedly submitting an ante-dated medical
report, this Court increases the award of moral damages from ₱50,000.00 to ₱l00,000.00 as compensation for
the anxiety and inconvenience that respondent suffered. The award of exemplary damages is also increased
110

from ₱50,000.00 to ₱l00,000.00 to serve as a deterrent against the commission of similar oppressive acts. 111

Considering that the NLRC absolved petitioner Moises R. Florem, Jr. from personal liability in the absence of
evidence that he had a direct hand in denying respondent's disability claims and that this finding was never
112

contested by any of the parties, this Court sees no reason to disturb this ruling.

Shipping companies should constantly be reminded of the humanity of their employees. Seafarers who leave
their families for extended periods to pilot and maintain ships that bring profit for these corporations deserve
better treatment than how respondent was treated in this case. In the ultimate analysis, if ever there will be a
day of judgment, all of us will be held to account as to how we treated our fellow human beings, not by the
amount of profit we generated for our corporations.

Petitioners could have done better in this case. With this judgment, this Court ends respondent's travails and
can only hope that the benefits this Court now awards can assuage his suffering.

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The Court of Appeals
October 24, 2012 Decision in CA-G.R. SP No. 123318 is AFFIRMED with MODIFICATION. Petitioners Sharpe
Sea Personnel, Inc. and Monte Carlo Shipping, Inc. are ORDERED to solidarily pay Macario Mabunay, Jr. the
amount of US$60,000.00 as permanent and total disability benefits plus ten percent (10%) thereof as
atton1ey's fees. Furthermore, petitioners Sharpe Sea Personnel, Inc. and Monte Carlo Shipping, Inc.
are ORDERED to pay ₱l00,000.00 as moral damages, ₱l00,000.00 as exemplary damages, ₱36,500.00 as
reimbursement of transportation expenses, and ₱7,300.00 as reimbursement of MRI expenses. Legal interest
shall be computed at the rate of six percent (6%) per annum of the total award from date of finality of
judgment until full satisfaction.

SO ORDERED.
13. G.R. No. 203328

JOSELITO A. ALVA, Petitioner

vs.
HIGH CAPACITY SECURITY FORCE, INC. and ARMANDO M. VILLANUEVA, Respondents

DECISION

REYES, J.:

The laborer's availment of the free legal services offered by the Public Attorney's Office (PAO) does not
prevent the award of attorney's fees upon the successful conclusion of the litigation.

This treats of the Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of
1

the Decision dated February 24, 2012 and Resolution dated August 30, 2012, rendered by the Court of
2 3

Appeals (CA) in CA-G.R. SP No. 114442 and CA-G.R. SP No. 114520, which deleted the award of attorney's fees
in favor of petitioner Joselito A. Alva (Alva).

The Antecedents

On November 1, 2003, Alva was hired as a security guard by respondent High Capacity Security Force, Inc.,
(High Capacity), a duly organized security agency. Alva was initially detailed as a security guard at the Basa
Land Power Plant in Rosario, Cavite, earning a daily wage of Three Hundred Thirty Pesos (Php 330.00).

On April 16, 2004, Alva was promoted as Assistant Security Officer. After sometime, he was again promoted as
Security Officer, with a daily salary of Four Hundred Thirty Pesos (Php 430.00).
Meanwhile, on June 5, 2007, Alva was assigned as an Assistant Officer-in-Charge of HRD-PTE, Ltd. Inc. (HRD
PTE). While assigned thereat, one of the security guards under his supervision allowed the entry of a garbage
collection truck without securing the prior permission and approval of the company's Administrative and
Personnel Manager. Bearing the crudgels of such mishap, Alva was suspended for one month beginning
October 21, 2007.

During Alva's suspension, HRD-PTE requested for Alva's relief from post. HRD-PTE complained that Alva was
found sleeping while on duty and exercised favoritism in the assignment of shifts of security guards.

Thereafter, Alva was placed on floating status. On November 23, 2007, while Alva was still on floating status,
High Capacity informed him of the lack of available posts where he could be assigned as Security Officer or
Assistant Security Officer. Instead, Alva was given an option to temporarily render duty as an ordinary guard
while waiting for an available officer's post. However, Alva was no longer given any post. Alva begged for an
assignment, but his pleas were all unheeded.

This prompted Alva to file a Complaint for Illegal Dismissal, Underpayment of Wages, Non-Payment of 13th
Month Pay, Service Incentive Leave, Holiday Premium, ECOLA, Payment for Rest Day, Night Shift Differential
Pay, Separation Pay, moral and exemplary damages and attorney's fees against High Capacity and its General
Manager, Armando Villanueva. Alva was assisted by the PAO in the proceedings before the Labor Arbiter (LA).

Ruling of the LA

On October 28, 2008, the LA rendered a Decision finding High Capacity guilty of illegal dismissal. The LA
observed that Alva was placed on floating status from October 21, 2007 to April 22, 2008, and was not given
any assignment or duty after the lapse of six months. The failure of High Capacity to reinstate Alva after the
lapse of his off-detail status on April 22, 2008, rendered it liable for illegal dismissal.

Accordingly, the LA ordered Alva's reinstatement with the payment of backwages, computed six months after
he was first placed on floating status up to the promulgation of its decision. Likewise, the LA awarded
separation pay in lieu of reinstatement, equivalent to one month salary for every year of service. In addition,
the LA awarded attorney's fees equivalent to ten percent (10%) of the total monetary award, finding that Alva
was constrained to hire the services of counsel to protect his rights and interests.

Aggrieved, High Capacity filed an appeal before the National Labor Relations Commission (NLRC). 10

Ruling of the NLRC

On December 8, 2009, the NLRC modified the earlier ruling of the Labor Arbiter. The NLRC found that Alva
was dismissed for just cause, as he was caught sleeping while on duty. However, the NLRC noted that High
Capacity failed to observe procedural due process in effecting Alva's dismissal from employment. Accordingly,
the NLRC deleted the award of backwages and separation pay, and instead ordered the payment of nominal
damages in addition to Alva's monetary claims. The NLRC maintained the award of attorney's fees. The
dispositive portion of the NLRC decision reads:

WHEREFORE, premises considered, the Decision is MODIFIED. Respondents are ordered: (1) to pay
Complainant the amount of ₱30,000.00 by way of nominal damages; (2) to pay the Complainant the
aggregate amount of P52,890.00 representing his holiday pay, service incentive leave pay and 13th month
pay; (3) to pay Complainant an amount equivalent to ten (10%) percent of the judgment award, as and for
attorney's fees.
SO ORDERED. 12

Dissatisfied with the ruling of the NLRC, both parties filed their respective Motions for Reconsideration.

In his Motion for Reconsideration, Alva claimed that the NLRC gravely abused its discretion in modifying the
13

decision of the LA by deleting the awards of backwages and separation pay. Alva maintained that he was
entitled to backwages as a recompense for the earnings he lost due to his illegal dismissal.

On the other hand, High Capacity averred that the NLRC's award of nominal damages amounting to Thirty
Thousand Pesos (Php 30,000.00), effectively forbid the imposition of any other damages. In this regard, High
Capacity argued that the award of Fifty Two Thousand Eight Hundred Ninety Pesos (Php 52,890.00), which
represented Alva's holiday pay, service incentive leave pay and 13th month pay, partook the nature of actual
damages that may no longer be imposed. In addition, High Capacity prayed for the deletion of attorney's fees,
there being no justification for its award. High Capacity stressed that the award of attorney's fees is an
exception, rather than the general rule. 14

On March 30, 2010, the NLRC issued a Resolution partially granting High Capacity's Motion for
15

Reconsideration by deleting the award of attorney's fees in favor of Alva. The NLRC found no basis to award
attorney's fees considering that Alva's dismissal from employment was justified. As such, the NLRC opined
that no bad faith may be imputed against High Capacity. 16

Dissatisfied with the ruling, both parties filed separate Petitions for Certiorari before the CA. The two
17

petitions were consolidated. One of the issues raised before the 1CA was the propriety of the deletion of the
award of attorney's fees.18

Ruling of the CA

On February 24, 2012, the CA rendered the assailed Decision. The CA held that Alva was constructively
dismissed, when he was placed on floating status for more than six months. The unreasonable length of time
that Alva was not given a new assignment inevitably resulted in his constructive dismissal. Additionally, the CA
observed that High Capacity failed to comply with procedural due process requirements in effecting Alva's
dismissal.

Accordingly, the CA ordered the payment of backwages, computed from the time Alva's compensation was
withheld up to the finality of the Court's decision. Acceding to Alva's request not to be reinstated, the CA
awarded separation pay in lieu of reinstatement. Likewise, the CA granted Alva's claims for holiday pay,
22

service incentive leave pay and 13th month pay. However, the CA deleted the award of attorney's fees noting
that Alva was represented by the PAO. 23

The dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the assailed Decision dated December 8, 2009 rendered by the [NLRC] in
NLRC LAC No. 12- 004020-08 and its Resolution dated March 30, 2010 issued in the same case are hereby
VACA TED and SET ASIDE and another judgment entered as follows:

1. Declaring the dismissal of Joselito A. Alva to be illegal and consequently, HCSFI and Armando Villanueva are
directed to pay Mr. Alva his separation pay, backwages and monetary claims constituting holiday pay, service
incentive leave pay and 13th month pay;
2. Dismissing the claim of Joselito A. Alva for attorney's fees; and

3. The [LA] of origin is DIRECTED to compute the following with dispatch:

1. Joselito A. Alva's backwages from the time his salary was withheld on April 22, 2008, up to the date of
finality of this Decision;

2. Joselito A. Alva's separation pay from the date he was employed on November 1, 2003 up to the date of
finality of this Decision; and

3. Joselito A. Alva's monetary claims comprising of holiday pay, service incentive leave pay and 13th month
pay with due consideration to the corresponding changes in the daily salary rate received by him within the
period of three years, that is, from 2005 until the year he filed the case for illegal dismissal on April 22, 2008.

The total monetary award shall earn legal interest from the date of the finality of this Decision until fully
paid.24

Both parties filed their respective Motions for Reconsideration, which were denied by the CA in its
25

Resolution dated August 30, 2012.

26

The Issue

Undeterred, Alva filed the instant Petition, praying for the modification of the assailed decision, on the
following lone ground, to wit:

THE CA GRAVELY ERRED IN DELETING THE AW ARD OF ATTORNEY'S FEES. 27

Alva asserts that High Capacity should be ordered to pay attorney's fees pursuant to Article 2208 paragraphs
(2) and (7) of the Civil Code. Alva asserts that he is entitled to attorney's fees as he was compelled to litigate
28

to protect his interest by reason of the unjustified and unlawful termination of his employment. The fact that
29

he is represented by the PAO does not militate against his right to receive attorney's fees. Alva points out that
Section 6 of Republic Act (R.A.) No. 9406 actually sanctions the award of attorney's fees in favor of the PAO
30

in successfully litigated cases. 31

On the other hand, High Capacity counters that the CA was correct in deleting the award of attorney's fees.
High Capacity avers that the award of attorney's fees is warranted only in cases where the plaintiff was
compelled to litigate or incur expenses to protect his interest due to the act or omission of the defendant.
Alva, who was represented by the PAO, did not incur any expenses to protect his interest, as the former
merely availed of the latter's free legal services. High Capacity relies on the Court's pronouncement in Lambo
v. NLRC, which disallowed the award of attorney's fees to litigants who were represented by the
32

PAO. Similarly, High Capacity points out that the award of attorney's fees in favor of Alva was bereft of any
33

factual, legal and equitable justification. Finally, High Capacity asserts that the award of attorney's fees under
34

Article 2208 of the Civil Code is discretionary on the courts. This being so, the CA's refusal to award attorney's
fees must thus be respected.

Ruling of the Court

The petition is impressed with merit. It must be noted at the outset that the only issue submitted for the
Court's resolution is the propriety of the deletion of the award of attorney's fees. There remains no issue
regarding the finding of illegal dismissal, thereby rendering all pronouncements on the matter of illegal
dismissal final.

The Concept of Attorney's Fees in

Labor Cases

Essentially, there are two commonly accepted concepts of attorney's fees - the ordinary and extraordinary. On
the one hand, in its ordinary concept, an attorney's fee is the reasonable compensation paid by the client to
his lawyer in exchange for the legal services rendered by the latter. The compensation is paid for the cost
and/or results of the legal services, as agreed upon by the parties or as may be assessed by the courts. On the
other hand, as an extraordinary concept, an attorney's fee is deemed an indemnity for damages ordered by
the court to be paid by the losing party to the winning party. In labor cases, attorney's fees partake of the
nature of an extraordinary award granted to the victorious party as an indemnity for damages. As a general
rule, it is payable to the client, not to his counsel, unless the former agreed to give the amount to the latter as
an addition to, or part of the counsel's compensation. 35

Notably, Article 111 of the Labor Code sanctions the award of attorney's foes in cases of the unlawful
withholding of wages, wherein the culpable party may be assessed attorney's fees equivalent to ten percent
(10%) of the amount of wages recovered. The amount of attorney's fees shall not exceed ten percent (10%)
36

of the total monetary award, and the fees may be deducted from the amount due the winning party. 37

In addition, Article 2208 of the Civil Code allows the award of attorney's fees in the following instances, to wit:

ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid,
just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable. (Emphasis Ours)

To recapitulate, both the Labor Code and the Civil Code provide that attorney's fees may be recovered in the
following instances, namely, (i) in cases involving the unlawful withholding of wages; (ii) where the
38

defendant's act or omission has compelled the plaintiff to litigate with third persons or the plaintiff incurred
expenses to protect his interest; (iii) in actions for the recovery of wages of household helpers, laborers and
39

skilled workers; (iv) in actions for indemnity under workmen's compensation and employer's liability
40

laws; and (v) in cases where the court deems it just and equitable that attorney's fees and expenses of
41

litigation should be recovered.

42

In a catena of cases, the Court awarded attorney's fees in favor of illegally dismissed employees who were
compelled to file an action for the recovery of their lawful wages, which were withheld by the employer
without any valid and legal basis. A plain showing that the lawful wages were not paid without justification
43

was sufficient to warrant an award of attorney's fees.44

Moreover, "Article III is an exception to the declared policy of strict construction in the award of attorney's
fees." In fact, the general rule that attorney's fees may only be awarded upon proof of bad faith takes a
45

different turn when it comes to labor cases. The established rule in labor law is that the withholding of wages
need not be coupled with malice or bad faith to warrant the grant of attorney's fees under Article III of the
Labor Code. All that is required is that the lawful wages were not paid without justification, thereby
46

compelling the employee to litigate. 47

Thus, based on the foregoing laws and jurisprudence, it becomes all too apparent that Alva, whose wages and
monetary benefits were unlawfully withheld, is indeed entitled to an award of attorney's fees.

The Availment of Free Legal

Services Does Not Foreclose an
Award of Attorney's Fees

In the case at bar, the CA deleted the award of attorney's fees on the simple pretext that Alva was
represented by the PAO.

The CA was mistaken.

Needless to say, in addition to the fact that attorney's fees partake of an indemnity for damages awarded to
the employee, there is nothing that prevents Alva and the PAO from entering into an agreement assigning
attorney's fees in favor of the latter. It must be noted that in 2007, Congress passed R.A. No. 9406 inserting
new sections in Chapter 5, Title III, Book IV of Executive Order No. 292 (E.O. 292), or the Adminstrative Code
of 1987. R.A. No. 9406 sanctions the receipt by the PAO of attorney's fees, and provides that such fees shall
constitute a trust fund to be used for the special allowances of their officials and lawyers, viz.:

SEC. 6. New sections are hereby inserted in Chapter 5, Title III, Book IV of Executive Order No. 292, to read as
follows:

xxxx
SEC. 16-D. Exemption from Fees and Costs of the Suit. - The clients of the PAO shall [sic] exempt from payment
of docket and other fees incidental to instituting an action in court and other quasi-judicial bodies, as an
original proceeding or on appeal.

The costs of the suit, attorney's fees and contingent fees imposed upon the adversary of the PAO clients after
a successful litigation shall be deposited in the National Treasury as trust fund and shall be disbursed for
special allowances of authorized officials and lawyers of the PAO. (Emphasis Ours)
48

In fact, the matter of entitlement to attorney's fees by a claimant who was represented by the PAO has
already been settled in Our Haus Realty Development Corporation v. Alexander Parian, et al. The Court,
49

speaking through Associate Justice Arturo D. Brion ruled that the employees are entitled to attorney's fees,
notwithstanding their availment of the free legal services offered by the PAO. The Court ruled that the
amount of attorney's fees shall be awarded to the PAO as a token recompense to them for their provision of
free legal services to litigants who have no means of hiring a private lawyer, to wit:

It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorney's fees is legally and morally justifiable.
Moreover, under the PAO Law or Republic Act No. 9406, the costs of the suit, attorney's fees and contingent
fees imposed upon the adversary of the PAO clients after a successful litigation shall be deposited in the
National Treasury as trust fund and shall be disbursed for special allowances of authorized officials and
lawyers of the PAO.

Thus, the respondents are still entitled to attorney's fees. The attorney's fees awarded to them shall be paid
to the PAO. It serves as a token recompense to the PAO for its provision of free legal services to litigants who
have no means of hiring a private lawyer. (Citations omitted and emphasis Ours)
50

Thus, Alva's availment of free legal services from the PAO does not disqualify him from an award of attorney's
fees. Simply put, Alva should be awarded attorney's fees notwithstanding the fact that he was represented by
1âwphi1

the PAO.

The Respondent's Reliance on the

Case of Lambo v. NLRC is
Misplaced

In Lambo, the Court disallowed the payment of attorney's fees on the ground that therein petitioners were
51

represented by the PAO.

It must be noted that the Lambo case was decided on October 26, 1999, when the law that governed the
52

PAO was still E.O. 292. Nothing in the provisions of E.O. 292 granted the PAO the right to an award of
attorney's fees. In contrast, the later law R.A. No. 9406 allows the award of attorney's fees and clearly
instructs that such attorney's fees shall constitute a special allowance for the PA O's officers and lawyers.

In fine, the award of attorney's fees is sanctioned in the case at bar, where there was an unlawful and
unjustified withholding of wages, and as a result thereof, the employee was compelled to litigate to protect
and defend his interests. This award is not prevented by the fact that the employee was represented by the
PAO. After all, attorney's fees are awarded as a recompense against the employer who unjustifiably deprived
the employee of a source of income he industriously worked for.
WHEREFORE, premises considered, the petition is GRANTED. The Decision dated February 24, 2012 of the
Court of Appeals in CA-G.R. SP No. 114442 and CA-G.R. SP No. 114520 is MODIFIED in order to INTEGRATE the
award of attorney's fees equivalent to ten percent (10%) of the total monetary award.

SO ORDERED.

14. G.R. No. 202613

SECOND DIVISION

G.R. No. 202613, November 08, 2017

SYMEX SECURITY SERVICES, INC. AND RAFAEL Y. ARCEGA, Petitioners, v. MAGDALINO O. RIVERA, JR. AND ROBERTO B.
YAGO, Respondents.

DECISION

CAGUIOA, J.:

Assailed in this petition for review on certiorari 1 are the Decision2 dated January 12, 2012 and the Resolution 3 dated June 27, 2012 of
the Court of Appeals (CA) in CA-G.R. SP No. 119039, which affirmed the Decision 4 dated December 9, 2010 and Resolution 5 dated
February 7, 2011 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 042778-05 (RA-06-10) that, in turn, reversed the
Decision6 dated April 30, 2010 of the Labor Arbiter (LA) in NCR-02-02569-03 which dismissed the complaint for illegal dismissal filed by
respondents Magdalino O. Rivera, Jr. and Roberto B. Yago (respondents) against petitioners Symex Security Services, Inc. (petitioner
Symex) and Rafael Y. Arcega (petitioner Arcega), and ordered petitioners to pay respondents in the amount of P1,543.75 each or a total
of P3,087.50.

Facts

The instant case stemmed from a complaint for underpayment/nonpayment of wages, overtime pay, holiday pay, premium for rest day,
service incentive leave pay, clothing allowance and 13 th month pay as well as illegal deduction of cash bond and firearm bond and repair
filed by respondents before the LA.

Respondents alleged that they had been employed as security guards by petitioner Symex sometime in May 1999. Petitioner Symex is
engaged in the business of investigation and security services. Its President and Chairman of the Board is petitioner Arcega.
Respondents were both assigned at the offices and premises of Guevent Industrial Development Corporation (Guevent), a client of
petitioner Symex. As security guards, they were tasked to guard the entrance and the exit of the building, and check the ingress and
egress of the visitors' vehicles going through the building. Their tour of duty was from Monday to Saturday, from 6:00AM to 6:00PM, a
twelve-hour duty, but they were not paid their overtime pay. Respondents were likewise not given a rest day, and not paid their five-
day service incentive leave pay, and 13th month pay.

At the time of their employment, respondents were receiving a salary of P198.00 a day from January 20 to March 2001. From April
2001 to March 2003, they were receiving P250.00 a day. They were required to report for work during legal holidays, but they were not
paid holiday premium pay.

On February 25, 2003, respondents filed a complaint for nonpayment of holiday pay, premium for rest day, 13th month pay, illegal
deductions and damages.

On March 13, 2003, Capt. Arcego Cura (Capt. Cura), the Operations Manager of petitioner Symex, summoned respondents to report to
the head office the next day.

The following day or on March 14, 2003, respondents went to the head office where Capt. Cura told them that they would be relieved
from the post because Guevent reduced the number of guards on duty. Capt. Cura told them to go back on March 17, 2003 for their
reassignment.

On March 17, 2003, Capt. Cura told respondents that they would not be given a duty assignment unless they withdrew the complaint
they filed before the LA. Respondents were made to choose between resignation or forcible leave. Capt. Cura gave them a sample
affidavit of desistance for them to use as a guide. Respondents both refused to obey Capt. Cura, who then told them that they were
dismissed.

The next day or on March 18, 2003, respondents amended their complaint before the LA to include illegal dismissal.

In their defense, petitioners Symex and Arcega maintained that they did not illegally dismiss respondents. They claimed that
respondents are still included in petitioner Symex's roll of security guards. They shifted the blame to respondents, arguing that
respondents refused to accept available postings. 17

The LA Ruling

In a Decision dated April 30, 2010, the LA dismissed respondents' amended complaint for illegal dismissal but ordered petitioner Symex
to pay respondents their proportionate 13 th month pay, viz.:

Rates: P198/day (1/12/01-3/31/01) Dismissed 3/14/03

P250/day (4/1/01-3/31/03) =

A. MAGDALINO O. RIVERA, JR.

PROP. 13th MO. PAY:
1/1/03-3/14/03
P250 X 30 X 2.4 7/12 = P1,543.75

B. ROBERTO B. YAGO
PROP. 13th MO. PAY:
1/1/03-3/14/03
P250 X 30 X 2.4 7/12 = P1,543.75
 � � � �
SUMMARY OF COMPUTATION: � �
A. MAGDALINO O. RIVERA, JR � P1,543.75
B. ROBERTO B. YAGO � P1,543.75
TOTAL AWARD: P3,087.5019

The LA found that respondents were merely relieved from their post by Capt. Cura. According to the LA, a relief order in itself does not
sever the employment relationship between a security guard and the agency. Further, the LA did not give credence to the purported
handwritten Affidavit of Desistance supposedly given to respondents by Capt. Cura because such affidavit offered no assurance of its
authenticity as it was unsigned and at best, self-serving. 20

The LA also ruled that the pay slips presented by respondents themselves showed that they were not underpaid. Respondents have
also failed to prove that they rendered overtime work or that they worked on a holiday/rest day. Respondents also failed to show proof
that they were entitled to their claims for service incentive leave pay and for illegal deductions. The LA also ruled that there were no
qualifying circumstances in the instant case to warrant the grant of damages. 21

Aggrieved, respondents appealed to the NLRC.

The NLRC Ruling

In a Decision dated December 9, 2010, the NLRC reversed and set aside the LA ruling, viz.:

WHEREFORE, the foregoing premises considered, the decision of the Labor Arbiter is hereby REVERSED and SET ASIDE,
a new one
entered declaring complainants illegally dismissed by Respondents who are hereby ORDERED to pay
complainants the following, as per attached computation:

� � � Magdalino O. Rivera Roberto B. Yago

1. Separation pay - P 133,320.00 P 145,440.00
2. Full backwages - 1,017,522.21 1,017,522.21
3. Underpaid wages - 18,713.47 17,882.59
4. Underpaid service incentive leave pay - 209.91 248.37
5. Underpaid 13th month pay - 1,559.46 1,490.22
6. Moral damages - 10,000.00 10,000.00
7. Exemplary damages - 10,000.00 10,000.00
Sub-Total - P1,191,375.05 P 1,202,583.39
8. 10% attorney's fees - 119,137.50 120,258.34
� TOTAL � P 1,310,512.55 P 1,322,841.72

Other claims are however dismissed for lack of basis.

SO ORDERED.23

Contrary to the LA's findings, the NLRC found that respondents were illegally dismissed by Capt. Cura, the Operations Manager of
petitioner Symex, who told them that unless they withdrew their complaint for money claims pending before the LA, their services
would be terminated. It held that the burden of proving that the dismissal of an employee was for a valid or authorized cause lies on
the employer, and that failure to discharge this burden of proof makes the employer liable for illegal dismissal. The NLRC found that
petitioners failed to prove, with substantial evidence, that respondents were furnished with a written order of detail or re-assignment.
It added that neither were respondents guilty of abandonment of work as they immediately amended their complaint for money claims
to include a complaint for illegal dismissal. The NLRC relied on A'Prime Security Services, Inc. v. NLRC 24 which held that abandonment of
work is inconsistent with the filing of a complaint for illegal dismissal. 25

Accordingly, the NLRC held that respondents are entitled to separation pay at one month per year of service from the time of their
employment up to the finality of the decision with backwages and monetary claims, subject to the three-year prescriptive period. It
also awarded respondents ten thousand pesos (P10,000.00) each as moral damages and exemplary damages in the same amount, plus
ten percent (10%) of the total monetary award as attorney's fees. 26

Petitioners moved for reconsideration, but this was denied in a Resolution 27 dated February 7, 2011. Dissatisfied, they filed a petition
for certiorari28 before the CA.

The CA Ruling

In a Decision dated January 12, 2012, the CA affirmed the questioned NLRC Decision.

It held that the NLRC did not gravely abuse its discretion as the undisputed facts clearly established respondents to have been illegally
dismissed and that petitioners used their prerogative to reassign and post security guards, merely as leverage to cause the withdrawal
of the labor complaint filed against them by respondents.

The CA likewise found that the NLRC sufficiently ruled on respondents' money claims. It ruled that once the employee has set out with
particularity in his complaint, position paper, affidavits and other documents the labor standard benefits he is entitled to, and which the
employer allegedly failed to pay him, it becomes the employer's burden to prove that it has paid these money claims. One who pleads
payment has the burden of proving it; and even where the employees must allege nonpayment, the general rule is that the burden
rests on the defendant to prove payment, rather than on the plaintiff to prove nonpayment. 31

The CA also affirmed the award for moral and exemplary damages as well as attorney's fees. 32

Petitioners filed a motion for reconsideration 33 dated February 9, 2012, which was, however, denied in a Resolution 34 dated June 27,
2012.

The Issues Before the Court

The issues for the Court's resolution are whether or not: (a) the CA correctly ruled that the NLRC did not gravely abuse its discretion,
and consequently, held that respondents were illegally dismissed; (b) petitioners are liable to respondents for backwages, service
incentive leave pay, 13th month pay, separation pay, moral damages, exemplary damages and attorney's fees; and ( c) petitioner Arcega
should be held solidarily liable with petitioner Symex for respondents' monetary awards.

The Court's Ruling

The petition is without merit.

NLRC did not commit grave abuse of discretion.

"To justify the grant of the extraordinary remedy of certiorari, the petitioner must satisfactorily show that the court or quasi-judicial
authority gravely abused the discretion conferred upon it. Grave abuse of discretion connotes a capricious and whimsical exercise of
judgment, done in a despotic manner by reason of passion or personal hostility, the character of which being so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation of law." 35
"In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and conclusions are not
supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion."36

Guided by the foregoing considerations, the Court finds that the CA correctly found no grave abuse of discretion on the part of the
NLRC in reversing the LA ruling, as the LA's finding that respondents were not illegally dismissed from employment is not supported by
substantial evidence.

A judicious review of the records of the case reveals that respondents were dismissed by Capt. Cura, the Operations Manager of
petitioner Symex. Even as the Court has acknowledged the management prerogative of security agencies to transfer security guards
when necessary in conducting its business, it likewise has repeatedly held that this should be done in good faith. 37

In the case of Exocet Security and Allied Services Corporation v. Serrano, 38 the Court ruled that the security agency was able to prove
that it was in good faith when it placed the security guard on floating status and was therefore not guilty of illegal dismissal nor
constructive dismissal. The evidence presented by the security agency showed that the security guard's own refusal to accept a non-VIP
detail was the reason that he was not given an assignment within the six-month period. The Court, in the subject case, ruled that it was
manifestly unfair and unacceptable to immediately declare the mere lapse of the six-month period of floating status as a case of
constructive dismissal, without looking into the peculiar circumstances that resulted in the security guard's failure to assume another
post.39 The Court emphasized that:

[T]he security guard's right to security of tenure does not give him a vested right to the position as would deprive the company of its
prerogative to change the assignment of, or transfer the security guard to, a station where his services would be most beneficial to the
client. Indeed, an employer has the right to transfer or assign its employees from one office or area of operation to another, or in
pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the transfer is not motivated by discrimination or bad faith, or effected as a form of punishment or demotion without
sufficient cause.40

In the controversy now before this Court, there is no question that respondents were placed on floating status after their relief from
their post in Guevent. The crux of the controversy lies in whether or not this floating status was actually a dismissal.

Respondents were illegally dismissed.

Petitioner Symex insists that Capt. Cura did not constructively dismiss respondents, explaining that they refused to accept their new
assignments on the ground that their new postings would be inconvenient to them. 41 Respondents, on the other hand, maintain that
they did not refuse re-assignment nor did they abandon their work. 42 The narration of respondents is enlightening:

Noon February 26, 2003 nagkaisa kami na iparating na sa Labor para makuha naming [ang aming] mga benepisyo na dapat mapasamin.
At noong March 13, 2003 tumawag si Captain Cura (Operation Ma[n]ager ng SYMEX SCTY. SVCS.) na magreport daw kaming dalawa sa
SYMEX OFFICE, kinabukasan March 14, 2003, mga 9:00 A.M. dumating kami sa SYMEX OFFICE, binigyan kami ng order na inaalis daw
kami sa kliyente dahil nagbawas [daw ng] gwardiya doon at nagtaka kami dahil marami nam[a]ng baguhan pa doon pero kami talaga
ang tinanggal na matagal na at sinabi sa amin na magreport kami sa lunes March 17, 2003 para sa panibagong duty daw sa ibang
kliyente.

Noong March 17, 2003 dumating kami sa SYMEX OFFICE band[a]ng 9:00A.M. at ito ang sinabi sa amin na hindi daw kami pwedeng
bigyan ng duty dahil idinamay daw [namin] ang agency at hindi daw kami pwedeng magtrabaho sa agency habang hindi pa naaayos ang
kaso. At sa panahon pala na iyon natanggap na nila ang demanda [namin) [galing) sa Labor at doon kami inutusan ni Capt. Cura na
kumuha daw kami ng Affidavit of Desistance at saka ibabalik daw kami sa duty at sa katunayan binigyan pa kami ng sample kung
paano kumuha ng affidavit of desistance, at kung hindi daw kami kumuha ng nasabing affidavit magleave na lang daw kami o
m[a]gresign at bago kami umalis sa opisina ng SYMEX humingi kami ng pabor na mag log man lang kami para sa aming attendance sa
araw na iyon. Pero tumanggi si Kapitan Cura na magsulat kami sa Log book nya. Tapas kinausap din [namin] ang kasama nya sa opisina
na si Yolly Ansus na mag-log kami para sa aming attendance, siya ay tumanggi at sabi niya ay baka daw magalit si Capt. Cura. At
kinabukasan March 18, 2003 pumunta kami sa NLRC para amendahan [ang aming] demanda laban sa SYMEX at idinagdag [namin] ang
Illegal Dismisal (actual) at noong April 3, 2003 sa araw ng Hearing [namin], natanggap ni Capt. Cura ang amended complaint [namin]. 43

In cases of illegal dismissal, the employees must first establish by substantial evidence that they were dismissed. If there is no dismissal,
then there can be no question as to the legality or illegality thereof. 44In Machica v. Roosevelt Services Center, lnc.,45 the Court
enunciated:
The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that
respondents dismissed them from their employment. It must be stressed that the evidence to prove this fact must be clear, positive and
convincing. The rule that the employer bears the burden of proof in illegal dismissal cases finds no application here because the
respondents deny having dismissed the petitioners. 46

To the mind of the Court, the NLRC did not err in finding that respondents had substantially discharged this burden. Apart from their
sworn declarations, respondents offered the sample affidavit of desistance given them by Capt. Cura to support their narration that
Capt. Cura threatened to terminate them unless they executed such affidavit of desistance. The NLRC found the narration of
respondents convincing:

On complainants' claim that they were illegally dismissed, suffice it to state that complainants' following narration is convincing: that
they were relieved from their post upon request of respondent's client to reduce the assigned security guards in their place to reduce
their expenses; that Complainants were thus relieved and when they reported to respondent's office, they were told to go back for re-
assignment; that meantime, complainants already filed a complaint for money claims against respondents; that when complainants
returned to respondent's office, they were told by no less than the General Manager that their services were terminated due to the
complaint they filed and as a condition for their re-posting or re-assignment, they were ordered first to withdraw their complaint but
they refused; that Complainants then amended their earlier complaint to illegal dismissal.

From the foregoing narration, it can be easily inferred that complainants were dismissed categorically. There can be no abandonment
on their part as they even immediately amended their complaint to include illegal dismissal when they were given a condition to
withdraw their complaint first before they could be given assignment. Such condition is illegal and unwarranted. x x x 47 (Emphasis
supplied)

The CA also found that petitioner Symex used its prerogative to re-assign its security guards as leverage in the withdrawal of the labor
complaint filed against petitioners by respondents, viz.:

We find nothing reversible in the ruling of the NLRC in finding illegal the dismissal of the private respondents.

The assertion of Symex that the private respondents committed abandonment is contrary to the circumstances herein presented. While
it is a recognized prerogative for the employer in the security services to reassign and post its security guards from time to time for
the exigency of service, We however hold that in this case, the petitioner used such prerogative as a leverage in the withdrawal of
the labor complaint filed against them by the private respondents.

It is well to remember that the private respondents in this case initially filed a labor complaint for monetary claims prior to their recall
to the head office for possible reassignment and new postings. To believe that the private respondents refused to the new postings
assigned to them because it will inconvenience them is unlikely and contrary to human experience. 48 (Emphasis supplied)

Petitioners, on the other hand, failed to discharge their burden of proving that the termination of respondents was for a valid or
authorized cause. In fact, they simply maintained that respondents were not illegally dismissed because they refused their new
assignments. Yet, petitioners offered no evidence at all to prove respondents' alleged new assignments or respondents' refusal to
accept the same. All that petitioners offer as proof that respondents were not dismissed is the argument that respondents remained in
the roll of the security guards of petitioner Symex. And yet, petitioners failed to even present said roll of security guards to prove this
assertion.

Respondents are not guilty of abandonment.

The Court further agrees with the findings of the CA that respondents were not guilty of abandonment. Tan Brothers Corporation of
Basilan City v. Escudero49 extensively discussed abandonment in labor cases:

As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It constitutes neglect of duty and is a just cause for termination of employment under paragraph (b) of Article 282 [now
Article 297] of the Labor Code. To constitute abandonment, however, there must be a clear and deliberate intent to discontinue one's
employment without any intention of returning. In this regard, two elements must concur: (1) failure to report for work or absence
without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element
as the more determinative factor and being manifested by some overt acts. Otherwise stated, absence must be accompanied by overt
acts unerringly pointing to the fact that the employee simply does not want to work anymore. It has been ruled that the employer has
the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of
returning.50 (Emphasis supplied)
In this case, the respondents' act of filing a complaint for illegal dismissal with prayer for reinstatement belies any intention to abandon
employment.51 To be sure, the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement,
has been held to be totally inconsistent with a charge of abandonment. 52 To reiterate, abandonment is a matter of intention and cannot
be lightly inferred, much less legally presumed, from certain equivocal acts. 53

The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded not only respect, but at times, even
finality because of the special knowledge and expertise gained by these agencies from handling matters falling under their specialized
jurisdiction.54 It is also settled that this Court is not a trier of facts and does not normally embark in the evaluation of evidence adduced
during trial.55

The Court has consistently ruled in the recent decisions of Perea v. Elburg Shipmanagement Philippines, Inc.56 and Madridejos v. NYK-Fil
Ship Management, Inc.,57 that the factual findings of the NLRC, when confirmed by the CA, are usually conclusive on this Court:

[T]his Court limits itself to questions of law in a Rule 45 petition:

As a rule, we only examine questions of law in a Rule 45 petition. Thus, "we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the [National Labor Relations Commission], an administrative body that has
expertise in its specialized field." Similarly, we do not replace our "own judgment for that of the tribunal in determining where the
weight of evidence lies or what evidence is credible." The factual findings of the National Labor Relations Commission, when confirmed
by the Court of Appeals, are usually "conclusive on this Court." 58

Award of separation pay is proper.

Separation pay is warranted when the cause for termination is not attributable to the employee's fault, such as those provided in
Articles 29859 to 29960 of the Labor Code, as well as in cases of illegal dismissal where reinstatement is no longer feasible. 61

The payment of separation pay and reinstatement are exclusive remedies. 62 In Dee Jay's Inn and Cafe v. Raneses,63 the Court ruled that
"[i]n a case where the employee was neither found to have been dismissed nor to have abandoned his/her work, the general course of
action is for the Court to dismiss the complaint, direct the employee to return to work, and order the employer to accept the
employee."64The circumstances in this case, however, warrant the application of the doctrine of strained relations.

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when
the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.65

Strained relations must be demonstrated as a fact. 66 The doctrine of strained relations should not be used recklessly or applied loosely
nor be based on impression alone.67

On this score, the NLRC has made a factual finding, sustained by the CA, that the length of time this case
has dragged has invariably resulted in a strain in the relations between respondents and petitioners, so
that reinstatement is now impossible. Once more, this factual finding is binding on this Court.
Accordingly, the award for separation pay is proper.

Award of other money claims, moral and exemplary damages are warranted.

With respect to the award of money claims, as well as moral and exemplary damages, the sole office of the writ of certiorari, as aptly
pointed out by the CA, is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack
or excess of jurisdiction. 68 It does not include correction of the NLRC's evaluation of the evidence or of its factual findings. 69 Such
findings are generally accorded not only respect but also finality. 70

In this case, it is noteworthy to stress that respondents have presented their pay slips to prove their monetary claims. It is settled that
once the employee has set out with particularity in his complaint, position paper, affidavits and other documents the labor standard
benefits he is entitled to, and which the employer failed to pay him, it becomes the employer's burden to prove that it has paid these
money claims. Once more, he who pleads payment has the burden of proving it; and even where the employees must allege
nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove
nonpayment.71 Petitioners could have easily presented pertinent company records to disprove respondents' claims. Yet, the records of
the case are bereft of such company records thus giving merit to respondents' allegations. It is a rule that failure of employers to submit
the necessary documents that are in their possession as employers gives rise to the presumption that the presentation thereof is
prejudicial to their cause.72

Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to
labor, or is done in a manner contrary to good morals, good customs or public policy. Exemplary damages, on the other hand, are
recoverable when the dismissal was done in a wanton, oppressive, or malevolent manner. 73

The Court also affirms the award of moral and exemplary damages to respondents. As aptly pointed out
by both the NLRC and the CA, the acts constitutive of respondents' dismissal are clearly tainted with bad
faith as they were done to punish them for filing a complaint against petitioner Symex before the LA and
for their refusal to withdraw the same.

Petitioner Arcega is not liable for obligations of petitioner Symex absent showing of gross
negligence or bad faith on his part.

Finally, as to petitioner Arcega's liability for the obligations of Symex to respondents, the Court notes that there was no showing that
Arcega, as President of Symex, willingly and knowingly voted or assented to the unlawful acts of the company.

In Guillermo v. Uson,74 the Court resolved the twin doctrines of piercing the veil of corporate fiction and personal liability of company
officers in labor cases. According to the Court:

The common thread running among the aforementioned cases, however, is that the veil of corporate fiction can be pierced,
and responsible corporate directors and officers or even a separate but related corporation, may be impleaded and held answerable
solidarily in a labor case, even after final judgment and on execution, so long as it is established that such persons have deliberately
used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad faith or malice in doing so .
When the shield of a separate corporate identity is used to commit wrongdoing and opprobriously elude responsibility, the courts and
the legal authorities in a labor case have not hesitated to step in and shatter the said shield and deny the usual protections to the
offending party, even after final judgment. The key element is the presence of fraud, malice or bad faith. Bad faith, in this instance, does
not connote bad judgment or negligence but imparts a dishonest purpose or some moral obliquity and conscious doing of wrong; it
means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.

As the foregoing implies, there is no hard and fast rule on when corporate fiction may be disregarded; instead, each case must be
evaluated according to its peculiar circumstances. For the case at bar, applying the above criteria, a finding of personal and solidary
liability against a corporate officer like Guillermo must be rooted on a satisfactory showing of fraud, bad faith or malice, or the
presence of any of the justifications for disregarding the corporate fiction.75 (Emphasis supplied)

A corporation is a juridical entity with a legal personality separate and distinct from those acting for and in its behalf and, in general,
from the people comprising it. 76 Thus, as a general rule, an officer may not be held liable for the corporation's labor obligations unless
he acted with evident malice and/or bad faith in dismissing an employee. 77 Section 3178 of the Corporation Code is the governing law on
personal liability of officers for the debts of the corporation. 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.79

Based on the records, respondents failed to specifically allege either in their complaint or position paper that Arcega, as an officer of
Symex, willfully and knowingly assented to the acts of Capt. Cura, or that Arcega had been guilty of gross negligence or bad faith in
directing the affairs of the corporation. In fact, there was no evidence at all to show Arcega's participation in the illegal dismissal of
respondents. Clearly, the twin requisites of allegation and proof of bad faith, necessary to hold Arcega personally liable for the
monetary awards to the respondents, are lacking.

Arcega is merely one of the officers of Symex and to single him out and require him to personally answer for the liabilities of Symex are
without basis. The Court has repeatedly emphasized that the piercing of the veil of corporate fiction is frowned upon and can only be
done if it has been clearly established that the separate and distinct personality of the corporation is used to justify a wrong, protect
fraud, or perpetrate a deception. To disregard the separate juridical personality of a corporation, the wrongdoing must be established
clearly and convincingly. It cannot be presumed.

WHEREFORE, the petition is DENIED. The Decision dated January 12, 2012 and the Resolution dated June 27, 2012 of the Court of
Appeals in CA-G.R. SP No. 119039 are hereby AFFIRMED with MODIFICATION in that petitioner Rafael Y. Arcega is absolved from
solidary liability.

SO ORDERED.

15. G.R. No. 204288

DEMEX RATTANCRAFT, INC. AND NARCISO T. DELA MERCED, Petitioners

vs.
ROSALIO A. LERON, Respondent

DECISION

LEONEN, J.:

To justify the dismissal of an employee based on abandonment of work, there must be a showing of overt
acts clearly evidencing the employee's intention to sever the employer-employee relationship.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the February 9, 2012
1

Decision and October 25, 2012 Resolution of the Court of Appeals in CA-G,R. SP No. 109077. The assailed
2 3

judgments reversed the Resolutions of the National Labor Relations Commission, which found that
respondent Rosalio A. Leron's (Leron) dismissal was for a just cause.

In 1980, Leron was hired as a weaver by Demex Rattancraft, Inc. (Demex), a domestic corporation engaged in
manufacturing handcrafted rattan products for local sale and export. Narciso T. Dela Merced was Demex's
president.

Leron was paid on a piece-rate basis and his services were contracted through job orders. He worked from
Monday to Saturday. However, there were times when he was required to work on Sundays. Leron received
his wages at the end of every week but he never received standard benefits such as 13th month pay, service
incentive leave, rest day pay, holiday pay, and overtime pay.
Sometime in June 2006, Leron was dismissed by Demex's foreman, Marcelo Viray (Viray), and Demex's
personnel manager, Nora Francisco (Francisco). Both accused him of instigating a campaign to remove Viray
1âwphi1

as the company's foreman. Before Leron was dismissed from service, he was given a memorandum stating
that the dining chair he had previously weaved for export to Japan was rejected. For this reason, Demex
expressed that it would no longer avail of his services.

On June 28, 2006, Leron did not report for work. The next day, he filed a complaint against Demex for illegal
dismissal before the Labor Arbiter of Quezon City. This case was docketed as NLRC NCR Case No. 00-06-
05490-06. 14

Meanwhile, Demex construed Leron 's failure to report to work as an absence without leave. On July 3, 2006,
Dcmex sent Leron a notice requiring him to return to work on July 5, 2006. This was personally served to
Leron by one (1) of his co-employees. On July 7, 2006, Demex sent another notice to Leron requiring him to
report to work. Despite having received these two (2) notices, Leron did not resume his post. On July 12,
15

2006, Leron received a third notice from Demex informing him of its decision to terminate his services on the
ground of abandonment. 16

On August 3, 2006, the Labor Arbiter dismissed the illegal dismissal case without prejudice on the ground of
improper venue. Leron refiled his complaint before the Labor Arbiter of San Fernando City, Pampanga. This
17

case was docketed as NLRC Case No. RAB II109-10461-06. 18

In his Decision dated July 30, 2007, Labor Arbiter Leandro M. Jose (Labor Arbiter Jose) dismissed the
19

complaint holding that Leron's termination from employment was valid. However, Demex was ordered to pay
13th month pay amounting to ₱5,833.00. 20

Leron appealed Labor Arbiter Jose's July 30, 2007 Decision before the National Labor Relations Commission.
This was docketed as LAC No. 06- 002057-08. 21

On January 30, 2009, the National Labor Relations Commission rendered a Resolution affirming the Decision
of Labor Arbiter Jose but awarded Leron ₱5,000.00 as nominal damages for Demex's non-compliance with
procedural due process. The National Labor Relations Commission declared that Leron's absence was a valid
ground to terminate him from employment. Leron moved for reconsideration but his motion was denied in
the Resolution dated March 16, 2009.

Leron filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Cou11 of Appeals assailing
26

the Resolutions of the National Labor Relations Commission. 27

In its Decision dated February 9, 2012, the Court of Appeals found grave abuse of discretion on the part of the
National Labor Relations Commission when it declared that Leron abandoned his work. According to the
Court of Appeals, Demex failed to establish the elements constituting abandonment. There was no clear
intention on the part of Leron to sever the employer-employee relationship because he filed an illegal
dismissal case immediately after he was dismissed by Viray and Francisco. Aside from this, the Court of
Appeals ascribed bad faith on Demex and held that its act of sending return-to-work notices was merely an
afterthought. Accordingly, the assailed Resolutions of the National Labor Relations Commission were reversed
and set aside. Demex was ordered to pay Leron accrued backwages and separation pay in lieu of
reinstatement due to the strained relations between the parties. The Court of Appeals also deleted the
30

award of nominal damages. The dispositive portion of its Decision stated:

WHEREFORE, the petition is Granted. The assailed Resolutions, dated January 30, 2009 and March 16, 2009,
of the Public Respondent National Labor Relations Commission, in NLRC LAC NO. 06-002057-08 are hereby
REVERSED and SET ASIDE and a new one is entered declaring Petitioner's dismissal illegal, thus:

1. Private Respondent Demex is ordered to pay Petitioner backwages, separation pay and ₱5,833.00 as
proportionate 13th month pay for the year 2006.

2. The awarded nominal damages in the amount of ₱5,000.00 is deleted.

This case is remanded to the Labor Arbiter for the computation of Petitioner's accrued backwages and
separation pay.

SO ORDERED. (Emphasis in the original)

31

Demex moved for reconsideration but its motion was denied in the Resolution dated October 25, 2012.
32

On December 21, 2012, Demex filed a Petition for Review on Certiorari before this Court assailing the
February 9, 2012 Decision and October 25, 2012 Resolution of the Court of Appeals. Respondent filed his
33

Comment on April 16, 2013 to which petitioners filed their Reply on May 21, 2013.
34 35

In the Resolution dated June 17, 2013, this Court gave due course to the petition and required the parties to
36

submit their respective memoranda.

Petitioners filed their Memorandum on August 23, 2013 while respondent filed his Memorandum on
37 38

January 8, 2014.

Petitioners justify respondent's dismissal from employment on the ground of abandonment. They point out
that respondent's unauthorized absences, non-compliance with the return-to-work notices, and alleged act of
crumpling the first return-to-work notice are indicators of his intention to sever his employment. Petitioners
39

add that the return-to-work notices were not sent to respondent as an afterthought because they only
discovered the existence of the first illegal dismissal case after they sent the first notice.
40

On the other hand, respondent argues that his act of filing an illegal dismissal case negates the charge of
abandonment. He points out that he had already filed the illegal dismissal complaint against petitioners
before he was given a return-to-work notice. Petitioners "were very much aware" of the case and had
41

actively participated in the proceedings. Respondent also argues that he cannot be faulted for his refusal to
return to work. The filing of case for illegal dismissal caused a strained relationship between him and
petitioners. 42

The sole issue for this Court's resolution is whether or not respondent Rosalio A. Leron was validly dismissed
from employment by petitioners Demex Rattancraft, Inc. and Narciso T. Dela Merced on the ground of
abandonment of work.

Only questions of law may be raised in a petition for review brought under Rule 45 of the Rules of Court. This
43

Court, not being a trier of facts, would no longer disturb the lower court's factual findings when supported by
substantial evidence. 44

The determination of whether or not an employee is guilty of abandonment is a factual matter. It involves a
review on the probative value of the evidence presented by each party and the correctness of the lower
courts' assessments. The Court of Appeals' finding that respondent did not abandon his work would
45

generally be binding upon the parties and this Court. However, an exception should be made in this case
46

considering that there is a variance in the findings of the Court of Appeals and the National Labor Relations
Commission. 47

Article 297 of the Labor Code enumerates the just causes for the dismissal of an employee:

Article 297. Termination by Employer. - An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

Although abandonment of work is not expressly enumerated as a just cause under Article 297 of the Labor
Code, jurisprudence has recognized it as a form of or akin to neglect of duty.
48

Abandonment of work has been construed as "a clear and deliberate intent to discontinue one's employment
without any intention of returning back." To justify the dismissal of an employee on this ground, two (2)
49

elements must concur, namely: "(a) the failure to report for work or absence without valid or justifiable
reason; and, (b) a clear intention to sever the employer-employee relationship."50

Mere failure to report to work is insufficient to support a charge of abandonment. The employer must adduce
clear evidence of the employee's "deliberate, unjustified refusal . . . to resume his [or her] employment,''
which is manifested through the employee's overt acts. 51

Set against these parameters, this Court finds that the Court of Appeals did not err in holding that the
National Labor Relations Commission gravely abused its discretion in upholding respondent's dismissal from
service.

In affirming the findings of the Labor Arbiter and in declaring that the petitioners discharged the burden of
proof, the National Labor Relations Commission relied on petitioners' evidence. Petitioners presented (1)
52

the Sinumpaang Salaysay of the employee who served the first return-to-work notice; (2) the second return-
to-work notice dated July 7, 2006; and (3) the termination notice addressed to respondent. The National
53

Labor Relations Commission declared:

In the instant case, we agree with the finding of the Labor Arbiter that the respondents were able to
discharge their burden of proving the validity of the dismissal of the complainant. As borne by the records,
the complainant stopped reporting for work beginning June 28, 200[6]. Although he claims that he was not
allowed to work on that day, he admitted having received the notices sent by the respondents for him to go
back to work. He also failed to justify or offer good reason for ignoring such return[-]to[-]work notices. Thus,
the respondents promptly acted in considering him [Absent Without Leave], which is a just ground for his
dismissal.54

The National Labor Relations Commission committed grave abuse of discretion in holding that respondent's
absence from work is a valid ground for his dismissal.

Petitioners' evidence does not clearly establish a case of abandonment. Petitioners failed to prove the second
element of abandonment, which is regarded by this Court as the more decisive factor. 55

Intent to sever the employer-employee relationship can be proven through the overt acts of an employee.
However, this intent "cannot be lightly inferred or legally presumed from certain ambivalent acts." The overt
56

acts, after being considered as a whole, must clearly show the employee's objective of discontinuing his or
her employment. 57

Petitioners point to respondent's absences, non-compliance with the return-to-work notices, and his alleged
act of crumpling the first return-to-work notice as indicators of abandonment. These acts still fail to
58

convincingly show respondent's clear and unequivocal intention to sever his employment.

Respondent filed an illegal dismissal case against petitioners on June 29, 2006, the day after he was
unceremoniously dismissed by his superiors on June 28, 2006. Petitioners deny respondent's arbitrary
59

dismissal and claim that respondent abandoned his work starting June 28, 2006.
60 61

Petitioners' narrative would mean that respondent instituted an illegal dismissal complaint right after his first
day of absence. This is illogical. There was no unequivocal intent to abandon. Respondent even pursued the
illegal dismissal case after it was dismissed without prejudice on the ground of improper venue.
Respondent's non-compliance with the return-to-work notices and his alleged act of complying the first
return-to-work notice are equivocal acts that fail to show a clear intention to sever his employment. Strained
relations caused by being legitimately disappointed after being unfairly treated could explain the employee's
hesitation to report back immediately. If any, his actuations only explain that he has a grievance, not that he
wanted to abandon his work entirely. Petitioners also failed to comply with procedural due process,
particularly the twin-notice rule. They admitted that after sending two (2) return-to-work notices, they sent a
notice to respondent informing him of his dismissal.

Valid termination requires the employer to send an initial notice to the employee, stating the specific grounds
or causes for dismissal and directing the submission of a written explanation answering the charges. After
considering the employee's answer, the employer must give another notice informing the employee of the
employer's findings and reason for termination. These are the operative acts that terminate an employer-
64

employee relationship. In Kams International, Inc. v. National Labor Relations Commission, this Court
65

explained:

Furthermore, it must be stressed that abandonment of work does not per se sever the employer-employee
relationship. It is merely a form of neglect of duty, which is in turn a just cause for termination of
employment. The operative act that will ultimately put an end to this relationship is the dismissal of the
employee after complying with the procedure prescribed by law. (Emphasis supplied)
66

The employer has the burden of proving that an employee's dismissal from service was for a just or
authorized cause. Having failed to clearly establish that respondent abandoned his work, this Court denies
the petition and affirms the Court of Appeals' finding that respondent was illegally dismissed from
employment.

WHEREFORE, the Petition is DENIED. The February 9, 2012 Decision and October 25, 2012 Resolution of the
Court of Appeals in CA G.R. SP NO. 109077 are AFFIRMED.

SO ORDERED.

16. G.R. No. 225995

TEODORO V. VENTURA, JR., Petitioner

vs.
CREWTECH SHIPMANAGEMENT PHILIPPINES, INC., RIZZOBOTTIGLIERI- DE CARLINI ARMATORI S.P.A.,
*

and/or ANGELITA ANCHETA, Respondents

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari are the Decision dated March 1, 2016 and the
1 2

Resolution dated July 4, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 142802 which reversed and set
3

aside the Decision dated June 30, 2015 and the Resolution dated August 27, 2015 of the National Labor
4 5

Relations Commission (NLRC) in NLRC LAC (OFW-M)-06-000514-15, and instead, reinstated the Labor Arbiter's
(LA) Decision dated April 30, 2015 dismissing the complaint for total and permanent disability benefits, but
6

ordered respondent Elburg Shipmanagement Phils., Inc. to pay petitioner Teodoro V. Ventura, Jr. (petitioner)
his unpaid sickness allowance and 10% attorney's fees.

The Facts

Petitioner was employed by respondent Crewtech Shipmanagement Philippines, Inc. (Crewtech), for its
principal, Rizzo-Bottiglieri-De Carlini Armatori S.P.A. (Rizzo), as Chief Cook on board the vessel MV Maria
Cristina Rizzo under a nine (9)-month contract that was signed on October 18, 2013, with a basic monthly
salary of US$710.00 exclusive of overtime pay and other benefits. After undergoing the required pre-
employment medical examination (PEME) where he was declared fit for sea duty by the company-designated
physician, petitioner boarded the vessel on October 31, 2013. Petitioner claimed to have been consistently
employed as such by Crewtech for the past three (3) years and assigned at its different vessels.

On April 4, 2014, the vessel MV Maria Cristina Rizzo was transferred to respondent Elburg Shipmanagement
Phils., Inc. (Elburg) which assumed full responsibility for all contractual obligations to its seafarers that were
originally recruited and processed by Crewtech.

Sometime in April 2014, petitioner complained to the Chief Mate that he was having a hard time urinating
that was accompanied by lower abdominal pain. He was given pain relievers and advised to take a substantial
amount of water. Upon reaching the port of Singapore on April 30, 2014, petitioner was brought to a
specialist at the Maritime Medical Centre and was diagnosed to have "prostatitis" and declared "unfit for
12

duty." Petitioner disclosed to the foreign doctor that he: (a) has a history of prostatitis that occurred three (3)
years ago; (b) was treated for kidney stone in August 2013; and (c) was not under any regular medication.

Thus, on May 1, 2014, petitioner was medically repatriated and referred to a company-designated physician
15

for further evaluation and treatment. His ultrasound revealed "Cystitis with Cystolithiases; Prostate Gland
16

Enlargement, Grade III with Concretions; and Bilateral Renal Cortical Cysts," while his CT
stonogram showed "Cystolithiases; Bilateral Non-Obstructing Nephrolithiases; Bilateral Renal Cortical Cysts;
17

Prostatomegaly." In a Medical Report dated May 5, 2014, the company-designated physician eventually
18

diagnosed petitioner's illnesses to be "Cystitis with Cystolithiases; and Benign Prostatic Hyperplasia (BPH),"
which he declared to be not work-related explicating that cystitis (inflammation of the urinary bladder)
19

secondary to cystolithiasis (urinary stone formation in the urinary bladder) was usually on account of a
combination of genetic predisposition, diet, and water intake, while BPH involved changes in hormone levels
that occur with aging. 20

Notwithstanding this finding, petitioner was consistently monitored by the company-designated physician
and was even recommended to undergo "Open Prostatectomy with possible Transurethral Resection of the
Prostate" for his BPH and "Open Cystolithotripsy with Possible Laser Intracorporeal Lithotripsy and
21

Endoscopic Extraction Bladder Stones" for his Cystolithiasis. Thereafter, he is subjected to three (3) sessions
22

of "Extracorporeal Shockwave Lithotripsy." The length of treatment was estimated at three (3) months
23

barring unforeseen circumstances. While awaiting approval of the foregoing procedures, the company-
24

designated physician noted petitioner's increasing complaints of pain during urination that was accompanied
with blood, for which he was prescribed medications. He was also inserted with an Indwelling Foley
25

Catheterization to address his persistent hypogastric pain and difficulty in urination.26

On July 10, 2014, petitioner underwent Open Prostatectomy with possible Transurethral Resection of the
Prostate, as well as Open Cystolithotomy on his own account. On July 14, 2014, petitioner also underwent
27 28

"Cystoscopy, Evacuation of Blood Clots and Coagulation of Bleeders." He was also subjected to continuous
29

cystoclysis (bladder irrigation). However, despite the foregoing procedures, petitioner still suffered from
30

intermittent pain on his hypogastric area and attempts to remove his indwelling foley catheter were shown
31

to be unsuccessful. The specialist further opined that petitioner was suffering from urethral stricture and
32

possible urinary bladder neck contracture, for which he was recommended to undergo "Urethroscopy, Visual
Internal Urethrotomy, Cystoscopy, Transurethral Resection of Bladder Neck Contracture." Meanwhile, in the
33

letters dated August 4, 2014 and September 18, 2014, the company-designated physician reiterated that
34

petitioner's illnesses were not work-related, while his subsequent urethral stricture was only secondary to the
series of surgeries he had undergone and as such, was likewise not work-related.

On October 8, 2014, or prior to the expiration of the 240-day period reckoned from his repatriation on May 1,
2014, petitioner claimed that he was verbally informed by the company-designated physician that it would be
his last check-up session and that subsequent consultations would be for his own account. Considering that
petitioner's illnesses remained unresolved and he was still on catheters, the latter was compelled to seek an
independent physician of his choice, Dr. May S. Donato-Tan (Dr. Tan), who, in a Medical Certificate dated
October 20, 2014, declared him to be permanently disabled, in view of his existing indwelling catheter that
caused frequent urinary tract infection and rendered him incapable of performing his job effectively.
Consequently, petitioner filed a complaint for total permanent disability benefits, sickness allowance,
transportation and medical expenses, damages and attorney's fees against Crewtech, Rizzo, and its
President/Manager, respondent Angelita Ancheta (Ancheta) before the NLRC, docketed as NLRC NCR Case No.
(M)-10-13052-14.

For their part, Crewtech, Rizzo, and Ancheta denied petitioner's claim for disability benefits, contending that
the latter was guilty of fraudulent misrepresentation when he failed to disclose his previous medical history of
prostatitis and kidney stone treatment during his last PEME, and as such, was disqualified from any
compensation and benefits under Section 20 (E) of the 2010 Philippine Overseas Employment Administration
Standard Employment Contract (2010 POEA-SEC). They likewise contended that petitioner's ailments, Cystitis
with Cystolithiases and BPH, have no causal connection to his work and were declared by the company-
designated physician to be not work-related, hence, not compensable. They added that petitioner's
42

independent physician did not contradict the finding that his illnesses were not work-related, and that his
failure to observe the procedure for the joint appointment of a third doctor under Section 20 (A) (3) of the
43

2010 POEA-SEC was fatal to his cause. They denied petitioner's claim for sickness allowance, in view of his
44

concealment, and averred that they had shouldered all the necessary treatments, surgery, laboratory,
hospital, professional fees and medicines. They likewise denied the claim for moral and exemplary damages
45

as petitioner was treated fairly despite the finding that his illnesses were not work-related, and attorney's fees
for lack of basis. Lastly, they prayed that Crewtech be dropped as party-respondent to the case and be
46

substituted by Elburg. 47

The LA Ruling

In a Decision dated April 30, 2015, the LA dismissed the complaint for lack of merit, ruling that petitioner
failed to discharge the burden of proving that his illnesses were work-related. The LA pointed out that since
petitioner had a history of prostatitis in 2011 and did not take regular medication for it, he merely suffered
from a recurrence of a pre-existing illness. The LA added that there was no clear and convincing indication
that petitioner's work as Chief Cook has aggravated his condition given that it was his duty and responsibility
to prepare safe and quality meals to the crew and that he was charged with the planning and requisition of
food and catering supplies. Moreover, petitioner's non-disclosure of a previous illness during his last PEME
49

legally barred him from availing of the disability benefits pursuant to Section 20 (E) of the 2010 POEA-
SEC. Nevertheless, the LA ordered Elburg to pay petitioner his sickness allowance which was computed at
50

US$2,840.00, as well as 10% attorney's fees since the latter was clearly compelled to litigate to protect his
rights and interests. 51

Aggrieved, petitioner filed an appeal to the NLRC.

52

The NLRC Ruling

In a Decision dated June 30, 2015, the NLRC partly ruled in favor of petitioner, directing Crewtech, Rizzo, and
Ancheta, in solidum, to pay him his total and permanent disability benefits in the amount of US$60,000.00,
and further sustained the award of sickness allowance and 10% attorney's fees. Contrary to the findings of
the LA, the NLRC ruled that there was no fraudulent concealment on the part of petitioner given that
Crewtech was well aware of his past medical history as reflected in the Medical Report dated May 2, 2014 and
thus, cannot feign ignorance of his true condition. The NLRC likewise ruled that petitioner's illness was work-
related, holding that as Chief Cook, the latter cannot just excuse himself to obey the call of nature more so
when preparing and cooking food of the officers and crew of the vessel, and that the limited water provisions
for the entire voyage and their diet may have increased the development, if not aggravation of his illness. As
57

petitioner's illness rendered him incapable of resuming work, he was entitled to total and permanent
disability or Grade 1 impediment pursuant to the 2010 POEA-SEC and not the FIT/CISL-SIRIUS SHIP
management SRL - Genoa 2012-2014 IBF Model CBA that covered only those disabilities arising from an
accident. Finally, the NLRC ruled that since the complaint was not amended to implead Elburg, no
58

jurisdiction was acquired over said corporation and as such, Crewtech, Rizzo, and Ancheta, were ordered, in
solidum, to pay petitioner his disability benefits subject to reimbursement by Elburg on account of the
assumption of responsibility agreement. The latter's motion for reconsideration was denied in a
59 60

Resolution dated August 27, 2015.

61

Dissatisfied, Elburg elevated the matter to the CA via a petition for certiorari, docketed as CA-G.R. SP No.
62

142802.

The CA Ruling

In a Decision dated March 1, 2016, the CA partly granted the petition and set aside the NLRC Decision in so far
as it ordered the payment to petitioner of total permanent disability benefits in the amount of
US$60,000.00. Contrary to the findings of the NLRC, the CA ruled that petitioner willfully concealed his
previous treatment for prostatitis in 2011 during his 2013 PEME. Moreover, he ticked the box "no" in answer
to the question of whether or not he was suffering from any medical condition likely to be aggravated by sea
service. The CA further held that petitioner failed to discharge the burden of proving that his illness was
65

work-related. It observed that petitioner merely enumerated his duties and responsibilities as Chief Cook
without establishing a reasonable connection between the nature of his work and his illness and how his
working conditions contributed to and/or aggravated his condition. It added that the company-designated
66

physician's assessment of non-work relatedness was supported by medical studies, given that petitioner's
BPH was a common condition for aging men due to their hormonal imbalance. It noted that even petitioner's
67

independent physician failed to provide any medical explanation that would establish reasonable connection
between his working condition and illness. Finally, the CA ruled that since Elburg, Rizzo, and Ancheta
68

(respondents) failed to appeal the LA's Decision granting petitioner his claim for sickness allowance and
attorney's fees, the same can no longer be modified or reviewed, and thus, was sustained. 69

Petitioner filed a motion for reconsideration, which was denied in a Resolution dated July 4, 2016; hence,
70 71

this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA erred in holding that the NLRC gravely
abused its discretion when it ruled that petitioner was entitled to total and permanent disability benefits.

The Court's Ruling

The petition is denied.

It is basic that the entitlement of a seafarer on overseas employment to disability benefits is governed by the
medical findings, the law, and the parties' contract. The material statutory provisions are Articles 197 to
199 (formerly Articles 191 to 193) of the Labor Code in relation to Section 2 (a), Rule X of the Amended
72 73 74

Rules on Employees' Compensation (AREC), while the relevant contracts are the POEA-SEC, the parties'
75

Collective Bargaining Agreement (CBA), if any, and the employment agreement between the seafarer and the
employer. In this case, petitioner executed his employment contract with respondents during the effectivity of
the 2010 POEA-SEC; hence, its provisions are applicable and should govern their relations.

Pursuant to the 2010 POEA-SEC, the employer is liable for disability benefits when the seafarer suffers from a
work-related injury or illness during the term of his contract. In this regard, Section 20 (E) thereof, mandates
the seafarer to disclose all his pre-existing illnesses in his PEME, failing which, shall disqualify him from
receiving the same, to wit:

E. A seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical
Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and
benefits. This is likewise a just cause for termination of employment and imposition of appropriate
administrative sanctions.

Here, contrary to the findings of the C A, there was no concealment on the part of petitioner when he failed
to disclose in his 2013 PEME that he was previously treated for prostatitis in 2011. As culled from the records,
respondents were well aware of petitioner's past medical history given that the company-designated
physician was able to provide a detailed medical history of the latter in the Medical Report dated May 2, 2014
which showed all of his past illnesses, the year he was treated and where he obtained his
treatment. Moreover, since petitioner's prostatitis was shown to have been treated in 2011 with no
76

indication that he was required to undergo further medical attention or maintenance medication for the
same, he cannot be faulted into believing that he was completely cured and no longer suffering from said
illness. This is further bolstered by the fact that he was rehired by respondents the following year in 2012 and
no longer found to be suffering from prostatitis during his PEME. Evidently, petitioner's non-disclosure of the
same in his PEME in 2013 did not amount to willful concealment of vital information and he was in fact,
truthful in answering "no" to the query on whether or not he was "suffering" from any medical condition
likely to be aggravated by sea service or render him unfit for such service on board the vessel.

Be that as it may, the CA is nevertheless correct in holding that petitioner's illnesses, Cystitis with
Cystolithiases and BPH, were not work-related, hence, not compensable.

Section 20 (A) of the 2010 POEA-SEC is explicit that the employer is liable for disability benefits only when the
seafarer suffers from a work-related injury or illness during the term of his contract. Thus, work-relation must
be established. As a general rule, the principle of work-relation requires that the disease in question must be
one of those listed as an occupational disease under Section 32-A thereof. Nevertheless, should it not be
classified as occupational in nature, Section 20 (A) paragraph 4 thereof provides that such diseases
77

are disputably presumedas work-related. However, the presumption does not necessarily result in an
automatic grant of disability compensation. The claimant still has the burden to present substantial evidence
that his work conditions caused or at least increased the risk of contracting the illness.78

In this case, records reveal that petitioner was repatriated after having been diagnosed with
prostatitis. Prostatitis is the swelling and inflammation of the prostate gland and among its risk factors are:
1âwphi1
79

(a) a catheter or other instrument recently placed in the urethra, (b) an abnormality found in the urinary
tract, or (c) a recent bladder infection. Upon further examination, the company-designated physician found
petitioner to have cystitis, or inflammation of the bladder, which is commonly caused by a bacterial infection
known as urinary tract infection (UTI), and BPH, an enlargement of the prostate gland that is common
80

among aging men which can block the flow of urine out of the bladder and cause bladder, urinary tract or
81

kidney problems. Although the foregoing illnesses became manifest only while petitioner was on board the
82

vessel, such circumstance alone is not sufficient to entitle him to disability benefits. It bears stressing that for
a disability to be compensable, the seafarer must show a reasonable link between his work and his illness in
order for a rational mind to determine that such work contributed to, or at least aggravated, his illness. It is
not enough that the seafarer's injury or illness rendered him disabled; rather, he should be able to establish a
causal connection between his injury or illness, and the work for which he is engaged. 83

Here, petitioner's general averments that he was exposed to stressful demands of his duties and
responsibilities and subjected to hazardous condition of his station are mere allegations couched in
conjectures. There was no evidence presented to establish how and why petitioner's working conditions
increased the risk of contracting his illness. In the absence of substantial evidence, the Court cannot just
presume that petitioner's job caused his illness or aggravated any pre-existing condition he might have had.
Mere possibility will not suffice and a claim will still fail if there is only a possibility that the employment
caused the disease. Probability of work-connection must at least be anchored on credible information and
84

bare allegations do not suffice to discharge the required quantum of proof, as in this case. Moreover, the
Court notes that even petitioner's physician of choice, Dr. Tan, failed to refute the company-designated
physician's pronouncement that his illness was not work-related.

In the Medical Certificate dated October 20, 2014, Dr. Tan merely reiterated petitioner's medical history of his
illness and declared him permanently disabled on the justification that he would not be able to perform his
job effectively, in view of the presence of the catheter that caused frequent episodes of urinary tract
infection. It is significant to point out at this stage that in determining the work-causation of a seafarer's
illness, the diagnosis of the company-designated physician bears vital significance given that the latter is
mandated by the 2010 POEA-SEC to arrive at a definite assessment of the seafarer's fitness to work or
permanent disability. And while the seafarer is not irrevocably bound by the findings of the company-
designated physician as he is allowed to seek a second opinion and consult a doctor of his choice, Section 20
(A) (3) thereof further provides that any disagreement in the findings may be referred to a third doctor jointly
agreed upon by the parties, whose findings shall be final and binding between them. The Court has
consistently held that non-observance of the requirement to have the conflicting assessments determined by
a third doctor would mean that the assessment of the company-designated physician prevails. 86

Considering that petitioner failed to observe the conflict-resolution procedure provided under the 2010
POEA-SEC, the Court is inclined to uphold the opinion of the company-designated physician that petitioner's
illnesses were not work-related, hence, not compensable.

Accordingly, no error can be imputed against the CA in granting respondents' certiorari petition as the findings
and conclusions reached by the NLRC are tainted with grave abuse of discretion since the claim for disability
benefits remains unsupported by substantial evidence. Verily, while the Court adheres to the principle of
liberality in favor of the seafarer, it cannot allow claims for compensation based on whims and caprices. When
the evidence presented negates compensability, the claim must fail, lest injustice be caused to the employer.

WHEREFORE, the petition is DENIED. The Decision dated March 1, 2016 and the Resolution dated July 4, 2016
of the Court of Appeals in CA-GR. SP No. 142802 are hereby AFFIRMED as afore-discussed.

SO ORDERED.
17. G.R. No. 200576

MAERSK-FILIPINAS CREWING, INC. and AP MOLLER SINGAPORE PTE LTD., Petitioners

vs.
ROSEMARY G. MALICSE (Legal wife of the deceased seafarer Efren B. Malicse, representing the latter's
estate), Respondent

DECISION

SERENO, CJ.:

Before this Court is a Petition for Review on Certiorari, seeking a reversal of the Court of Appeals (CA)
1

Decision and Resolution, awarding death benefits, moral and exemplary damages, and attorney's fees to
2

respondent Rosemary G. Malicse as the beneficiary of the deceased seafarer, Efren B. Malicse.

The antecedent facts are as follows:

For the tenth time, Efren was employed as an able-bodied seaman by petitioner AP Moller Singapore Pte.,
3

Ltd. for a term of nine months through its agency, Maersk-Filipinas Crewing, Inc. At the time of his
4

employment, he had already passed his pre-employment medical examination and was declared fit to work.

Four months later, on 20 May 2007, Efren complained of a fever and headache while on board Maersk
Tide. When paracetamol, bed rest, and tetracycline administered by the vessel's medical staff did not work,
he was sent to Clinica Hospital del Atlantico in Panama on 25 May 2007. On 29 May 2007, he died.
5

The death certificate of Efren stated that he died of "multiple organ dysfunction, Septicemia and
Mononucleosis due to Cytomegalovirus." According to the Autopsy Report and the Pathological Report of Dr.
6

Edwin C. Alconel, an anatomical and clinical pathologist of the City Health Office of General Santos City, Efren
died of "multiple organ failure secondary to septicemia." Neither party disclaimed that Efren died of
7

septicemia, which is severe blood poisoning or infection.

Petitioners paid Rosemary USD 1,000 representing burial benefits. As for death benefits, they offered her USD
40,000, which was equivalent to half of the death benefits provided by the Collective Bargaining Agreement
8

(CBA) between Maersk and Singapore Organization of Seamen, the union to which her husband
belonged. When she demanded a full copy of the CBA, as well as a copy of the International Transport
9

Workers Federation Standard Collective Agreement (ITF Agreement) from petitioners, the latter refused.
10
Consequently, Rosemary filed a Complaint before the Executive Labor Arbiter (LA) for death benefits, moral
11

and exemplary damages, and attorney's fees. Petitioners responded that the death of her husband was not
caused by a work-related illness. Rosemary countered by arguing that according to the ITF Agreement, she
was entitled to death benefits regardless of the cause of Efren's death.

In its Decision dated 26 February 2009, the LA sustained the claim of Rosemary that the labor union of her
12

husband was an affiliate of the ITF. The LA held that the ITF Agreement should prevail over the CBA and the
2000 Philippine Overseas Employment Administration Standard Employment Contract for Seafarers (POEA-
SEC). The ITF Agreement, said the LA, had a more beneficial provision on granting death benefits since it
awards claims regardless of the seafarer's cause of death.

The LA granted death benefits of USD 82,500 to Rosemary and ordered petitioners to pay her moral damages
of PHP 5 million, exemplary damages of PHP 3 million, and 10% attorney's fees.

Petitioners appealed before the National Labor Relations Commission (NLRC). Rosemary likewise appealed
13

and demanded payment for loss of income and interest on her monetary claims. The NLRC dismissed the
appeals. Both parties moved for reconsideration, but to no avail.

In its Resolution dated 29 June 2010, the NLRC held that the LA correctly appreciated the applicability of the
14

ITF Agreement. In addition, the NLRC declared that petitioners had the burden of proving that Efren had died
of a non-compensable illness. Finding that petitioners had failed to discharge such burden, the NLRC affirmed
the ruling of the LA with the modification that moral and exemplary damages be reduced to ₱l00,000 and
₱50,000, respectively.

Petitioners and respondent separately filed Petitions for Certiorari before the CA, with essentially the same
15

arguments as those raised a quo. At the outset, the appellate court issued a Temporary Restraining
Order and a Writ of Preliminary Injunction in favor of petitioners.
16 17

After perusing the merits of the main case, the CA found no grave abuse of discretion on the part of the NLRC.
In its assailed Decision dated 21 October 2011, the CA maintained that petitioners were liable to Rosemary
for full death benefits and damages, but that she was not entitled to additional compensation in the form of
income losses and interest claims. The dispositive portion reads in part:
18

Maersk-Filipinas Crewing, Inc., with its corporate officers and directors and its foreign principal A.P. Moller
Singapore PTE. LTD., are hereby adjudged jointly and solidarily liable in the payment of eighty thousand US
Dollars (USD 80,000.00) payable in its equivalent in Philippine currency computed at the prevailing rate of
exchange at the time of payment as indemnity pursuant to the ITF Standard Collective Agreement. Moral and
exemplary damages are hereby awarded to Rosemary G. Malicse in the amounts of ₱100,000.00 and
₱50,000.00, respectively, or a total of ₱150,000.00. Ten percent (10%) of the total monetary award is further
awarded to Rosemary G. Malicse as attorney's fees.

SO ORDERED.

The CA echoed the appreciation of the NLRC that employers have the burden of proof in showing that the
seafarer died from a non-compensable illness. Based on the records, the appellate court ruled that petitioners
had failed to show that they were not liable to pay respondent's claims for death benefits.
Petitioners and respondent unsuccessfully moved for reconsideration. Petitioners have therefore filed the
19

instant Petition for Review on Certiorari, questioning the grant of death benefits and damages, as well as the
applicability of the ITF Agreement. Respondent has waived her right to comment on this petition. 20

Before this Court are questions of law. We are tasked to evaluate the applicability of the following contracts:
the POEA-SEC, the CBA, and the ITF Agreement. Corollary to that issue, this Court outlines and applies the
burdens of proof involved in seafarers' claims for death benefits.

RULING OF THE COURT

The Applicability of the PO EA-SEC,

the CBA, and the ITF Agreement

The entitlement to disability benefits of seafarers on overseas work is a matter governed not only by medical
findings, but also by law and contract. By contract, the POEA-SEC and the CBA bind seafarers and their
21

employers. An overriding instrument, such as the instant ITF Agreement, also forms part of the covenants of
22

the parties to each other.

23

In awarding death benefits to Rosemary in the amount of USD 82,500, the LA, the NLRC, and the CA cited
Section 19 of the ITF Agreement, viz:

If a Seafarer dies through any cause, whilst in the employment of the Company, or arising from her/his
employment with the Company, including death from natural causes or death occurring whilst travelling to or
from the vessel, or as a result of marine or other similar peril, the Company shall pay the sums specified in
the attached schedule [US$82,500 in Annex 2] to the widow or children or parents and to each dependent
child up to a maximum of 4 (four) under the age of 21. x x x.

However, before claimants may avail themselves of the benefits provided by Section 19 of the ITF Agreement,
they must comply with Section 1:

This agreement sets out the standard terms and conditions applicable to all Seafarers serving on any Ship in
respect of which there is in existence a Special Agreement ("the Special Agreement") made between the
Union, an affiliate of the International Transport Workers' Federation (the ITF) and the Company who is the
Owner/Agent of the Ship.

The following are the conditions for the applicability of the ITF Agreement: (1) the seafarer is a member of a
union, (2) which is affiliated with the ITF, (3) that has entered into a special agreement with petitioners.

The parties have not disputed the first requisite. As regards the other two, the LA, the NLRC, and the CA only
made the following pronouncement: 24

[p]er ITF Standard collective agreement, of which the union is an affiliate, does (sic) not make any distinction
as to the kind of death of the covered seafarer.

Noticeably, the labor tribunals made a generalization without citing their sources. They failed to point to
specific evidence showing that Efren's labor union was affiliated with the ITF. Neither did the LA, the NLRC, or
the CA allude to a special agreement between the union or the ITF and petitioners. Therefore, this Court will
not automatically conclude that the seafarer is entitled to the benefits given under the ITF Agreement
premised on the unreferenced determination of the labor tribunals. 25
Perusing now the records before us, we find that none of the pieces of evidence adduced by the parties has
depicted with clarity the relationship of Efren's labor union - Singapore Organisation of Seamen - with the ITF.
Furthermore, none of the documents herein portray that petitioners entered into any special agreement. In
this light, we find grave abuse of discretion on the part of the CA for awarding the death benefits provided by
the ITF Agreement sans any proof of the applicability thereof.

Given that the ITF Agreement is not an overriding instrument in this case, we apply the minimum acceptable
terms in a seafarer's employment contract provided by the POEA-SEC. However, in Legal Heirs of Deauna v.
26

Fil-Star Maritime Corp., we clarified that beneficial CBA clauses prevail over the POEA-SEC:
27

More importantly, the special clauses on collective bargaining agreements must prevail over the standard
terms and benefits formulated by the POEA in its Standard Employment Contract. A contract of labor is so
impressed with public interest that the more beneficial conditions must be endeavored in favor of the laborer.
This is in consonance with the avowed policy of the State to give maximum aid and full protection to labor as
enshrined in Article XIII of the 1987 Constitution. (Emphasis supplied)

We then proceed to an inquiry into whether or not the compensability clauses in the CBA provide greater
death benefits to the seafarer than those granted under the POEA-SEC.

Section 20(A)(l) of the POEA-SEC provides that in case of the work-related death of a seafarer during the term
of his contract, the employer shall pay his beneficiaries the "Philippine Currency equivalent to the amount of
Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to
each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate
prevailing during the time of payment."

On the other hand, Section 25(1) of the CBA states that petitioners shall pay compensation to a seafarer for
any death arising from an accident equivalent to USD 80,000. Section 25(5) further provides that if a seafarer
28

"dies from natural causes or illness while in the employment of the Company, the Company shall pay fifty
percent of the quantum payable for death x x x." 29

Comparing these two provisions, the CBA clearly provides higher death benefits of USD 80,000. However, the
cause of death of the seafarer must be due to an accident; otherwise, his beneficiaries would receive only
USD 40,000. That amount is lower than the benefit granted by the POEASEC, which is USD 50,000. But before
beneficiaries may receive compensation under the POEA-SEC, there must be substantial evidence that the
seafarer died of a work-related illness.
30

Thus, respondent is entitled to the more beneficial provision of the POEA-SEC if his death is proven to have
been work-related. Otherwise, the CBA's provision on the grant of USD 40,000 regardless of the cause of
1âwphi1

death will apply. The labor tribunals, therefore, should have ascertained whether or not Efren's death was
caused by a work-related illness.

Burden of Proof in Compensation

Proceedings for Seafarers

In its assailed Decision, the CA sustained the appreciation of the NLRC that petitioners failed to show that
Efren died from a non-compensable illness. For the CA, petitioners were "less than convincing in their denial
of liability to their deceased employee." 31
The CA believes that employers have the duty to prove that a seafarer died from a non-compensable illness.
However, in numerous cases, this Court has explained that "whoever claims entitlement to the benefits
provided by law should establish his rights to the benefits by substantial evidence." Hence, the claimants of
32

death benefits, and not the employers, carry the burden of proof. We elucidated in Quizora v. Denholm Crew
33

Management (Philippines), Inc. as follows:

At any rate, granting that the provisions of the 2000 POEA-SEC apply, the disputable presumption provision in
Section 20(B) does not allow him to just sit down and wait for respondent company to present evidence to
overcome the disputable presumption of work-relatedness of the illness. Contrary to his position, he still has
to substantiate his claim in order to be entitled to disability compensation. He has to prove that the illness he
suffered was work-related and that it must have existed during the term of his employment contract. He
cannot simply argue that the burden of proof belongs to respondent company. (Emphases supplied)

Therefore, in resolving the death claims of respondent, the CA proceeded from an incorrect legal framework,
which this Court must rectify. After all, in a petition under Rule 45 of the Rules of Court, what we review are
the legal errors that the CA may have committed in the assailed decision. 34

The correct approach in adjudging claims of seafarers for death and disability benefits is to determine
whether the claimants have proven the requisites of comperisability under Section 32-A of the POEA-
35

SEC, viz: (1) the seafarer's work must have involved the risks described therein; (2) the disease was contracted
as a result of the seafarer's exposure to the described risks; (3) the disease was contracted within a period of
exposure and under such factors necessary to contract it; and (4) there was no notorious negligence on the
part of the seafarer.

Here, respondent has failed to satisfy the required positive propositions on compensability. First, she did not
describe the tasks performed by Efren on board Maersk Tide. While his employment contract identified him
36

as an able-bodied seaman, none of the documents on record enumerated his particular duties. Respondent
did not even explain how his work environment caused his fever and headache, and how these conditions
worsened into the alleged fatal illness.

Second, given the dearth of evidence as regards Efren's actual job, there was absolutely no showing of how
his duties or tasks contributed to the development of his illness. Therefore, there could be no basis to
conclude that his multiple organ failure secondary to septicemia was contracted as a result of his exposure to
the risks of his trade.

The instant case is similar to Covita v. SSM Maritime Services, Inc. In that case, we said that by failing to
37

prove the nature of the work of the seafarer, logically, the claimants would not be able to prove the work-
relatedness of his illness.

A reading of petitioner's above-quoted allegations to prove the work-relatedness of her husband's chronic
renal failure shows that they are mere general statements with no supporting documents or medical records.
She failed to show the nature of Rolando's work as a Bosun on board the vessel since there was no specific
description of Rolando's daily tasks or his working conditions which could have caused or aggravated his
illness. Her claim that Rolando's working conditions were characterized by stress, heavy workload and over
fatigue were mere self-serving allegations which are not established by any evidence on record. In fact,
petitioner alleged that one of the main causes of kidney failure is high blood pressure due to stress, however,
there was nothing on record to show that Rolando was suffering from high blood pressure during his seven
day's employment in the vessel. Bare allegations do not suffice to discharge the required quantum of proof of
compensability. The beneficiaries must present evidence to prove a positive proposition. (Emphasis supplied).
Given that none of the labor tribunals made a factual determination of the work assignments of Efren as an
able-bodied seaman, this Court finds an utter lack of basis for granting the POEA-SEC's USD 50,000 death
benefits to respondent.

Nonetheless, as earlier explained, respondents are still entitled to claim the death benefits provided by the
CBA. Section 25(5) thereof grants USD 40,000 regardless of whether the seafarer died of a work-related
illness, provided that he died while in the employment of petitioners. In the case at bar, none of the parties
dispute that Efren died of multiple organ failure secondary to septicemia caused by severe infection on 29
May 2007 or during the term of his contract with petitioners.

Therefore, petitioners were correct to offer respondent only USD 40,000. Based on their uncontested
narrative, they had already proposed the payment of that sum to Rosemary as early as the negotiations
preceding the filing of the claims before the LA.

We find this circumstance an exercise in good faith on the part of petitioners. It would negate the imposition
upon them of moral and exemplary damages, as well as attorney's fees. These forms of indemnity may only
38

be imposed on a concrete showing of bad faith or malice on the part of petitioners.39

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP Nos. 03832-MIN and
03841-MIN are hereby REVERSED and SET ASIDE, and a new one ENTERED ordering petitioners to jointly and
severally pay respondent the death benefits of Efren B. Malicse amounting to USD 40,000.00 or its peso
equivalent at the time of payment, which shall earn legal interest at the rate of six percent (6%) per
annum from the finality of this Decision until fully paid.

SO ORDERED.
18. G.R. No. 193500

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioners

vs.
SIMEON TAÑEDO, JR., Respondent

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari pursuant to Rule 45 of the 1997 Rules on Civil Procedure filed by
petitioner Government Service Insurance System (GSIS) seeking to reverse and set aside the Decision dated 1

April 15, 2010 and the Resolution dated August 18, 2010 of the Court of Appeals in CA-G.R. SP No. 102493,
2

entitled "Simeon Tañedo, Jr. v. Employees ' Compensation Commission (ECC) and Government Service
Insurance System (GSIS)."The first appellate court issuance reversed the Decision dated December 17, 2007
3

of the Employees' Compensation Commission (ECC) in ECC Case No. GM-17750-0917-07 while the latter
denied the motion for reconsideration filed by GSIS with regard to the aforementioned reversal. The ECC
Decision at issue affirmed the denial by the GSIS of respondent Simeon A. Tañedo, Jr.'s (Tañedo) claim for
disability benefits under Presidential Decree No. 626, as amended.

The factual history of this case was concisely narrated in the assailed April 15, 2010 Decision of the Court of
Appeals as follows:

[Tañedo] has been a public servant since March 1, 1976. Before his retirement in December 2007, he held the
position of records officer at the Bureau of Internal Revenue (BIR). His duties and responsibilities included the
following:

a. Encodes and prints in the computer treasury reconciliation statements, supporting schedules and
endorsement letters of funds;

b. Delivers said statements, schedules and letters to financial and administrative service, Commission on
Audit and other revenue services;

c. Files statements and letters to the records section;

d. Performs other functions designated by the division chief.

On December 1, 2003, petitioner was examined at the National Kidney Institute where he was found to have
varicosities or varicose veins in his legs as follows:

1. Mildly dilated left greater saphenous vein, particularly at the above knee, below the knee and ankle
segment.
2. All deep veins are compressible with no evidence of deep venous thrombosis.

3. Superficial varicosities join the above knee and ankle segment of the left greater saphenous vein and its
adjoining varices.

4. Mild venous blood flow reflux on maneuver in the left common femoral vein, entire left greater saphenous
vein and its adjoining varices.

5. Incompetent and perforator vein join the distal left posterior tibial vein with superficial varicosities.

Convinced that his ailment supervened by reason and in the course of his employment with the BIR, [Tañedo]
filed a claim before the Government Service Insurance System (GSIS) for compensation benefits under P.D.
No. 626, as amended. His plea, however, was denied by the GSIS in a letter dated January 24, 2004 on the
ground that varicosities is not considered an occupational disease under P.D. No. 626, as amended. 4

On appeal, the ECC affirmed the GSIS's denial of Tañedo's claim, ruling that:

The pertinent provision of the law provides that for sickness or death to be compensable, the ailment or
death resulting therefrom must be listed as an occupational disease. Otherwise, proof must be shown that
the risk of contracting the ailment is increased by the nature of the employment and/or the working
conditions of the covered employee. This is the so-called Increased Risk Theory where only substantial
evidence is required by law to support one's claim.

xxxx

Varicosities is not among the occupational diseases listed under Annex "A" of the Amended Rules on
Employees' Compensation Law. Thus, it is required of the appellant to prove that the risk of contracting the
said ailment was increased by the nature of his working conditions. However, looking at the possible causes
and the appellant's job as Records Officer, it appears that causal relationship between his illness and his job
cannot be established. Medical science has already established that familial tendency is the most important
predisposing factor in the development of varicose veins.

The appellant should have presented substantial evidence x x x showing that the nature of his employment or
working conditions increased the risk of varicosities. In this case, there is no showing that the progression of
the disease was brought about largely by the conditions in the appellant's job.x x x. 5

Dissatisfied with the ECC's verdict, Tañedo elevated his case to the Court of Appeals which, in its assailed April
15, 2010 Decision, granted his appeal and disposed of the case in this wise:

FOR THESE REASONS, We GRANT the instant petition. The assailed Decision of the Employees' Compensation
Commission is SET ASIDE. Respondent Government Service Insurance System is ORDERED to pay petitioner
the compensation benefits due him under P.D. 626, as amended. 6

The GSIS filed a motion for reconsideration but this was denied in the assailed August 18, 2010 Resolution of
the appellate court.

Thereafter, the GSIS filed the present petition and raised the following issues for consideration:
1. WHETHER THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENT'S VARICOSITIES WAS
WORKCONNECTED OR THAT THE NATURE OF HIS WORK INCREASED THE RISK OF CONTRACTING THE SAME;
AND

2. WHETHER THE COURT OF APPEALS ERRED IN GRANTING RESPONDENT'S CLAIM FOR TEMPORARY
DISABILITY BENEFITS. 7

The petition is meritorious.

Simply put, the issue for resolution in this case is whether or not Tañedo's medical condition is compensable
under the law.1âwphi1

Presidential Decree No. 626, as amended, defines compensable sickness as "any illness definitely accepted as
an occupational disease listed by the Commission, or any illness caused by employment subject to proof by
the employee that the risk of contracting the same is increased by the working conditions."

In order to warrant compensation for an ailment and its resulting disability or death under Presidential
Decree No. 626, as amended, Section l(b), Rule III of the Amended Rules on Employees' Compensation (AREC)
provides:

SECTION 1. Grounds. - (a) For the injury and the resulting disability or death to be compensable, the injury
must be the result of accident arising out of and in the course of the employment.

(a) For the sickness and the resulting disability or death to be compensable, the sickness must be the result
of an occupational disease listed under Annex "A" of these Rules with the conditions set therein satisfied,
otherwise, proof must be shown that the risk of contracting the disease is increased by the working
conditions. (Emphases supplied.)

Thus, for sickness or death of an employee to be compensable, the claimant must show either: (1) that it is a
result of an occupational disease listed under Annex "A" of the AREC with the conditions set therein satisfied;
or (2) if not so listed, that the risk of contracting the disease was increased by the working conditions.
8

It is undisputed that Tañedo's medical condition (i.e., varicosities in the left leg) is not among the
occupational diseases listed under Annex "A" of the AREC. Therefore, he is required by statute to prove that
the risk of contracting the said ailment was increased by the nature of his working conditions.

The Court of Appeals was correct in stating in its assailed April 15, 2010 Decision that "what the law requires
is reasonable work-connection, not direct causal relation" and that "the degree of proof required under
9

Presidential Decree No. 626 is merely substantial evidence or such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion." 10

However, a careful review of the records of this case would reveal that Tañedo failed to provide substantial
evidence to prove that his medical condition was caused by his work at the Bureau of Internal Revenue (BIR).
He was unable to present any competent medical history, records or a physician's report that would
objectively demonstrate that his claim of a reasonable connection between his work and his medical ailment
has substantial basis. All that can be found on record are (a) the hospitalization claim for payment, and (b) the
radiology consultation report that both merely describe his medical condition of "stasis dermatitis" or
"superficial varicosities" but with no medical assessment as to the cause thereof.
In his pleadings, Tañedo asserted that his function of delivering documents to various government offices,
encoding, printing as well as filing statements and letters cannot be accomplished without great leg exertion
which caused the varicosities on his left leg. Unfortunately, his statements were not supported by any
substantial medical or credible proof. Being such, they are mere speculations or presumptions upon which an
award of compensation cannot be properly based. It is axiomatic that the employee is required to prove a
positive proposition - that the risk of contracting the disease is increased by his working conditions.
11

Although we agree with the Court of Appeals that according to jurisprudence "it is enough that the
hypothesis, on which the workmen's claim is based, is probable," we likewise previously ruled
12

in Government Service Insurance System v. Cuntapay, that said probability must be reasonable and based on
13

credible information, to wit:

Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings. And
probability must be reasonable; hence, it should, at least, be anchored on credible information. Moreover, a
mere possibility will not suffice; a claim will fail if there is only a possibility that the employment caused the
disease.

In all, Tañedo's evidence merely point to a possibility that there is a nexus between his work and his ailment
which cannot be deemed adequate basis to grant workmen's compensation claims.

We have held that findings of facts of quasi-judicial agencies are accorded great respect and, at times, even
finality if supported by substantial evidence. In the case at bar, we concur with the ECC's evaluation of the
14

evidence that Tañedo suffered from a non-occupational disease and that he failed to prove the work-
connection of his illness. Perforce, his claim for compensation under Presidential Decree No. 626, as
amended, has no legal and factual bases.

In closing, we reiterate that while we sympathize with the plight of the working man like Tañedo, it is
important to note that such sympathy must be balanced by the equally vital interest of denying undeserving
claims for compensation. Compassion in this instance must give way to "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." In Government Service Insurance System v. Capacite, we again
15 16

elucidated on the underlying reason why the workmen's compensation fund or insurance trust fund should
only be applied to legitimate claims for compensation benefits, to wit:

While PD 626, as amended, is a social legislation whose primary purpose is to provide meaningful protection
to the working class against the hazards of disability, illness, and other contingencies resulting in loss of
income, it was not enacted to cover all ailments of workingmen. The law discarded, among others, the
concepts of "presumption of compensability" and "aggravation" and substituted a system based on social
security principles. The intent was to restore a sensible equilibrium between the employer's obligation to pay
workmen's compensation and the employee's right to receive reparation for work-connected death or
disability.

In light of the foregoing, we are compelled to overturn the appellate court's grant of Tañedo's claim for
compensation benefits for want of substantial evidence to prove work-related causation or aggravation of his
medical condition.

WHEREFORE, the petition is GRANTED. The Decision dated April 15, 2010 and the Resolution dated August
18, 2010 of the Court of Appeals in CA-G.R. SP No. 102493 are hereby REVERSED and SET ASIDE. The Decision
dated December 17, 2007 of the Employees' Compensation Commission in ECC Case No. GM-17750-0917-07
is hereby REINSTATED.

SO ORDERED.

19. G.R. No. 230791

FIRST DIVISION

G.R. No. 230791, November 20, 2017

FROEL M. PU-OD, BOMBOM L. LAYAONA, DANILO L. ORSAL, JOSEPH B. FLORES AND JOEL M. PU-OD, Petitioners, v. ABLAZE BUILDERS,
INC./ROLANDO PAMPOLINO, Respondents.

DECISION

TIJAM, J.:

In this Petition for Review on Certiorari under Rule 45,1 petitioners assail the Decision2 dated November 8, 2016 and Resolution3 dated
March 20, 2017 of the Court of Appeals (CA) in CA-G.R. SP No. 142970.

The Factual Antecedents

Respondent-company Ablaze Builders, Inc., headed by its president, private respondent Rolando Pampolino, is engaged in the
construction business. It has been respondents' practice to hire construction workers, foreman, and other personnel on a per project
basis. Respondents hired petitioners on different dates, positions and daily salaries, as follows:

Name Date of Employment Position Daily Salary

Froel M. Pu-od June 2013 Carpenter Php370.00
 Joel M. Pu-od 07/08/08 Welder Php370.00
Bombom L. Layaona 07/15/08 Mason Php370.00
Joseph B. Flores 07/22/13 Helper Php280.00
Danilo L. Orsal 11/19/11 Mason Php370.005

Sometime in June 2013, respondents hired petitioners to work in its project located at Roces Avenue, Quezon City (QC Project),
specifically for the finishing phase.

On February 28, 2014, a project engineer of respondents allegedly told the petitioners that they are already terminated from their
employment because there was no more work to be done, even if in reality, the phase on which they were working on was not yet
completed. Aggrieved by the verbal dismissal, petitioners filed a complaint for illegal dismissal, against respondents before the Labor
Arbiter (LA). Petitioners admitted that they no longer chose to be reinstated due to the strained relationship of the parties.

Both parties were required to file their respective position papers.

Petitioners averred, among others, that respondents unceremoniously terminated their employment without giving them an
opportunity to explain their side. They maintained that they are entitled to their money claims, as follows: salary differential; thirteenth
(13th) month pay; service incentive leave pay; holiday pay; refund for illegal deductions; including moral damages, exemplary damages
and attorney's fees.10

Respondents, on the other hand, alleged that the company did not terminate petitioners' employment, but rather, this is a case of
abandonment of work on the part of the petitioners. Respondents likewise claimed that sometime in February 2014, after the
resignation of its project site engineer, Engr. Romeo Calma (Engr. Calma), the petitioners stopped appearing for work, which caused
delay in the turnover of the project to respondents' client. Consequently, respondents has not yet been fully paid by its client due to
discussions on penalties. Respondents made efforts in communicating with petitioners, specifically, through complainant Layaona, but
to no avail. As a result, respondents were compelled to engage the services of other personnel for the completion of the QC project.
Respondents further alleged that the company never heard from the petitioners again, except on the information given by Engr. Calma
to the effect that petitioners have already accepted employment at another construction company. 12Respondents submitted the
affidavits of Engr. Calma and Engr. Pedro Bacalso, Jr. (Engr. Bacalso, Jr.) who were the project site engineers at the time the petitioners
were assigned to the QC project. The engineers denied under oath that either of them informed the petitioners on February 28, 2014,
of their alleged verbal dismissal.13

Respondents claimed that the petitioners were not underpaid, considering that during the course of their employment they were
provided with transportation allowances, boarding houses, free but limited use of electricity and water. 14

On February 27, 2015, the LA rendered a decision against the petitioners, thereby dismissing their complaint. The LA ruled that there
was no dismissal, actual or constructive, committed by respondents, since the petitioners have failed to substantiate their allegation of
the fact of dismissal. The LA denied the petitioners their money claims. The dispositive portion of the decision, reads:

WHEREFORE, premises considered, judgment is entered dismissing the case for lack of merit.

SO ORDERED.16

Petitioners filed a Memorandum of Appeal with Notice of Appeal 17 before the National Labor Relations Commission (NLRC), questioning
the LA's decision.

On July 24, 2015, the NLRC issued a resolution, in favor of the petitioners, thereby reversing the LA's decision. The NLRC held
respondents liable to pay the petitioners their backwages and separation pay. The dispositive portion of the resolution reads, thus:

WHEREFORE, premises considered, Complainants-Appellants' appeal is hereby GRANTED. The February 27, 2015 Decision of the Labor
Arbiter Renaldo Hernandez is hereby REVERSED AND SET ASIDE.

Respondents are liable to pay complainants:

1. full backwages in the following amounts:

a. FROEL M. PU-OD �

� 2/2014 - 4/3/15 �

� P451.00 x 26 x 14.13 = P165,688.38

� � �
� 4/4/15 - 7/15/15 �
� P466.00 x 26 x 3.40 = P 41,194.40
P206,8[8]2.78
==========
� � � �
b. JOEL PU-OD � �
� 1/2014- 4/3/15 � �
� P451.00 x 26 x 15.13 = P177,414.38
� � � �
� 4/4/15-7/15/15 � �
� P466.00 x 26 x 3.40 = P 41,194.40
P 218,608.78
=========
� � � �
c. BOMBOM LAYAONA � �
� 1/2014-4/3/15 � �
� P451.00 x 26 x 15.13 = P177,414.38
� � � �
� 4/4/15-7/15/15 � �
� P466.00 x 26 x 3.40 = P 41,194.40
P218,608.78
=========
� � � �
d. JOSEPH FLORES � �
� 2/2014 - 4/3/15 � �
� P451.00 x 26 x 14.13 = P165,688.38
� � � �
� 4/4/15 - 7/15/15 � �
� P466.00 x 26 x 3.40 = P 41,194.40
P206,882.78
=========
� � � �
e. DANILO ORSAL � �
� 11/2013- 12/31/13 � �
� P436.00 x 26 x 2 = P22,672.00
� � � �
� 1/1/14 - 4/3/15 � �
� P451.00 x 26 x 15.10 = P177,062.60
� � � �
� 4/4/15 - 7/15/15 � �
� P466.00 x 26 x 3.40 = P 41,194.40
P240,929.00
=========
� � � �
2. separation pay in lieu of reinstatement in the
amounts of:
� � � �
a. FROEL PU-OD
6/20/13 - 7/15/2015
P466.00 x 26 x 2 = P
24,232.00
� �
b. JOEL PU-OD
7/2008-7/15/15
P466.00 x 26 x 7 = P
84,812.00
� �
c. BOMBOM LAYAONA
 7/2008- 7/15/15
P466.00 x 26 x 7 = P
84,812.00
� �
d. JOSEPH FLORES
6/2013-7/15/15
P466.00 x 26 x 2 = P
24,232.00
� �
e. DANILO ORSAL
3/2011 - 7/15/15
P466.00 x 26 x 4 = p 48,
[4]64.00

SO ORDERED."19

On August 10, 2015, respondents filed a Motion for Extension of Time to File Motion for Reconsideration with Substitution of
Counsel,20 stating therein that: (1) they received a copy of the NLRC's decision on July 31, 2015; (2) they terminated the legal services of
their previous lawyer, Atty. Michael M. Racelis, and hired Malcolm Law as their new counsel; and, (3) due to lack of material time,
volume and pressure of work, they cannot complete the motion within the period allowed by the 2011 NLRC Rules of Procedure.
Subsequently, respondents filed a Motion for Reconsideration,21 on August 20, 2015, arguing, among others, that: since there was no
proper service of the petitioners' Memorandum of Appeal with Notice of Appeal to respondents, there was no perfected appeal, hence,
the LA's decision has attained finality; the petitioners proffered no evidence that they were either dismissed from employment or that
they were prevented from returning to work or otherwise deprived of any work assignment; and, the petitioners are not entitled to
backwages and separation pay since they failed to prove that they were illegally dismissed.

Both motions, however, were denied in the NLRC's September 29, 2015 resolution. 22 The NLRC ruled that the motion for extension was
denied since the substitution of counsel was not a valid ground to extend the period to file a motion for reconsideration. Consequently,
the motion for reconsideration proper, was deemed to have been filed out of time.

Unfazed, respondents elevated the matter to the CA by filing a Petition for Certiorari under Rule 65 of the Rules of Court, urgently
praying for a Temporary Restraining Order and/or Writ of Preliminary Injunction.23

The Ruling of the CA

On November 8, 2016, the CA rendered a decision, granting the petition and reversing the NLRC decision. The CA brushed aside
technicalities and ruled that the NLRC is given the discretion to exercise liberality to enable it to ascertain the facts of the case speedily
and objectively without any ill intent to wear out the laborer's resources. The CA found that respondents were not in any way
motivated to unnecessarily delay the resolution of the case. The CA likewise ruled that the petitioners failed to establish the fact of
their dismissal and that they abandoned their employment. The dispositive portion of the CA's decision, reads:

WHEREFORE, finding the petition to be impressed with merit, the same is hereby GRANTED. The assailed NLRC resolutions are hereby
ANNULLED, and a new judgment is hereby ENTERED finding no unlawful termination of private respondents' employment in the case at
bar. The Labor Arbiter's dismissal of private respondents' complaint is hereby REINSTATED. 24

Their motion for reconsideration 25 having been denied in the CA's resolution dated March 20, 2017, petitioners filed the instant
petition, and raised the following issues:

I.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION WHEN IT GRANTED THE RESPONDENTS' PETITION FOR
CERTIORARI DESPITE THE BELATED FILING OF THEIR MOTION FOR RECONSIDERATION OF THE NLRC 24 JULY 2015 RESOLUTION.

II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN ANNULLING THE DECISION OF THE NLRC FINDING THE PETITIONERS
TO HAVE BEEN ILLEGALLY DISMISSED AND, IN EFFECT, REINSTATING THE LABOR ARBITER'S DECISION DISMISSING THE PETITIONERS'
LABOR COMPLAINT.

The petition lacks merit.

The Ruling of the Court

Procedural:

The CA did not err when it gave due course to Respondents' Petition for Certiorari �

The 2011 NLRC Rules of Procedure mandate that a motion for reconsideration of the NLRC decision must be filed within 10 calendar
days from receipt of said decision, otherwise, the decision shall become final and executory. 27 "A motion for reconsideration of the
NLRC decision must be filed before the remedy of a petition for certiorari may be availed of, to enable the commission to pass upon and
correct its mistakes without the intervention of the courts. Failure to file a motion for reconsideration of the decision is a procedural
defect that generally warrants a dismissal of the petition for certiorari''.28 However, "We held that despite procedural lapses,
fundamental consideration of substantial justice may warrant this Court to decide a case on the merits rather than dismiss it on a
technicality. In so doing, We exercise our prerogative in labor cases that no undue sympathy is to be accorded to any claim of
procedural misstep, the idea being that our power must be exercised according to justice and equity and substantial merits of the
controversy",29 in order to avoid further delay.30

Likewise, the NLRC is not restricted by the technical rules of procedure and is allowed to be liberal in the application of its rules in
hearing and deciding labor cases. 31 Under Section 2, Rule I of the 2005 Revised Rules of Procedure and reiterated verbatim in the same
provision of the 2011 NLRC Rules of Procedure, it is provided that:

Section 2. Construction. � These Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious and inexpensive resolution and
settlement of labor disputes.

Then, too, under Section 10, Rule VII of both the 2005 Revised Rules of Procedure and the 2011 NLRC Rules, it is also identically stated
that:

Section 10. Technical Rules Not Binding. � The rules of procedure and evidence prevailing in courts of law and equity shall not be
controlling and the Commission shall use every and all reasonable means to ascertain the facts in each case speedily and objectively,
without regard to technicalities of law or procedure, all in the interest of due process.

In any proceeding before the Commission, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any
Presiding Commissioner or Commissioner to exercise complete control of the proceedings at all stages.

In view of the factual circumstances of the case, We are persuaded that the rigid rules of procedure must give way to the demands of
substantial justice, and that the case must be decided on the merits. Indeed, the prevailing trend is to accord party litigants the amplest
opportunity for the proper and just determination of their causes, free from the constraints of needless technicalities, especially so in
this case where the varying and conflicting factual deliberations of the LA, the NLRC and the CA are factored in. Thus, the CA committed
no error when it admitted Ablaze's petition for certiorari, and had jurisdiction over said petition.

Substantial:

Neither illegal dismissal by the employer nor abandonment by the employees exists in this
case �

This Court is aware of the familiar rule in labor cases that the employer has the burden of proving that the termination was for a valid
or authorized cause. 33 However, We stress that it remains incumbent upon the employees that they should first establish by competent
evidence the fact of their dismissal from employment. 34 Since an allegation is not evidence, it is elementary that a party alleging a
critical fact must support his allegation with substantial evidence. 35 It has also been held that the evidence to prove the fact of dismissal
must be clear, positive and convincing.36

Stated otherwise, in cases of illegal dismissal, before the employer must bear the burden of proof to establish that the termination was
for a valid or authorized cause, the employees must first prove by substantial evidence the fact of their dismissal from service. Logically,
if there is no dismissal, then there can be no question as to the legality or illegality thereof, as in this case.

Here, there is no ample evidence to establish a prima facie case that petitioners were dismissed from employment. That they were told
on February 28, 2014 by one of respondents' project engineer that their employment has been terminated since there is no more work
to be done is at best, speculative. The identity of the project engineer was not revealed. There is even no proof that respondents
authorized the unnamed project engineer, or any project engineer for that matter, to notify the petitioners of their alleged dismissal.
Petitioners were likewise inconsistent as to the date of their alleged employment and under what particular circumstance were they
dismissed from employment. Respondents, on the other hand, presented affidavits executed by their project engineers, Engr. Calma
and Engr. Bacalso, Jr., who adamantly denied that they eased the petitioners out of their employment. 37

As correctly observed by the LA, thus:

There would be no dismissal committed by respondents, actual, or constructive, as complainants have failed to substantiate their
allegation that there was in fact a dismissal "On 28 February 2014, a Project Engineer of Respondent Corporation told them that they
are terminated from their employment since there was no work to be done, even if the phase on which they were working was not yet
completed," whereas respondents substantiated their denial of any dismissal effected thru the Affidavits of their two project engineers,
one Romeo Calma and Pedro Bacalso, Jr., Project Site Engineers, Pedro Bacalso, Jr. being the Project Engineer at the Races Avenue QC
Finishing phase Project whereof complainants were last engaged as project employees, and denying under oath of having told
complainants on 2/28/2014 that they were already terminated, re their allegation that "On 28 February 2014, a Project Engineer of
Respondent Corporation told them that they are terminated from their employment since there was no work to be done, even if the
phase on which they were working was not yet completed."

Of note, adding to this disbelief as to complainants (sic) claim of constructive dismissal is that complainants stated in their complaint
that the date of their respective dismissal was Froel Pu-od - "FEBRUARY 2014," Bombom Layaona "01-2014" Joel Pu-od "01-2014"
Danilo Orsal "11-2003) (sic) and Joseph Flores "02-2014" whereas in their position paper, they all inconsistently alleged a single date on
2/28/2014 of having been told of their dismissal by a Project Engineer, which makes it impossibly hard to tie the knots of credibility to
this allegation of constructive dismissal. Moreover, complainants did not even present even a speck of assertion, far less any evidence
as to the motivation or factual circumstances why they would be discriminated, harassed, their employment made unbearable as
defined in a charge of constructive dismissal, and eventually dismissed on 2/28/2014. 38 [Citations Omitted.]

The records are likewise bereft of any indication that petitioners were barred from respondents' premises or were otherwise deprived
of any work assignment after the alleged verbal dismissal. On the contrary, the evidence showed that respondents tried to contact
them, but its effort was to no avail. Consequently, respondents learned that petitioners were already reporting for work in another
construction company.

Thus, in the absence of any showing of an overt or positive act proving that respondents had dismissed petitioners, the latter's claim of
illegal dismissal cannot be sustained as the same would be self-serving, conjectural and of no probative value. 39

Be that as it may, however, the Court finds that petitioners did not abandon their employment, as erroneously claimed by the
respondents.

Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. 40 It is incumbent upon the employer
to prove the two elements that must concur in order for an act to constitute abandonment: First, respondents must provide evidence
that petitioners failed to report for work for an unjustifiable reason. Second, respondents must prove petitioners' overt acts showing a
clear intention to sever their ties with their employer, 41 with the second element as the more determinative factor, and being
manifested by some overt acts.
The record shows that respondents proffered nothing beyond bare allegations to prove that petitioners had abandoned their
employment. Although respondents made an effort in requiring petitioners to return to work, there was neither proof that petitioners'
failure to comply with the same was for an unjustifiable reason; nor was there any proof that petitioners' absence amounted to a clear
intention to sever their employment. Indeed, the mere absence or failure to report for work, even after notice to return, does not
necessarily amount to abandonment.42

This Court recalls to mind that petitioners filed a complaint for illegal dismissal without opting to be reinstated, and admitting in
their Rejoinder that reinstatement is no longer feasible due to strained relationship.

This act of filing the complaint is inconsistent with abandonment of employment. This effectively negates any suggestion that they had
the intention to abandon their employment.43

Verily, respondents failed to show a clear proof of deliberate and unjustified intent on the part of the petitioners to sever the
employer� employee relationship. The operative act is still the employees' ultimate act of putting an end
to their employment, which is totally missing in this case.

Deletion of Award of Backwages and Separation Pay �

In cases where there is both an absence of illegal dismissal on the part of the employer and an absence of abandonment on the part of
the employees, the remedy is reinstatement but without backwages. However, considering that the reinstatement was already
impossible by reason of the strained relations of the parties, and the fact that petitioners already found another employment, each
party must bear his or her own loss, thus, placing them on equal footing.

Thus, in MZR Industries, et.al. v. Majen Colambot, 44 We held that:

These circumstances, taken together, the lack of evidence of dismissal and the lack of intent on the part of the respondent to
abandon his work, the remedy is reinstatement but without backwages. However, considering that reinstatement is no longer
applicable due to the strained relationship between the parties and that Colambot already found another employment, each party
must bear his or her own loss, thus, placing them on equal footing.

Verily, in a case where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden
of economic loss is not rightfully shifted to the employer; each party must bear his own loss.[Emphasis Supplied.]

So too, in John L. Borja and Aubrey L. Borja/Dong Juan v. Randy B. Mi �oza and Alaine S. Bandalan,45 wherein this Court deleted the
award of separation pay in a factual situation analogous to the instant case, We explained that:

"Therefore, since respondents were not dismissed and that they were not considered to have abandoned their jobs, it is only proper for
them to report back to work and for petitioners to reinstate them to their former positions or substantially-equivalent positions. In this
regard, jurisprudence provides that in instances where there was neither dismissal by the employer nor abandonment by the
employee, the proper remedy is to reinstate the employee to his former position, but without the award of backwages. However, since
reinstatement was already impossible due to strained relations between the parties, as found by the NLRC, each of them must bear
their own loss, so as to place them on equal footing. At this point, it is well to emphasize that 'in a case where the employee's failure to
work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the
employer; each party must bear his own loss.'

In sum, the NLRC ruling holding that respondents were not constructively dismissed and that they did not abandon their jobs must be
reinstated, subject to the modification that the award of separation pay in their favor must be deleted." [Emphasis Supplied.]

Based on the doctrines embodied in the aforementioned cases, this Court is constrained to rule that the petitioners are not entitled to
the award of backwages and separation pay. To restate, considering that petitioners' cessation of employment was neither brought
about by abandonment nor illegal dismissal, and their reinstatement is no longer feasible due to strained relations and because they
did not opt to be reinstated, coupled with the fact that they already found employment elsewhere, the legal effect is that the burden of
economic loss is not rightfully shifted to the employer; the parties must bear the burden of their own loss. WHEREFORE, We DENY the
petition. The Decision dated November 8, 2016 and Resolution dated March 20, 2017 of the Court of Appeals in CA-G.R. SP No. 142970,
are hereby REVERSED and SET ASIDE and a new judgment is rendered declaring petitioners' failure to prove the fact of their dismissal;
and that respondent-company in turn, failed to show abandonment on the part of the petitioners. Thus, petitioners are not entitled to
their money claims, either in the form of backwages or separation pay.

SO ORDERED.

20. G.R. No. 224319

DE LA SALLE ARANETA UNIVERSITY, INC., Petitioner

vs.
DR. ELOISA G. MAGDURULANG, Respondent

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari are the Decision dated November 9, 2015 and the
1 2

Resolution dated April 22, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 123219, which modified the
3

Decision dated July 15, 2011 and the Resolution dated December 12, 2011 of the National Labor Relations
4 5

Commission (NLRC) in NLRC Case No. NCR-08-11300-10, and accordingly, ordered petitioner De La Salle
Araneta University, Inc. (petitioner) to pay respondent Dr. Eloisa G. Magdurulang (respondent) backwages
corresponding to her full monthly salaries for three (3) semesters, i.e., first and second semesters of school
year (SY) 2010-2011 and first semester of SY 2011-2012, as well as pro-rated 13th month pay.

The Facts

This case stemmed from an amended complaint for constructive dismissal with prayer for reinstatement and
payment of salaries and other benefits filed by respondent against petitioner. Respondent alleged that
petitioner initially hired her as a part-time faculty member for the latter's College of Business for the second
semester of SY 2007-2008 (November 5, 2007-March 18, 2008), as well as the summer semester of 2008
(March 31, 2008-May 13, 2008). For the second semester of SY 2008- 2009 (October 13, 2008-May 31, 2009),
she was then appointed as a full-time faculty member/BSBA Program Coordinator, with such designation
being renewed for the first and second semesters of SY 2009-2010 (June 1, 2009-May 31, 2010). During the
pendency of respondent's contract for SY 2009-2010, the University's Acting Assistant Dean recommended to
the University President that respondent be already accorded a permanent status, effective the second
semester of SY 2009-2010. While the University President initially acceded to such recommendation, he
ended up not extending a permanent appointment to respondent, pursuant to Section 117 of the Manual of
Regulations for Private Higher Education (MORPHE) which provides that "[t]he probationary employment of
academic teaching personnel shall not be more than a period of six (6) consecutive semesters or nine (9)
consecutive trimesters of satisfactory service, as the case may be." Thus, on November 4, 2009, the University
President instead issued a reappointment to respondent as full-time faculty member/BSBA Program
Coordinator for the first and second semesters of SY 2010-2011 (June 1, 2010-May 31, 2011), with a re-
classified ranking of Assistant Professor 4 and on contractual basis.

As a result, respondent wrote a letter dated January 18, 2010 to the University President, asking clarification
14

as to why: (a) her rank was changed from Associate Professor 2 to Assistant Professor 4 in her reappointment
for SY 2010-2011, resulting in diminution of salaries and benefits; and (b) she was not extended a permanent
appointment despite the favorable recommendation from the Acting Assistant Dean. In response thereto,
15

the University President wrote respondent a letter dated February 23, 2010, explaining to her, among others,
16

that she cannot be extended a regular and permanent appointment as of the moment as she has yet to finish
the probationary period of six (6) straight semesters, as provided under Section 3.1.3 of the 2009 DLSAU
Personnel Handbook, which in turn, expressly adopts Section 117 of the MORPHE. On July 20, 2010,
17 18

respondent wrote another letter reiterating her concerns, this time addressed to the new University
19

President. However, before the new University President could answer, respondent filed the instant
complaint, claiming that despite her re-appointment for SY 2010-2011, she was no longer given any teaching
load and that her academic administrative position as BSBA Program Coordinator was likewise
discontinued. Respondent also insisted that she had already attained the status of a regular employee since
she has been teaching for about three (3) years beginning in 2007, and considering too that the Acting
Assistant Dean already recommended her permanent appointment.

In its defense, petitioner countered that it neither constructively nor actually dismissed respondent,
maintaining that it could not appoint respondent to a regular and permanent position as she has yet to
complete the probationary period of six (6) consecutive semesters, as laid down in the MORPHE, as well as in
the 2009 DLSAU Personnel Handbook. In this regard, petitioner pointed out that respondent's appointments
25

all throughout her probationary employment were on a fixed-term basis, which she voluntarily and freely
accepted. As such, it is within the university's prerogative to re-hire her or not at the end of such contracts.
26 27

The Labor Arbiter's (LA) Ruling

In a Decision dated February 16, 2011, the LA dismissed the complaint for lack of merit. The LA found that
since petitioner is a private educational institution for higher education, respondent's employment status
therein is covered not only by the MORPHE but also the 2009 DLSAU Personnel Handbook. Since respondent
30

has not held a full time academic teaching position for a period of six (6) consecutive semesters or nine (9)
straight trimesters, she is not eligible for permanent appointment. Moreover, considering that respondent's
employment contracts were on a fixed-term basis, her services may be subject to termination. 31

Aggrieved, respondent appealed to the NLRC.

32

The NLRC Ruling

In a Decision dated July 15, 2011, the NLRC reversed and set aside the LA ruling, and accordingly, declared
respondent to have been constructively dismissed. Consequently, it ordered petitioner to reinstate her to the
position of Associate Professor with full backwages reckoned from the first semester of SY 2010-2011 up to
her actual reinstatement, and to pay her all other monetary benefits which inure to such position during the
time she was not given any teaching load, as well as the honorarium for the position of BSBA Program
Director until the end of her term on May 31, 2011.

The NLRC held that while petitioner has yet to complete the probationary period of six (6) consecutive
semesters, such period was effectively shortened when the Acting Assistant Dean recommended her for a
permanent status, which was initially formally acted upon by the University President. In this regard, 36

petitioner's act of voluntary shortening respondent's probationary period effectively accorded the latter the
status of a regular employee. Perforce, for not having been given any teaching load, as well as discontinuing
her appointment as BSBA Program Coordinator, respondent was deemed to have been constructively
dismissed.37
Petitioner moved for reconsideration, which was, however, denied in a Resolution dated December 12,
38 39

2011. Dissatisfied, it filed a petition for certiorarz before the CA.

40

The CA Ruling

In a Decision dated November 9, 2015, the CA modified the NLRC ruling, deleting respondent's reinstatement.
In lieu thereof, it ordered petitioner to pay respondent backwages corresponding to her full monthly salaries
for three (3) semesters, i.e., the first and second semester of school year (SY) 2010-2011 and the first
semester of SY 2011-2012, as well as prorated 13th month pay.

Contrary to the NLRC's ruling, the CA held that respondent has no vested right to a permanent appointment
since she had not completed the pre-requisite six (6) consecutive semesters necessary to be eligible for the
same. Nonetheless, as a probationary employee, respondent still enjoys a limited security of tenure, and
therefore, cannot be terminated except for just or authorized causes, or if she fails to qualify in accordance
with the reasonable standards set by petitioner. As respondent was not given any teaching load for SY 2010-
43

2011 and her services as BSBA Program Coordinator were discontinued without any justifiable reason, she
was deemed to have been constructively dismissed. As such, respondent is entitled to receive the benefits
appurtenant to the remainder of her probationary period, namely, both semesters of SY 2010-2011 and the
first semester of SY 2011-2012. However, the CA pointed out that due to the dispute of the litigating parties in
this case, it may be inferred with certainty that petitioner had already opted not to retain respondent in its
employ beyond her probationary period. 44

Undaunted, petitioner moved for reconsideration, but the same was denied in a Resolution dated April 22,
45 46

2016; hence, this petition.

47

The Issue Before the Court

The issue for the Court's resolution is whether or not the CA correctly ruled that respondent was: (a) a
probationary employee; and (b) constructively dismissed by petitioner, thereby entitling her to the benefits
appurtenant to the remainder of her probationary period.

The Court's Ruling

Preliminarily, the Court stresses the distinct approach in reviewing a CA's ruling in a labor case. In a Rule 45
review, the Court examines the correctness of the CA's Decision in contrast to the review of jurisdictional
errors under Rule 65. Furthermore, Rule 45 limits the review to questions of law. In ruling for legal
correctness, the Court views the CA Decision in the same context that the petition for certiorari was
presented to the CA. Hence, the Court has to examine the CA's Decision from the prism of whether the CA
correctly determined the presence or absence of grave abuse of discretion in the NLRC decision. 48

Case law states that grave abuse of discretion connotes a capricious and whimsical exercise of judgment,
done in a despotic manner by reason of passion or personal hostility, the character of which being so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by
or to act at all in contemplation of law.
49

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are
not supported by substantial evidence, which refers to that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has basis in the evidence and
the applicable law and jurisprudence, then no grave abuse of discretion exists and the CA should so declare,
and accordingly, dismiss the petition.50

Guided by the foregoing considerations and as will be explained hereunder, the Court finds that the CA
correctly ascribed grave abuse of discretion on the part of the NLRC, as the latter's finding that respondent
had attained a regular status patently deviates from the evidence on record, as well as settled legal principles
of labor law. Further, while the CA correctly ruled that petitioner constructively dismissed respondent, it erred
in holding that respondent is entitled to the benefits pertaining to the remainder of her probationary
period i.e., both semesters of SY 2010-2011 and the first semester of SY 2011-2012.

A probationary employee or probationer is one who is on trial for an employer, during which the latter
determines whether or not the former is qualified for permanent employment. During this period, the
employer, on the one hand, is given the opportunity to observe the fitness of an employee while at work in
order to ascertain the latter's efficiency and productivity; on the other hand, the employee seeks to prove to
his employer that he has the qualifications to meet the reasonable standards for permanent employment. As
used to describe such phase of employment, the word "probationary" implies the purpose of such term or
period, and not necessarily its length.51

Indeed, the employer has the right, or is at liberty, to choose who will be hired and who will be declined. As a
component of this right to select his employees, the employer may set or fix a probationary period within
which the latter may test and observe the conduct of the former before hiring him permanently. Notably, the
52

exercise of such right is regulated by law insofar as it sets a maximum allowable period within which the
employer may subject an employee to a probationary period. As a general rule, such limit is set under Article
296 of the Labor Code, as amended:
53 54

Article 296. [281] Probationary Employment. - Probationary employment shall not exceed six (6) months from
the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a
longer period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular employee.

As an exception, however, case law has provided that the probationary period of employment of academic
personnel such as professors, instructors, and teachers - including the determination as to whether they have
attained regular or permanent status - shall not be governed by the Labor Code but by the standards
established by the Department of Education and the Commission on Higher Education, as the case may
be. In this regard, Section 92 of the 1992 Revised Manual of Regulations for Private Schools (8th Edition)
55

explicitly provides that: (a)for those in elementary and secondary levels, the probationary period shall not be
more than three (3) consecutive years of satisfactory service; and (b) for those in the tertiary level, such
period shall be six (6) consecutive semesters or nine (9) consecutive trimesters, as the case may be. 56

The rule on the probationary employment of elementary and secondary academic personnel is reiterated in
Section 63 of the 2010 Manual of Regulations for Private Schools in Basic Education, which reads:

Section 63. Probationary Period; Regular or Permanent Status. - A probationary period of not more than three
(3) years in the case of the school teaching personnel and not more than six (6) months for nonteaching
personnel shall be required for employment in all private schools. A school personnel who has successfully
undergone the probationary period herein specified and who is fully qualified under the existing rules and
standards of the school shall be considered permanent.
The rule relative to private higher education institutions is likewise reiterated in Sections 117 and 118 of the
57

MORPHE:

Section 117. Probationary Period. - An academic teaching personnel who does not possess the minimum
academic qualifications prescribed under Sections 35 and 36 of this Manual shall be considered as part-time
employee, and therefore cannot avail of the status and privileges of a probationary employment. A part-time
employee cannot acquire regular permanent status, and hence, may be terminated when a qualified teacher
becomes available.

The probationary employment of academic teaching personnel shall not be more than a period of six (6)
consecutive semesters or nine (9) consecutive trimesters of satisfactory service, as the case may be.

Section 118. Regular or Permanent Status. -A full-time academic teaching personnel who has satisfactorily
completed his/her probationary employment, and who possesses the minimum qualifications required by the
Commission and the institution, shall acquire a regular or permanent status if she/she is re-hired or re-
appointed immediately after the end of his/her probationary employment. However, a regular or permanent
academic teaching personnel who requests a teaching load equivalent to a part-time load, shall be considered
resigned, and hence, may forfeit his/her regular or permanent status at the discretion of the management of
the higher education institution and shall thereby be covered by a term-contract employment.

Thus, for an academic personnel to acquire a regular and permanent employment status, it is required that:
(a) he is considered a full-time employee; (b) he has completed the required probationary period; and (c) his
service must have been satisfactory. However, it must be emphasized that mere completion of the
58

probationary period does not, ipso facto, make the employee a permanent employee of the educational
institution, as he could only qualify as such upon fulfilling the reasonable standards for permanent
employment as faculty member. This is especially true in the case of institutions of higher education which,
consistent with academic freedom and constitutional autonomy, has the prerogative to provide standards for
its academic personnel and determine whether the same have been met. Thus, at the end of the probation
period, the decision to re-hire a probationary employee, and thus, vest upon him a regular and permanent
status, belongs to the educational institution as the employer alone. Otherwise stated, upon the expiration
59

of their contract of employment, academic personnel on probation cannot automatically claim security of
tenure and compel their employers to renew their employment contracts which would then transform them
into regular and permanent employees. 60

A judicious perusal of the records in this case reveals that while the respondent complied with the first and
third requisites, as she is a full-time professor and has consistently received satisfactory ratings for her
services, the second requisite is noticeably absent. As aptly pointed out by the CA: (a) respondent's
appointments for the second semester of SY 2007-2008 and the summer semester of SY 2008 were on a part-
time basis only, and thus, cannot be counted for purposes of regularization; (b) her full-time appointments for
the second semester of SY 2008-2009 and both semesters of SY 2009-2010, where she was actually given
teaching loads and an administrative function as BSBA Program Coordinator, only consist of three (3)
consecutive semesters; and (c) even if her full-time appointment for both semesters of SY 2010-2011 - the
time when she was no longer given a teaching load and her administrative function was discontinued - were
to be counted in her favor, she would only have a total of five (5) consecutive semesters as a full-time
professor, and thus, would not have made her eligible for regular and permanent appointment. Hence, the CA
correctly declared that respondent failed to acquire a regular and permanent status.

To be sure, the Court finds the NLRC's conclusion that respondent's probationary period was effectively
shortened when the Acting Assistant Dean recommended her for a permanent appointment effective the
second semester of SY 2009-2010 to be untenable. Suffice it to say that while there was indeed such
61
recommendation and that the University President was initially inclined to approve the same, the latter
ended up not going through with such recommendation and instead renewed respondent's appointment for
both semesters of SY 2010-2011. While the period of probation may be reduced if the employer voluntarily
extends a permanent appointment even before the end of such period, it must be pointed out that absent
circumstances which unmistakeably show that an abbreviated probationary period has been agreed upon, the
default probationary term still governs, as in this case.
62

Nonetheless, as a probationary employee, respondent still enjoys limited security of tenure during the period
of her probation-that is, she cannot be terminated except for just or authorized causes, or if she fails to
qualify in accordance with reasonable standards prescribed by petitioner for the acquisition of permanent
status of its teaching personnel. Hence, the CA was also correct in ruling that petitioner's unjustified acts of
63

depriving her of teaching loads, as well as her functions as BSBA Program Coordinator during the pendency of
her appointment for both semesters of SY 2010-2011, constitute constructive dismissal, for which it should
64

be made liable to respondent for the latter's benefits appurtenant thereto.

However, the CA erred in holding that respondent is entitled to complete her final three (3) semesters of
probationary employment, considering that at the time of her constructive dismissal, her existing contract
with petitioner was only fixed for both semesters of SY 2010-2011, or the fourth and fifth semesters of her
probationary employment. In Magis Young Achievers' Learning Center v. Manalo, the Court held that it is an
65 66

accepted practice among educational institutions that the probationary employment is split into numerous
fixed-term contracts so that the employer will be given the flexibility to no longer continue with the
employee's probationary employment should it become apparent that the latter does not meet the former' s
standards; and that it is only when the probationary contract does not indicate any period that it will be
assumed that the employee was hired for the entire duration of the probationary employment, viz.:

The common practice is for the employer and the teacher to enter into a contract, effective for one school
year. At the end of the school year, the employer has the option not to renew the contract, particularly
considering the teacher's performance. If the contract is not renewed, the employment relationship
terminates. If the contract is renewed, usually for another school year, the probationary employment
continues. Again, at the end of that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would then be the last year - since it
would be the third school year - of probationary employment. At the end of this third year, the employer may
now decide whether to extend a permanent appointment to the employee, primarily on the basis of the
employee having met the reasonable standards of competence and efficiency set by the employer. For the
entire duration of this three-year period, the teacher remains under probation. Upon the expiration of his
contract of employment, being simply on probation, he cannot automatically claim security of tenure and
compel the employer to renew his employment contract.x x x

It is important that the contract of probationary employment specify the period or term of its effectivity. The
failure to stipulate its precise duration could lead to the inference that the contract is binding for the full
three-year probationary period. (Emphasis and underscoring supplied)
67

Records show that petitioner did not hire respondent for the entire duration of the latter's probationary
period. In fact, respondent's probationary employment with petitioner lasting five (5) semesters was split
1âwphi1

into three (3) separate fixed-term contracts, to wit: (a) Appointment dated September 23, 2008 for the
68

second semester of SY 2008-2009; (b) Appointment dated May 26, 2009 for both semesters of SY 2009-2010;
69

and (c) Appointment dated November 4, 2009 for both semesters of SY 2010-2011. Since respondent's
70

constructive dismissal occurred during the effectivity of her last contract, she is entitled only to the benefits
arising from such. Consequently, petitioner cannot be made to pay her benefits corresponding to
respondent's last semester of probationary employment as there is simply no contract covering the same.
In sum, the CA correctly ruled that respondent is a probationary employee who was constructively dismissed
by petitioner during the course of her probationary employment. However, the CA erred in awarding
respondent benefits pertaining to the remainder of her probationary employment spanning three (3)
semesters as the duration of her last contract with petitioner only lasts for two (2) semesters. As such,
respondent is only entitled to the benefits sourced therefrom. Finally, as a result of the foregoing
proceedings, the CA aptly inferred that respondent's employment no longer ripened into a regular and
permanent status, and as such, petitioner is no longer bound to reinstate her. WHEREFORE, the petition
is PARTLY GRANTED. Accordingly, the Decision dated November 9, 2015 and the Resolution dated April 22,
2016 of the Court of Appeals in CA-G.R. SP No. 123219 are AFFIRMED with MODIFICATION, in that the order
of backwages corresponding to respondent Dr. Eloisa G. Magdurulang's supposed salaries and benefits for the
first semester of school year 2011-2012 is hereby DELETED. The rest of the ruling STANDS.

SO ORDERED.
21. G.R. No. 194001

MARIA VILMA G. DOCTOR and JAIME LAO, JR., Petitioners

vs.
NII ENTERPRISES and/or MRS. NILDA C. IGNACIO, Respondents

DECISION

LEONARDO-DE CASTRO, J.:

Before this Court is a Petition for Review on Certiorari filed by petitioners Maria Vilma G. Doctor (Doctor) and
Jaime Lao, Jr. (Lao) assailing the (a) Decision dated April 23, 2010 of the Court of Appeals in CA-G.R. SP No.
1

107497, which reversed and set aside the Decision dated February 1, 2008 of the National Labor Relations
2

Commission (NLRC) in NLRC NCR CA No. 045354-05 and dismissed petitioners' complaint for illegal dismissal
against respondents NII Enterprises and/or Mrs. Nilda C. Ignacio (Ignacio); and (b) Resolution dated 3

September 28, 2010 of the appellate court in the same case, which denied petitioners' Motion for
Reconsideration. The NLRC had previously affirmed with modification the Labor Arbiter's Decision dated 4

March 5, 2005 in NLRC-NCR Case No. 00- 02-02670-04, finding that petitioners were illegally dismissed and
ordering respondents to pay petitioners backwages and separation pay.

The following events gave rise to the instant Petition:

Respondent NII Enterprises is a sole proprietorship engaged in the business of providing car air-conditioning
(aircon) services, which is owned by respondent Ignacio. Petitioners had been employed by respondents,
particularly, petitioner Doctor as a clerk since April 3, 1995 and petitioner Lao as an aircon technician since
December 5, 1995. On February 10, 2004, respondent Ignacio and petitioner Doctor had a serious argument,
which prompted petitioner Doctor to file a complaint for slander and threat against respondent Ignacio
at Barangay San Antonio, Makati City. Per the minutes of the barangay proceedings, petitioner Doctor
complained of respondent Ignacio committing the following acts:

"Dinuduro niya ako at minura nya ako ng leche at inambahan niya ako na ipupukpok sa akin ang telepono at
dinerty finger nya ako. Inakusahan niya ako ng mga bagay na hindi ko ginawa at sinabi pa niya na kung ano
ang gusto niya siya ang masusunod."

In her prayer, [petitioner] Vilma Doctor prayed:

"Ang gusto ko lang naman ay makapag-usap kami ng malaya. Sana ay maging maayos ang lahat at matapos
na."5

Since efforts to amicably resolve the dispute between respondent Ignacio and petitioner Doctor failed,
the barangayissued a Certification to File Action dated February 20, 2004.
6
On February 24, 2004, petitioner Doctor filed a complaint for illegal dismissal against respondents before the
NLRC, docketed as NLRC-NCR Case No. 00-02-02670-04.

Petitioner Lao, who accompanied petitioner Doctor at the barangay proceedings, also joined the complaint
for illegal dismissal before the NLRC as a party-complainant.

In their Position Paper, petitioners alleged that:

7

[Petitioners] MA. VILMA G. DOCTOR and MR. JAIME S. LAO, JR. were arbitrarily and illegally dismissed on
February 10, 2004 by the above-said company. They were barred from reporting to their former positions or
employment respectively without any valid reason under the law despite their willingness to report and
continue their works. Surprisingly, the company continued to refuse and give the two [petitioners] the
opportunity to be heard and to explain their side. This arbitrary decision of summary termination of services
is tantamount to denial of due process of law and failure to respect their substantive rights under the Labor
Code. Moreover, granting et arguendo that they have violated any policy of the company yet there was no
formal accusation made against them nor were they informed beforehand of any valid reasons invoked by the
company in support of their illegal dismissal. Hence, it is very clear and conclusive that as they belonged to
the category of regular employees they cannot just be summarily and capriciously dismissed from their
employment without any valid reasons under the law. 8

Petitioners prayed that respondents be ordered to pay them backwages, holiday pay, bonus pay, 13th/14th
month pay, moral and exemplary damages, and attorney's fees.

Respondents countered that after respondent Ignacio and petitioner Doctor had a heated altercation
sometime in February 2004, petitioner Doctor no longer reported for work. Petitioner Lao similarly absented
himself from work without prior leave. To respondent Ignacio's surprise, petitioner Doctor instituted a
complaint for slander and threat against her before the barangay, but the parties did not reach an amicable
settlement. Respondents intimated that petitioner Doctor, who was then engaged to be married to petitioner
Lao, filed the complaint for illegal dismissal against respondents in an attempt to mulct them for money to
finance petitioners' forthcoming wedding. Respondents denied that petitioners were ever told not to report
for work and averred that it was petitioners who abandoned their jobs. Thus, respondents sought that
petitioners' complaint for illegal dismissal against them be dismissed.
9

The Labor Arbiter, in his Decision dated March 5, 2005, found that respondents failed to prove just and valid
cause and observance of due process in petitioners' dismissal. As to respondents' allegation that petitioners
abandoned their jobs, the Labor Arbiter held the same to be bereft of merit as respondents also failed to
prove the requisites for a valid defense of abandonment. The Labor Arbiter, moreover, pointed out that the
petitioners' timely filing of the complaint for illegal dismissal negated respondents' defense of abandonment.
The Labor Arbiter reminded that extreme caution should be exercised in terminating the services of a worker
for his/her job might be the only lifeline on which his/her family depended for survival in difficult times.
Although petitioners were entitled to reinstatement as a consequence of their illegal dismissal, the Labor
Arbiter ordered payment of separation pay in lieu of reinstatement due to the strained relationship between
the parties. The Labor Arbiter did not grant petitioners' money claims given the lack of substantiation. The
Labor Arbiter, ultimately, adjudged:

WHEREFORE, premises all considered, judgment is hereby issued finding the dismissal illegal and ordering
respondents to pay [petitioners] backwages and separation pay as follows:
 VILMA DOCTOR:

Backwages - ₱80,000.00

(₱7,500.00 x 12 mos = (₱80,000.00)

Separation Pay - ₱67,500.00

(₱7,500.00 x 9 = ₱67,500.00)

JAIME LAO, JR.:

Backwages - ₱80,000.00

(₱7,500.00 x 12 mos = (₱80,000.00)

Separation Pay - ₱67,500.00

(₱7,500.00 x 9 = ₱67,500.00)

All other claims are dismissed for lack of merit. 10

Respondents filed before the NLRC an appeal of the foregoing judgment of the Labor Arbiter, which was
docketed as NLRC NCR CA No. 045354-05. Respondents asserted that there had been no illegal dismissal as
petitioners were never issued notices of termination. Respondents reiterated that petitioner Doctor did not
report for work after her altercation with respondent Ignacio, and instead filed a complaint for threat and
slander against respondent Ignacio before the barangay. Only when no amicable settlement was reached
before the barangay did petitioner Doctor proceed to file her complaint for illegal dismissal against
respondents before the NLRC. Respondents further argued that they had no reason to terminate petitioner
Lao's services and that the latter simply joined the complaint for illegal dismissal before the NLRC even
though he was not involved in the dispute between respondent Ignacio and petitioner Doctor. Respondents
contended that petitioners were not entitled to separation pay since they were not terminated from
employment. Nevertheless, assuming that petitioners were illegally dismissed, respondents maintained that
the Labor Arbiter's award of separation ·pay in petitioners' favor was excessive because such pay should be
computed at only one-half (½)-month pay, not one (1)-month pay, for every year of service and petitioner Lao
worked for respondents for eight (8) years, not nine (9) years.

In its Decision dated February 1, 2008, the NLRC ruled: WHEREFORE, premises considered, respondents'
appeal is partially granted. Accordingly, the appealed Decision is hereby MODIFIED to the extent that the
award of separation pay to Jaime Lao shall cover only a total of eight (8) years. All other dispositions are
hereby AFFIRMED.

Respondents filed a Motion for Reconsideration, which the NLRC denied in a Resolution dated November 27,
2008. Respondents filed before the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of
Court, which was docketed as CAG. R. SP No. 107497, averring grave abuse of discretion, tantamount to lack
or excess of jurisdiction, on the part of the NLRC in issuing its Decision dated February 1, 2008 and Resolution
dated November 27, 2008. The Court of Appeals rendered its Decision on April 23, 2010 finding respondents'
Petition meritorious.
The appellate court stressed that while the employer has the burden in illegal dismissal cases of proving that
the termination was for valid or authorized cause, the employee must first establish by substantial evidence
the fact of dismissal from service, and this, petitioners failed to do. Pertinent findings of the Court of Appeals
are quoted below:

It should be noted that [petitioner Doctor] brought a case for threat and slander against [respondent Ignacio]
before the Barangay but amicable settlement failed as further bitter arguments between the parties ensued.
Thus, a Certification to File Action was issued on February 20, 2004. On February 24, 2004, the complaint for
illegal dismissal was filed by [petitioners] against [respondents].

In [petitioners'] position paper filed below, not even a passing mention was made of the previous heated
argument between [petitioner Doctor] and [respondent Ignacio], but simply stating that both [petitioners]
were barred from the work premises, despite their willingness to do so. [Petitioners] were not candid, not
mentioning the incident in order not to highlight the fact that they absented themselves from work after the
altercation. This is as much as [petitioners] admitted in their Comment to the petition that "both [petitioners}
went on absence right after the argument", and arguing that their absence should not justify the employer in
dismissing them. They even justified their absence by explaining in their comment, "If Doctor truly failed to
report for work on days following their argument, it was only because she felt that it was no longer conducive
for her [to} continue her employment as the emotional strain created thereby entailed an unbearable and
stressful work environment for her. The same holds true with respect to [petitioner} Lao. Being the significant
other of Doctor, he was also aware of the possible retaliation that the [respondents} may have against him.
As it became impossible for [petitioners} to return for work, it was, therefore, correct for them to claim for
separation pay instead."

With that admission, coupled with the immediate filing of the complaint for illegal dismissal on February 24,
2004 after the barangay conciliation on February 20, 2004 failed, We are convinced that no actual dismissal
ever happened. [Petitioners] simply stopped working and thereafter immediately filed the illegal dismissal
case. There is no constructive dismissal either, which contemplates an unbearable situation created by the
employer or any act done manifesting a case of discrimination, disdain, or resulting in employee's demotion
in rank, diminution in pay, or subjecting him to unbearable working conditions, leaving no option to the
employee but to forego his continued employment. None was shown in this case. The situation in the present
case is clear that both the employer and employee were involved in the incident. The employer did not alone
create the situation, which [petitioner Doctor] considers as an unpleasant and hostile working environment,
her apprehension prompting her to quit from her work.

The immediate filing of the case for illegal dismissal did not give the employer the opportunity to even send
show cause notices to [petitioners'] absences. Rather than undergo the normal process of disciplining
[petitioners] for repeated absences, [respondent Ignacio] had no other option but to defend her case. Hence,
there is no violation of due process to speak of.

As far as [petitioner Lao] is concerned, [respondent Ignacio] has no cause to terminate him. It is more likely
that since his sweetheart [petitioner Doctor] opted to quit, he joined her, fearing the possible retaliation
against him as admitted in his Comment. Further, it would be too foolhardy for [respondent Ignacio] to
terminate him for no reason at all and be held liable for illegal dismissal without even a semblance of good
defense.

All in all, the circumstances surrounding this case do not permit Us to apply the principle that filing an illegal
dismissal case is not consistent with abandonment. This is not an ironclad rule. What we see here is
[petitioners'] decision to quit from their employment because of the unnerving thought of working in a
hostile environment, resulting from the heated argument between [petitioner Doctor] and [respondent
Ignacio]. 14

The Court of Appeals explicitly declared that in finding that petitioners were illegally dismissed, the NLRC
committed grave abuse of discretion and clearly misappreciated the facts of the case resulting in a wrong
conclusion.

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the instant petition is GRANTED. The February 01, 2008· Decision of the National Labor
Relations Commission which affirmed with slight modification the Decision dated March 5, 2005 of the Labor
Arbiter declaring [petitioners] illegally dismissed and ordering [respondents] to pay [petitioners] their
backwages and separation pay, and the NLRC Resolution dated November 27, 2008 denying the motion for
reconsideration, are NULLIFIED and SET ASIDE. The complaint for illegal dismissal is DISMISSED for lack of
merit.15

Petitioners filed a Motion for Reconsideration but the appellate court denied the same in a Resolution dated
September 28, 2010.

Hence, petitioners come before this Court via the instant Petition for Review on Certiorari, raising the sole
issue of:

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NA TI ON AL
LABOR RELATIONS COMMISSION FINDING THAT THE PETITIONERS WERE NOT ILLEGALLY DISMISSED. 16

Petitioners question the scant consideration given by the Court of Appeals to their version of events just
because of their failure to mention in their Position Paper before the NLRC the altercation between
respondent Ignacio and petitioner Doctor. Petitioners explain that "their alleged failure to include in their
pleadings filed before the NLRC the altercation incident cannot in anyway be construed as a strategy to deter
this Honorable Court's attention from the main issue. For whether the incident was alleged or not is of no
consequence." 17

Petitioners also call attention to the fact that both the Labor Arbiter and the NLRC found that petitioners were
actually dismissed when they were expressly told not to report for work on February 10, 2004 and prohibited
from entering the premises of respondent NII Enterprises. It was respondents who first mentioned and
argued in their Petition for Certiorari filed before the Court of Appeals that there was no constructive
dismissal of petitioners, hence, petitioners were constrained to refute respondents' argument. Petitioners,
without admitting that they were constructively dismissed, acknowledged that their case could also
constitute constructive dismissal as petitioner Doctor filed the complaint for illegal dismissal before the NLRC
because she felt that it was already difficult, if not impossible, to continue working for respondent Ignacio;
and petitioner Lao joined Doctor in filing said complaint because he feared that respondent Ignacio might also
vent her ire on him. The appellate court, unfortunately, took petitioners' statements on constructive dismissal
out of context and dismissed their complaint for illegal dismissal based thereon.

Petitioners maintain that they did not abandon their work. According to petitioners, it is highly unbelievable
that after working for respondents for a long time, they would simply stop working for no apparent reason. As
proof that petitioner Doctor had no intention of severing her employment with respondents, petitioner
Doctor even attempted to settle her dispute with respondent Ignacio at the barangay.
Moreover, petitioners allege that from February 10, 2004 (when they were prevented from returning to work)
to March 11, 2004 (when respondent Ignacio received the summons regarding the scheduled mandatory
conference before the Labor Arbiter), respondents did not issue any notice nor impose any disciplinary
measure against petitioners for their continued absences. Petitioners aver that respondents' aforedescribed
apathy was an indication that the latter were bent on terminating petitioners' employment without due
process of law.

Since they were illegally terminated from employment, petitioners claim that they are entitled to backwages
and separation pay, in lieu of reinstatement, as awarded by the Labor Arbiter and the NLRC.

At the outset, the Court reiterates that in a petition for review on certiorari under Rule 45 of the Rules of
Court, its jurisdiction is generally limited to reviewing errors of law. The Court is not a trier of facts, and this
applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality. They are binding upon this Court unless there is a showing
of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter
disregard of the evidence on record. However, it is equally settled that one of the exceptions to this rule is
when the factual findings of the quasi-judicial agencies concerned are conflicting or contrary with those of the
Court of Appeals, as in the present case. Thus, the Court proceeds with its own factual determination herein
18

based on the evidence of the parties.

Article 294 of Presidential Decree No. 442, also known as the Labor Code of the Philippines, as amended and
19

renumbered, protects the employee's security of tenure by mandating that "[i]n cases of regular
employment, the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title." A lawful dismissal must meet both substantive and procedural requirements; in fine,
the dismissal must be for a just or authorized cause and must comply with the rudimentary due process of
notice and hearing. 20

In labor cases, as in other administrative and quasi-judicial proceedings, the quantum of proof required is
substantial evidence, defined as "that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion." The burden of proof rests upon the party who asserts the affirmative of an
21

issue.
22

The Court recognizes the rule that in illegal dismissal cases, the employer bears the burden of proving that the
termination was for a valid or authorized cause. However, there are cases wherein the facts and the evidence
do not establish prima facie that the employee was dismissed from employment. Before the employer must
bear the burden of proving that the dismissal was legal, the employee must first establish by substantial
evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the
legality or illegality thereof.
23

In this case, petitioners, on one hand, allege that on February 10, 2004, they were suddenly prohibited from
entering the premises of respondent NII Enterprises and expressly told not to report for work anymore; and
their efforts to continue their employment with respondents remained unheeded. Respondents, on the other
hand, deny that petitioners were dismissed at all and aver that petitioners simply stopped reporting for work
after a heated altercation between respondent Ignacio and petitioner Doctor on February 10, 2004.

Petitioners' bare allegation that they were dismissed from employment by respondents, unsubstantiated by
impartial and independent evidence, is insufficient to establish such fact of dismissal. Petitioners' general
claims that they were barred by respondents from entering the work premises and that respondents did not
heed petitioners' efforts to continue their employment lacked substantial details to be credible. The Court
reiterates the basic rule of evidence that each party must prove his affirmative allegation, that mere
allegation is not evidence. The Court also stresses that the evidence to prove the fact of the employee's
24

termination from employment must be clear, positive, and convincing. Absent any showing of an overt or
25

positive act proving that respondents had dismissed petitioners, the latter's claim of illegal dismissal cannot
be sustained - as the same would be self-serving, conjectural, and of no probative value.
26

Petitioners did not provide any explanation for completely failing to mention in their pleadings before the
Labor Arbiter the heated argument between respondent Ignacio and petitioner Doctor on February 10, 2004,
except only to say that whether they alleged said incident or not is of no consequence. It is readily apparent
that said altercation between respondent Ignacio and petitioner Doctor sparked this entire controversy, so it
escapes the Court how petitioners could view the same as inconsequential.

Consideration by the Court of the said incident will not deter the attention of the Court from the main issue
of the case. In fact, said incident sheds light on the parties' actuations on and after February 10, 2004. The
Court of Appeals very aptly observed that "[petitioners] were not candid, not mentioning the incident in
order not to highlight the fact that they absented themselves from work after the altercation." Petitioners
27

initially made it appear that respondents just arbitrarily barred them from reporting for work. The fact that a
serious argument took place between respondent Ignacio and petitioner Doctor on February 10, 2004 would
have given more credence to respondents' averment that petitioners, after immediately filing a complaint for
slander and threat against respondent Ignacio at the barangay, already willfully absented themselves from
work.

Respondents' failure to take any disciplinary action against petitioners between February 10, 2004 (the day of
the argument between respondent Ignacio and petitioner Doctor) and March 11, 2004 (the day respondents
received the Labor Arbiter's summons as regards the illegal dismissal case filed against them by petitioners)
does not constitute clear, positive, and convincing evidence that respondents had already dismissed
petitioners from employment. Respondents have satisfactorily explained that they had no opportunity to
commence any disciplinary proceedings against petitioners under the circumstances. It should be noted that
during said one-month period, petitioners had instituted two successive complaints against respondents, one
for slander and threat before the barangay, and one for illegal dismissal before the NLRC. During the several
conferences held before the barangay,the parties were still trying to reach an amicable settlement of the
dispute between them; and when the parties' efforts on amicable settlement failed, petitioners, shortly
thereafter, already filed the illegal dismissal case against respondents before the NLRC. As the Court of
Appeals opined, "[t]he immediate filing of the case for illegal dismissal did not give the employer the
opportunity to even send show cause notices to [petitioners'] absences. Rather than undergo the normal
process of disciplining [petitioners] for repeated absences, [respondent Ignacio] had no other option but to
defend her case." 28

Nevertheless, respondents' arguments on constructive 4ismissal are misplaced and superfluous given the
circumstances in this case. Petitioners have always maintained that they were actually dismissed from
employment when they were barred by respondents from entering the work premises and from reporting for
work; and respondents have persistently denied that they dismissed petitioners from employment, claiming
that petitioners simply stopped reporting for work after the altercation between respondent Ignacio and
petitioner Doctor on February 10, 2004.

Constructive dismissal is defined as follows:

Constructive dismissal has often been defined as a "dismissal in disguise" or "an act amounting to dismissal
but made to appear as if it were not." It exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay. In some cases, while no demotion in rank or diminution in pay may be attendant,
constructive dismissal may still exist when continued employment has become so unbearable because of acts
of clear discrimination, insensibility or disdain by the employer, that the employee has no choice but to
resign. Under these two definitions, what is essentially lacking is the voluntariness in the employee's
separation from employment. 29

Without petitioners alleging their demotion in rank, diminution in pay, or involuntary resignation due to
unbearable working conditions caused by the respondents as employers, there is no need to belabor the
issue of constructive dismissal herein. Any discussion on constructive dismissal will be merely speculative
and/or academic.

Also contrary to respondents' contention, petitioners cannot be deemed to have abandoned their work
simply because they had been absent the days following February 10, 2004. Settled is the rule that mere
absence or failure to report for work is not tantamount to abandonment of work. 30

For abandonment to exist, the following requisites must be present: (1) that the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and (2) that there must have
been a clear intention to sever the employer-employee relationship manifested by some overt acts. Absence
must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to
work anymore. And the burden of proof to show that there was unjustified refusal to go back to work rests on
the employer. Respondents herein failed to present any proof of petitioners' overt acts which manifest the
latter's clear intention to terminate their employment. In addition, petitioners' filing of a complaint for illegal
dismissal is inconsistent with the charge of abandonment, for employees who take steps to protest their
dismissal cannot, by logic, be said to have abandoned their work. 31

In sum, petitioners failed to discharge the burden of proving with substantial evidence that they were actually
dismissed from work by respondents. Since the fact of dismissal had not been satisfactorily established by
1

petitioners, then the burden of proving that the dismissal was legal, i.e., that it was for just and authorized
cause/s and in accordance with due process, did not shift to the respondents. Also, petitioners could not be
deemed to have abandoned their work by merely being absent and without clear intention of severing the
employer-employee relationship. There being no dismissal and no abandonment, the appropriate course of
action is to reinstate the employee/s but without the payment of backwages.

Yet, in Dee Jay's Inn and Cafe v. Raneses, the Court ordered therein employers to pay the employee
33

separation pay instead when reinstatement was no longer possible and reasonable. The Court pronounced
in Dee Jay's Inn that:

In a case where the employee was neither found to have been dismissed nor to have abandoned his/her
work, the general course of action is for the Court to dismiss the complaint, direct the employee to return to
work, and order the employer to accept the employee. However, the Court recognized in Nightowl that when
a considerable length of time had already passed rendering it impossible for the employee to return to work,
the award of separation pay is proper. Considering that more than ten (10) years had passed since respondent
stopped reporting for work on February 5, 2005, up to the date of this judgment, it is no longer possible and
reasonable for the Court to direct respondent to return to work and order petitioners to accept her. Under
the circumstances, it is just and equitable for the Court instead to award respondent separation pay in an
amount equivalent to one (1) month salary for every year of service, computed up to the time she stopped
working, or until February 4, 2005. (Citation omitted.)
In the instant case, petitioners' reinstatement is similarly rendered impossible and unreasonable given the
length of time that had .passed since the controversy started on February 10, 2004, as well as respondents'
own allegations that they already reduced their workforce and that petitioners "[have] no more place in the
business" of respondents. Therefore, respondents are ordered to pay petitioners separation pay, equivalent
34

to one (1) month salary for every year of service, in lieu of reinstatement.

Accordingly, petitioners Doctor and Lao are entitled to the following amounts of separation pay:

Petitioner One (1) Month Salary No. of Years Employed Total Separation Pay

Doctor ₱7,500.00 Nine (9) Years ₱67,500.00

Lao ₱7,500.00 Eight (8) Years ₱60,000.00

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is PARTIALLY GRANTED. The
Decision dated April 23, 2010 and Resolution dated September 28, 2010 of the Court of Appeals in CA-G.R. SP
No. 107497 is AFFIRMED with MODIFICATION. The complaint for illegal dismissal of petitioners Maria Vilma G.
Doctor and Jaime Lao, Jr. against respondents NII Enterprises and/or Mrs. Nilda C. Ignacio is DISMISSED for
lack of merit. Although petitioners are entitled to reinstatement to their former positions without payment of
backwages, petitioners' reinstatement is already impossible and unreasonable under the particular
circumstances of this case. Respondents are, therefore, ORDERED to pay petitioners Doctor and Lao
separation pay in lieu of reinstatement in the amounts of ₱67,500.00 and ₱60,000.00, respectively.

SO ORDERED.
22. G.R. No. 210080

MACARIO S. PADILLA, Petitioner

vs.
AIRBORNE SECURITY SERVICE, INC. AND/OR CATALINA SOLIS, Respondents

DECISION

LEONEN, J.:

Placing security guards on floating status is a valid exercise of management prerogative. However, any such
placement on off-detail should not exceed six (6) months. Otherwise, constructive dismissal shall be deemed
to have occurred. Security guards dismissed in this manner are ordinarily entitled to reinstatement. It is not
for tribunals resolving these kinds of dismissal cases to take the initiative to rule out reinstatement.
Otherwise, the discriminatory conduct of their employers in excluding them from employment shall
unwittingly find official approval.

Age, per se, cannot be a valid ground for denying employment to a security guard.

This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure praying
1

that the assailed April 18, 2013 Decision and November 11, 2013 Resolution of the Court of Appeals in CA-
2 3

G.R. SP No. 122700 be reversed and set aside.

The assailed Court of Appeals April 18, 2013 Decision sustained the August 3, 2011 Decision of the National
4

Labor Relations Commission, which affirmed the September 10, 2010 Decision of Labor Arbiter Fedriel S.
5

Panganiban (Labor Arbiter Panganiban) dismissing petitioner Macario S. Padilla's (Padilla) Complaint for 6

illegal dismissal. The assailed Court of Appeals November 11, 2013 Resolution denied petitioner's Motion for
Reconsideration.7

On September 1, 1986, Padilla was hired by respondent Airborne Security Service, Inc. (Airborne) as a security
guard. He was first assigned at an outlet of Trebel Piano along Ortigas Avenue Extension, Pasig City. Padilla
allegedly rendered continuous service until June 15, 2009, when he was relieved from his post at City
Advertising Ventures Corporation and was advised to wait for his re-assignment order. On July 27, 2009, he
allegedly received a letter from Airborne directing him to report for assignment and deployment. He called
Airborne's office but was told that he had no assignment yet. On September 9, 2009, he received another
letter from Airborne asking him to report to its office. He sent his reply letter on September 22, 2009 and
personally reported to the office to inquire on the status of his deployment with a person identified as Mr.
Dagang, Airborne's Director for Operations. He was told that Airborne was having a hard time finding an
assignment for him since he was already over 38 years old. Padilla added that he was advised by Airborne's
personnel to resign, but he refused. In December 2009, when he reported to the office to collect his 13th
month pay, he was again persuaded to hand in his resignation letter. Still not having been deployed or re-
assigned, on February 23, 2010, Padilla filed his Complaint for illegal dismissal, impleading Airborne and its
president, respondent Catalina Solis (Solis).

Respondents countered that Padilla was relieved from his post on account of a client's request. Thereafter,
12

Padilla was directed to report to Airborne's office in accordance with a Disposition/Relieve Order dated June
15, 2009. However, he failed to comply and went on absence without leave Instead. Respondents added that
13

more letters-dated July 27, 2009; September 9, 2009, which both directed Padilla to submit a written
explanation of his alleged unauthorized absences; January 12, 2010; and May 27, 2010-instructed Padilla to
report to Airborne's office, to no avail. Respondents further denied receiving Padilla's September 22, 2009
14

letter of explanation.15

In his September 10, 2010 Decision, Labor Arbiter Panganiban dismissed Padilla's Complaint. He lent credence
to respondents' claim that Padilla failed to report for work despite the letters sent to him.

In its August 3, 2011 Decision, the National Labor Relations Commission affirmed in toto Labor Arbiter
Panganiban's Decision. 20

The assailed Court of Appeals April 18, 2013 Decision sustained the rulings of the National Labor Relations
Commission and of Labor Arbiter Panganiban. It concluded that, if at all, Padilla was placed on floating status
for only two (2) months, from June 15, 2009, when he was recalled, to July 27, 2009. It emphasized that the
temporary ''off-detail" or placing on '"floating" status of security guards for less than six (6) months does not
amount to dismissal and that there is constructive dismissal only when a security agency fails to provide an
23

assignment beyond the six (6)-month threshold. The Court of Appeals also found that it was Padilla who
24

failed to report for work despite respondents' July 27, 2009 and September 9, 2009 letters. 25

Following the Court of Appeals' denial of his Motion for Reconsideration, Padilla filed the present Petition
26

before this Court.

For this Court's resolution is the sole issue of whether or not petitioner Macado S. Padilla was constructively
dismissed from his employment with respondent Airborne Security Service, Inc., he having been placed on
floating status apparently on the basis of his age and not having been timely re-assigned.

The Court of Appeals gravely erred in ruling that petitioner was not constructively dismissed and in
concluding that he went on absence without leave and abandoned his work.

Rule 45 petitions, such as the one brought by petitioner, may only raise questions of law. Equally settled
27

however, is that this rule admits of the following exceptions:

(1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) 1:vhen the
judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making its findings the [Court of Appeals] went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court;
(8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when
the facts set forth in the petition, as well as in the petitioner's main and reply briefs, are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) When the [Court of Appeals} manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion. (Emphasis supplied, citation omitted)
28

The Court of Appeals made a gross misapprehension of facts and overlooked other material details. The facts
of this case, when more appropriately considered, sustain a conclusion different from that of the Court of
Appeals. Petitioner was constructively dismissed from employment owing to his inordinately long floating
status.

II

The practice of placing security guards on "floating status" or "temporary off-detail" is a valid exercise of
management prerogative. Jurisprudence has settled that the period of temporary off-detail must not exceed
29

six (6) months. Beyond this, a security guard's floating status shall be tantamount to constructive
dismissal. In Reyes v. RP Guardians Security Agency:
30 31

Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a
security agency's client decided not to renew their service contract with the agency and no post is available
for the relieved security guard. Such situation does not normally result in a constructive
dismissal. Nonetheless, when the floating status lasts for more than six (6) months, the employee may be
considered to have been constructively dismissed. No less than the Constitution guarantees the right of
workers to security of tenure, thus, employees can only be dismissed for just or authorized causes and after
they have been afforded the due process of law. (Emphasis supplied, citations omitted)
32

Therefore, a security guard's-employer must give a new assignment to the employee within six (6)
months. This assignment must be to a specific or particular client. "A general return-to-work order does not
33 34

suffice.":
35

A holistic analysis of the Court's disposition in JLFP Investigation reveals that: [1] an employer must assign the
security guard to another posting within six (6) months from his last deployment, otherwise, he would be
considered constructively dismissed; and [2] the security guard must be assigned to a specific or particular
client. A general return-to- work order does not suffice. 36

III

To prove that petitioner was offered a new assignment, respondents presented a series of letters requiring
petitioner to report to respondent Airborne's head office. These letters merely required petitioner to report
37

to work and to explain why he had failed to report to the office. These letters did not identify any specific
client to which petitioner was to be reassigned. The letters were, at best, nothing more than general return-
to-work orders.

Jurisprudence is consistent in its disapproval of general return-to-work orders as a justification for failure to
timely render assignments to security guards.

In Ibon v. Genghis Khan Security Services, petitioner Ravengar Ibon (Ibon) filed a complaint for illegal
38

dismissal after he was placed on floating status for more than six (6) months by his employer, respondent
Genghis Khan Security Services (Genghis Khan). In its defense, Genghis Khan claimed that Ibon abandoned his
work after he failed to report for work despite its letters requiring him to do so. Ruling in favor of Ibon, this
Court noted that:
Respondent could not rely on its letter requiring petitioner to report back to work to refute a finding of
constructive dismissal. The letters, dated November 5, 2010 and February 3, 2011, which were supposedly
sent to petitioner merely re-quested him to report back to work and to explain why he failed to report to the
office after inquiring about his posting status.
39

Similarly, in Soliman Security Services, Inc. v. Sarmiento, respondent security guards claimed that they were
40

illegally dismissed after they were placed on floating status for more than six (6) months. Their employer,
petitioner Soliman Security Services, Inc. (Soliman), presented notices requiring them to go back to work.
However, this Court found that the notices did not absolve Soliman of liability:

The crux of the controversy lies in the consequences of the lapse of a significant period of time without
respondents having been reassigned. Petitioner agency faults the respondents for their repeated failure to
comply with the directives to report to the office for their new assignments. To support its argument,
petitioner agency submitted in evidence notices addressed to respondents, which read:

You are directed to report to the undersigned to clarify your intentions as you have not been reporting to seek
a new assignment after your relief from Interphil.

To this date, we have not received any update from you neither did you update your government
requirements. . .

We are giving you up to May 10, 2007 to comply or we will be forced to drop you from our roster and
terminate your services for abandonment of work and insubordination.

Consider this our final warning.

As for respondents, they maintain that the offers of new assignments were mere empty promises.
Respondents claim that they have been reporting to the office for new assignments only to be repeatedly
turned down and ignored by petitioner's office personnel.

....

Instead of taking the opportunity to clarify during the hearing that respondents were not dismissed but
merely placed on floating status and instead of specifying details about the available new assignments, the
agency merely gave out empty promises. No mention was made regarding specific details of these pending
new assignments. If respondent guards indeed had new assignments awaiting them, as what the agency has
been insinuating since the day respondents were relieved from their posts, the agency should have identified
these assignments during the hearing instead of asking respondents to report back to the office. The agency's
statement in the notices - that respondents have not clarified their intentions because they have not reported
to seek new assignments since they were relieved from their posts - is specious at best.41

IV

As a further defense, respondents add that it was petitioner who abandoned his work. 42

For an employee to be considered to have abandoned his work, two (2) requisites must concur. First, the
employee must have failed to report for work or have been absent without a valid or justifiable reason.
Second, the employee must have had a "clear intention to sever the employer-employee relationship." This 43
Court has emphasized that "the second element [i]s the more determinative factor." This second element,
44

too, must be "manifested by some overt acts." 45

Petitioner's conduct belies any intent to abandon his work. To the contrary, it demonstrates how he took
every effort to retain his employment. Right after he received the first letter dated July 27, 2009, he called
1âwphi1

Airborne's head office, only to be told that he had no assignment yet. Upon being informed by his wife of a
46

subsequent letter dated September 9, 2009, he replied in the following manner: 47

SIR,

HEREWITH MY EXPLANATION REGARDING YOUR LETTER THAT I RECEIVED MY WIFE YESTERDAY 22 SEPT. 09,
WHY IM NOT REPORTING IN YOUR OFFICE, SINCE I RECEIVED IN MY POST AT CITY ADVERTISING CORP. JUNE
15 - 09. THAT'S NOT TRUE, SIR.

KINABUKASAN PAGKA RECEIVED KO SA CITY ADS CORP. NAG-REPORT AKO PERO DI TA YO NAGKIT A NAKA-ALIS
KA NA, NAGKA-USAP TA YO SA CELLPHONE NG OPISINA KAY MAM POPS. SABI MO SA PAY-DAY NA LANG TAYO
MAG-USAP.

AFTER OUR CONVERSATION ON PAY-DAY, YOU TOLD ME "NO AVAILABLE POST FOR YOU RIGHT NOW, BUT JUST
CALL ME UP, OR I WILL CALL YOU IF THERE'S A POSSIBLE POST." SO OFTENTIMES I'LL CALL, YOUR ANSWER'S
THE SAME: "NO POST".

SO DON'T WORRY, SIR, I'LL ALWAYS PRAY TO OUR ALMIGHTY GOD, SOMEDAY, YOU GIVE ME WORK I BEST
POST.

THANK YOU AND HOPING FOR YOUR UNDERSTAND REGARDING THESE MATTER.

RESPECTFULLY YOURS,

Mr. M. PADILLA 48

Petitioner emphasized that he also personally reported to Airborne's Operations Director, Mr. Dagang, to
inquire about his re-assignment. However, Mr. Dagang told him that ''they were having difficulty finding him a
deployment because he was already old." Petitioner added that sometime in December 2009, when he
49

personally reported to the head office to get this 13th month pay, he was persuaded to resign. 50

Considering petitioner's 24 years of uninterrupted service, it is highly improbable that he would abandon his
work so easily. There is no logical explanation why petitioner would abandon his work. Being a security guard
51

has been his source of income for 24 long years.

In Tatel v, JLFP Investigation Security Agency, Vicente Tatel (Tatel), a security guard, filed a complaint for
52

illegal dismissal after being placed on floating status for more than six (6) months. In finding that Tatel did not
abandon his work, this Court gave consideration to Tatel's prolonged service or continuous employment:

The charge of abandonmient in this case is belied by the high improbability of Tatel intentionally abandoning
his work, taking into consideration his length of service and, 9011comitantly, his security of tenure with JLFP.
As the NLRC had opined, no rational explanation exists as to why an employee who had worked for his
employer for more than ten (10) years would just abandon his work and forego whatever benefits he may be
entitled to as a consequence thereof. As such, respondents failed to si1fficicntly establish a deliberate and
unjustified refusal on the part of Tatel to resume his employment, which therefore leads to the logical
conclusion that the latter had no such intention to abandon his work. 53

Equally belying petitioner's intent to abandon his work is his immediate filing of a Complaint for illegal
4ismissal on February 23, 2010. This was only eight (8) months after he was placed on floating status. As 54

similarly noted in Tatel v. JLFP Investigation Security Agency:

55

An employee who forthwith takes steps to protest his layoff cannot, as a general rule, be said to have
abandoned his work, and the filing of the complaint is proof enough of his desire to return to work, thus
negating any suggestion of abandonment. (Citation omitted)
56

Taking the totality of circumstances into consideration, this Court is unable to conc1ude that petitioner
abandoned his work. Rather, this Court finds that he was placed on floating status for more than six (6)
months. Thus, he was constructively dismissed.

As a consequence of the finding of illegal dismissal, petitioner would ordinarily be entitled to reinstatement,
pursuant to Article 294 of the Labor Code:

Article 294. Security of Tenure. - ... 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 backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

It [is unreasonable to deny employees their means of earning a living exclusively on the basis of age when
there is no other indication that they are incapable of performing their functions. It is true that certain tasks
require able-bodied individuals. Age, per se, is not a reliable indication of physical stamina1 or mental rigor.
What is crucial in determining capacity for continuing employment is an assessment of an employee's state of
health, not his or her biological age, Outside of limitations founded on scientific and established wisdom such
as the age of minority, proscriptions against child labor, or a standard retirement age, it is unjust to
discriminate against workers who are within an age range that is typical of physical productivity.

Ordinarily, it is not for this Court to foreclose an employee's chances of regaining employment through
reinstatement. It is not for this Court to rule out reinstatement on its own. To do so would amount to a tacit
approval of the abusive, discriminatory conduct displayed by employers such as Airborne. It would be a
capitulation to and virtual acceptance of the employer's assertion that employees of a certain age can no
longer engage in productive labor. However, considering that petitioner himself specifically prayed for an
award of separation pay and has also been specific in asking that he no longer be reinstated, this Court
awards him separation pay, in lieu of reinstatement.

VI

Respondent Solis may not be held personally liable for the illegal / termination of petitioner's employment.

As this Court explained in Saudi Arabian Airlines v. Rebesencio: 57

A corporation has a personality separate and distinct from those of the persons composing it. Thus, as a rule,
corporate directors and officers are not liable for the illegal termination of a corporation's employees. It is
only when they acted in bad faith or with malice that they become solidarily liable with the corporation.
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng Ever Electrical, this court clarified
that "[b]ad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral
obliquity i:uid conscious doing of wrong; it means breach of a known duty through some motive or interest or
ill will; it partakes of the nature of fraud."
58

Other than Solis' designation as Airborne's president, this Court finds no indication that she acted out of bad
faith or with malice specifically aimed at petitioner as, regards the termination of his employment. Thus, this
Court finds that she did not incur any personal liability. WHEREFORE, the Petition for Review
on Certiorari is GRANTED. The assailed April 18, 2013 Decision and November 11, 2013 Resolution of the
Court of Appeals in CA-G,R. SP No. 122700 are REVERSED and SET ASIDE. Accordingly, respondent Airborne
Security Service, Inc. is ordered to pay petitioner Macario S. Padilla: 1. Full backwages and other benefits
computed from the date petitioner's employment was illegally terminated until the finality of this Decision; 2.
Separation pay computed from the date petitioner commenced employment,until the finality of this Decision
at the rate of one (1) month's salary for every year of service, with a fraction of a year of at least six (6)
months being counted as one (1) whole year; and 3. Attorney's fees equivalent to ten percent (10%) of the
total award. The case is REMANDED to the Labor Arbiter to make a detailed computation of the amounts due
to petitioner, which must be paid without delay, and for the execution of this judgment. The case is
DISMISSED with respect to respondent Catalina Solis.

SO ORDERED.
23. G.R. No. 213748

SECOND DIVISION

G.R. No. 213748, November 27, 2017

RICARDO G. SY AND HENRY B. ALIX, Petitioners, v. NEAT, INC., BANANA PEEL AND PAUL VINCENT NG, Respondents.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari of the Court of Appeals Decision 1 dated March 27, 2014, which reversed and set aside the
Decision2 dated December 27, 2012 issued by the National Labor Relations Commission in NLRC LAC Case No. 08-002451-12 and,
accordingly, entered a new judgment finding that petitioners Ricardo Sy and Henry Ali were terminated from employment for just
causes, but ordered respondents Neat, Inc., Banana Peel and Paul Vincent Ng to pay petitioners P30,000.00 each as nominal damages
for the denial of their right to procedural due process.

Respondent Neat, Inc. is a corporation existing by virtue of Philippine laws, and the owner/distributor of rubber slippers known as
"Banana Peel," while respondent Paul Vincent Ng is its President and Chief Executive Officer. Petitioner Ricardo Sy was hired on May 5,
2008 as company driver and was dismissed from work on August 4, 2011. Petitioner Henry Alix was hired on November 30, 2005 as a
delivery helper/utility and was dismissed from work on May 31, 2011. Recounting how he was dismissed from work, petitioner Sy
alleged that on July 28, 2011, his co-worker Jeffrey Enconado blocked his way to the daily time record of the company, which annoyed
him as he was going to be late for work. When he learned from the delivery schedule that Enconado would be his partner, Sy requested
the company assistant operations manager, Cesca Abuan, to assign him another "pahinante" or delivery utility, but the request was not
acted upon. In order to avoid confrontation with Enconado, Sy assigned to himself a new delivery utility. Abuan reported the incident to
the human resources department, for which Sy was required to submit a written explanation. The next day, Sy was informed that he
would be suspended due to insubordination for three (3) days starting July 29, 2011 until August 2, 2011. Meantime, Sy was supposedly
issued 3 other memoranda, covering violations of company rules and regulations on wearing of improper office uniform, which were
committed in 2009. On August 3, 2011, Sy reported for work but was not allowed to log in/time in. Human Resource (HR) Manager
Anabel Tetan informed Sy that his services will be terminated effective August 4, 2011 due to poor performance. Sy disagreed, claiming
that for the 3 years that he worked with the company, he received bonuses for excellent performance.

For his part, petitioner Alix averred that sometime in February 2011, he was ordered to assist a newly-hired clerk. After helping his co-
worker, Alix sat down for a while. Respondent Ng saw Alix, and thought that he was doing nothing during working hours. On May 19,
2011, Alix was assigned to clean at the company warehouse. After working, Ng saw Alix resting again. Alix was suspended for 3 days,
and was thereafter dismissed. A month after his dismissal, Alix went back to the company to ask for his salary. Before being allowed to
receive his salary, Alix was asked to sign a document. In dire need of money, he was left with no option but to sign the document, which
he later discovered to be a waiver.

On August 10, 2011, petitioners Sy and Alix filed a Complaint 3 for illegal dismissal and payment of money claims.

Respondents Neat, Inc. and Ng countered that during the period that petitioners were employed, they
were both problem employees. They alleged that Sy was the recipient of numerous disciplinary actions,
namely:
 Date of Memorandum Nature of Offense Penalty Imposed
30 January 2009 Improper uniform (wearing earrings) Warning
29 May 20009 Improper uniform Warning
01 June 2009 Improper uniform 3-day suspension
28 July 2011 Insubordination 3-day suspension
05 August 2011 Poor Performance Evaluation Warning
In a notice dated August 4, 2011, respondent Neat, Inc., through HR. Manager Tetan, terminated Sy's services effective on even date,
thus:
We regret to inform you that Neat, Inc. has terminated your employment effective August 04, 2011. Your dismissal is due to the
offenses made; according to our record you have been issued 5 written warnings that are subjected to your dismissal.

Neat, Inc. would like to take this opportunity to thank you for your service that you rendered in our company. Please report to the head
office HR Department for your clearance and return any company properties that are in your possession. 4
Alix was also a recipient of many disciplinary actions:
Date of Memorandum Nature of Offense Penalty Imposed
21 July 2007 Negligence in work Warning
29 May 2009 Improper Uniform Warning
01 February 2011 Wasting Time Warning
01 February 2011 Poor Performance Warning
Evaluation
19 May 2011 Wasting Time 3-day suspension
20 May 2011 Frequent Tardiness Warning
30 May 2011 Poor Performance Warning
5
In a Memorandum dated May 31, 2011, Neat, Inc., through HR. Manager Tetan, terminated Alix's services on even date, thus:
We regret to inform you that your employment with Neat, Inc. has terminated effective as of May 31,
2011. Your dismissal is due to the offense made; according to our record you have been issued 6 written
warnings that are subjected to your dismissal.

Reason for your termination are as follows:

1st warning (issued on July 21, 2008)
negligence in performing his work
-
2nd warning (issued on May 29,
Not wearing complete uniform
2009) -
3rd warning (issued on February 1,
Wasting time during working hours
2011) -
4th warning (issued on February 1, Poor performance evaluation from Production Supervisor,
2011) - Noel Jabagat
5th warning (issued on May 19,
Wasting time during working hours
2011) -
6th warning (issued on May 20, Tardiness for the month of January, February, March, April
2011) - 2011
7th warning (issued on May 30,
Poor performance evaluation from operation[s] head.
2011) -
Respondents contended that because of petitioners' continued and repeated commission of various offenses and violations of company
rules and regulations, they were terminated for a just cause. They added that petitioners were paid wages, overtime pay, 13 th month
pay and other benefits in accordance with the Labor Code and other laws, as shown in the payslips attached as Annexes "1" to "354" of
their position paper.

As the parties failed to reach a settlement, the Labor Arbiter 6 (LA) directed them to submit their respective position papers. Both
parties submitted their Position Papers on October 13, 2011, their Replies on November 15, 2011, and their Rejoinders on November
28, 2011.

On July 25, 2012, the LA rendered a Decision, the dispositive portion of which states: WHEREFORE, premises considered, the complaint
for illegal dismissal is dismissed for lack of merit. But, the respondents are hereby ordered to pay complainants Alix and Sy the amount
of P15,000.00 each, or a total of P30,000.00 for both, as financial assistance.

All other claims of complainants are dismissed for lack of merit.

SO ORDERED.7
The LA found that petitioners Sy and Alix were dismissed due to serious misconduct, gross neglect of duty and insubordination. It held
that these offenses were duly proven by the respondents, as can be gleaned from the case records, and noted that Alix even signed a
Waiver and Release on June 10, 2011, releasing respondents from any liabilities whatsoever in connection with his employment. The LA
ruled that the evidence on record shows that respondents gave petitioners opportunity to defend themselves, and have thus complied
with the procedural due process required by the Labor Code. Nonetheless, for compassionate reasons and considering that petitioners
have rendered services which somehow contributed to the growth of the company, the LA deemed it proper to award them financial
assistance in the amount of P15,000.00 each.

Dissatisfied with the Labor Arbiter decision, petitioners filed an appeal before the National Labor Relations Commission ( NLRC).

On December 27, 2012, the NLRC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, complainants' APPEAL is hereby GRANTED. Respondents are hereby ordered to pay complainants full backwages and
separation pay equivalent to one (1) month salary for every year of service. The award of financial assistance is deleted.

The attached computation shall form part of the decision.

SO ORDERED.8
The NLRC reversed the LA's Decision, finding that the records failed to support the grounds of serious misconduct, gross neglect of duty
and insubordination cited by respondents as bases in terminating petitioners' employment. It held that records show that petitioners
were suspended after a single incident and thereafter, they were served notices of termination which denied them their rights to
defend themselves. The NLRC noted that Sy was suspended after changing his "pahinante" despite not being allowed to do so, and was
then issued 3 memos for infractions committed in 2009, while Alix was suspended after being caught resting and not working, and was
thereafter served with a notice of termination.

The NLRC stressed that past infractions cannot be collectively taken as justification for dismissal of an employee from service. The NLRC
pointed out that in the matrix submitted by respondents, corresponding penalties for past infractions were already imposed, and
petitioners were further suspended for their latest infractions; thus, there is no valid justification on the part of respondents to consider
the past infractions in terminating petitioners. Anent the waiver and release signed by Alix, the NLRC rejected it, stating that his wage is
his only source of income to sustain his family, and that any person in a similar situation would sign any document to get the withheld
salary. Since petitioners were illegally dismissed, the NLRC held that they are entitled to payment of backwages and payment of
separation pay in lieu of reinstatement on account of the strained relations between the parties, but the award of financial assistance is
considered moot and academic.
Respondents filed a motion for reconsideration, which the NLRC denied for lack of merit in the Resolution dated June 20, 2013.

Aggrieved by the NLRC Decision, respondents filed before the Court of Appeals (CA) a petition for certiorari under Rule 65 of the Rules
of Court.

On March 27, 2014, the CA rendered the assailed Decision, finding that the NLRC gravely abused its discretion in reversing the decision
of the LA, and disposing as follows:
WHEREFORE, in view of the foregoing premises, the petition is hereby partially GRANTED. The Resolution dated June 20, 2013 and the
Decision dated December 27, 2012 issued by the National Labor Relations Commission (Fourth Division) in NLRC LAC Case No. 08-
002451-12 are REVERSED AND SET ASIDE.

Accordingly, a NEW JUDGMENT is entered finding that private respondents were terminated from employment for just cause. However,
the petitioners are ordered to pay private respondents P30,000.00 each as nominal damages for the former's denial of their right to
procedural due process.

SO ORDERED.9
The CA held that the dismissal of petitioners was justified under Article 282 (a) and (b) of the Labor Code, as amended, on the grounds
of serious misconduct or willful disobedience of the lawful order of the employer or representative in connection with the employee's
work, and gross and habitual neglect of the employee's duties.

With respect to petitioner Sy, the CA stressed that his repeated violations of the company's rules and regulation, as reflected in the
several warnings found on record, amounted to just cause for termination, and that his act of insubordination alone when he changed
his "pahinante" in direct contravention of the orders of his superior, amounts to serious misconduct or willful disobedience. As for
petitioner Alix, the CA said that aside from his frequent tardiness, the six (6) warnings issued to him provide a just cause for his
dismissal. While there are just causes for the termination of petitioners' employment, the CA ruled that failure to comply with the
procedural requirements of notice [specifying the ground/s for termination, and giving to the employee reasonable opportunity to be
heard] and hearing, constitutes denial of due process, which entitles them to an award of nominal damages in the amount of
P30,000.00 each. As regards the Waiver and Release signed by Alix, the CA said that it cannot bar him from demanding what is legally
due, because an employee does not stand on equal footing with the employer, and in desperate situations may even be willing to
bargain away his rights. Finally, there being no basis for the grant of backwages and separation pay, the CA no longer discussed the
monetary award computed by the NLRC.

Unconvinced with the CA Decision, petitioners filed this petition for review on certiorari under Rule 45, arguing in the affirmative of the
following Issues:
I.

WHETHER THE PETITIONERS' ALLEGED PAST INFRACTIONS IS DETERMINATIVE IN IMPOSING THE PENALTY FOR THEIR SUPPOSED RECENT
INFRACTION.

II.

WHETHER RESPONDENTS ILLEGALLY DISMISSED PETITIONERS.

III.

WHETHER PETITIONERS ARE ENTITLED TO MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES. 10
The petition is partly impressed with merit.

In resolving the issue of whether or not respondents were able to establish that petitioners were validly terminated on the ground of
serious misconduct and willful disobedience of the lawful orders of the employer, and gross and habitual neglect of duties, the Court is
called upon to re-examine the facts and evidence on record. Given that the Court is not a trier of facts, and the scope of its authority
under Rule 45 of the Rules of Court is confined only to errors of law and does not extend to questions of fact, which are for labor
tribunals to resolve, 11 one of the recognized exceptions to the rule is when the factual findings and conclusion of the labor tribunals are
contradictory or inconsistent with those of the CA. 12Departure from the settled rule is warranted and a review of the records and the
evidence presented by the opposing parties shall be made in order to determine which findings should be preferred as more
conformable with evidentiary facts.

After a circumspect study of the records, the Court rules that the CA erred in finding that respondents were able to prove that the
totality of Sy's violations of company rules and regulations constitute a just cause for termination of employment.

It is well settled that in illegal dismissal cases, "the burden of proof is upon the employer to show that the employee's termination from
service is for a just and valid cause. The employer's case succeeds or fails on the strength of its evidence and not on the weakness of
that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of
doubt in the evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence
which is understood as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other
equally reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that
the dismissal is not justified and therefore illegal." 13

In determining the sanction imposable on an employee, the employer may consider the former's past misconduct and previous
infractions. Also known as the principle of totality of infractions, the Court explained such concept in Merin v. National Labor Relations
Commission, et al.,14 thus:
The totality of infractions or the number of violations committed during the period of employment shall be considered in determining
the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately.
Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability
separate and independent of each other. While it may be true that petitioner was penalized for his previous infractions, this does not
and should not mean that his employment record would be wiped clean of his infractions. After all, the record of an employee is a
relevant consideration in determining the penalty that should be meted out since an employee's past misconduct and present behavior
must be taken together in determining the proper imposable penalty. Despite the sanctions imposed upon petitioner, he continued to
commit misconduct and exhibit undesirable behavior on board. Indeed, the employer cannot be compelled to retain a misbehaving
employee, or one who is guilty of acts inimical to its interests. It has the right to dismiss such an employee if only as a measure of self-
protection.
A closer look into the entirety of the violations imputed against Sy shows that respondents failed to prove with substantial evidence
that the totality of infractions committed by him constitutes as a just cause for his dismissal under the Labor Code. In fact, even by its
own standards, respondents' dismissal of Sy fails to measure up to Neat, Inc.'s Guide to the Administration of Code of Conduct, 15 which
states that the "termination of employment of the employee by the Company is usually imposed when the employee's record over the
period of time shows clearly that the amount of warnings and other disciplinary actions has not made the employee understand the
error of his ways and/or for the first offense which is such a serious error that cannot be ignored." 16

There is no dispute that Sy was properly warned twice and aptly sanctioned with a 3-day suspension for violation of the company dress
code which he committed on January 29,2009, May 28,2009 and May 30, 2009. 17 There is also no question that Sy is guilty of
insubordination for not following the instruction of Operation Assistant Cesca Abuan on July 28, 2011 as to the swapping of his assigned
delivery utility, and for insisting on his preferred delivery utility. Because of such incident, a Memorandum 18 dated July 29, 2011 was
issued to Sy (1) suspending him for 3 days starting on even date until August 2, 2011; (2) requiring him to report to the head office on
August 3, 2011 to discuss the grounds and degree of violation, and (3) warning him that further violation of policies will result in
disciplinary action up to and including immediate termination of employment. Unfortunately, Sy was terminated the following day,
August 4, 2011, due to the 5 written warnings previously issued to him - 3 of which were due to wearing of improper uniform in 2009, 1
for insubordination on July 28, 2011, and the last for supposed poor performance evaluation on August 3, 2011.

Based on a Memorandum19 dated August 5, 2011, HR Manager Tetan met with Sy on August 3, 2011 to discuss his work performance,
particularly his attitude problem: On said date, Tetan discussed Sy's performance evaluation by his Operation Manager, Ricky Jamlid,
who said that on several instances Sy was not following instruction, despite being given verbal warning. Tetan also pointed out that
such concern has already been raised by the previous Operations Manager, Marianne De Leon, and aside from not following
instruction, complaints were also received that Sy keeps on arguing and did not show respect to his superior. Tetan added that based on
Sy's written explanation with regard to his performance evaluation, he did not take the criticism positively and blamed someone else
for his mistake. Tetan stated that Sy just realized and acknowledged his mistake after having a closed door meeting together with his
operation manager last August 3, 2011, and promised to take the necessary steps to improve his performance. In closing, Tetan
informed Sy that the meeting was held to give appropriate action for the complaints of his operations manager on his poor
performance.

Contrary to respondents' contention, however, the past 3 infractions in 2009 for wearing of improper uniform can no longer be taken
against Sy, because he was already warned and penalized for them, and he has, in fact, reformed his errors in that regard. Notably, in
the Performance Appraisal dated August 3, 2011 for the criteria of "Personal Appearance - personal impression of an individual makes
on others. (Consider cleanliness, grooming, neatness and appropriateness of dress on the job," 20 Operations Manager Jamlid gave Sy a
grade of 80 points for "Good-Competent and dependable level of performance. Meets standards at the job", 21 and commented that Sy
report[s] to work in complete uniform. Where an employee had already suffered the corresponding penalties for his infraction, to
consider the same offenses as justification for his dismissal would be penalizing the employee twice for the same offense. 22

Significantly, the infractions of Sy for wearing of improper uniform are not related to his latest infractions of insubordination and
purported poor performance evaluation. Previous offenses may be used as valid justification for dismissal only if they are related to the
subsequent offense upon which the basis of termination is decreed, 23 or if they have a bearing on the proximate offense warranting
dismissal.24

Neither can respondents fault Sy's sole act of insubordination as amounting to serious misconduct, willful disregard of the lawful orders
of the employer, or gross and habitual negligence.
Misconduct is defined as 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." 25 In order for serious misconduct to justify dismissal, these
requisites must be present: (a) it must be serious; (b) it must relate to the performance of the employee's duties, showing that the
employee has become unfit to continue working for the employer, and (c) it must have been performed with wrongful intent. 26 On the
other hand, to be considered as a just cause for terminating an employee's services, " insubordination" requires that the orders,
regulations or instructions of the employer or representative must be (a) reasonable and lawful; (b) sufficiently known to the employee;
(c) in connection with the duties which the employee has been engaged to discharge; and (d) the employee's assailed conduct must
have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude. 27

Sy's insubordination of changing his delivery utility without permission from the operations manager is no doubt a misconduct, but not
a serious and willful one as to cost him his livelihood. Concededly, Sy's act of unilaterally assigning to himself another delivery utility in
lieu of the one designated to him, reflects his attitude problem and disregard of a lawful order of a representative of the employer. Be
that as it may, such willful disobedience cannot be deemed to depict a wrongful attitude, because it was prompted by his desire to
carry out his duty without distractions. It is not farfetched that Sy's annoyance with the delivery utility assigned to him, who annoyed
him earlier in the day by blocking his way to the daily time record, could have prevented him from performing his task, or worst, could
have resulted in fisticuffs with the said co-worker.

As a just cause for termination of employment, on the other hand, the neglect of duties must not only be gross but habitual as well.
Gross negligence means.an absence of that diligence that a reasonably prudent man would use in his own affairs, and connotes want of
care in the performance of one's duties. 28 Habitual neglect implies repeated failure to perform one's duties for a period of time,
depending upon the circumstances. 29 A single or isolated act of negligence does not constitute a just cause for the dismissal of the
employee. Suffice it to state that by no stretch of reasoning can the 5 infractions - wearing of improper uniform, insubordination and
poor performance evaluation - imputed against Sy be collectively deemed as gross and habitual negligence.

A careful perusal of the Memorandum dated August 5, 2011 regarding Sy's poor performance evaluation further reveals that such
unfavorable conclusion is not consistent with the Performance Appraisal dated August 3, 2011. Instead of being given an
"Unsatisfactory" rating, Operations Manager Jamlid merely stated that Sy "needed improvement" in terms of "People Interaction,"
"Cooperativeness" and "Judgment" mainly because he is very emotional when dealing with his superior and co-workers. In citing poor
performance as a ground for termination, respondents cannot also ignore the other factors where Sy was rated "Good," namely:
"Quality," "Productivity," "Job Knowledge," "Availability," "Independence," "Personal Appearance," and "Attendance." Granted that the
employer enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the
employees, those directives must always be fair and reasonable, and the corresponding penalties, when prescribed, must be
commensurate to the offense involved and to the degree of the infraction. 30 To be lawful, the cause for termination must be a serious
and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the spirit of our Constitution
and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor. 31After
all, an employment is not merely a contractual relationship, since in the life of most workers it may spell the difference of whether or
not a family will have food on their table, roof over their heads and education for their children.

With respect to Sy's attitude problem, the Court finds no evidence to substantiate such allegation. Aside from the allegations in the
August 5, 2012 memorandum to the effect that the Operations Managers have complained about his attitude problem, nothing in the
records show that Sy was previously warned for not following instructions, and for arguing with or disrespecting his superiors. Bare
allegations, unsubstantiated by evidence, are not equivalent to proof under our Rules. To be sure, unsubstantiated suspicions,
accusations and conclusions of employers do not provide for legal justification for dismissing an employee. Respondents failed to
present reports or sworn statements of the Operations Managers, narrating the instances when he displayed attitude problems at
work, as well as his previous Performance Appraisal indicating unsatisfactory evaluation of his work.

On the other hand, in light of the totality of petitioner Alix's infractions against the company rules and regulations, the Court cannot
extend the same magnanimity it has accorded to Sy. Respondents have proven with substantial evidence said infractions through 7
written warnings, viz.:

1. July 21, 2007 - Negligence of work due to lost or receipt of Handy Man 32

2. May 29, 2009 - Wearing of improper uniform33

3. February 1, 2011 - Wasting time during working hours 34

4. February 1, 2011 - Poor Performance Evaluation35

5. May 19, 2011 - Wasting time during working hours36

 6. May 20, 2011 - Tardiness for the months of January, February, March and April of 2011 37

7. May 30, 2011 - Poor Performance evaluation from operations head 38

It does not escape the attention of the Court that the third (3 rd) to sixth (6th) warnings were all received by petitioner Alix only on May
20, 2011, and that the seventh (7th) warning was received on the very day of his termination, May 31, 2011, prompting him to make
separate handwritten explanations on the same date of receipt of said warnings. Respondents' perfunctory observance of Alix's right to
notice and hearing, however, does not detract from the veracity of the violations of company rules and regulation imputed against him.

Habitual tardiness alone, as aptly noted by the CA, is a just cause for termination of Alix's employment. Punctuality is a reasonable
standard imposed on every employee, whether in government or private sector, whereas habitual tardiness is a serious offense that
may very well constitute gross or habitual neglect of duty, a just cause to dismiss a regular employee. 39 Habitual tardiness manifests lack
of initiative, diligence and discipline that are inimical to the employer's general productivity and business interest. 40 Respondents have
substantiated habitual tardiness by presenting Alix's daily time card, showing that in 2011 alone prior to his dismissal, he was late
fourteen (14) times in January, seven (7) times in February, eight (8) times in March, and five (5) times in April. 41

Having in mind the work productivity-related infractions he incurred in a span of 5 months from January to May 2011 - consisting of
habitual tardiness, 2 warnings for wasting time during working hours and 2 more warnings for poor performance evaluation - the Court
must agree with the CA that respondents have a just cause to terminate Alix's employment. As held in Piedad v. Lanao del Norte Electric
Coop, Inc.,42 "fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct
and ability separate and independent of each other. A series of irregularities when put together may constitute serious misconduct,
which under Article 283 [now Art. 297] of the Labor Code, is a just cause for dismissal."

More than the fact that an employee's right to security of tenure does not give him a vested right to his position, 43 Alix would also do
well to bear in mind the prerogative of the employer to prescribe reasonable rules and regulations necessary or proper for the conduct
of its business and to provide certain disciplinary measures in order to implement said rules and to assure that the same would be
complied with.44 Although the State affords the constitutional blanket of affording protection to labor, the rule is settled that it must
also protect the right of employers to exercise what are clearly management prerogatives, so long as the exercise is without abuse of
discretion.45

Having discussed the just causes for termination of employment, the Court may now dwell on the procedural requirements of due
process as laid down in King of Kings Transport, Inc. v. Mamac:46
To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt
of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data
and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against
the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be
given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds
have been established to justify the severance of their employment.
Respondents failed to afford petitioners the first written notice, containing the specific causes or grounds for termination against them,
as well as the requisite hearing or conference wherein they should have been given reasonable opportunity to be heard and defend
themselves. Save for the notices of termination dated August 4, 2011 and May 31, 2011 47 issued to petitioners Sy and Alix, respectively,
all the other notices given to petitioners consist of warnings, suspension, and orders to submit written explanations for specific
violations of company rules and regulations. It bears stressing that prior to his termination on August 4, 2011, the last warning given to
Sy on August 3, 2011 was on account of poor performance evaluation only, without mentioning his past infractions of wearing improper
uniform and insubordination. As for Alix, the last warning given to him was received on the very day of his termination, May 31, 2011,
for poor performance evaluation sans any reference to his past infractions of negligence in performing work, wearing of improper
uniform, wasting time during working hours, tardiness, and poor performance evaluation. While they were given several warnings for
separate offenses committed, petitioners were not given opportunity to be heard why they should not be terminated on account of the
totality of their respective infractions against company rules and regulations. It bears emphasis that notice to the employee should
embody the particular acts or omissions constituting the grounds for which the dismissal is sought, and that an employee may be
dismissed only if the grounds cited in the pre-dismissal notice were the ones cited for the termination of employment. 48

An employee who is dismissed without just cause and due process is entitled to either reinstatement if viable or separation pay if
reinstatement is no longer viable, and payment of full backwages and other benefits. Specifically prayed for by petitioner Sy, 49 the NLRC
correctly awarded separation pay, which is proper when reinstatement is no longer viable due to the antagonism and strained
relationship between the employer and the employee as a consequence of the litigation, not to mention the considerable length of
time that the latter has been out of the former's employ. Nevertheless, the Court limits the award of separation pay, backwages and
other benefits, because Sy is not entirely faultless. 50 Since the latest infraction of Sy relating to attitude problem at work does not
constitute serious misconduct, willful disobedience to lawful orders of the employer or gross and habitual negligence in the
performance of duties, as to merit the harsh penalty of dismissal, the Court holds that Sy is entitled to the award of (1) separation pay
equivalent to 1 month salary for every year of service computed from May 5, 2008 when he was hired up to December 27, 2012 when
the NLRC ruled that he was illegally dismissed; and (2) backwages and other benefits, computed from the time of his termination on
August 4, 2012 until December 27, 2012.

Anent the Waiver and Release dated June 10, 2011 where Alix stated that he has no claim of whatever kind and nature against Neat,
Inc., the Court sustains the CA that such quitclaim does not bar an employee from demanding what is legally due him, especially when
it is made under circumstances where the voluntariness of such agreement is questionable. While quitclaims are, at times, considered
as valid and binding compromise agreements, 51 the rule is settled that the burden rests on the employer to prove that the quitclaim
constitutes a credible and reasonable settlement of what an employee is entitled to recover, and that the one accomplishing it has done
so voluntarily and with a full understanding of its import. 52 Respondents failed to discharge such burden. Recognizing that the
subordinate position of individual rank-and-file employees vis-a-vis management renders the former vulnerable to the latter's
blandishments, importunings and even intimidation that may well result in the improvident if reluctant signing over of benefits to
which the employees are entitled, the Court has consistently held that quitclaims of workers' benefits will not bar them from asserting
these benefits on the ground that public policy prohibits such waivers. 53

The Court likewise upholds the award of nominal damages awarded in favor of petitioners Sy and Alix. Nominal damages are
"adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him." 54 Jurisprudence holds that such
indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later. 55 The sanction should be in the
nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the
due process violation of the employer. 56 Considering that petitioners were deprived of their right to notice and hearing prior to their
termination, the Court affirms the CA's award of P30,000.00 as nominal damages.

To be entitled to an award of moral damages, it is not enough for an employee to prove that he was dismissed without just cause or
due process. Moral damages are recoverable only where the dismissal or suspension of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. 57 "The
person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes
good faith."58 Awarded in accordance with the sound discretion of the court, on the other hand, exemplary damages are imposed as a
corrective measure when the guilty party has acted in a wanton, fraudulent, reckless and oppressive manner. In this case, apart from
petitioners' bare allegation of entitlement thereto, no proof was presented to justify an award of moral and exemplary damages. At any
rate, all the damages awarded to petitioners shall incur interest at the rate of six percent (6%) per annum from finality of this Decision
until fully paid, in line with Nacar v. Gallery Frames, Inc.59

In actions for recovery of wages, or where an employee was forced to litigate and thus incur expenses to protect his rights and
interests, a monetary award by way of attorney's fees is justifiable under Article III of the Labor Code, Section 8, Rule VIII, Book III of its
Implementing Rules; and paragraph 7, Article 2208 of the New Civil Code. Considering that petitioners were compelled to engage the
services of the Public Attorney's Office to protect their rights and interests, the attorney's fees equivalent to 10% of the monetary
award to which they are entitled should be deposited to the National Treasury in accordance with Republic Act No. 9406. 60

Finally, as to the liability of respondent Paul Vincent Ng as President and ChiefExecutive Officer ofNeat, Inc., for the illegal dismissal of
petitioner Sy and the dismissal of Alix without due process, it has been held that a corporation, being a juridical entity, may act only
through its directors, officers and employees, and that obligations incurred by these officers, acting as such corporate agents, are not
theirs but the direct accountability of the corporation they represent. Solidary liability may at times be incurred, but only under
exceptional circumstances. In labor cases, corporate directors and officers are solidarily liable with the corporation for the termination
of employment of employees only if such is done with malice or in bad faith. There being no proof that he was guilty of malice and bad
faith in Sy's illegal dismissal, respondent Ng, as its President and CEO, cannot be held solidarily liable with Neat, Inc. WHEREFORE, the
petition for review on certiorari is PARTLY GRANTED. The DeCision of the Court of Appeals dated March 27, 2014 in CA-G.R. SP No.
131410 is AFFIRMED WITH MODiFICATIONdeclaring that petitioner Ricardo Sy was dismissed without just cause and due process.
Accordingly, respondent Neat, Inc. is ORDERED to PAY him:
(1) Separation pay equivalent to one (1) month salary for every year of service, computed from May 5, 2008 when he was hired up to
December 27, 2012 when the National Labor Relations Commission ruled that he was illegally dismissed;

(2) Backwages and other benefits, computed from August 4, 2011 when he was illegally dismissed up to December 27, 2012; and

(3) Ten percent (10%) attorney's fees based on the total amount of the awards, which shall be deposited to the National Treasury in
accordance with Republic Act No. 9406.
Legal interest is further imposed on the monetary awards at the rate of six percent (6%) per annum from finality of this Decision until
fully paid. The records of this case is REMANDED to the Labor Arbiter, who is ORDERED to make a re-computation of the total monetary
benefits awarded.

SO ORDERED.
124. G.R. No. 184819

VETERANS FEDERATION OF THE PHILIPPINES, Petitioner

vs.
EDUARDO L. MONTENEJO, MYLENE M. BONIFACIO, EVANGELINE E. VALVERDE, DEANA N. PAGAL, and VFP
MANAGEMENT DEVELOPMENT CORPORATION, Respondents

DECISION

VELASCO, JR., J.:

This case is an appeal from the Decision dated July 29, 2008 and Resolution dated October 2, 2008 of the
1 2 3

Court of Appeals (CA) in CA-G.R. SP No. 101041.

The Facts

VFP. VFPIA and the VMDC

Petitioner Veteran's Federation of the Philippines (VFP) is a national federation of associations of Filipino war
veterans. It was created in 1960 by virtue of Republic Act No. 2640.4

In 1967, through the government's Proclamation No. 192, VFP was able to obtain control and possession of a
vast parcel of land located in Taguig. VFP eventually developed said land into an industrial complex, which is
now known as the VFP Industrial Area (VFPIA).

Respondent VFP Management and Development Corporation (VMDC), on the other hand, is a private
management company organized in 1990 pursuant to the general incorporation law.

The Management Agreement and its Termination

On January 4, 1991, VFP entered into a management agreement with VMDC. Under the said agreement,
5

VMDC was to assume exclusive management and operation of the VFPIA in exchange for forty percent (40%)
of the lease rentals generated from the area.

In managing and operating the VFPIA, VMDC hired its own personnel and employees. Among those hired by
VMDC were respondents Eduardo L. Montenejo, Mylene M. Bonifacio, Evangeline E. Valverde and Deana N.
Pagal (hereafter collectively referred to as "Montenejo, et al.").
6

The management agreement between VFP and VMDC had a term of five (5) years, or up to 4 January 1996,
and is renewable for another five (5) years. Subsequently, both parties acceded to extend the agreement up
7

to 1998. After 1998, the agreement was again extended by VFP and VMDC albeit only on a month-to-month
8

basis.

Then, in November 1999, the VFP board passed a resolution terminating the management agreement
effective December 31, 1999. VMDC conceded to the termination and eventually agreed to turn over to VFP
9

the possession of all buildings, equipment and other properties necessary to the operation of the VFPIA. 10
On January 3, 2000, the President of VMDC issued a memorandum informing the company's employees of
11 12

the termination of their services effective at the close of office hours on January 31, 2000 "[i]n view of the
termination of the [management agreement]." True to the memorandum's words, on January 31, 2000,
VMDC dismissed all of its employees and paid each his or her separation pay.

The Illegal Dismissal Complaint

Contending in the main that their dismissals had been effected without cause and observance of due process,
Montenejo, et al. filed before the Labor Arbiter (LA) a complaint for illegal dismissal, money claims and
13

damages. They impleaded both VMDC and VFP as defendants in the complaint.

VMDC, for its part, denied the contention. It argued that the dismissals of Montenejo, et al. were valid as they
were due to an authorized cause-the cessation or closure of its business. VMDC claimed that the cessation of
its operations was but the necessary consequence of the termination of such agreement.

VFP, on the other hand, seconded the arguments of VMDC. In addition, however, VFP asserted that it could
not, at any rate, be held liable under the complaint because it is not the employer of Montenejo, et al.

The Ruling of the LA

On November 7, 2005, the LA rendered a decision disposing of the illegal dismissal complaint as follows:
14

WHEREFORE, judgment is hereby made dismissing as lacking in merit the [Montenejo et al.'s] charge of illegal
dismissal but ordering [VFP] and [VMDC] to pay, solidarily, each complainant his/her salaries for eleven (11)
months. [VFP and VMDC] are so ordered to recompute their separation pay with the date January 4, 2001 as
their last day of service and accordingly pay them their balance.

[VFP and VMDC] are also ordered to pay, solidarily, [Montenejo et al.'s] proportionate 13th month pay for the
year 2000.

Other claims are dismissed for lack of merit.

SO ORDERED.

The LA hinged its disposition on the following findings: 15

1. Montenejo, et al. were not illegally dismissed. Their separation was the result of the closure of VMDC, an
authorized cause. Hence, Montenejo, et al. are not entitled to reinstatement and backwages.

2. Montenejo, et al. were contractual employees; they were hired for a definite term that is similar to the
maximum term of the management agreement between VFP and VMDC. As the management agreement
between VFP and VMDC can have a maximum term of ten (10) years from January 4, 1991, or until January 4,
2001, the employments of Montenejo, et al. also have terms of up to January 4, 2001.

In this case, however, Montenejo, et al. were dismissed on January 3, 2000-which is eleven (11) months short
of their January 4, 2001 contract date. Accordingly, Montenejo, et al. are each entitled: (a) to their salary
corresponding to the unexpired portion of their contract and (b) also to a separation pay computed with
January 4, 2001 as their last day of employment.
3. Montenejo, et al. are not entitled to recover damages. Their dismissals were not shown to be tainted with
bad faith.

4. VFP and VMDC are solidarily liable for the monetary awards in favor of Montenejo, et al. The basis of VFP's
liability is the fact that it is an indirect employer of Montenejo, et al.

Montenejo, et al. and VFP filed separate appeals with the National Labor Relations Commission (NLRC).
16

The Ruling of the NLRC

On appeal, the NLRC reversed and set aside the decision of the LA. It decreed:
17

WHEREFORE, premises considered, the appeal is GRANTED. The Decision of [the LA] dated November 7, 2005
is hereby REVERSED[,] SET ASIDE and a NEW ONE entered declaring that [VFP and VMDC] ILLEGALLY
DISMISSED [Montenejo et al.]. [VFP and VMDC] are therefore ordered to pay [Montenejo et al.'s] separation
pay in lieu of reinstatement and to pay them full backwages, 13th month pay and SLIP (sic), as computed
below:

A. EDUARDO L. MONTENEJO
Rate: ₱30,000.00
Pd: 1/1/91-1/4/0l(GIVEN)
*VP for Operation
Cut-off date: 8/7/06
1) SEP. PAY (1 MO.):
1/1/91-8/7/06
₱30,000.00 x 16 yrs.= ₱480,000.00
2) BACKWAGES:
1/4/01-8/7/06
₱30,000.00 x 67.10 = ₱2,013,000.00
13th MO. PAY:
₱2,013,000/12 = 167,750.00 2,180,750.00
₱2,660,750.00
Less: Amt. already rcvd (See, Annexes
"2-5, "pp. 358-361, Vol. II, Records) 175,000

TOTAL:
₱2,485, 750.00
B. MYLENE M. BONIFACIO
Rate: ₱6,798.15 Pd: 1/1/91-1/4/0l(GIVEN)
Cut-off date: 8/7 /06
1) SEP. PAY (1 MO.):
1/1/93-8/7/06
₱300 x 26 x 14 yrs. = ₱109,200.00
2) BACKWAGES:
1/4/01-8/7/06
1/4/01-6/15/05
₱362,817.26
₱6,789.15 x 53.37 =
6/16/05-7/10/06
91,520.00
₱275 x 26 x 12.80 =
7/11/06-8/7 /06
₱300 x 26 x .90 7,020.00

₱461,357.26
13th MO. PAY:
38,446.43
₱461,357.26/12 =
SILP:
₱6,789.15 / 26 = ₱261.46
1/4/01-6/15/05
₱261.46 x 5/12 x 53.37 = ₱362,817.26
6/16/05-7/10/06
₱275 x 5/12 x 12.80 = 1,466.67
7/11/06-8/7/06
₱300 x 5/12 x .90 = 112.50
7,393.38
COLA:
11/5/01-1/31/02
₱15 x 26 x 2.87 = ₱1,119.30
2/1/02-7 /9/04
₱30 x 26 x29.27 = 22,830.60
7/10/04-7/10/06 31,200.00
₱50x26 x24=

55,149.90 ₱523,900.54

₱633,100.54
Less: Amt. already rcvd (See, Annexes
"6-7, "pp. 362-363, Vol. II, Records) 53,661.87
TOTAL ₱579,438.67
C. EVANGELINE E. VAL VERDE-
Rate: ₱10,000.00 Pd: 1/1/91-1/4/0l(GIVEN)
Cut-off date: 8/7/06
1) SEP. PAY (1 MO.): ₱160,000.00
1/1/91-8/7/06
₱10,000.00 x 16 yrs.=
2) BACKWAGES:
1/4/01-8/7/06
₱10,000.00 x 67.10 = ₱671,000.00
13th MO. PAY:
₱671,000.00/12 = 55,916.67
SILP:
₱10,000 / 26 = ₱384.61
1/4/01-8/7 /06
₱384.61 x 5/12 x 67.10 =
10,753.05 737,669.72
₱897,669.72
Less: Amt. already rcvd (See, Annex
"17" pp. 358-361, Vol. II, Records) 32,172.61

TOTAL: ₱865,497.11
D. DEANA N. PAGAL
Rate: ₱15,000.00
Cut-off date: 8/7/06 Pd: 1/1/91-1/4/0l(GIVEN)
1) SEP. PAY (1 MO.):
1/1/91-8/7 /06
₱15,000.00 x 16 yrs. = ₱240,000.00
2) BACKWAGES:
1/4/01-8/7 /06
₱15,000.00 x 67.10 = ₱1,060,000.00
13th MO. PAY:
₱l,006,500.00/12 = 83,875.00
SILP:
₱15,000 I 26 = ₱576.92
1/4/01-8/7 /06
₱576.92 x 5/12 x 67.10= 16, 129.72 1,106,504.72
₱1,346,504.72

Less: Amt. already rcvd. (See, Annex

"11-15" pp. 344-350, Vol. II, Records) 199.803.96
TOTAL: ₱1,146,700.76
SUMMARY OF COMPUTATION:
A. EDUARDO A. MONTENEJO ₱2,485, 750.00
 B. MYLENE BONIFACIO 579,438.67
C. EVANGELINE F. VAL VERDE 865,497.11
D. DEANA N. PAGAL 1,146,700.76
TOTAL AWARD: ₱5,077 ,386.54

The claim for damages is dismissed for lack of substantial evidence that respondents acted in bad faith.

SO ORDERED.

The reversal was premised on the NLRC's disagreement with the first two findings of the LA. For the NLRC, the
dismissals of Montenejo, et al. were illegal and the latter were not merely contractual employees: 18

1. Montenejo, et al. were illegally dismissed. Accordingly, Montenejo, et al. should be paid full backwages,
separation pay in lieu of reinstatement, 13th month pay and service incentive leave pay (SILP). In addition,
petitioner Mylene M. Bonifacio should also be awarded with cost of living allowance (COLA).

The dismissals of Montenejo, et al. were not valid because

a. VMDC was not able to establish that the dismissals were based on an authorized cause. VMDC presented
no evidence that it had formally closed shop and a closure cannot be inferred from the mere termination of
the management agreement between it and VFP. The claim of VMDC that its very existence hinges on the
management agreement is belied by its own Articles of Incorporation. Under VMDC's Articles of
19

Incorporation, VMDC is authorized, as part of its primary purpose, to "manage, operate, lease, develop,
organize, any and all kinds of business enterprises." Hence, the existence of VMDC cannot be regarded as
20

exclusively dependent on its management agreement with VFP.

b. Further compromising VMDC's claim of closure is the fact that it had never filed a notice of closure or
cessation of its operations with the Department of Labor and Employment (DOLE).

2. Montenejo, et al. are not contractual employees but regular employees of VMDC. The management
agreement between VFP and VMDC is not the contract of employment of Montenejo, et al. One cannot be
applied to or equated with the other.

The NLRC, however, concurred with the third finding of the LA. Like the LA, the NLRC was of the view that
Montenejo, et al. are not entitled to recover any damages for the reason that there is not enough evidence
showing that their dismissals were tainted with bad faith.

The NLRC also agreed with the LA regarding the solidary liability of VFP and VMDC for the monetary awards
due to Montenejo, et al. However, the NLRC proffered a different opinion as to the legal basis of VFP's liability.
According to the NLRC, the liability of VFP was not due to the latter being an indirect employer of Montenejo,
et al. but is based on the application of the doctrine of piercing the veil of corporate fiction. The NLRC noted
that there are circumstances present in the instant case that warrant a disregard of the separate personalities
of VFP and VMDC insofar as the claims of Montenejo, et al. were concerned.

Aggrieved, VFP filed a certiorari petition with the CA.

21

The Ruling of the CA and the Present Appeal

On July 29, 2008, the CA rendered a decision dismissing VFP's certiorari petition. In doing so, the CA
22

essentially agreed with the ratiocinations of the NLRC. VFP moved for reconsideration, but the CA remained
steadfast.

Hence, this appeal by VFP.

VFP, in substance, raises two qualms in this appeal: 23

First. VFP first questions the finding that Montenejo, et al. had been illegally dismissed, viz:

a. VFP insists that the dismissals of Montenejo, et al. were based on the closure of VMDC that was, in turn,
occasioned by the termination of the management agreement. It maintains the decision to close shop was an
exercise by VMDC's management of its prerogative, which ought to be upheld as valid in the absence of
showing that the same was implemented in bad faith and/or to circumvent the rights of its employees.

b. VFP also argues that the failure of VMDC to file a notice of closure with the DOLE did not invalidate the
former' s closure. In support of such argument, VFP cites the ruling in Sebuguero v. NLRC. 24

Second. VFP also challenges the finding that it may be held solidarily liable with VMDC for any monetary
award that may be adjudged in favor of Montenejo, et al. It submits that liability for any award ought to rest
exclusively on VMDC, the latter being the sole employer of Montenejo, et al. In this connection, VFP contends
that it cannot be treated as one and the same corporation as VMDC. It denies the existence of circumstances
in the case at bench that may justify the application of the doctrine of piercing the veil of corporate fiction.

Our Ruling

We grant the appeal.

The first qualm of VFP is justified. The NLRC and the CA erred in ruling that Montenejo, et al. were illegally
dismissed.

Montenejo, et al. were dismissed as a result of the closure of VMDC. Contrary to the ruling of the NLRC and
the CA, there is ample support from the records to establish that VMDC did, in fact, close its operations.
VMDC's closure, more importantly, qualifies as a bona fide cessation of operations or business as
contemplated under Article 298 of the Labor Code. 25

The dismissals of Montenejo, et al. were, therefore, premised on an authorized cause. Being so, such
dismissals are valid and remain to be valid even though they suffer from a procedural defect. Consequently,
Montenejo, et al. are not entitled to the monetary awards (i.e., full backwages, separation pay in lieu of
reinstatement, 13th month pay, SILP and COLA) granted to them by the NLRC, but only to nominal damages
on top of the separation pay under Article 298 of the Labor Code.

Concept of Illegal Dismissal; Closure of

Business as an Authorized Cause for the
Termination of Employment

We begin with the basics.

In our jurisdiction, the right of an employer to terminate employment is regulated by law. Both the
Constitution and our laws guarantee security of tenure to labor and, thus, an employee can only be validly
26

dismissed from work if the dismissal is predicated upon any of the just or authorized causes allowed under
the Labor Code. Correspondingly, a dismissal that is not based on either of the said causes is regarded as
27

illegal and entitles the dismissed employee to the payment of backwages and, in most cases, to
reinstatement. 28

One of the authorized causes for dismissal recognized under the Labor Code is the bona fide cessation of
business or operations by the employer. Article 298 of the Labor Code explicitly sanctions terminations due to
the employer's cessation of business or operations-as long as the cessation is bona fide or is not made ''for
the purpose of circumventing the [employees' right to security of tenure]":

Art. 298. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month. before the intended date thereof In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

As stated in the provision, an employer's closure or cessation of business or operations is regarded as an

invalid ground for the termination of employment only when the closure or cessation is made for the purpose
of circumventing the tenurial rights of the employees. A survey of relevant jurisprudence can shed light on
what can be considered as an invalid cessation of business or operations:

1. In Me-Shurn Corporation v. Me-Shurn Workers Union-FSM, a company that supposedly closed due
29

to financial losses was discovered to have revived its operations barely a month after it closed. Some
of the employees who were dismissed as a consequence of the company's closure challenged their
terminations on the ground that such closure is not bona fide and claimed that the same was only
made to forestall the formation of their union. When the issue reached us, we sided with the
employees-ratiocinating that the company's unusual and immediate resumption of operations had
lent credence to the employees' claim that the company's earlier closure had been done in bad faith.

2. Danzas Intercontinental, Inc. v. Daguman, on the other hand, featured a company which
30

apparently closed one of its departments. However, in the ensuing illegal dismissal case filed by the
employees terminated in the closure, it had been established that the company did not actually stop
operating the concerned department as it even hired a new set of staff for the same. On these
premises, we declared that the company's earlier closure of the subject department as not bona
fide and ordered the reinstatement of the terminated employees.

3. A cross between Me-Shum and Danzas is the case of St. John Colleges, Inc. v. St. John Academy
Faculty and Employees Union. In St. John, a deadlock in the Collective Bargaining Agreement
31

negotiations between a school and its faculty union prompted the former to close its high school
department and effect a mass lay-off. But barely one year after it announced such closure, the school
reopened its high school department. The employees who lost their jobs in the closure of the high
 school department lodged an illegal dismissal complaint hinged on the argument that said closure is
invalid and made in bad faith. We favored the employees and observed that the timing and the
reason of both the closure of the high school department and its reopening were indicative of the
school's bad faith in effecting the closure.

4. And finally, the case of Eastridge Golf Club, Inc. v. East Ridge Golf Club, Inc. Labor Union-
Super. Eastridge involved a company which closed one of its departments by allegedly transferring its
32

operations to a concessionaire. However, in the illegal dismissal case filed by the employees laid off in
the closure, it was proven that the company did not actually transfer the operations of the subject
department to a concessionaire and that the former remained to be the employer of all the workers
in the department. On this score, we ruled that the company's closure of its department was
simulated and that the employees' dismissal by reason thereof was illegal.

All of the instances of invalid closures of business or operations discussed above have a common and telling
characteristic-all of them were not genuine closures or cessations of businesses; they are mere simulations
which make it appear that the employer intended to close its business or operations when the latter, in truth,
had no such intention. To unmask the true intent of an employer when effecting a closure of business, it is
important to consider not only the measures adopted by the employer prior to the purported closure but also
the actions taken by the latter after the fact. For, as can be seen from the examples in the cited cases, the
employer's subsequent acts of suddenly reviving a business it had just closed or surreptititiously continuing
with its operation after announcing a shutdownare telltale badges that the employer had no real intent to
cease its business or operations and only seeks an excuse to terminate employees capriciously.

Guided by the foregoing, we shall now address the issue at hand.

VMDC's Closure Was Established;

The Closure Is Bona Fide; The
Dismissals of Montenejo, et al. Are
Based on an Authorized Cause

In this case, the NLRC and the CA both ruled against the validity of the dismissals of Montenejo, et al. for the
reason that the dismissals were not proven to be based on any valid cause. The NLRC and the CA were
disapproving of the claim that the dismissals were due to the closure of VMDC, lamenting the lack of any
evidence showing that VMDC had formally closed its business.

We disagree.

Though not proclaimed in any formal document, the closure of VMDC was still duly proven in this case. The
closure can be inferred from other facts that were established by the records and/or were not refuted by the
parties. These facts are:

1. The fact that VMDC, on January 3, 2000, had turned over possession of all buildings, equipment and other
properties necessary to the operation of the VFPIA to VFP; and
33

2. The fact that, on January 31, 2000, VMDC had dismissed all of its officials and employees, which included
Montenejo, et al. 34

The confluence of the above facts, to our mind, indicates that VMDC indeed closed shop or ceased operations
following the termination of its management agreement with VFP. The acts of VMDC in relinquishing all
propertiesrequired for its operations and in dismissing its entire workforce would have indubitably
compromised its ability to continue on with its operations and are, thus, the practical equivalents of a
business closure. Hence, in these regards, we hold that the closure of VMDC had been established.

Moreover, we find VMDC's cessation of operations to be bona fide. None of the telltale badges of bad faith in
closures of business, as illustrated in our jurisprudence, was shown to be present in this case. Here, there is
no evidence on record that shows that VMDC-after dismissing its entire workforce and ceasing to operate-had
revived its business or had hired new employees to replace those dismissed. Thus, it cannot be reasonably
said that VMDC's cessation of operations was just a ruse or had been implemented merely as an excuse to
terminate its employees.

The mere fact that VMDC could have chosen to continue operating despite the termination of its
management agreement with VFP is also of no consequence. The decision of VMDC to cease its operations
after the termination of the management agreement is, under the law, a lawful exercise by the company's
leadership of its management prerogative that must perforce be upheld where, as in this case, there is an
absence of showing that the cessation was made for prohibited purposes. As Alabang Country Club, Inc. v.
35

NLRC reminds: 36

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go
into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of
the law if a court interferes with management's prerogative to close or cease its business operations just
because the business is not suffering from any loss or because of the desire to provide the workers continued
employment.

The validity of the closure of VMDC necessarily validates the dismissals of Montenejo, et al. that resulted
therefrom. The dismissals cannot be regarded as illegal because they were predicated upon an authorized
cause recognized by law.

Montenejo, et al Are Not Entitled to

Monetary Awards Adjudged in Their Favor by
the NLRC; They Are Only Entitled to
Separation Pay Under Article 298 of the
Labor Code

Since Montenejo, et al. had been validly dismissed, it becomes apparent that the monetary awards granted to
them by the NLRC, and affirmed by the CA, were not proper. We substantiate:

1. The awards for full backwages and separation pay in lieu of reinstatement cannot be sustained as these
awards are reserved by law, and jurisprudence, for employees who were illegally dismissed. 37

2. The awards for 13th month pay, SILP and COLA, on the other hand, must also be invalidated as these are
mere components of the award for backwages and were, thus, made by the NLRC and the CA in consideration
of the illegality of the dismissals of Montenejo, et al. The 13th month pay, SILP and COLA that were awarded
by the NLRC and the CA refer to the benefits that Montenejo, et al. would be entitled to had they not been
illegally dismissed and are computed from the time of their dismissals up to the time the judgment declaring
their dismissals illegal becomes final. The awards, in other words, were not due to any failure on the part of
38

VMDC to pay 13th month pay, SILP and COLA to Montenejo, et al. during the subsistence of their employer-
employee relationship.
For having been terminated by reason of the employer's closure of operations that was not due to serious
business losses or financial reverses, Montenejo, et al. are, however, entitled to be paid separation
pay pursuant to Article 298 of the Labor Code. The records in this regard, though, reveal that Montenejo, et
al. have already received their respective separation pays from VMDC. 39

Failure of VMDC to File a Notice of Closure

with the DOLE Does Not Invalidate the
Dismissals of Montenejo, et al.; Such
Procedural Lapse Only Gives Rise to
Liability for Nominal Damages

Anent the failure of VMDC to file a notice of closure with the DOLE, we find our rulings in Agabon v.
NLRC and Jaka Food Processing Corporation v. Pacot to be apt.
40 41

To recall, Agabon laid out the rule that when a dismissal is based on a just cause but is implemented without
observance of the statutory notice requirements, the dismissal should be upheld as valid but the employer
must thereby pay an indemnity to the employee in the amount of ₱30,000. Jaka, on the other hand,
expounded on Agabon in two (2) ways:

1. First, Jaka extended the application of the Agabon doctrine to dismissals that were based
on authorizedcauses but have been effected without observance of the notice requirements. Thus,
similar to Agabon, the dismissals under such circumstances will also be regarded as valid while the
employer shall likewise be required to pay an indemnity to the employee; and

2. Second, Jaka increased the amount of indemnity payable by the employer in cases where the
dismissals are based on authorized causes but have been effected without observance of the notice
requirements. It fixed the amount of indemnity in the mentioned scenario to ₱50,000.

Verily, the failure of VMDC to file a notice of closure with the DOLE does not render the dismissals of
Montenejo, et al., which were based on an authorized cause, illegal. Following Agabon and Jaka, such failure
only entitles Montenejo, et al. to recover nominal damages from VMDC in the amount of ₱50,000 each, on
top of the separation pay they already received. 1awp++i1

II

The NLRC and the CA also erred in ruling that VFP may be held solidarily liable with VMDC for any monetary
award that may be found due to Montenejo, et al. We find that, contrary to the holding of the NLRC and the
CA, the application of the doctrine of piercing the veil of corporate fiction is not justified by the facts of this
case.

Accordingly, the liability for the award of nominal damages-the only award that Montenejo, et al. are entitled
to in this case-ought to rest exclusively upon their employer, VMDC.

Doctrine of Piercing the Veil of

Corporate Fiction Does Not Apply to
This Case

The NLRC and the CA's stance is based on their submission that the doctrine of piercing the veil of corporate
fiction is applicable to this case, i.e., that VFP and VMDC could, for purposes of satisfying any monetary award
that may be due to Montenejo, et al., be treated as one and the same entity. According to the two tribunals,
the doctrine may be applied to this case because VFP apparently owns almost all of the shares of stock of
VMDC. In this regard, both the NLRC and the CA cite the Closing Agreement of VFP and VMDC which states
42

that:

NOW THEREFORE, for and in consideration of the foregoing premises the [VFP] and the [VMDC] hereby agree
to terminate the [management agreement] for the development and management of the [VFPIA] in Taguig
effective on 3 January 2000, subject to the following conditions:

1. The [VMDC] agrees that the [VFP] is the majority stockholder of the [VMDC] and that all its original
incorporators have endorsed all their shares of stock to the [VFP] except one (1) qualifying share each to be
able to sit as Director in the Board of Directors of the [VMDC]. (Emphasis supplied)

We disagree with the submission.

The doctrine of piercing the veil of corporate fiction is a legal precept that allows a corporation's separate
personality to be disregarded under certain cirumstances, so that a corporation and its stockholders or
members, or a corporation and another related corporation could be treated as a single entity. The doctrine is
an equitable principle, it being meant to apply only in situations where the separate corporate personality of
a corporation is being abused or being used for wrongful purposes. As Manila Hotel Corporation v.
43

NLRC explains:
44

Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is used
to defeat public convenience, justify wrong, protect fraud or defend a crime. It is done only when a
corporation is a mere alter ego or business conduit of a person or another corporation. (Citations omitted)

In Concept Builders, Inc. v. NLRC, we laid down the following test to determine when it would be proper to
45

apply the doctrine of piercing the veil of corporate fiction:

1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of
policy and business practice in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own;

2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation
of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff's legal
rights; and

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of

The absence of any one of these elements prevents piercing the Ocorporate veil. In applying the
instrumentality or alter ego doctrine, the courts are concerned with reality and not form, with how the
corporation operated and the individual defendant's relationship to that operation. (Emphasis supplied and
citations omitted).

Relative to the Concept Builders test are the following critical ruminations from Rufina Luy Lim v. CA: 46

Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a
corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities.
Moreover, to disregard the separate juridical personality of a corporation, the wrong-doing must be clearly
and convincingly established. It cannot be presumed. (Citations omitted)

Utilizing the foregoing standards, it becomes clear that the NLRC and the CA were mistaken in their
application of the doctrine to the case at bench. The sole circumstance used by both to justify their disregard
of the separate personalities of VFP and VMDC is the former's alleged status as the majority stockholder of
the latter. Completely absent, however, both from the decisions of the NLRC and the CA as well as from the
records of the instant case itself, is any circumstance which establishes that VFP had complete control or
domination over the ''finances[,]. .. policy and business practice" of VMDC. Worse, even assuming that VFP
had such kind of control over VMDC, there is likewise no evidence that the former had used the same
to "commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest
and unjust act in contravention of [another's] legal rights."

Given the absence of any convincing proof of misuse or abuse of the corporate shield, we, thus, find the
application of the doctrine of piercing the veil of corporate fiction to the present case to be unwarranted, if
not utterly improper. Consequently, we must also reject, for being erroneous, the pronouncement that VFP
may be held solidarily liable with VMDC for any monetary award that may be adjudged in favor of Montenejo,
et al. in this case.

Application: Exclusive Liability for

Nominal Damages Rests on VMDC

As established in the previous discussion, the only award to which Montenejo, et al. are entitled in the instant
case is for nominal damages pursuant to the Agabon and Jaka doctrines. Considering that the doctrine of
piercing the veil of corporate fiction does not apply, the liability for the satisfaction of this award must be
deemed to rest exclusively on the employer of Montenejo, et al., VMDC.

III

In fine-

Our finding upholding the validity of the dismissals of Montenejo, et al. warranted the nullification of the
awards of full backwages, separation pay in lieu of reinstatement, 13th month pay, SILP and COLA that were
originally adjudged in their favor by the NLRC. Thus, the assailed CA decision and resolution, for sustaining
such awards, ought to be reversed and set aside. Necessarily, the NLRC decision must also be set
aside except with respect to the finding that Montenejo, et al. were regular employees of VMDC. The statuses
of Montenejo, et al. as regular employees of VMDC were not challenged in the present appeal of VFP.

In light of the failure of VMDC to file a notice of closure with the DOLE, however, we must adjudge VMDC to
pay nominal damages to Montenejo, et al. pursuant to the Agabon and Jaka doctrines. The amount of the
nominal damages is ₱50,000 per person and the satisfaction thereof is the exclusive liability of VMDC, the
employer of Montenejo, et al. VFP is absolved from any further liability to Montenejo, et al.

WHEREFORE, premises considered, the instant petition is GRANTED. The Decision dated July 29, 2008 and
Resolution dated October 2, 2008 of the Court of Appeals in CA-G.R. SP No. 101041 are REVERSED and SET
ASIDE. Except as to the finding that respondents Eduardo L. Montenejo, Mylene M. Bonifacio, Evangeline E.
Valverde and Deana N. Pagal were regular employees of the VFP Management and Development Corporation,
the Decision dated May 16, 2007 of the National Labor Relations Commission in NLRC NCR Case Nos. 30-01-
00494-02 and 048927-06 is SET ASIDE.
Judgment is hereby made directing the VFP Management and Development Corporation to PAY respondents
Eduardo L. Montenejo, Mylene M. Bonifacio, Evangeline E. Valverde and Deana N. Pagal the sum of ₱50,000
each as NOMINAL DAMAGES.

SO ORDERED.

25. G.R. No. 230682

JOLO'S KIDDIE CARTS/ FUN4KIDS/ MARLO U. CABILI, Petitioners

vs.
EVELYN A. CABALLA and ANTHONY M. BAUTISTA, Respondents

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari are the Resolutions dated July 28, 2016 and February 22,
1 2

2017 of the Court of Appeals (CA) in CA-G.R. SP No. 146460 which dismissed the petition for certiorari filed
3 4
 by petitioners Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili (petitioners), due to a technical ground, i.e., non-
filing of a motion for reconsideration before filing a petition for certiorari.

The Facts

The instant case stemmed from a complaint for illegal dismissal, underpayment of salaries/wages and 13th
5

month pay, non-payment of overtime pay, holiday pay, and separation pay, damages, and attorney's fees filed
by Evelyn A. Caballa (Caballa), Anthony M. Bautista (Bautista; collectively, respondents), and one Jocelyn S. 6

Colisao (Colisao) against petitioners before the National Labor Relations Commission (NLRC). Respondents
and Colisao alleged that petitioners hired them as staff members in the latter's business; Caballa and Bautista
were assigned to man petitioners' stalls in SM Bacoor and SM Rosario in Cavite, respectively, while Colisao
was assigned in several SM branches, the most recent of which was in SM North EDSA. They were paid a daily
7

salary that reached ₱330.00 for a six (6)-day work week from 9:45 in the morning until 9:00 o'clock in the
evening. They claimed that they were never paid the monetary value of their unused service incentive leaves,
8

13th month pay, overtime pay, and premium pay for work during holidays; and that when petitioners found
out that they inquired from the Department of Labor and Employment about the prevailing minimum wage
rates, they were prohibited from reporting to their work assignment without any justification. 9

For their part, petitioners denied dismissing respondents and Colisao, and maintained that they were the
10

ones who abandoned their work. They likewise maintained that they paid respondents and Colisao their
11

wages and other benefits in accordance with the law and that their money claims were bereft of factual and
legal bases. 12

The Labor Arbiter's (LA) Ruling

In a Decision dated November 27, 2015, the LA dismissed the case insofar as Colisao is concerned for failure
13

to prosecute. However, the LA ruled in favor of respondents, and accordingly, ordered petitioners to
14

solidarily pay them the following, plus attorney's fees equivalent to ten percent (10%) ofthe total monetary
awards:

Separation Back-wages Wage Di- 13th month Moral Exemplary Total

Pay fferential pay damages damages
Caballa 60,580.00 109,870.80 75,156.12 10,608.00 10,000.00 5,000.00 ₱271,214.92
Bautista 60,580.00 112,294.00 74,480.12 10,608.00 10,000.00 5,000.00 272,962.12

544,177.04
Plus 10% Attorney's Fees 54,417.70

GRAND TOTAL ₱598,594.74 15

The LA found that respondents' adequate substantiation of their claim that they were no longer given any
work assignment and were not allowed to go anywhere near their respective workstations, coupled with
petitioners' failure to prove abandonment, justifies the finding that respondents were indeed dismissed
without just cause nor due process. 16

Aggrieved, petitioners appealed to the NLRC.

17
The NLRC Ruling

In a Decision dated April 28, 2016, the NLRC modified the LA ruling, finding no illegal dismissal nor
18

abandonment of work. Accordingly, the NLRC ordered petitioners to reinstate respondents to their former or
substantially equivalent positions without loss of seniority rights and privileges; deleted the awards for
payment of backwages, separation pay, and moral and exemplary damages; and affirmed the rest of the
awards. For this purpose, the NLRC attached a Computation of Monetary A ward detailing the monetary
19 20

awards due to respondents, as follows: (a) for Caballa, ₱15,623.00 as holiday pay, ₱109,870.80 as wage
differential, and ₱75,156.12 as 13th month pay; (b) for Bautista, ₱15,623.00 as holiday pay, ₱l12,294.00 as
wage differential, and ₱74,480.12 as 13th month pay; and (c) attorney's fees amounting to ten percent (10%)
of the total monetary value awarded. 21

Anent the procedural matters raised by petitioners, the NLRC ruled that: (a) petitioners waived the issue of
improper venue when they failed to raise the same before the filing of position papers; and (b) respondents
substantially complied with the requirement of verifying their position papers, and thus, the same is not fatal
to their complaint. As to the merits, while the NLRC agreed with the LA's finding that there was no
22

abandonment on the part of respondents, the latter were unable to adduce any proof that petitioners indeed
committed any overt or positive act operative of their dismissal. In view of the finding that there was neither
23

dismissal on the part of petitioners nor abandonment on the part of respondents, the NLRC ordered the
latter's reinstatement but without backwages. Finally, the NLRC held that respondents should be entitled to
their holiday pay as it is a statutory benefit which payment petitioners failed to prove. 24

Dissatisfied, petitioners directly filed a petition for certiorari before the CA, without moving for
25

reconsideration before the NLRC.

The CA Ruling

In a Resolution dated July 28, 2016, the CA denied the petition due to petitioners' failure to file a motion for
26

reconsideration before the NLRC prior to the filing of a petition for certiorari before the CA. It held that the
prior filing of such motion before the lower tribunal is an indispensable requisite in elevating the case to the
CA via certiorari, and that petitioners' failure to do so resulted in the NLRC ruling attaining finality.
27

Petitioners moved for reconsideration, but the same was denied in a Resolution dated February 22, 2017;
28 29

hence, this petition. 30

The Court's Ruling

The petition is partly meritorious.

I.

As a rule, the filing of a motion for reconsideration is a condition sine qua non to the filing of a petition
for certiorari. The rationale for this requirement is that "the law intends to afford the tribunal, board or office
31

an opportunity to rectify the errors and mistakes it may have lapsed into before resort to the courts of justice
can be had." Notably, however, there are several recognized exceptions to the rule, one of which is when the
32

order is a patent nullity. 33

In this case, records show that the LA ruled in favor of respondents, and accordingly, ordered petitioners to
pay them the following monetary awards:
 Separation Back-wages Wage Di- 13th month Moral Exemplary Total
Pay fferential pay damages damages
Caballa 60,580.00 109,870.80 75,156.12 10,608.00 10,000.00 5,000.00 ₱271,214.92
Bautista 60,580.00 112,294.00 74,480.12 10,608.00 10,000.00 5,000.00 272,962.12
544,177.04
Plus 10% Attorney's Fees 54,417.70
GRAND TOTAL ₱598,594.74

Upon petitioners' appeal to the NLRC, the LA ruling was modified, deleting the awards for separation pay,
backwages, moral damages, and exemplary damages, while affirming the awards for wage differential and
13th month pay. In the Computation of Monetary Award attached to the NLRC ruling - which according to
34

the NLRC itself, shall form part of its decision - it was indicated that Caballa's awards for wage differential
35

and 13th month pay are in the amounts of ₱109,870.80 and ₱75,156.12, respectively; while the awards in
Bautista's favor were pegged at ₱l12,294.00 and ₱74,480.12, respectively. However, a simple counterchecking
of the NLRC's computation with the LA ruling readily reveals that: (a) the amounts of ₱l09,870.80 and
₱l12,294.00 clearly pertain to the awards of backwages, which were already deleted in the NLRC
ruling; (b) the amounts of ₱75,156.12 and ₱74,480.12 pertain to the awards of wage differential; and (c) the
amount of ₱l0,608.00 which pertain to the awards of 13th month pay for both respondents, were no longer
reflected in the NLRC computation. While this is obviously just an oversight on the part of the NLRC, it is not
without any implications as such oversight resulted in an unwarranted increase in the monetary awards due
to respondents. Clearly, such an increase is a patent nullity as it is bereft of any factual and/or legal basis.

Verily, the CA erred in dismissing the petition for certiorari filed before it based on the aforesaid technical
ground, as petitioners were justified in pursuing a direct recourse to the CA even without first moving for
reconsideration before the NLRC. In such instance, court procedure dictates that the case be remanded to the
CA for a resolution on the merits. However, when there is already enough basis on which a proper evaluation
of the merits may be had, as in this case, the Court may dispense with the time-consuming procedure of
remand in order to prevent further delays in the disposition of the case and to better serve the ends of
justice. In view of the foregoing - as well as the fact that petitioners pray for a resolution on the merits - the
36 37

Court finds it appropriate to exhaustively resolve the instant case.

II.

It must be stressed that to justify the grant of the extraordinary remedy of certiorari, petitioners must
satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it.
Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is
tantamount to lack of jurisdiction. To be considered "grave," discretion must be exercised in a despotic
manner by reason of passion or personal hostility, and must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act at all in contemplation
of law. 38

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are
not supported by substantial evidence, which refers to that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has basis in the evidence and
the applicable law and jurisprudence, then no grave abuse of discretion exists and the CA should so declare
and, accordingly, dismiss the petition.
39
Guided by the foregoing considerations and as will be explained hereunder, the Court finds that the NLRC did
not gravely abuse its discretion in ruling that: (a) petitioners are barred from raising improper venue and that
the verification requirement in respondents' position paper was substantially complied with; and (b)
respondents were neither dismissed by petitioners nor considered to have abandoned their jobs. However
and as already discussed, the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it awarded respondents increased monetary benefits without any factual and/or legal
bases.

III.

Anent the first procedural issue, petitioners insist that since respondents worked in Cavite, they should have
filed their complaint before the Regional Arbitration Branch IV of the NLRC and not in Manila, pursuant to
Section 1, Rule IV of the 2011 NLRC Rules of Procedure. As such, the LA in Manila where the complaint was
filed had no jurisdiction to rule on the same. However, such insistence is misplaced as the aforesaid provision
40

of the 2011 Rules of Procedure clearly speaks of venue and not jurisdiction. Moreover, paragraph (c) of the
same provision explicitly provides that "[w]hen venue is not objected to before the first scheduled mandatory
conference, such issue shall be deemed waived." Here, the NLRC aptly pointed out that petitioners only raised
improper venue for the first time in their position paper, and as such, they are deemed to have waived the
41

same.

In this relation, Article 224 (formerly Article 217) of the Labor Code, as amended, clearly provides that the
42

LAs shall have exclusive and original jurisdiction to hear and decide, inter alia, termination disputes and
money claims arising from employer-employee relations, as in this case. As such, the LA clearly had
jurisdiction to resolve respondents' complaint.

Another procedural issue raised by petitioners is that respondents signed the Verification and Affidavit of
Non-Forum Shopping attached to their Position Paper a day earlier than the date such pleading was filed by
their counsel. In this regard, petitioners assert that such is a fatal infirmity that necessitates the dismissal of
respondents' complaint. However, the NLRC correctly ruled that respondents' substantial compliance with
43

the requirement, coupled with their meritorious claims against petitioners, necessitates dispensation with the
strict compliance with the rules on verification and certification against forum shopping in order to better
serve the ends of justice. In Fernandez v. Villegas, the Court held:
44

The Court laid down the following guidelines with respect to noncompliance with the requirements on or
submission of a defective verification and certification against forum shopping, viz.:

1) A distinction must be made between non-compliance with the requirement on or submission of defective
verification, and noncompliance with the requirement on or submission of defective certification against
forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or correction or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of
justice may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the
petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent submission or correction thereof, unless there is a need
to relax the Rule on the ground of "substantial compliance" or presence of "special circumstances or
compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a common interest and involve a
common cause of action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must
1âwphi1

execute a Special Power of Attorney designating his counsel of record to sign on his behalf.

xxxx

Besides, it is settled that the verification of a pleading is only a formal, not a jurisdictional requirement
intended to secure the assurance that the matters alleged in a pleading are true and correct. Therefore, the
courts may simply order the correction of the pleadings or act on them and waive strict compliance with the
rules, as in this case.

xxxx

Similar to the rules on verification, the rules on forum shopping are designed to promote and facilitate the
orderly administration of justice; hence, it should not be interpreted with such absolute literalness as to
subvert its own ultimate and legitimate objectives. The requirement of strict compliance with the provisions
on certification against forum shopping merely underscores its mandatory nature to the effect that the
certification cannot altogether be dispensed with or its requirements completely disregarded. It does not
prohibit substantial compliance with the rules under justifiable circumstances, as also in this case. (Emphases
45

and underscoring supplied)

IV.

In Claudia's Kitchen, Inc. v. Tanguin, the Court was faced with a situation where, on the one hand, the
46

employee claimed she was illegally dismissed by her employer; on the other, the employer denied ever
dismissing such employee and even accused the latter of abandoning her job, as in this case. In resolving the
matter, the Court extensively discussed:

In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a
valid or authorized cause. But before the employer must bear the burden of proving that the dismissal was
legal, the employees must first establish by substantial evidence that indeed they were dismissed. If there is
no dismissal, then there can be no question as to the legality or illegality thereof. In Machica v. Roosevelt
Services Center, Inc., the Court enunciated:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove
their allegation that respondents dismissed them from their employment. It must be stressed that the
evidence to prove this fact must be clear, positive and convincing. The rule that the employer bears the
burden of proof in illegal dismissal cases :finds no application here because the respondents deny having
dismissed the petitioners.

xxxx

The Court further agrees with the findings of the LA, the NLRC[,] and the CA that Tanguin was not guilty of
abandonment. Tan Brothers Corporation of Basilan City v. Escudero extensively discussed abandonment in
labor cases:

As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It constitutes neglect of duty and is a just cause for tem1ination of
employment under paragraph (b) of Article 282 [now Article 296] of the Labor Code. To constitute
abandonment, however, there must be a clear and deliberate intent to discontinue one's employment
without any intention of returning. In this regard, two elements must concur: (1) failure to report for work or
absence without valid or justifiable reason; and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by some overt
acts. Otherwise stated, absence must be accompanied by overt acts unerringly pointing to the fact that the
employee simply does not want to work anymore. It has been ruled that the employer has the burden of
proof to show a deliberate and unjustified refusal of the employee to resume his employment without any
intention of returning. (Emphases and underscoring supplied)
47

As aptly ruled by the NLRC, respondents failed to prove their allegation that petitioners dismissed them from
work, as there was no indication as to how the latter prevented them from reporting to their work stations; or
that the petitioners made any overt act that would suggest that they indeed terminated respondents'
employment. In the same vein, petitioners failed to prove that respondents committed unequivocal acts that
48

would clearly constitute intent to abandon their employment. It may even be said that respondents' failure to
report for work may have been a direct result of their belief, albeit misplaced, that they had already been
dismissed by petitioners. Such mistaken belief on the part of the employee should not lead to a drastic
conclusion that he has chosen to abandon his work. More importantly, respondents' filing of a complaint for
49

illegal dismissal negates any intention on their part to sever their employment relations with petitioners. To50

reiterate, abandonment of position is a matter of intention and cannot be lightly inferred, much less legally
presumed, from certain equivocaI acts. 51

In light of the finding that respondents neither abandoned their employment nor were illegally dismissed by
petitioners, it is only proper for the former to report back to work and for the latter to reinstate them to their
former positions or a substantially-equivalent one in their stead. In this regard, jurisprudence provides that in
instances where there was neither dismissal by the employer nor abandonment by the employee, the proper
remedy is to reinstate the employee to his former position but without the award of backwages. 52

As for respondents' money claims for holiday pay, wage differential, and 13th month pay, the NLRC properly
observed that petitioners failed to show that payment has been made. As such, they must be held liable for
the same. It is well-settled that "with respect to labor cases, the burden of proving payment of monetary
claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records,
remittances and other similar documents - which will show that overtime, differentials, service incentive leave
and other claims of workers have been paid - are not in the possession of the worker but in the custody and
absolute control of the employer." However and as already adverted to earlier, the awards of wage
53

differential and 13th month pay due to respondents must be adjusted to properly reflect the computation
made by the LA, in that: (a) Caballa is entitled to wage differential and 13th month pay in the amounts of
₱75,156.12 and ₱10,608.00, respectively; while (b) Bautista's entitlement to such claims are in the amounts
of ₱74,480.12 and ₱10,608.00, respectively.
In the same manner, the NLRC correctly awarded attorney's fees to respondents, in light of Article 111(a) of
the Labor Code which states that: "[i]n cases of unlawful withholding of wages, the culpable party may be
assessed attorney's fees equivalent to ten percent (10%) of the amount of wages recovered," as in this case.

Finally, all monetary awards due to respondents shall earn legal interest at the rate of six percent (6%) per
annumfrom the finality of this Decision until fully paid, pursuant to prevailing jurisprudence.
54

WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated July 28, 2016 and February 22, 2017 of
the Court of Appeals in CA-G.R. SP No. 146460 are hereby SET ASIDE. Accordingly, the Decision dated April
28, 2016 of the National Labor Relations Commission is AFFIRMED with MODIFICATION, ordering petitioners
Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili to pay:

a) Respondent Evelyn A. Caballa the amounts of ₱15,623.00 as holiday pay, ₱75,156.12 as wage differential,
and ₱10,608.00 as 13th month pay, plus attorney's fees amounting to ten percent (10%) of the aforesaid
monetary awards. Further, said amounts shall then earn legal interest at the rate of six percent (6%) per
annum from the finality of the Decision until fully paid; and

b) Respondent Anthony M. Bautista the amounts of ₱15,623.00 as holiday pay, ₱74,480.12 as wage
differential, and ₱10,608.00 as 13th month pay, plus attorney's fees amounting to ten percent (10%) of the
aforesaid monetary awards. Further, said amounts shall then earn legal interest at the rate of six percent
(6%) per annum from the finality of the Decision until fully paid.

Finally, the Temporary Restraining Order dated May 26, 2017 issued in relation to this case is
hereby LIFTED. The Decision dated April 28, 2016 of the National Labor Relations Commission in NLRC NCR
Case No. 03-03168-15 (NLRC LAC No. 02-000701-16), as modified, shall be implemented in accordance with
this Decision.

SO ORDERED.

26. G.R. No. 219370

SECOND DIVISION

G.R. No. 219370, December 06, 2017

VERONICO O. TAGUD, Petitioner, v. BSM CREW SERVICE CENTRE PHILS., INC./NARCISSUS DURAN AND/OR BERNHARD SCHULTE
SHIPMANAGEMENT (CYPRUS), Respondents.

DECISION

CARPIO, J.:
This is a petition for review on certiorari 1 assailing the Decision2 dated 24 November 2014 and the Resolution 3 dated 29 June 2015 of
the Court of Appeals (CA) in CA-G.R. SP No. 119633. The CA affirmed the Decision 4 dated 12 January 2011 of the National Labor
Relations Commission (NLRC) Second Division which dismissed petitioner's claim for disability benefits and other monetary awards.

The Facts

Respondent Bernhard Schulte Shipmanagement (Cyprus) (Bernhard), a foreign shipping company doing business in the Philippines
through its local manning agent, respondent BSM Crew Service Centre Philippines, Inc. (BSM) hired petitioner Veronico O. Tagud
(Tagud) as Able Bodied Seaman since 2005. BSM is a domestic corporation engaged in the manning and recruitment of Filipino seafarers
on board ocean going vessels and respondent Narcissus Duran is the company's President and authorized representative.

On 7 March 2008, Tagud was re-hired by respondents as Able Bodied Seaman for the Kota Pemimpin
vessel under a contract approved by the Philippine Overseas Employment Administration (POEA). The
terms and conditions of the employment stated:

Duration of contract: 7 months

Position: Able Bodied Seaman
Basic Monthly Salary: US$648/month
Hours of Work: 40 hours/week
Leave and Food Allowance: $317/month
Gtrd Ot: $561/month
Overtime: $4.68/hour after 120 hours
Point of Hire: Manila, Philippines5

Tagud passed the required pre-employment medical examination at the American Outpatient Clinic and was declared to be "Fit for Sea
Duty (without restriction)."6 On 24 March 2008, Tagud was deployed and joined the Kota Pemimpin vessel in Hongkong on the same
day.

Tagud's job as Able Bodied Seaman required him to (1) stand watch while in port or at sea, and (2) perform routine deck department
maintenance tasks, e.g. cleaning, painting, and preserving the ship. Tagud's other responsibilities also include underway replenishment,
cargo handling, forklift operation, and helicopter flight deck operations.

On 18 October 2008, while on duty doing a sanding job, Tagud lost his balance due to the sudden tilting of the ship and his right elbow
region crashed against a hard object. As a result, he lost sensation and strength on his upper right extremity. After three days, he was
brought to a doctor for medical attention when the vessel docked in Wynnum, Queensland.

Tagud underwent an x-ray of his right elbow. The x-ray report dated 21 October 2008 yielded the following result:

Clinical History: Trauma to the lateral elbow three days ago.

Findings: There is no fracture. There is a small olecranon spur. No other abnormality. 7

Twenty-one days later, on 8 November 2008, Tagud disembarked in Singapore and was repatriated to Manila on the same day.

Tagud alleged that when he reported to his manning agency, he was not given any assistance or even referred to a company-designated
physician for a follow-up medical examination. After four months, on 9 and 10 March 2009, Tagud sought medical attention at Sta.
Isabel Medical Clinic in Caloocan City. Dr. Ruben Chua examined Tagud and prescribed medicines for Tagud's elevated blood pressure
and pain in his upper right extremities.

Then sometime in September 2009, Tagud sought another medical consultation for neuritis with loss of strength of the right hand at
Peter the Rock Family Medical Polyclinic in Caloocan City and was attended to by Dr. Sisinio Quilicot. Tagud returned on 16 January 2010
to Dr. Quilicot for a follow-up treatment of his neuritis which became chronic. With an illness which limits the flexion of his upper right
extremity, Tagud was no longer employed in any gainful occupation.
On 11 December 2009, Tagud filed a complaint 8 with the NLRC, National Capital Region, Quezon City, against respondents for
permanent and total disability benefits, sickness wages, reimbursement of medical expenses, damages, and attorney's fees.

On 3 February 2010, Tagud sought for a thorough medical examination at the Veterans Memorial Medical Center in Quezon City. The
attending physician, Dr. Liberato Casison, reported his assessment:

Subject has permanent disability neurologic in nature caused by repetitive vibratory trauma and physical trauma during work.
Disability rating: Disability 1.9

Tagud claimed that as a result of his work-related illness which he contracted during the term of his employment, he should be entitled
to permanent disability benefits in the amount of US$125,000 in accordance with the schedule of rates applied by the foreign principal
for crew of its vessels.10

Respondents denied any liability to Tagud. They contended that on 8 November 2008 Tagud was repatriated to the Philippines on a
"finished contract'' as stated in Tagud's disembarkation report. Respondents maintained that after Tagud's disembarkation, Tagud did
not (1) complain of any illness or infirmity, (2) mention any accident or incident on board the Kota Pemimpin vessel, and (3) ask for any
post-employment medical examination after disembarkation. Respondents also asserted that Tagud failed to report to his manning
agency within the three-day mandatory reporting period reckoned from the date of his repatriation.

In a Decision11 dated 10 September 2010, the Labor Arbiter granted Tagud's complaint. The dispositive portion of the Decision states:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents BSM Crew Service Centre Inc., and/or Bernhard
Schulte Shipmanagement (Cyprus) to pay complainant Veronico O. Tagud jointly and severally, the Philippine Peso equivalent at the
time of actual payment of ONE HUNDRED TWENTY-FIVE [THOUSAND] US DOLLARS (US$ 125,000) representing total permanent
disability benefits plus ten percent (10%) of the judgment award as and for attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED.12

Respondents filed an appeal 13 with the NLRC. In a Decision 14 dated 12 January 2011, the NLRC reversed the Labor Arbiter's decision. The
NLRC stated that Tagud failed to prove that he reported to the manning agency within three days from his arrival in the Philippines on 8
November 2008 in order to be examined or treated for any injury sustained during the period of his employment. The NLRC added that
it took Tagud about four months from his discharge from the vessel to seek medical treatment for a claim of "work-related injury." Thus,
the NLRC declared that in the absence of a physician's opinion on Tagud's medical status immediately after repatriation, there can be no
basis for his claim for disability benefits. The dispositive portion of the NLRC's decision states:

WHEREFORE, all the foregoing premises considered, the assailed Decision is hereby REVERSED and/or SET ASIDE, and a new one
entered DISMISSING the instant complaint for lack of merit.

SO ORDERED.15

Tagud filed a motion for reconsideration. The NLRC Second Division, in a Resolution dated 24 March 2011, denied the motion for lack of
merit.16

On 30 May 2011, Tagud filed a petition for certiorari with the Court of Appeals. In a Decision dated 24 November 2014, the CA
dismissed the petition. The CA stated that during petitioner's employment on board MN Kota Pemimpin, there was no incident or
accident report submitted by his captain; and upon his arrival in the Philippines, Tagud did not report to respondents any ailment or
injury he allegedly suffered on board said vessel. The CA concluded that petitioner was repatriated on a finished contract and not for
any other reason. Thus, he is not entitled to claim any disability benefits absent proof of compliance with the requirements set forth m
Section 20(B)(3) of the 2000 POEA Standard Employment Contract.

Tagud then filed a motion for reconsideration which was denied by the CA in a Resolution dated 29 June 2015. 17

Hence, the instant petition.

The Issue

The issue in this case is whether or not the CA erred in affirming the decision of the NLRC which dismissed petitioner's claim for
permanent disability benefits.

The Court's Ruling

The petition lacks merit.

Petitioner contends that his injury was work-related and had existed during the term of his employment. Petitioner states that he
submitted medical evidence consisting of an x-ray examination result issued by a medical facility in Wynnum, Queensland. Petitioner
adds that even if his repatriation was regarded as a finished contract, this should not change the nature of his work-related injury.
Petitioner also insists that his alleged non� compliance with the three-day mandatory reporting requirement should be considered as
an exception since his non-compliance was not his fault but the inadvertence or deliberate refusal of respondents.

Respondents, on the other hand, maintain that in order to be entitled to claim disability benefits, a seafarer must submit himself to the
company-designated physician for evaluation within three days from repatriation which petitioner did not do. Respondents reiterate
that the most important basis to determine if the illness or injury is work-related and compensable is the post-employment medical
examination. Without this examination or its equivalent, respondents cannot be made liable for compensation. Also, respondents
contend that petitioner disembarked from the vessel due to a finished contract and not for medical reasons. Thus, he cannot claim any
disability benefits since his contract had already ended.

At the outset, this Court only entertains question of law under Rule 45 of the Rules of Court. However, the Court admits of exceptions,
such as in this case, when the factual findings of the labor arbiter, NLRC or courts below are in conflict with each other. Here, the labor
arbiter found that petitioner should be awarded total permanent disability benefits and attorney's fees and the NLRC and the CA, on
the other hand, decreed otherwise.

A seafarer employed on overseas vessels is entitled to disability benefits by law and by contract. By law, the provisions of Articles 191 to
193 under Chapter VI (Disability Benefits) of the Labor Code, in relation to Rule X of the Rules and Regulations Implementing Book IV of
the Labor Code, are applicable. By contract, the POEA Standard Employment Contract (POEA-SEC) and the parties' Collective Bargaining
Agreement bind the seafarer and the employer to each other. 18

In this case, Tagud executed his employment contract with respondents on 7 March 2008. Accordingly, the 2000 POEA-SEC, as provided
under Department Order No. 4, series of 2000, issued by the Department of Labor and Employment (DOLE) on 31 May 2000, applies
here.

The POEA, pursuant to said order by the DOLE to formulate the guidelines on the implementation of the amended contract for
seafarers, issued Memorandum Circular (MC) No. 9, series of 2000, on 14 June 2000. MC No. 9 or the POEA standard agreement,
entitled Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, sets
the minimum requirements acceptable to the POEA for Filipino seafarers employed on board ocean-going vessels and became effective
for all agreements signed starting 25 June 2000.

In a Resolution dated 11 September 2000, this Court issued a temporary restraining order (TRO) on the implementation of certain
amendments of the 2000 POEA-SEC. However, this TRO was lifted on 5 June 2002. 19 Thus, the 2000 POEA-SEC governs the relations
between the parties in determining if Tagud is entitled to permanent disability benefits.

Section 20(B) of the 2000 POEA-SEC provides the compensation and benefits a seafarer is entitled to in case of illness or injury. The
provision states:

SECTION 20. COMPENSATION AND BENEFITS

xxxx

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows:
1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel;

2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the full cost of such
medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to be
repatriated.

However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at
cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-designated
physician.

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

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

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

4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related.

5. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full cost of repatriation in the event
that the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is unable to find employment for the seafarer on
board his former vessel or another vessel of the employer despite earnest efforts.

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness, the seafarer shall be compensated
in accordance with the schedule of benefits enumerated in Section 33 of his Contract. Computation of his benefits arising from an
illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was
contracted. (Emphasis supplied)

For disability to be compensable under Section 20(B) of the 2000 POEA-SEC, two elements must concur: (1) that the illness or injury
must be work-related, and (2) that the work-related illness or injury must have existed during the term of the seafarer's employment
contract.

The 2000 POEA-SEC defines "work-related injury" as Injury resulting in disability or death arising out of and in the course of
employment and "work-related illness" as any sickness resulting to disability or death as a result of an occupational disease listed under
Section 32-A of the 2000 POEA-SEC. Thus, the seafarer only has to prove that his illness or injury was acquired during the term of
employment to support his claim for sickness allowance and disability benefits.

It is stated in Section 20 (B)(3) of the 2000 POEA-SEC that a seafarer, upon signing off from the vessel for medical treatment, is required
to submit himself to a post-employment medical examination by a company-designated physician within three working days upon his
return. The only exception is when the seafarer is physically incapacitated to do so, in which case, the seafarer must give a written
notice to the agency within three working days in order to have complied with the requirement. Otherwise, he forfeits his right to claim
his sickness allowance and disability benefits.

In Heirs of the Late Delfin Dela Cruz v. Philippine Transmarine Carriers, Inc.,20 we held that the three-day mandatory reporting
requirement must be strictly observed since within three days from repatriation, it would be fairly manageable for the company-
designated physician to identify whether the illness or injury was contracted during the term of the seafarer's employment or that his
working conditions increased the risk of contracting the ailment. Moreover, the post-employment medical examination within three
days from arrival is required to ascertain the seafarer's physical condition, since to ignore the rule would set a precedent with negative
repercussions because it would open the floodgates to seafarers claiming disability benefits that are not work-related or which arose
after the employment. It would certainly be unfair to the employer who would have difficulty determining the cause of a claimant's
illness considering the passage of time. In such a case, the employer would have no protection against unrelated claims. Therefore, it is
the company-designated physician who must proclaim that the seafarer suffered a permanent disability, whether total or partial, due to
either illness or injury, during the term of the latter's employment.
In the present case, Tagud disembarked in Singapore and was repatriated to Manila on 8 November 2008. He alleged that he reported
to his manning agency but was not given any assistance or referred to a company-designated physician. However, Tagud did not present
any evidence to prove that he tried to submit himself to a company-designated physician within three working days upon his return.
Tagud did not also present any letter that he was physically incapacitated to see the company � designated physician in order to be
exempted from the rule. It took him about four months from repatriation or on 9 and 10 March 2009 to seek medical attention for pain
in his upper right extremities, not from respondents' company-designated physician, but at a private clinic in Caloocan City. No other
documents were submitted to prove that he asserted his rights against the company, or that he immediately took action to seek
medical assistance from the company, within three days from his repatriation.

It is true that the POEA standard employment contract is designed primarily for the protection and benefit of Filipino seafarers in the
pursuit of their employment on board ocean-going vessels and its provisions should be construed and applied fairly, reasonably, and
liberally in favor or for the benefit of the seafarer and his dependents. 21 However, one who claims entitlement to the benefits provided
by law should not only comply with the procedural requirements of law but must also establish his right to the benefits by substantial
evidence.22 The burden, therefore, rests on Tagud to show that he suffered or contracted his illness or injury, while still employed as a
seafarer, which resulted in his permanent disability.

Unfortunately, Tagud failed to discharge this burden. He only presented an x-ray report dated 21 October 2008 taken in Wynnum,
Queensland, where the Kota Pemimpin vessel docked three days after he lost his balance due to the tilting of the ship which hurt his
right elbow region. But even findings in the x-ray result stated that there was no fracture and no abnormality except for a small
olecranon spur. This finding is therefore not conclusive and can lead to many other assumptions. Also, after the x-ray procedure was
taken, Tagud could have immediately requested for a follow-up check-up or demonstrated that he was in need of urgent medical
attention. But he did not. Thus, the reasonable conclusion is that at the time of his repatriation, Tagud was not suffering from any
physical disability requiring immediate medical assistance and that his employment was terminated due to a finished contract. It is also
well noted that many other incidents could have occurred in the duration of four months from the time he was repatriated until he
consulted a private physician which could have triggered the pain in his upper right extremities and that such illness or injury could not
have been work-related at the time he was still employed by respondents.

In sum, we agree with the findings and conclusions of the NLRC and the CA. We hold that Tagud is not entitled to permanent disability
benefits for his failure to (1) undergo a post-employment medical examination within the three-day mandatory reporting period as
required under the law, or to show that such failure was due to a valid reason; (2) establish that his illness or injury was work-related;
and (3) show that his illness or injury was contracted during the term of his employment contract.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 November 2014 and the Resolution dated 29 June 2015 of the
Court of Appeals in CA-G.R. SP No. 119633.

SO ORDERED.
27. GR 228449

PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated August
25, 2016 and the Resolution[3] dated November 9, 2016 of the Court of Appeals
(CA) in CA-GR. SP No. 144608, which reversed the Decision [4] dated October 16,
2014 and the Resolution[5]dated December 29, 2015 of the National Labor
Relations Commission (NLRC), and accordingly, reinstated the Decision [6] dated
May 26, 2014 of the Labor Arbiter (LA) finding petitioner Grace R. Aluag (Aluag) to
have been validly dismissed from service by respondent BIR Multi-Purpose
Cooperative (BIRMPC).
The Facts
This case arose from a complaint [7] for, inter alia, illegal dismissal filed by Aluag
against BIRMPC and its officers, respondents Norma L. Lipana and Estelita V. Datu
(respondents). Aluag alleged that she was employed as BIRMPC's cashier from
November 16, 1994 until her termination on October 31, 2013. [8] Her duties,
among others, were to receive remittances and payments, deposit all collections
daily, record fixed deposits, determine cash positions, issue checks for loans,
collect cash receipts, and perform such other duties that the general manager
may assign to her.[9] She claimed that from the time of her employment, she was
tasked to give only verbal weekly reports on BIRMPC's funds until 2010 when she
was required to put them into writing. In 2011, BIRMPC's loan processors started
accepting post-dated checks with the prior approval of the general manager, who
then was Gerardo Flores (Flores).[10] She added that in July 2013, upon Flores'
instruction, she submitted a report of bounced checks and deposited the
remaining checks in her possession.[11]
On July 16, 2013 or ten (10) days before she gave birth, Aluag received a
letter[12] from BIRMPC's Board of Directors temporarily relieving her from her
position pending an investigation against her and two (2) loan processors involving
several suspicious loans, requiring her to submit an answer within ten (10) days.
[13]
She complied only after she gave birth or on July 29, 2013, wherein she
admitted that she: (a) was tasked to have all collections deposited everyday; (b)
received verified post-dated checks for safekeeping and deposit to the bank when
due; and (c) opted not to deposit matured checks upon request of the debtors.
[14]
She then went on a maternity leave from July 30 to September 30, 2013, during
which period, she received another letter from BIRMPC preventively suspending
her from August 1 to October 31, 2013.[15] Claiming that the suspension was
illegal, she filed a complaint for illegal suspension with the NLRC. While the case
was pending, Aluag received another letter[16] dated October 31, 2013 terminating
her employment; hence, she amended the complaint to one for illegal dismissal.
[17]

For their part, respondents averred that Aluag was legally dismissed on the
ground of loss of trust and confidence. They narrated that while reviewing loan
documents in June 2013, they found rampant violations of BIRMPC's by-laws,
rules, and regulations. When they interviewed Aluag, the latter admitted the
infractions, but claimed that Flores had full knowledge of them. [18] Thereafter,
respondents sent letters to Aluag and other concerned employees to explain why
no charges should be filed against them and, later on, placed them under
preventive suspension. To validate the extent of the irregularities and financial
damage, they engaged the services of an external accountant who, in her report,
observed that the cashier failed to regularly report post-dated checks received
and did not observe proper monitoring of the checks' due dates to be deposited.
The accountant also pointed out that some checks were not deposited at all. [19] In
light of the foregoing, BIRMPC terminated Aluag's employment effective
November 1, 2013 on the ground of loss of trust and confidence for the following
infractions: (a) acceptance of accommodation checks; (b) failure to deposit checks
on due dates, pursuant to a member/debtor's request; (c) not reporting to the
manager those checks with no sufficient funds or which accounts had already
closed; and (d) failure to act upon returned checks.[20]
The LA Ruling
In a Decision[21] dated May 26, 2014, the LA dismissed the complaint for illegal
dismissal for lack of merit. Nonetheless, it ordered BIRMPC to pay Aluag the
amounts of P15,416.48 and P3,557.65, representing her 13 th month pay and
service incentive leave pay for the year 2013, respectively. [22]
The LA found that as a company cashier, Aluag held a position of trust and
confidence. Thus, her commission of various infractions, which substantially
contributed damages to BIRMPC's financial position in the amount of
P35,526,599.77, constituted sufficient basis for loss of trust and confidence.
[23]
Further, the LA found that BIRMPC accorded Aluag her procedural due process
rights, as two (2) notices were accordingly served on her, namely: (a) the written
notice containing a statement of the cause of her dismissal, in order to afford her
an opportunity to be heard and defend herself; and (b) the written notice of
dismissal dated October 31, 2013, stating clearly the reasons therefor. [24] The
foregoing notwithstanding, the LA still ordered BIRMPC to pay Aluag her
13th month pay and service incentive leave pay for 2013, absent any showing that
the latter had already paid the same.[25]
Aggrieved, Aluag appealed[26] to the NLRC.
The NLRC Ruling
In a Decision[27] dated October 16, 2014, the NLRC reversed the LA ruling, and
found Aluag to have been illegally dismissed. Accordingly, it ordered BIRMPC to
pay Aluag the amounts of P250,187.18 as backwages, P370,000.00 as separation
pay, P15,416.48 as 13th month pay, P3,557.65 as service incentive leave pay, and
ten percent (10%) of the total monetary awards as attorney's fees. [28]
Contrary to the LA's findings, the NLRC found that Aluag's perceived infractions
were insufficient to dismiss her on the ground of loss of trust and confidence
because they were not violations of her ministerial duties as cashier. [29] First, she
merely received the accommodation checks which were previously verified by the
loan processors and approved by the general manager. The NLRC noted that Aluag
was neither clothed with the authority to inquire into the validity of the checks
nor authorized to exercise discretion in receiving them. [30] Second, Aluag's tasks
did not include depositing the checks and no evidence was presented to show
that the general manager assigned this task to her. The NLRC added that no
evidence was presented to prove that the non-deposit of checks was due to
debtors' requests.[31] Third, Aluag did submit a report on dishonored checks to the
general manager upon his request. The NLRC observed that this function is not
among the routine duties of a cashier.[32] Fourth, the NLRC stated that acting upon
returned or dishonored checks is not among Aluag's duties, but is a discretionary
function of the general manager. [33] As regards the external accountant's report,
the NLRC added that regular submission of reports and monitoring of the checks'
status are not part of Aluag's routine responsibilities.[34]
Respondents moved for reconsideration, [35] which was denied in a
Resolution[36] dated December 29, 2015. Dissatisfied, respondents filed a petition
for certiorari[37] before the CA.
The CA Ruling
In a Decision[38] dated August 25, 2016, the CA reversed and set aside the NLRC
ruling and reinstated that of the LA. It held that Aluag was validly dismissed on the
grounds of serious misconduct and loss of trust and confidence, which were
applicable because she served as a cashier - a position requiring trust and
confidence.[39] The CA rejected Aluag's argument that she was not liable for the
charges levelled against her as these were beyond her duties as a cashier. It
explained that Aluag could have been more circumspect by refusing to accept
accommodation checks which appear to be unfunded based on BIRMPC's records,
and denying to issue checks after verifying that the loan applicant still had unpaid
loans with BIRMPC. Most importantly, she is tasked to deposit the checks on their
due dates, which she failed to do. [40] Thus, the CA concluded that it would already
be inimical to BIRMPC's interests should it be compelled to keep Aluag within its
employ.[41]
Further, the CA held that BIRMPC complied with the two (2)-notice rule, as the
evidence show that Aluag was properly notified of the charges against her to
enable her to respond thereto, and of her eventual termination from service. [42]
Aluag moved for reconsideration,[43] but was denied in a Resolution[44] dated
November 9, 2016; hence, the instant petition.
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA correctly reversed
and set aside the NLRC ruling, and accordingly held that BIRMPC had just cause to
terminate Aluag's employment.
The Court's Ruling
The petition is without merit.
I.
At the outset, the Court notes that, as aptly pointed out by respondents in their
Comment,[45] Aluag failed to serve a copy of the instant petition to the CA as
required by Section 3, Rule 45 of the Rules of Court. [46] Resultantly, the CA issued a
Resolution[47] dated March 24, 2017 stating that its Decision had become final and
executory on December 17, 2016, and, consequently, the Entry of
Judgment[48] was issued in due course. While Aluag filed a Motion and
Manifestation[49] dated June 13, 2017 before the CA explaining that the aforesaid
omission was merely due to inadvertence and praying that the Entry of Judgment
be set aside, records are bereft of any showing that the CA acted on the same.
Sections 3 and 5 of Rule 45, in relation to Section 5 (d) of Rule 56, [50] of the Rules
of Court, and item 2 of Revised Circular No. 1-88[51]require a proof of service to the
lower court concerned to be attached to the petition filed before the Court. The
first two (2) provisions read:
Sec. 3. Docket and other lawful fees; proof of service of petition. - Unless he has
theretofore done so, the petitioner shall pay the corresponding docket and other
lawful fees to the clerk of court of the Supreme Court and deposit the amount of
P500.00 for costs at the time of the filing of the petition. Proof of service of a
copy thereof on the lower court concerned and on the adverse party shall be
submitted together with the petition.
Sec. 5. Dismissal or denial of petition. - The failure of the petitioner to comply
with any of the foregoing requirements regarding the payment of the docket and
other lawful fees, deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof.
x x x x (Emphases supplied)
In the present case, Aluag failed to serve a copy of the petition to the CA, thereby
giving the Court sufficient ground to deny her petition. Her omission even led to
the CA's issuance of the resolution declaring the finality of its Decision. Verily,
Aluag's procedural mishap is a sufficient ground for the dismissal of her petition,
especially since the rules themselves expressly say so. [52] "Time and again, it has
been held that the right to appeal is not a natural right or a part of due process; it
is merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of law. A party who seeks to avail of the right
must, therefore, comply with the requirements of the rules, failing which the right
to appeal is invariably lost,"[53] as in this case.
In any event, the Court deems it appropriate to address the issue anent the
validity of Aluag's dismissal so as to finally resolve the main controversy at hand.
II.
Preliminarily, "the Court stresses the distinct approach in reviewing a CA's ruling in
a labor case. In a Rule 45 review, the Court examines the correctness of the CA's
Decision in contrast with the review of jurisdictional errors under Rule 65.
Furthermore, Rule 45 limits the review to questions of law. In ruling for legal
correctness, the Court views the CA Decision in the same context that the petition
for certiorari was presented to the CA. Hence, the Court has to examine the CA's
Decision from the prism of whether the CA correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision.[54]
Case law states that grave abuse of discretion connotes a capricious and whimsical
exercise of judgment, done in a despotic manner by reason of passion or personal
hostility, the character of which being so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty enjoined by or
to act at all in contemplation of law.[55]
In labor cases, grave abuse of discretion may be ascribed to the NLRC when its
findings and conclusions are not supported by substantial evidence, which refers
to that amount of relevant evidence that a reasonable mind might accept as
adequate to justify a conclusion. Thus, if the NLRC's ruling has basis in the
evidence and the applicable law and jurisprudence, then no grave abuse of
discretion exists and the CA should so declare and, accordingly, dismiss the
petition."[56]
Guided by the foregoing considerations, the Court finds that the CA correctly
ascribed grave abuse of discretion on the part of the NLRC, as the latter tribunal's
finding that BIRMPC illegally dismissed Aluag patently deviates from the evidence
on record, as well as settled legal principles of labor law.
A valid dismissal necessitates compliance with both substantive and procedural
due process requirements. Substantive due process mandates that an employee
may be dismissed based only on just or authorized causes under the Labor Code.
On the other hand, procedural due process requires the employer to comply with
the requirements of notice and hearing before effecting the dismissal.[57]
In the present case, BIRMPC alleged that Aluag's employment was terminated on
the ground of loss of trust and confidence under Article 297 (c) (formerly Article
282 [c])[58] of the Labor Code. The requisites for the existence of such ground are
as follows: (a) the employee concerned holds a position of trust and confidence;
and (b) he performs an act that would justify such loss of trust and confidence. [59]
Anent the first requisite, case law instructs that "[t]here are two (2) classes of
positions of trust: first, managerial employees whose primary duty consists of the
management of the establishment in which they are employed or of a department
or a subdivision thereof, and to other officers or members of the managerial staff;
and second, fiduciary rank-and-file employees, such as cashiers, auditors, property
custodians, or those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property. These employees, though rank-
and-file, are routinely charged with the care and custody of the employer's money
or property, and are thus classified as occupying positions of trust and
confidence."[60] Being a cashier charged with the collection of remittances and
payments, Aluag undoubtedly occupied a position of trust and confidence.
Notably, in holding a position requiring full trust and confidence, Aluag "gave up
some of the rigid guarantees available to ordinary employees."[61]
As regards the second requisite, the employee's act causing the loss of confidence
must be directly related to her duties rendering her woefully unfit to continue
working for the employer.[62] "In dismissing a cashier on the ground of loss of
confidence, it is sufficient that there is some basis for the same or that the
employer has a reasonable ground to believe that the employee is responsible for
the misconduct, thus making [her] unworthy of the trust and confidence reposed
in [her]."[63] If there is sufficient evidence showing that the employer has ample
reason to dismiss her, labor tribunals should not deny the employer the authority
to dismiss her from employment.[64]
In the present case, one of the infractions that BIRMPC cited in justifying Aluag's
dismissal is her failure to deposit checks on due dates, pursuant to a
member/debtor's request.[65] While the NLRC held that Aluag was not directly
responsible for depositing the checks on their due dates and that no evidence was
presented showing that her failure to deposit the checks resulted from the
request of debtors,[66]a more thorough and circumspect review of the records
reveals that the task of depositing checks on due dates definitely falls within
Aluag's scope of responsibilities. For one, the list of Aluag's responsibilities as
cashier stated that she was tasked to "have all collections deposited
everyday."[67] For another, she admitted in her explanation that she received
verified post-dated checks for safekeeping and deposit to the bank when due.
[68]
More relevantly, she likewise admitted in her explanation that she opted not to
deposit matured checks upon request of the debtors.[69] The external auditor's
report[70] also confirmed Aluag's infraction, thus:
The cashier failed to regularly report Post-Dated Checks (PDC) received and did
not observe proper monitoring of checks due to be deposited. There are checks
which were not deposited at all.[71] (Emphasis supplied)
Verily, her failure to deposit the checks on their due dates means that she failed to
deliver on her task to safeguard BIRMPC's finances. It is also well to note that she
was not given any discretion to determine whether or not to deposit the checks.
Under these circumstances, BIRMPC had ample reason to lose the trust and
confidence it reposed upon her and thereby, terminate her employment. Indeed,
it would be most unfair to require an employer to continue employing a cashier
whom it reasonably believes is no longer capable of giving full and wholehearted
trustworthiness in the stewardship of company funds, [72] as in this case. In fine,
BIRMPC had just cause for Aluag's dismissal.
On the issue of procedural due process, the Court exhaustively discussed the
matter in Puncia v. Toyota Shaw/Pasig, Inc.[73] as follows:
Anent the issue of procedural due process, Section 2 (I), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code provides for the required standard
of procedural due process accorded to employees who stand to be terminated
from work, to wit:
Section 2. Standard of due process; requirements of notice. - In all cases of
termination of employment, the following standards of due process shall be
substantially observed:
I. For termination of employment based on just causes as defined in Article 282
[now Article 297] of the Labor Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence, or rebut the evidence presented against him;
and
(c) A written notice of termination served on the employee indicating that upon
due consideration of all the circumstances, grounds have been established to
justify his termination.
The foregoing standards were then further refined in Unilever Philippines, Inc. v.
Rivera[74] as follows:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus Rules means
every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be construed as
a period of at least five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will
raise against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company rules, if any,
are violated and/or which among the grounds under Art. 282 is being charged
against the employees.
(2) After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge against them; (2) present evidence
in support of their defenses; and (3) rebut the evidence presented against them
by the management. During the hearing or conference, the employees are given
the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable
settlement.
(3) After determining that termination of employment is justified, the employers
shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of
their employment."[75] (Emphases and underscoring in the original)
Proceeding from the foregoing parameters, the Court finds that BIRMPC
sufficiently observed the standards of procedural due process in effecting Aluag's
dismissal, considering that it: (a) issued a written notice specifying her infractions;
(b) granted her ample opportunity to be heard or explain her side when she was
required to submit an explanation; and (c) served a written notice of termination
after verifying the infraction committed. Notably, the Court held in Perez v.
Philippine Telegraph and Telephone Company[76] that procedural due process is
met even without an actual hearing as long as the employee is accorded a chance
to explain her side of the controversy, as what happened here.
All told, the CA correctly held that the NLRC gravely abused its discretion, and
hence, reinstated the LA ruling, considering that BIRMPC observed Aluag's
procedural and substantive due process rights in dismissing her from
employment.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated August 25,
2016 and the Resolution dated November 9, 2016 of the Court of Appeals in CA-
G.R. SP No. 144608 are hereby AFFIRMED.
SO ORDERED.

28. G.R. No. 230357

ALMARIO F. LEONCIO, Petitioner,
vs.
MST MARINE SERVICES ' (PHILS. ), INC./ ARTEMIO V. SERAFICO and/or THOME SHIP MANAGEMENT PTE.,
LTD.,, Respondents.

DECISION

VELASCO, JR, J.:

Nature of the Case

By this petition for review under Rule 45 of the Rules of Court, petitioner Almario F. Leoncio (Leoncio) seeks
the reversal of the Decision dated November 9, 2016 of the Court of Appeals (CA)- in CA-G.R. SP No. 142956,
1

as reiterated in its Resolution of March 2, 2017, denying the petitioner's motion for reconsideration. The
assailed CA Decision sustained an earlier decision of the National Labor Relations Commission (NLRC), which
overturned that of the Labor Arbiter and denied the petitioner's claim for permanent total disability benefits.

Factual Antecedents

From the assailed Decision of the appellate court, the undisputed factual background of the case may be
stated as follows:

Private respondent MST Marine Services (Phils.), Inc. (MST Marine) is a domestic manning agency, with
private respondent Thome Ship Management Pte. Ltd (Thome) as one of its principals. 2

Starting May 5, 1996 and for a period of more than eighteen (18) years thereafter, MST Marine repeatedly
hired Leoncio to work for its principals, including Thome. 3

On August 23, 2001, petitioner disembarked from M/V Golden Stream, owned by one of respondent's
principals, and was repatriated to be treated for his Coronary Artery Disease/Hypertensive Cardio-Vascular
Disease (CAD/HCVD) by the company-designated physician. For two months, he received sickness allowance
and was in the care and management of the company-designated physician. Thereafter, he was declared "fit
to work" and redeployed by respondents on board M/V Frontier Express, albeit with a demotion in rank. 4

After several more deployments from 2005, petitioner Leoncio was employed by respondents on January 27,
2014 as Chief Cook on board M/V Knossos for a period of nine (9) months under a POEA Standard
Employment Contract (POEA-SEC). Prior to his embarkation, he underwent a pre-employment medical
examination (PEME) and was declared "fit for sea duty." Petitioner eventually boarded the vessel on February
5

5, 2014.6

While performing his duties on board M/V Knossos on May 25, 2014, Leoncio suddenly felt heavy chest pains,
shortness of breath, numbness of the left portion of his face, and hypertensive reaction. The Master of the
Vessel allowed him to rest and take medicine when Leoncio reported his condition. However, on June 2014,
Leoncio again experienced the same symptoms. Hence, the Master of the Vessel asked respondent MST
Marine to refer Leoncio for a medical check-up.7

On June 8, 2014, Leoncio was admitted to the Geelong Hospital in Australia where he was diagnosed with
"unstable angina" and subsequently, underwent "PCI (Percutaneous Coronary Intervention) to severe distal
8

RCA (Right Coronary Artery)."9

In due course, Leoncio was medically repatriated to the Philippines on July 12, 2014. Two days later, he was
10

referred to the company-designated physician for post-employment medical examination and treatment of
his coronary artery disease and hypertensive cardiovascular disease. He was then confined at the St. Luke's
Medical Center for four days under the care of Dr. Elpidio Nolasco.
11

While undergoing treatment, respondent MST Marine inquired from Dr. Nolasco regarding Leoncio's
condition. In particular, MST Marine asked the doctor to cpeck or confirm whether Leoncio had previously
undergone stenting procedures. On October 4, 2014, Dr. Nolasco confirmed that, indeed, Leoncib had
12

previously undergone stenting procedure sometime in 2008 and that "there are stents found on the LAD [Left
Anterior Descending] and LCS [Left Circumflex] arteries in the heart or in the coronary arteribs. "
13

Based on this information, MST Marine cut off the medical and sickness allowances provided to Leoncio on
the ground of his failure to declare during the PEME that he underwent a stenting procedure in 2009 .
14
Petitioner then promptly consulted Dr. Ramon Reyes. The latter issued a medical certificate dated October
15

24, 2014 declaring Leoncio unfit for work, viz:

This is to certify that the said patient underwent emergency angioplasty last August 26, 2014. Based on his
PEME he was declared as FIT FORSEA DUTY because of NORMAL STRESS ECHO indicative that he has no stress
induced ischemia or in layman's term CORONARY ARTERY'DISEASE. Therefore, upon evaluation of his
cardiovascular history he is labelled as UNFIT for further sea duty and therefore compensable with Grade 1
impediment, the basis for which is IT IS WORK-RELATED and he was declared as FIT from his PEME based on
his NORMAL STRESS ECHO and that the lesions that underwent angioplasty are new and not of the previous
PCI. 16

Dr. Fernandez Alzate, an internal medicine-cardiologist at the St. Luke's Medical Center, echoed Dr. Reyes'
findings in a medical certification dated October 28, 2014.17

On account of the doctors' findings that the lesions found in 2014 were new and not connected with the
previous stents, Leoncio filed a complaint for permanent and total disability benefits against the private
respondents.

Ruling of the Labor Arbiter

In a Decision dated April 20, 2015, the Labor Arbiter rendered a decision finding for the petitioner. The
dispositive portion of the Labor Arbiter decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents MST Marine Services
(Phils.) and/or Thome Ship Management Pte. Ltd., jointly and severally to pay complainant the following:

1) Permanent and total disability benefits under the IBPAMOSUP IMEC/TCCC CBA in the amount of
UNITED STATED DOLLARS: ONE HUNDRED TWENTY-SEVEN THOUSAND NINE HUNDRED THIRTY-TWO
(US$127,932.00) [or] on its peso equivalent at the time of payment;

2) Sickness allowance for two (2) months in the amount of US$1,440.00 at their Philippine peso
equivalent at the time of payment.

3) Moral damages in the amount of US$1,000.00; and exemplary damages in the amount of
US$1,000.00 at the time of actual payment.
 4) Attorney's fees equivalent to ten percent (10%) of the total judgment award, or at their Philippine
peso equivalent at the time of actual payment.

All other claims are ordered dismissed.

The Labor Arbiter noted, as petitioner has insisted, that the respondents were already aware of the existence
of Leoncio's coronary artery disease (CAD/HCVD) since 2001 but nonetheless reemployed and redeployed
him to work for several more years. Thus,' for the Labor Arbiter, petitioner's failure to disclose the stenting
procedure in 2009 cannot bar his claim for permanent and total disability benefits. Further, the Labor Arbiter
noted that the subject of the stenting procedure in 2009 were the Left Anterior Descending (LAD) and the Left
Circumflex '(LCX) arteries, which are distinct and different from the cause and subject of his angioplasty, and
later repatriation, in 2014-the Right Coronary Artery (RCA).

Ruling of the NLRC

Respondents filed an appeal with the NLRC, which was granted in the tribunal's Decision of July 28, 2015. The
falloof the NLRC Decision reads:

WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed Decision dated April 20, 2015
of the Labor Arbiter is REVERSED and SET ASIDE, and the Complaint is DISMISSED for lack of merit. 18

Relying on this Court's ruling in Status Maritime v. Spouses Delalamon, the NLRC held that Leoncio's
19

concealment of the stenting procedure during the PEME is a misrepresentation that bars his right to any
disability compensation or illness benefit under the POEA-SEC. The NLRC paid no heed to Leoncio's argument
20

that the respondent already knew of his coronary artery disease since 2001 when he was first medically
repatriated on account thereof. The NLRC took the opinion that "a previous illness which qccurred seven
years prior to the 200[9] medical procedure should not be u1sed as proof of [petitioner's] illness."
21

The NLRC denied petitioner's motion for reconsideration in a Resolution dated September 24, 2014.
Therefrom, respondent went on a Certiorari to the CA, in CA-G.R. SP No. 142956.

Ruling of the Court of Appeals

In the assailed Decision dated November 9, 2016, the appellate court ruled against Leoncio's entitlement to
the benefits he claimed, and accordingly sustained the NLRC. The decretal portion reads:

WHEREFORE, the foregoing considered, the Petition for Certiorari 1is DENIED. The Decision dated 28 July
2015 and Resolution dated 24 September 2015 of the NLRC in NLRC LAC No. 06-000498-15 (NLRC NCR-OFW-
M-11-13791-14) are SUSTAINED.

Adopting the NLRC's recitation of facts and likewise citing Status Maritime v. Spouses Delalamon, the legal
22

conclusions reached by the NLRC were likewise adhered to by the CA in holding that Leoncio's concealment of
the stenting procedure during the PEME bars his right to disability benefit under the POEA-SEC. Besides a
23

brief statement of Leoncio's argument that the respondents' knew of his condition given his medical
repatriation in 2001, this fact was lost in the appellate court's discussion.

With his motion for reconsideration having been denied by the CA in its equally challenged Resolution of
March 2, 2017, Leoncio is now with this Court via the present recourse, submitting the following issues for
our consideration:
 1. Whether the "stenting procedure done in 2009 ... " in [Petitioner's] left Coronary Arteries
constitutes willful concealment and/or fraudulent misrepresentation under Section 20(E) of the
POEA-SEC which would disqualify petitioner from claiming permanent total disability benefits under
Section 20 (A) (6) of the 2010 POEA-SEC; and

2. Whether the work-relatedness of petitioner's pre-existing illness of Coronary Artery

Disease/Hypertensive Cardio-Vascular Disease already known to respondents since 2001 can be set
aside by the alleged concealment and/or misrepresentation of the 2009 stenting procedures on his
left coronary arteries.

Respondents filed their Comment on the petition on August 7, 2017 contending in the main that petitioner's
employment is contractual in nature so that he is required to divulge, during each PEME, "any pre-existing
medical condition that he has, including past medical history that can assist the Respondents in arriving at an
accurate decision as to whether or not he is fit for employment. "
24

Issue

Simply put, the main and decisive issue for resolution is whether petitioner committed a fraudulent
misrepresentation that bars his recovery of total disability benefits.

Our Ruling

The Court resolves to grant the petition.

The rule is that only questions of law may be raised in and resolved by this Court on petitions brought under
Rule 45 of the Rules of Civil Procedure, because the Court, not being a trier of facts, is not duty-bound to
reexamine and calibrate the evidence on record. Exceptions abound, however. This Court may delve into and
25

resolve factual issues when the lower fora come up with conflicting positions or where the CA manifestly
overlooked undisputed relevant facts, which, if properly considered, would support a different conclusion, as
26

in this case.

No fraudulent misrepresentation

The resolution of this case pivots on the construction of the phrase "illness or co4dition" in Section 20(E) of
the 2010 PO EA-SEC, which states:

SECTION. 20 COMPENSATION AND BENEFITS

xxxx

E. A seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical
Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and
benefits. This is likewise a just cause for termination of employment and imposition of appropriate
administrative sanctions. (emphasis supplied)

For the petitioner, the phrase refers to his "coronary artery disease." Thus, given his medical repatriation on
account thereof in 2001, for which he was compensated and even demoted by MST Marine, he cannot be
considered to have concealed the same during his PEME in 2014. Respondents, On the other hand, maintain
that the phrase includes and requires the disclosure of the stenting procedure on his LAD and LCX arteries
undergone by the petitioner in 2009. Thus, for the respondents, Leoncio's fail me to reveal the same is a
fraudulent misrepresentation that bars his entitlement to any compensation or benefit under the POEA-SEC
and/ or their CBA.

The rule is that where the law speaks in clear and categorical language, there is no room for interpretation;
there is only room for application. Only when the law is ambiguous or of doubtful meaning may the court
27

interpret or construe its true intent. Even then, Article 4 of the Labor Code is explicit that "all doubts in the
28

implementation and interpretation of the provisions of the Labor Code, including its implementing rules and
regulations, shall be resolved in favor of labor." This liberal interpretation of labor laws and rules have been
applied to employment contracts by Article 1702 of the New Civil Code which mandates that ''all labor
29 30

contracts" shall likewise be construed in favor of the laborer.

In this case, nothing can be plainer than the , meaning of the word "illness" as referring to a disease or injury
afflicting a, person's body. By the doctrine of noscitor a sociis, "condition" likewise refers to the state of one's
health. Neither of these words refers to a medical procedure undergone by a seafarer in connection with an
"illness or condition" already known to the employer as far back as 2001. For this, the Court extends its full
concurrence to the conclusion reached by the Labor Arbiter that the employer cannot validly decry his
supposed concealment and fraudulent misrepresentation of Leoncio's illness on account of the non-
disclosure of the stenting procedure. The Labor Arbiter observed:

In arguing that complainant is not entitled to the claimed disability compensation, respondents in the main
point to the fraudulent misrepresentation for non-disclosure of previous LAD and LCX stents patent
undergone in 2009 to PEME doctors in all his PEMEs with respondents.

However, a closer review of the alleged concealment of previous LAD and LCX stents patent undergone in
2009 is actually not a concealment nor a fact relevant to the cause of complainant's repatriation on July 12,
2014 due to an entirely different illness, i.e., Percutaneous Coronary Intervention (PCI) to severe distal Right
Coronary Artery (RCA) with one drug-eluting stent, First, the lesions of the previous LAD and LCX stents patent
undergone in 2009 [are] different from the lesions that underwent angioplasty in Australia before his second
medical repatriation on July 12, 2014. Second, after the LAD and LCX stents (Angioplasty) done in 2009,
complainant was re-deployed on respondents' various vessels for five years without medical issues relating to
the angioplasty done in 2009. Most importantly, the record is undisputed that complainant was first
medically repatriated in 2001 due to Hypertension and Angina Pectoris where he was declared "Fit for Sea
Duty" after undergoing treatment by the company-designated physician. He was initially demoted for one
contract after said medical repatriation but reverted to his old position as Chief Cook on subsequent
deployments. Respondents cannot claim there was misrepresentation by the complainant on account of his
medical repatriation in 2001 which contradicts their alleged lack of knowledge of said pre-existing illnesses
of the complainant. These circumstances indubitably establish respondents' awareness of complainant's
impaired medical condition despite being considered fit to work. Hence, the allegations of fraudulent
misrepresentation by the respondents cannot be given credence. (emphasis supplied)
31

This Court's pronouncement in Status Maritime v. Spouses Delalamon relied upon by both the NLRC and the
32

CA scarcely anchors their ruling. In that case, the seafarer was disqualified from receiving benefits for
knowingly concealing his diabetes-a pre-existing disease; not a prior procedure or surgery.

Even this Court's ruling in Vetyard Terminals & Shipping Services, Inc.v Suarez, cited by the appellate court in
33

its assailed Resolution, is not decisive in the present controversy. In Vetyard, the seafarer knowingly
misrepresented during his PEME that "he was merely wearing corrective lens" when in fact he had a previous
cataract operation that could have caused the condition he was diagnosed with. As the Court noted in that
case: "pseudophakia) indicates presence of artificial intraocular lens (IOL) replacing normal human lens
and posterior capsule opacification is the most frequent complication of cataract surgery. By their nature,
these ailments are more the result of eye disease than of one's kind of work." Clearly, in Vetyard, the
materiality of the active misrepresentation by the seafarer to the disability he complained of, which was not
heretofore known to the employer, cannot be more pronounced. What is more, there is nothing in Vetyard to
indicate that the seafarer's employers knew that he had suffered from cataract. This spells the substantial
disparity between the case at bar and Vetyard.

As the Court sees it, the so-called misrepresentation ascribed to the petitioner is more imaginary than
real. As it is, the stenting procedure undergone by Leoncio on his LAD and LCX arteries is nothing more
1âwphi1

than an attempt to discontinue the steady progression of his illness or condition-his CAD/HCVD, which was
already known by his employers. Simply, a stenting procedure is the "placement of a small wire mesh tube
calldd a stent to help prop the artery open and decrease its chance of narrowing again." As it is, the
34

procedure was intended to improve his health condition. Surely, the non-disclosure thereof does not diminish
MST Marine's knowledge of the "illness or condition" he had already been diagnosed with since 2001.
Undeniably then, Leoncio's failure to reveal the said procedure [does not amount to a concealment of a pre-
existing "illness or condition" that can bar his claim for disability benefit and compensation.

That the nature of petitioner's employment is contractual is immaterial to the issue in this case. For surely,
the knowledge acquired by MST Marine regarding the medical condition of a seafarer is not automatically
wiped out and obliterated upon the expiration of a contract and the execution of another. Instead, the
knowledge and information previously acquired by MST Marine, as agent, is imputed to its principals. The 35

latter cannot, therefore, deny knowledge of petitioner's medical condition and so refuse to pay his benefits.

Presumption of Work Relation

With the foregoing disquisition, what is left for this Court is to determine whether his illness or condition is
work-related.

Section 32-A of the POEA-SEC lists cardiovascular disease as a compensable work-related condition. Further,
in several cases, cardiovascular disease, coronary artery disease, as well as other heart ailments, were held to
be compensable. A few of these rulings were summarized in Magsaysay Mitsui OSK Marine, Inc. v.
36

Bengson, as follows:
37

In many cases decided in the past, this Court has held that cardiovascular disease, coronary artery disease,
and other heart ailments are compensable. Thus, in Fil-Pride Shipping Company, Inc. v. Balasta, severe 3-
vessel coronary artery disease which the seaman contracted while serving as Able Seaman was considered an
occupational disease. In Villanueva, Sr. v. Baliwag Navigation, Inc., it was held that the 2000 POEA-SEC
considers heart disease as an occupational disease. In Jebsens Maritime, Inc. v. Undag, the Court held that
hypertensive cardiovascular disease may be a compensable illness, upon proof. In Oriental Shipmanagement
Co., Inc. v. Bastoland Heirs of the late Aniban v. National Labor Relations Commission, it was held that
myocardial infarction as a disease or cause of death is compensable, such being occupational. Jloreta v.
Philippine Transmarine Carriers, Inc.held that hypertensive cardiovascular disease/coronary artery disease
and chronic stable angina are compensable. Micronesia Resources v. Cantomayor stated that a finding of
coronary artery disease entitles the claimant - a seaman Third Officer - to disability compensation. In Remigio
v. National Labor Relations Commission, the Court held that the claimant - a musician on board an ocean-
going vessel - was entitled to recover for suffering from coronary artery disease. In Sepulveda v. Employees'
Compensation Commission, it was declared that the employee's illness, myocardial infarction, was directly
brought about by his employment as schoolteacher or was a result of the nature of such employment.
The POEA-SEC provides as a condition for a known CAD to be compensable that there is proof that an acute
exacerbation was precipitated by the unusual strain of the seafarer's work. Having worked as a seafarer for
almost two decades and as a Chief Cook, no less, it can be fairly stated that petitioner was a "walking time
bomb ready to explode towards the end of his employment days." In this instance, on May 25, 2014,
38

petitioner already felt the onset of an attack, experiencing heavy chest pains, shortness of breath, numbness
of the left portion of his face, and hypertensive reaction. He again experienced these in June 2014, and so
39

was forced to disembark for an operation on June 8, 2014. To be sure, it is more than reasonable to conclude
that the risks present in his work environment precipitated the onset of the acute exacerbation of his heart
condition. It is likewise a matter of judicial notice that seafarers are exposed to varying temperatures and
harsh weather conditions as the ship crossed ocean boundaries. Worse, they are constantly plagued by
homesickness and worry for being physically separated from their families for the entire duration of their
contracts. Undoubtedly, this bears a great degree of emotional strain while making an effort to perform their
jobs well.
40

All told, the Court finds that petitioner proved, by substantial evidence, his right to be paid the disability
benefits he claims. Thus, the NLRC, under1 the present circumstances, committed grave abuse of discretion in
reversing the ruling of the Labor Arbiter. Accordingly, in affirming the NLRC's decision, the CA committed a
reversible error in not finding that the! NLRC committed an error of jurisdiction.

WHEREFORE, in the light of these considerations, We GRANT the petition for review on certiorari filed by the
petitioner. Accordingly, We REVERSE and SETASIDE the November 9, 2016 Decision and March 2, 2017
Resolution of the Court of Appeals in in CA-G.R. SP No. 142956, and I hereby REINSTATE the Labor Arbiter's
Decision dated April 20, 2015.

SO ORDERED.

29. G.R. No. 211892

INNODATA KNOWLEDGE SERVICES, INC., Petitioner

vs.
SOCORRO D'MARIE T. INTING, ISMAEL R. GARAYGAY, EDSON S. SOLIS, MICHAEL A. REBATO, JAMES HORACE
BALONDA, STEPHEN C. OLINGAY, DENNIS C. RIZON, JUNETH A. RENTUMA, HERNAN ED NOEL I. DE LEON, JR.,
JESS VINCENT A. DELA PENA, RONAN V. ALAMILLO, ENNOH CHENTIS R. FERNANDEZ, FRITZ J. SEMBRINO,
DAX MATTHEW M. QUIJANO, RODOLFO M. VASQUEZ, MA. NAZELLE B. MIRALLES, MICHAEL RAY B. MOLDE,
WENDELL B. QUIBAN, ALDRIN O. TORRENTIRA, and CARL HERMES CARSKIT, Respondents

DECISION

PERALTA, J.:
This is a petition for review seeking the reversal of the Decision of the Court of Appeals (CA), Cebu, Twentieth
1

(20th) Division, dated August 30, 2013 and its Resolution dated March 12, 2014 in CA-G.R. CEB-SP No. 06443
2

which reversed and set aside Decision of the National Labor Relations Commission (NLRC) on May 31, 2011.
3

The factual and procedural antecedents, as evidenced by the records of the case, are the following:

Petitioner Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data processing, encoding,
indexing, abstracting, typesetting, imaging, and other processes in the capture, conversion, and storage of
data and information. At one time, Applied Computer Technologies (ACT), a company based in the United
States of America, hired IKSI to review various litigation documents. Due to the nature of the job, ACT
required IKSI to hire lawyers, or at least, law graduates, to review various litigation documents, classify said
documents into the prescribed categories, and ensure that outputs are delivered on time. For this purpose,
IKSI engaged the services of respondents Socorro D’Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael
A. Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan Ed Noel I.
de Leon, Jr., Jess Vincent A. dela Pefia, Ronan V. Alamillo, Ennoh Chentis R. Fernandez, Wendell B. Quiban,
Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez,
Ma. Nazelle B. Miralles and Carl Hennes Carskit as senior and junior reviewers with a contract duration of five
(5) years.

On January 7, 2010, however, respondents received a Notice of Forced Leave from IKSI informing them that
they shall be placed on indefinite forced leave effective that same day due to changes in business conditions,
client requirements, and specifications. Hence, respondents filed a complaint for illegal dismissal,
reinstatement or payment of separation pay, backwages, and damages against IKSI.

Subsequently, IKSI sent respondents separate notices dated May 27, 2010 informing them that due to the
unavailability of new work related to the product stream and uncertainties pertaining to the arrival of new
workloads, their project employment contracts would have to be terminated.

On November 10, 2010, the Labor Arbiter (LA), in the consolidated cases of NLRC RAB VII Case No. 01-0159-
10, NLRC RAB VII Case No. O 1-0182-10, and NLRC RAB VII Case No. 02-0301-10, declared that there was no
illegal dismissal, thus:

WHEREFORE, in view of the foregoing, a decision is hereby rendered declaring that complainants were not
constructively dismissed but were placed on forced leave as a cost-saving measure. Consequently, herein
respondents are directed to recall complainants back to work as soon as work becomes available.
Complainants are likewise directed to report back to work within ten (10) days from receipt of the order of
respondents to report back to work, otherwise, their failure to do so would be construed as an abandonment.
In the event that reinstatement is no longer feasible, in lieu thereof, separation pay is granted equivalent to
one (1) month salary for every year of service, a fraction of six (6) months is considered as one (1) whole year,
sans backwages.

The claim for moral and exemplary damages as well as attorney’s fees are DISMISSED for lack of merit.

SO ORDERED. 4

WHEREFORE, the Decision of the Labor Arbiter is hereby AFFIRMED WITH MODIFICATION, in that in lieu of
reinstatement, to pay the twelve (12) complainants-appellants namely: Michael A. Rebato, Hernan Ed Noel L.
de Leon, Jr., Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III, Edson S. Solis, Stephen Olingay, Ronan
Alamillo, Jess Vincent A. dela Pena, Dax Matthew M. Quijano, Juneth A. Rentuma and Socorro D'Marie T.
Inting, the total amount of Php563,500.00.

SO ORDERED. 5

Undaunted, the employees elevated the matter to the CA Cebu, alleging grave abuse of discretion on the
NLRC’s part. On August 30, 2013, the CA granted their petition and reversed the assailed NLRC ruling, thus:

WHEREFORE, premises considered, this petition is GRANTED. The assailed Decision dated May 31, 2011
and Resolution dated August 26, 2011 of public respondent in NLRC Case No. VAC-01-000042-2011
are REVERSED and SET ASIDE. Petitioners Socorro D'Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael
A. Rebato, James Horace Balonda, Stephen C. Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan Ed Noel I.
de Leon, Jr., Jess Vincent A. dela Pena, Ronan V. Alamillo, Ennoh Chentis R. Fernandez, Wendell B. Quiban,
Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax Matthew M. Quijano, Rodolfo M. Vasquez,
Ma. Nazelle B. Miralles and Carl Hermes Carskit are declared to have been illegally dismissed by Innodata and
hence, each of them is entitled to the payment of the following:

(a) Backwages reckoned from the start of their employment up to the finality of this Decision
with interest as six percent (6%) per annum, and 12% legal interest thereafter until fully paid;

(b) Separation pay equivalent to one (1) month salary for every year of service, with a
fraction of at least six (6) months to be considered as one (1) whole year, to be computed
from the date of their employment up to the finality of this decision;

(c) Moral damages of Php50,000 and exemplary damages of Php25,000; and

(d) Attorney's fees equivalent to 10 percent (10%) of the total award.

The case is hereby ordered REMANDED to the labor arbiter for the computation of the amounts due each
petitioner.

Costs on private respondent Innodata.

SO ORDERED. 6

IKSI then filed a Motion for Reconsideration, but the same was denied in a Resolution dated March 12, 2014.
Hence, the instant petition.

The main issue in this case is whether or not the CA committed an error when it reversed the NLRC, which
declared that respondent employees, as mere project employees, were validly placed on floating status and,
therefore, were not illegally dismissed.

The Court rules in the negative.

Substantive Issues

Nature of respondents’ employment contracts

It is true that factual findings of administrative or quasi-judicial bodies which are deemed to have acquired
expertise in matters within their respective jurisdictions are generally accorded, not only respect, but even
finality, and bind the Court when supp011ed by substantial evidence. However, the Court may take
cognizance of factual issues when the findings of fact and conclusions of law of the LA and/or the NLRC are
inconsistent with those of the CA, as in the case at bar.
7

Here, the NLRC ruled that respondents were project employees. It ratiocinated that their contracts specifically
indicated that they were to hold their positions for the duration of the project which was expected to be
completed after a maximum of five (5) years, or on or before July 2, 2013. But the CA found that respondents'
8

employment contracts are fixed-term, which are contrary to the Constitution and labor laws. It then cited
several cases that supposedly involved IKSI itself and would reveal that its fixed-term employment contracts
9

have been consistently held as a form of circumvention to prevent employees from acquiring tenurial rights
and benefits.

The employment status of a person is defined and prescribed by law and not by what the parties say it should
be. Equally important to consider is that a contract of employment is impressed with public interest such that
labor contracts must yield to the common good. Thus, provisions of applicable statutes are deemed written
into the contract, and the parties are never at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply entering into contracts with each other. 10

Article 295 of the Labor Code provides the distinction between a regular and a project employment:
11

Art. 295. Regular and casual employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,That
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.

The aforecited provision contemplates four (4) kinds of employees: (1) regular employees or those who have
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of
the employer; (2) project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee; (3) seasonal employees or those who work or perform services which are seasonal in nature,
and the employment is for the duration of the season; and (4) casual employees or those who are not regular,
project, or seasonal employees. Jurisprudence later added a fifth (5 th) kind, the fixed-term employee. Based
on Article 295, the law determines the nature of the employment, regardless of any agreement expressing
otherwise. The supremacy of the law over the nomenclature of the contract and its pacts and conditions is to
bring life to the policy enshrined in the Constitution to afford full protection to labor. Thus, labor contracts are
placed on a higher plane than ordinary contracts since these are imbued with public interest and, therefore,
subject to the police power of the State. 12
Project employment contracts, which fix the employment for a specific project or undertaking, are valid under
the law. By entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may no longer be employed after the completion of the project for which he
was hired. But project employment contracts are not lopsided agreements in favor of only one party. The
employer's interest is equally important as that of the employees'. While it may be true that it is the employer
who drafts project employment contracts with its business interest as overriding consideration, such
contracts must not prejudice the employee. 13

As stated in IKSI’s petition itself, the following are the basic provisions of the employment contracts which
respondents signed with the company:

(a) the contracts are entitled "Project-Based Employment Contracts";

(b) the first Whereas clause states "the Company [IKSI] desires the services of a Project Employee for
the Content Supply Chain Project";

(c) Clause 1 on Term of Employment provides:

The Employee shall hold the position of [Junior/Senior] Reviewer and shall perform the duties and
responsibilities of such for the duration of the Project, which is expected to be completed after a maximum
of five (5) years, or on or before___________, (the "Term").

. . . Further, the Employee is granted one Saturday-off per month on a scheduled basis for the duration of
this PROJECT-BASED EMPLOYMENT CONTRACT ...

(d) The second paragraph of Clause 2 on Work Description provides:

The Employee shall render work in accordance with the schedule and/or program to which he/she may be
assigned or reassigned from time to time, in accordance with the operational requirements for the
completion of the Project. In addition, the Employee shall perform such other duties, functions, and
services related or incidental to the Project which, for purposes of expediency, convenience, economy,
customer interest, may be assigned by the Company.

(e) Clause 5 on Termination of Employment provides:

At any time during the Term of this Contract, or any extension thereof, the Company may terminate this
Contract, upon thirty (30) days' prior notice to the Employee...in the following instances:

a. the services contracted for by the Company under the Project is completed prior to the
agreed upon completion date; or

b. the specific phase of the Project requiring the Employee’s services is sooner completed;
or

c. substantial decrease in the volume of work for the Project; or

d. the contract for the Project is cancelled, indefinitely suspended or terminated;

(e) the first paragraph of Clause 6 on Compensation and Benefits provides:

The Employee shall receive a gross salary of ... In addition to his/her basic pay, Management may grant an
additional incentive pay should the Employee exceed the Project quota. 14

IKSI argued that based on the contract, it is undeniable that respondents’ employment was fixed for a specific
project or undertaking, with its completion or termination clearly determined at the time of the employee’s
engagement. Indeed, records would disclose that respondents signed employment contracts specifically
indicating the Content Supply Chain Project, also known as the ACT Project, as the project for which they
15

were being hired, which was expected to be completed after a maximum of five (5) years. However, sometime
in November 2008, IKSI required respondents to work on another project called "Bloomberg," which was not
included in the original contracts that they signed and without entering into a new project employment
contracts. Such fact was never refuted by IKSI. During that time, respondents were required to read and
review decided cases in the United States of America and they were no longer called Senior or Junior
Reviewers, but referred to as Case Classifiers. Respondents initially opposed working on said project but
eventually agreed, in fear of losing their employment altogether. Months later, they were again required to
work on the ACT Project and reverted to their previous designation as Document Reviewers. 16

In the case of ALU-TUCP v. NLRC, the Court made a pronouncement on the two (2) categories of project
17

employees. The project for which project employees are hired would ordinarily have some relationship to the
usual business of the employer. There should be no difficulty in distinguishing the employees for a certain
project from ordinary or regular employees, as long as the duration and scope of the project were
determined or specified at the time of engagement of said project employees. 18

In order to safeguard the rights of workers against the arbitrary use of the word "project" which prevents
them from attaining regular status, employers claiming that their workers are project employees have the
burden of showing that: (a) the duration and scope of the employment was specified at the time they were
engaged; and (b) there was indeed a project. Therefore, as evident in Article 295, the litmus test for
19

determining whether particular employees are properly characterized as project employees, as distinguished
from regular employees, is whether or not the employees were assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the employees were engaged for
that project.
20

Here, while IKSI was able to show the presence of a specific project, the ACT Project, in the contract and the
alleged duration of the same, it failed to prove, however, that respondents were in reality made to work only
for that specific project indicated in their employment documents and that it adequately informed them of
the duration and scope of said project at the time their services were engaged. It is well settled that a party
alleging a critical fact must support his allegation with substantial evidence, as allegation is not evidence. The
fact is IKSI actually hired respondents to work, not only on the ACT Project, but on other similar projects such
as the Bloomberg. When respondents were required to work on the Bloomberg project, without signing a
new contract for that purpose, it was already outside of the scope of the particular undertaking for which
they were hired; it was beyond the scope of their employment contracts. The fact that the same happened
only once is inconsequential. What matters is that IKSI required respondents to work on a project which was
separate and distinct from the one they had signed up for. This act by IKSI indubitably brought respondents
outside the realm of the project employees category.

IKSI likewise fell short in proving that the duration of the project was reasonably determinable at the time
respondents were hired. As earlier mentioned, the employment contracts provided for "the duration of the
Project, which is expected to be completed after a maximum of five (5) years, or on or before______ ."The
NLRC upheld the same, finding that the contracts clearly provided for the duration of the project which was
expected to end after a maximum of five (5) years, or on or before July 2, 2013. It is interesting to note,
however, that the five (5)-year period is not actually the duration of the project but merely that of the
employment contract. Naturally, therefore, not all of respondents' employment would end on July 2, 2013, as
the completion of the five (5)-year period would depend on when each employee was employed, thus: 21

Hiring Date Completion Date

Carl Hermes R. Carskit Nov. 1, ’07 May 31,’12
Ismael R. Garaygay III Mar. 5, ’08 Mar. 4, ‘13
Socorro D’ Marie T. Inting Apr. 7, ’08 Apr. 6, ‘13
James Horace A. Balonda May 12, ’08 May 11, ‘13
Wendell B. Quiban May 12, ’08 May 11, ‘13
Fritz J. Sembrino May 12, ’08 May 11, ‘13
Edson S. Solis May 12, ’08 May 11, ‘13
Rodolfo M. Vasquez, Jr. May 12, ’08 May 11, ‘13
Stephen C. Olingay May 16, ’08 May 15, ‘13
Michael A. Rebato May 19, ’08 May 18, ‘13
Ma. Nazelle B. Miralles May 21, ’08 May 20, ‘13
Dennis C. Rizon July 3, ’08 July 2, ‘13
Ronan V. Alamillo July 10, ’08 July 9, ‘13
Juneth A. Rentuma July 17, ’08 July16,’13
Jess Vincent A. Dela Peña Aug. 12, ’08 Aug. 11, ‘13
Dax Matthew M. Quijano Nov. 17, ’08 Nov. 16, ‘13
Michael Ray B. Molde May 18, ’09 May 17, ‘14
Aldrin O. Torrentira May 25, ’09 May24, ‘14
Ennoh Chentis R. Fernandez May 28, ’09 May 27, ‘14
Hernan Ed Noel L. De Leon, Jr. June 3, ’09 June 2, ‘14

This is precisely the reason why IKSI originally left a blank for the termination date because it varied for each
employee. If respondents were truly project employees, as IKSI claims and as found by the NLRC, then the
termination date would have been uniform for all of them.

Thus, while the CA erred in simply relying on the Court's rulings on previous cases involving Innodata Phils.,
Inc. since there is no substantial proof that Innodata Phils., Inc. and herein petitioner, IKSI, are one and the
same entity, it would appear, however, that respondents indeed entered into fixed-term employment
contracts with IKSI, contracts with a fixed period of five (5) years. But project employment and fixed-term
employment are not the same. While the former requires a particular project, the duration of a fixed-term
employment agreed upon by the parties may be any day certain, which is understood to be "that which must
necessarily come although it may not be known when." The decisive determinant in fixed-term employment
is not the activity that the employee is called upon to perform but the day certain agreed upon by the parties
for the commencement and termination of the employment relationship. 22
The Court has previously recognized the validity of fixed-term employment contracts, but it has consistently
held that this is more of an exception rather than the general rule. Aware of the possibility of abuse in the
utilization of fixed-term employment contracts, the Court has declared that where from the circumstances it
is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee,
they should be struck down as contrary to public policy or morals. 23

It is evident that IKSI’s contracts of employment are suspect for being highly ambiguous. In effect, it sought to
alternatively avail of project employment and employment for a fixed term so as to preclude the
regularization of respondents' status. The fact that respondents were lawyers or law graduates who freely and
with full knowledge entered into an agreement with the company is inconsequential. The utter disregard of
public policy by the subject contracts negates any argument that the agreement is the law between the
parties and that the fixed period was knowingly and voluntarily agreed upon by the parties. In the
24

interpretation of contracts, obscure words and provisions shall not favor the party that caused the obscurity.
Consequently, the terms of the present contract should be construed strictly against the employer, for being
the party who prepared it. Verily, the private agreement of the parties can never prevail over Article 1700 of
25

the Civil Code, which states:

Art. 1700. The relation between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to
special laws on labor unions, collective bargaining, strikes and lockouts, closed shops, wages, working
conditions, hours of labor and similar subjects.

Thus, there were no valid fixed-term or project contracts and respondents were IKSI’s regular employees who
could not be dismissed except for just or authorized causes. Any ambiguity in said contracts must be resolved
against the company, especially because under Article 1702 of the Civil Code, in case of doubt, all labor
contracts shall be construed in favor of the worker. The Court cannot simply allow IKSI to construe otherwise
what appears to be clear from the wordings of the contract itself. The interpretation which IKSI seeks to
conjure is wholly unacceptable, as it would result in the violation of respondents' right to security of tenure
guaranteed in Section 3 of Article XIII of the Constitution and in Article 294 of the Labor Code.
26 27

Presence of Just or Authorized Causes

for Termination of Employment

Here, IKSI placed respondents on forced leave, temporary lay-off, or floating status in January 2010 for the
alleged decline in the volume of work in the product stream where they were assigned. When respondents
filed a complaint for illegal dismissal, the LA dismissed the same for having been filed prematurely, since
placing employees on forced leave or floating status is a valid exercise of management prerogative and IKSI
never really had an intention to terminate their employment. It relied on the memoranda which IKSI issued
28

to respondents, the tenor of which would show the intention to recall the affected employees back to work
once the company's condition improves. The NLRC affirmed the LA’s ruling and declared that the fact of
dismissal, whether legal or illegal, is absent in this case.

Among the authorized causes for termination under Article 298 of the Labor Code is retrenchment, or what
29

is sometimes referred to as a layoff, thus:

Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (112)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

Retrenchment is the severance of employment, through no fault of and without prejudice to the employee,
which management resorts to during the periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new
production program or the introduction of new methods or more efficient machinery, or of automation. In
other words, lay-off is an act of the employer of dismissing employees because of losses in the operation, lack
of work, and considerable reduction on the volume of its business. However, a lay-off would amount to
dismissal only if it is permanent. When it is only temporary, the employment status of the employee is not
deemed terminated, but merely suspended. 30

Article 298, however, speaks of permanent retrenchment as opposed to temporary lay-off, as in the present
case. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides
1âwphi1

for the requisites in effecting it or a specific period or duration. Notably, in both permanent and temporary
31

lay-offs, the employer must act in good faith - that is, one which is intended for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under
the law or under valid agreements. 32

Certainly, the employees cannot forever be temporarily laid-off. Hence, in order to remedy this situation or fill
the hiatus, Article 301 may be applied to set a specific period wherein employees may remain temporarily
33

laid-off or in floating status. Article 301 states:

34

Art. 301. When Employment not Deemed Terminated. The bona-fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he indicates his desire to resume his work
not later than one (1) month from the resumption of operations of his employer or from his relief from the
military or civic duty.

The law set six (6) months as the period where the operation of a business or undertaking may be suspended,
thereby also suspending the employment of the employees concerned. The resulting temporary lay-off,
wherein the employees likewise cease to work, should also not last longer than six (6) months. After the
period of six (6) months, the employees should either then be recalled to work or permanently retrenched
following the requirements of the law. Failure to comply with this requirement would be tantamount to
dismissing the employees, making the employer responsible for such dismissal. Elsewise stated, an employer
35

may validly put its employees on forced leave or floating status upon bona fide suspension of the operation of
its business for a period not exceeding six (6) months. In such a case, there is no termination of the
employment of the employees, but only a temporary displacement. When the suspension of the business
operations, however, exceeds six (6) months, then the employment of the employees would be deemed
terminated, and the employer would be held liable for the same.
36

Indeed, closure or suspension of operations for economic reasons is recognized as a valid exercise of
management prerogative. But the burden of proving, with sufficient and convincing evidence, that said
closure or suspension is bona fide falls upon the employer. In the instant case, IKSI claims that its act of
placing respondents on forced leave after a decrease in work volume, subject to recall upon availability of
work, was a valid exercise of its right to lay-off, as an essential component of its management prerogatives.
The Court agrees with the LA's pronouncement that requiring employees on forced leave is one of the cost-
saving measures adopted by the management in order to prevent further losses. However, IKSI failed to
discharge the burden of proof vested upon it. Having the right should not be confused with the manner in
which that right is exercised; the employer cannot use it as a subterfuge to run afoul of the employees'
guaranteed right to security of tenure. The records are bereft of any evidence of actual suspension of IKSI's
business operations or even of the ACT Project alone. In fact, while IKSI cited Article 301 to support the
temporary lay-off of its employees, it never alleged that it had actually suspended the subject undertaking to
justify such lay-off. It merely indicated changes in business conditions and client requirements and
specifications as its basis for the implemented forced leave/lay-off. 37

In light of the well-entrenched rule that the burden to prove the validity and legality of the termination of
employment falls on the employer, IKSI should have established the bona fide suspension of its business
operations or undertaking that could legitimately lead to the temporary layoff of its employees for a period
not exceeding six (6) months, in accordance with Article 301. The LA severely erred when it sustained
38

respondents' temporary retrenchment simply because the volume of their work would sometimes decline,
thus, several employees at the ACT Project stream experienced unproductive time. Considering the grave
39

consequences occasioned by retrenchment, whether permanent or temporary, on the livelihood of the

employees to be dismissed, and the avowed policy of the State to afford full protection to labor and to assure
the employee's right to enjoy security of tenure, the Court stresses that not every loss incurred or expected to
be incurred by a company will justify retrenchment. The losses must be substantial and the retrenchment
must be reasonably necessary to avert such losses. The employer bears the burden of proving this allegation
of the existence or imminence of substantial losses, which by its nature is an affirmative defense. It is the
employer’s duty to prove with clear and satisfactory evidence that legitimate business reasons exist in
actuality to justify any retrenchment. Failure to do so would inevitably result in a finding that the dismissal is
unjustified. Otherwise, such ground for termination would be susceptible to abuse by scheming employers
who might be merely feigning business losses or reverses in their business ventures to dispose of their
employees. 40

Here, IKSI never offered any evidence that would indicate the presence of a bona fide suspension of its
business operations or undertaking. IKSI’s paramount consideration should be the dire exigency of its business
that compelled it to put some of its employees temporarily out of work. This means that it should be able to
prove that it faced a clear and compelling economic reason which reasonably constrained it to temporarily
shut down its business operations or that of the ACT Project, incidentally resulting in the temporary lay-off of
its employees assigned to said particular undertaking. Due to the grim economic repercussions to the
employees, IKSI must likewise bear the burden of proving that there were no other available posts to which
the employees temporarily put out of work could be possibly assigned. Unfortunately, IKSI was not able to
41

fulfill any of the aforementioned duties. IKSI cannot simply rely solely on the alleged decline in the volume of
work for the ACT Project to support the temporary retrenchment of respondents. Businesses, by their very
nature, exist and thrive depending on the continued patronage of their clients. Thus, to some degree, they
are subject to the whims of clients who may suddenly decide to discontinue patronizing their services for a
variety of reasons. Being inherent in any enterprise, employers should not be allowed to take advantage of
this entrepreneurial risk and use it in a scheme to circumvent labor laws. Otherwise, no worker could ever
attain regular employment status. In fact, IKSI still continued its operations and retained several employees
42

who were also working on the ACT Project even after the implementation of the January 2010 forced leave.
Much worse, it continued to hire new employees, with the same qualifications as some of respondents,
through paid advertisements and placements in Suns tar Cebu, a local newspaper, dated February 24, 2010
43

and March 7, 2010. The placing of an employee on floating status presupposes, among others, that there is
less work than there are employees. But if IKSI continued to hire new employees then it can reasonably be
assumed that there was a surplus of work available for its existing employees. Hence, placing respondents on
floating status was unnecessary. If any, respondents - with their experience, knowledge, and familiarity with
the workings of the company - should be preferred to be given new projects and not new hires who have little
or no experience working for IKSI.44

There being no valid suspension of business operations, IKSI’s act amounted to constructive dismissal of
respondents since it could not validly put the latter on forced leave or floating status pursuant to Article 301.
And even assuming, without admitting, that there was indeed suspension of operations, IKSI did not recall the
employees back to work or place them on valid permanent retrenchment after the period of six (6) months,
as required of them by law. IKSI could not even use the completion of the duration of the alleged project as
an excuse for causing the termination of respondents’ employment. It must be pointed out that the
termination was made in 2010 and the expected completion of the project in respondents' contracts was still
in 2012 to 2014. Also, if the Court would rely on IKSI’s own Notice of Partial Appeal and Memorandum on
Partial Appeal before the NLRC dated December 10, 2010, respondents might even had been put on floating
45

status for a period exceeding the required maximum of six (6) months. Evidence reveal that the assailed
forced leave took effect on January 7, 2010 and IKSI eventually sent its termination letters four (4) months
after, or on May 27, 2010, with the effectivity of said termination being on July 7, 2010. But as of December
10, 2010, IKSI was still insisting that respondents were never dismissed and were merely placed on forced
leave. It was only in its Comment on Complainants’ Motion for Reconsideration dated August 3, 2011 did IKSI
admit the fact of dismissal when it appended its own termination letters dated May 27, 2010.

But even on May 27, 2010, there was still no basis for IKSI to finally make the retrenchment permanent. While
it acknowledged the fact that respondents could not be placed on an indefinite floating status, it still failed to
present any proof of a bona fide closing or cessation of operations or undertaking to warrant the termination
of respondents' employment. The termination letter reads:
46

As you are probably already been aware by now, our Product Stream ACTDR of Project CSP, have been
experiencing a considerably downward trend in terms of workload. The Company has undertaken every effort
to obtain new commitments from its clients abroad in order to proceed with the expected volume of work
under the same product stream.

Unfortunately, however, it has become evident that despite said efforts being exerted by the Company, the
prospect of new work related to the product stream coming in, remains uncertain at this point. Management
has already utilized all available options, which include placing its project employees on forced leave. This,
however, cannot go on indefinitely.

It is therefore, with deep regret, that we inform you that in view of the unavailability of work of the
aforementioned product stream as well as the uncertainties pertaining to the arrival of new worldoads
thereof, we are constrained to terminate your Project Employment Contract in accordance with the terms
and conditions stated under the Termination of Employment of your Project Employment Contract,
effective 7/7/2010.

xxx

It bears to point out that said termination letter did not even state any of the following valid grounds under
the law as anchor for the dismissal:
Art. 297. Termination by Employer. An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing. 47

Art. 298. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

The NLRC likewise committed a grave error when it held that there was no basis for respondents' reliance on
the case of Bontia v. NLRc on the sole ground that, in the present case, the employees were neither actually
48

nor constructively dismissed. The Court affirms respondents’ contention that when IKSI feigned suspension of
operations and placed respondents on forced leave, the same had already amounted to constructive
dismissal. And when IKSI sent letters informing them that they would be terminated effective July 7, 2010,
respondents then had been actually dismissed. In Bontia, the manner by which the employer severed its
relationship with its employees was remarkably similar to the one in the case at bar, which was held to be an
underhanded circumvention of the law. Consolidated Plywood Industries summarily required its employees to
sign applications for forced leave deliberately crafted to be without an expiration date, like in this case. This
consequently created an uncertain situation which necessarily discouraged, if not altogether prevented, the
employees from reporting, or determining when or whether to report for work. The Court further ruled that
even assuming that the company had a valid reason to suspend operations and had filed the necessary notice
with the Department of Labor and Employment (DOLE), it still would not be a legitimate excuse to cursorily
dismiss employees without properly informing them of their rights and status or paying their separation pay
in case they were eventually laid off. Under the Labor Code, separation pay is payable to an employee whose
services are validly terminated as a result of retrenchment, suspension, closure of business or disease. Thus,
the Court held that Consolidated Plywood's employees should, at the very least, have been given separation
pay and properly informed of their status so as not to leave them in a quandary as to how they would
properly respond to such a situation. Similarly, respondents never received any separation pay when they
49
were terminated in July of 2010 since IKSI had been denying the existence of a dismissal, whether actual or
constructive.

Withal, in both permanent and temporary lay-offs, jurisprudence dictates that the one (1)-month notice rule
to both the DOLE and the employee under Article 298 is mandatory. Here, both the DOLE and respondents
50

did not receive any prior notice of the temporary lay-off. The DOLE Region VII Office was only informed on
January 11, 2010 or four (4) days after the forced leave had already taken effect. On the other hand,
51

respondents received the notice of forced leave on January 7, 2010, after the business day of which the
52

same forced leave was to take effect. Respondents also pointed out that when they received said notice, they
were told to no longer report starting the next day, made to completely vacate their workstations and
surrender their company identification cards, and were not even allowed to use their remaining unused leave
credits, which gave them the impression that they would never be returning to the company ever again.

Since dismissal is the ultimate penalty that can be meted to an employee, the requisites for a valid dismissal
from employment must always be met, namely: (1) it must be for a just or authorized cause; and (2) the
employee must be afforded due process, meaning, he is notified of the cause of his dismissal and given an
53

adequate opportunity to be heard and to defend himself. Our rules require that the employer be able to
prove that said requisites for a valid dismissal have been duly complied with. Indubitably, IKSI’s intent was not
merely to put respondents' employment on hold pending the existence of the unfavorable business
conditions and call them back once the same improves, but really to sever the employer-employee
relationship with respondents right from the very start. The Court cannot just turn a blind eye to IKSI’s
manifest bad faith in terminating respondents under the guise of placing them on a simple floating status. It is
positively aware of the unpleasant practice of some employers of violating the employees' right to security of
tenure under the pretense of a seemingly valid employment contract and/or valid termination. We must
abate the culture of employers bestowing security of tenure to employees, not on the basis of the latter's
performance on the job, but on their ability to toe the line. Unfortunately for IKSI, they chanced upon
54

respondents who, unlike the ordinary workingman who always plays an easy prey to these perfidious
companies, are fully aware of their rights under the law and simply refuse to ignore and endure in silence the
flagrant irruption of their rights, zealously safeguarded by the Constitution and our labor laws.

Procedural Issues

Tested against the above-discussed considerations, the Court finds that the CA correctly granted
respondents’ certiorari petition before it, since the NLRC gravely abused its discretion in ruling that
respondents were merely IKSI’s project employees and that they were validly put on floating status as part of
management prerogative, when they had satisfactorily established by substantial evidence that they had
become regular employees and had been constructively dismissed. Grave abuse of discretion connotes
55

judgment exercised in a capricious and whimsical manner that is tantamount to lack of jurisdiction. In labor
56

disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and conclusions,
as in the case at bar, are not supported by substantial evidence, or that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. 57

In the NLRC’s Decision, only the following petitioners were included: Michael A. Rebato, Hernan Ed Noel L. de
Leon, Jr., Wendell B. Quiban, Fritz Sembrino, Ismael R. Garaygay III, Edson S. Solis, Stephen Olingay, Ronan
Alamillo, Jess Vincent A. dela Pefia, Dax Matthew M. Quijano, Juneth A. Rentuma and Socorro D'Marie T.
Inting. On the other hand, James Horace Balonda, Dennis C. Rizon, Ennoh Chentis R. Fernandez, Aldrin 0.
Torrentira, Michael Ray B. Molde, Rodolfo M. Vasquez, Ma. Nazelle B. Miralles, and Carl Hermes Carskit were
excluded. IKSI argued that those eight (8) who were excluded did not sign the required Verification and
Certification of Non-Forum Shopping of the Appeal Memorandum before the NLRC, and some of them also
failed to execute the Verification in the Petition for Certiorari before the CA.
The Court has previously set the guidelines pertaining to non-compliance with the requirements on, or
submission of defective, verification and certification against forum shopping:58

1) A distinction must be made between non-compliance with the requirement on or submission of defective
verification, and noncompliance with the requirement on or submission of defective certification against
forum shopping;

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading
fatally defective. The court may order its submission or correction, or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of
justice may be served;

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to the
truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the
petition have been made in good faith or are true and correct;

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in

verification, is generally not curable by its subsequent submission or correction thereof, unless there is a need
to relax the Rule on the ground of substantial compliance or the presence of special circumstances or
compelling reasons;

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of them in the certification against forum
shopping substantially complies with the Rule; and

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must
1âwphi1

execute a Special Power of Attorney designating his counsel of record to sign on his behalf.

In the case at hand, only twelve (12) of respondents were able to sign the Verification and Certification
Against Forum Shopping since they were only given ten (10) days from the receipt of the LA's decision to
perfect an appeal. Some of them were even no longer based in Cebu City. But it does not mean that those
who failed to sign were no longer interested in pursuing their case.

In view of the circumstances of this case and the substantive issues raised by respondents, the Court finds
justification to liberally apply the rules of procedure to the present case. Rules of procedure should be viewed
as mere tools designed to facilitate the attainment of justice; their strict and rigid application, which would
result in technicalities that tend to frustrate rather than promote substantial justice, must always be
eschewed. 59

In a similar case, the Court found that the signing of the Verification by only 11 out of the 59 petitioners
already sufficiently assured the Court that the allegations in the pleading were true and correct and not the
product of the imagination or a matter of speculation; that the pleading was filed in good faith; and that the
signatories were unquestionably real parties-in-interest who undoubtedly had sufficient knowledge and belief
to swear to the truth of the allegations in the petition. In the same vein, the twelve (12) respondents who
60

signed the Verification in the instant case had adequate knowledge to swear to the truth of the allegations in
their pleadings, attesting that the matters alleged therein have been made in good faith or are true and
correct. With respect to the failure of some of respondents to sign the Certification Against Forum Shopping,
IKSI cited the case of Altres, et al. v. Empleo which ruled that the non-signing petitioners were dropped as
61

parties to the case. However, the reason of the Court for removing said petitioners from the case was not
because of the failure to sign per se, but actually because of the fact that they could no longer be contacted
or were indeed no longer interested in pursuing the case. Here, as mentioned earlier, those who failed to
62

sign the certification against forum shopping will not be dropped as parties to the case since reasonable or
justifiable circumstances are extant, as all respondents share a common interest and invoke a common cause
of action or defense; the signatures of some or even only one of them substantially complies with the Rule.

The Court previously held that the signature of only one of the petitioners substantially complied with the
Rules if all the petitioners share a common interest and invoke a common cause of action or defense. In cases,
therefore, where it is highly impractical to require all the plaintiffs to sign the certificate of non-forum
shopping, it is sufficient, in order not to defeat the ends of justice, for one of the plaintiffs, acting as
representative, to sign the certificate, provided that the plaintiffs share a common interest in the subject
matter of the case or filed the case as a "collective" raising only one common cause of action or
defense. Thus, when respondents appealed their case to the NLRC and the CA, they pursued the same as a
63

collective body, raising only one argument in support of their rights against the illegal dismissal allegedly
committed by IKSI. There was sufficient basis, therefore, for the twelve (12) respondents to speak and file the
Appeal Memorandum before the NLRC and the petition in the CA for and in behalf of their co-respondents.

Clearly, verification, like in most cases required by the rules of procedure, is a formal requirement, not
jurisdictional. Such requirement is simply a condition affecting the form of pleading, the non-compliance of
64

which does not necessarily render the pleading fatally defective. It is mainly intended to secure an assurance
65

that matters which are alleged are done in good faith or are true and correct and not of mere speculation.
Thus, when circumstances so warrant, as in this case, the court may simply order the correction of the
unverified pleadings or act on it and waive strict compliance with the rules in order that the ends of justice
may be served. Moreover, no less than the Labor Code directs labor officials to use all reasonable means to
66

ascertain the facts speedily and objectively, with little regard to technicalities or formalities, while Section 10,
Rule VII of the New Rules of Procedure of the NLRC provides that technical rules are not binding. Indeed, the
application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial
justice. Labor cases must be decided according to justice and equity and the substantial merits of the
controversy. After all, the policy of our judicial system is to encourage full adjudication of the merits of an
appeal. Procedural niceties should be avoided in labor cases in which the provisions of the Rules of Court are
applied only in suppletory manner. Indeed, rules of procedure may be relaxed to relieve a part of an injustice
not commensurate with the degree of non-compliance with the process required. For this reason, the Court
cannot indulge IKSI in its tendency to nitpick on trivial technicalities to boost its self-serving arguments.
67

The CA, however, erred when it still considered Atty. Ennoh Chentis Fernandez as one of the petitioners
before it and included him in the dispositive portion of its decision. It must be noted that Fernandez was one
of those who filed the Motion for Execution of Decision dated May 28, 2012, which prayed for the issuance
68

of a writ of execution of the LA and NLRC’s rulings. The movants likewise admitted therein that while some of
them elevated the case to the NLRC, they, however, did not. Corollarily, Fernandez should have been dropped
as one of the parties to the case before the CA since the rulings of the labor tribunals had already attained
finality with respect to him.

Award of Damages

Inasmuch as IKSI failed to adduce clear and convincing evidence to support the legality of respondents'
dismissal, the latter is entitled to reinstatement without loss of seniority rights and backwages computed
from the time compensation was withheld up to the date of actual reinstatement, as a necessary
consequence. However, reinstatement is no longer feasible in this case because of the palpable strained
relations between the parties and the possibility that the positions previously held by respondents are
already being occupied by new hires. Thus, separation pay equivalent to one (1) month salary for every year
of service should be awarded in lieu of reinstatement. 69

The Court sustains the CA’s award of moral and exemplary damages. Award of moral and exemplary damages
for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily
terminated by the employer. Moral damages may be awarded to compensate one for diverse injuries such as
mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned by the
unreasonable dismissal. 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 2220 of the Civil
Code. In line with recent jurisprudence, the Court finds the amount of ₱50,000.00 for each of moral and
exemplary damages adequate. 70

The award of attorney's fees is likewise due and appropriate since respondents incurred legal expenses after
they were forced to file an action to protect their rights. The rate of interest, however, has been changed to
71

6% starting July 1, 2013, pursuant to the Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013.
72

WHEREFORE, IN VIEW OF THE FOREGOING, the Court DISMISSES the petition,

and AFFIRMS with MODIFICATIONS the Decision of the Court of Appeals Cebu, Twentieth (20th) Division,
dated August 30, 2013 and Resolution dated March 12, 2014 in CA-G.R. CEB-SP No. 06443. Respondents
Socorro D'Marie Inting, Ismael R. Garaygay, Edson S. Solis, Michael A. Rebato, James Horace Balonda, Stephen
C. Olingay, Dennis C. Rizon, Juneth A. Rentuma, Hernan Ed Noel I. de Leon, Jr., Jess Vincent A. dela Pefia,
Ronan V. Alamillo, Wendell B. Quiban, Aldrin 0. Torrentira, Michael Ray B. Molde, Fritz J. Sembrino, Dax
Matthew M. Quijano, Rodolfo M. Vasquez, Ma. Nazelle B. Miralles and Carl Hermes Carskit are declared to
have been illegally dismissed by petitioner Innodata Knowledge Services, Inc. and hence, the latter is
hereby ORDERED to PAY each of them the following:

a) Backwages and all other benefits from the time compensation was withheld on January 8, 2010
until finality of this Decision;

b) Separation pay equivalent to one (1) month salary for every year of service, with a fraction of at
least six (6) months to be considered as one (1) whole year, to be computed from the date of their
employment up to the finality of this Decision;

c) Moral and exemplary damages, each in the amount of ₱50,000.00;

d) Attorney’s fees equivalent to ten percent (10%) of the total awards; and

e) Legal interest of twelve percent (12%) per annum of the total monetary awards computed from
January 8, 2010 up to June 30, 2013 and six percent (6%) per annum from July 1, 2013 until their full
satisfaction.

The case is hereby ordered REMANDED to the labor arbiter for the computation of the amounts due each
respondent.

Costs on petitioner Innodata Knowledge Services, Inc.

SO ORDERED.

30. G.R. No. 209468

THIRD DIVISION

[ G.R. No. 209468, December 13, 2017 ]

UNITED DOCTORS MEDICAL CENTER, PETITIONER, VS. CESARIO BERNADAS,

REPRESENTED BY LEONILA BERNADAS, RESPONDENT.

DECISION

LEONEN, J.:
An employee who has already qualified for optional retirement but dies before
the option to retire could be exercised is entitled to his or her optional retirement
benefits, which may be claimed by the qualified employee's beneficiaries on his or
her behalf.

This is a Petition for Review on Certiorari[1] assailing the June 21, 2013
Decision[2] and the October 4, 2013 Resolution [3] of the Court of Appeals in CA-G.R.
SP No. 126781, sustaining the National Labor Relations Commission's finding that
Cesario Bernadas' (Cesario) beneficiaries were entitled to his optional retirement
benefits.

On July 17, 1986, Cesario started working as an orderly in United Doctors Medical
Center's housekeeping department. He was eventually promoted as a utility man.
[4]

United Doctors Medical Center and its rank-and-file employees had a collective
bargaining agreement (CBA), under which rank-and-file employees were entitled
to optional retirement benefits.[5] On retirement pay, the CBA provided:

ARTICLE XI
RETIREMENT AND SEVERANCE PAY

SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER shall grant each
employee retirement and severance pay in accordance with law. It shall also
continue its present policy on optional retirement.[6]
Under the optional retirement policy, an employee who has rendered at least 20
years of service is entitled to optionally retire. The optional retirement pay is
equal to a retiree's salary for 11 days per year of service. [7]

In addition to the retirement plan, employees are also provided insurance, with
United Doctors Medical Center paying the premiums. The employees' family
members would be the beneficiaries of the insurance.[8]

On October 20, 2009, Cesario died from a "freak accident" [9] while working in a
doctor's residence. He was 53 years old.[10]

Leonila Bernadas (Leonila), representing her deceased husband, Cesario, filed a

Complaint[11] for payment of retirement benefits, damages, and attorney's fees
with the National Labor Relations Commission. Leonila and her son also claimed
and were able to receive insurance proceeds of P180,000.00 under the CBA. [12]

In a Decision[13] dated August 31, 2011, the Labor Arbiter dismissed Leonila's
Complaint. According to the Labor Arbiter, Cesario should have applied for
optional retirement benefits during his lifetime, the benefits being optional. Since
he did not apply for it, his beneficiaries were not entitled to claim his optional
retirement benefits.[14]

Leonila appealed to the National Labor Relations Commission. [15] In its April 30,
2012 Decision,[16] the National Labor Relations Commission reversed the Labor
Arbiter's Decision. It found that the optional retirement plan was never presented
in this case, casting a doubt on whether or not the plan required an application for
optional retirement benefits before an employee could become entitled to them.
[17]
Considering the "constitutional mandate to afford full protection to
labor,"[18] the National Labor Relations Commission resolved the doubt in favor of
Cesario. The dispositive portion of its Decision read:

WHEREFORE, premises considered, the Decision dated August 31, 2011 is

REVERSED AND SET ASIDE. Judgment is hereby rendered finding complainant
Cesario M. Bernadas is entitled to optional retirement benefit in the amount of
P98,252.55 and ordering respondent United Doctors Medical Center to pay the
said amount to the complainant.

SO ORDERED.[19]
United Doctors Medical Center's Motion for Reconsideration [20] was denied;
[21]
hence, it filed a Petition for Certiorari [22] with the Court of Appeals.

On June 21, 2013, the Court of Appeals rendered its Decision [23] sustaining the
ruling of the National Labor Relations Commission. According to the Court of
Appeals, the retirement plan and the insurance were two (2) "separate and
distinct benefits"[24] that were granted to the employees. It held that Leonila's
receipt of insurance proceeds did not bar her from being entitled to the
retirement benefits under the CBA.[25]

United Doctors Medical Center moved for reconsideration [26] but was denied in
the Court of Appeals October 4, 2013 Resolution. [27]Hence, this Petition[28] was
filed before this Court.

Petitioner argues that respondent Cesario's beneficiaries do not have legal

capacity to apply for Cesario's optional retirement benefits since respondent
himself never applied for it in his lifetime.[29] It asserts that even assuming
respondent Cesario was already qualified to apply for optional retirement three
(3) years prior to his death, he never did. Thus, there would have been no basis for
respondent Cesario's beneficiaries to be entitled to his optional retirement
benefits.[30] Petitioner likewise argues that to grant respondent Cesario's
beneficiaries optional retirement benefits on top of the life insurance benefits that
they have already received would be equal to "double compensation and unjust
enrichment."[31]

On the other hand, Leonila counters that had her husband died "under normal
circumstances,"[32] he would have applied for optional retirement benefits. That
Cesario was unable to apply before his death "is a procedural technicality" [33] that
should be set aside so that "full protection to labor" [34] is afforded and "the ends
of social and compassionate justice" [35] are met.

This Court is tasked to resolve the issue of whether or not Leonila Bernadas as her
husband's representative, may claim his optional retirement benefits. However, to
resolve this issue, this Court must first resolve the issue of whether or not Cesario
Bernadas is entitled to receive his optional retirement benefits despite his
untimely death.

This Court denies the Petition.

Jurisprudence characterizes retirement as "the result of a bilateral act of the

parties, a voluntary agreement between the employer and the employee whereby
the latter, after reaching a certain age, agrees to sever his or her employment with
the former."[36]

At the outset, retirement benefits must be differentiated from insurance

proceeds. One is in the concept of an indemnity while the other is conditioned on
age and length of service. "A 'contract of insurance' is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event." [37] On the other hand,
retirement plans,

while initially humanitarian in nature, now concomitantly serve to secure loyalty

and efficiency on the part of employees, and to increase continuity of service and
decrease the labor turnover, by giving to the employees some assurance of
security as they approach and reach the age at which earning ability and earnings
are materially impaired or at an end.[38] (Citation omitted)
Thus, the grant of insurance proceeds will not necessarily bar the grant of
retirement benefits. These are two (2) separate and distinct benefits that an
employer may provide to its employees.

II

Within this jurisdiction, there are three (3) types of retirement plans available to
employees.[39]

The first is compulsory and contributory. This type of plan is embodied in Republic
Act No. 8282[40] for those in the private sector and Republic Act No. 8291 [41] for
those in the government. These laws require a mandatory contribution from the
employer as well as the employee, which shall become a pension fund for the
employee upon retirement. Considering that the mandatory employee
contribution is deducted from the employee's monthly income, [42] "retirement
packages are usually crafted as 'forced savings' on the part of the employee." [43]

Under this type of retirement plan, the pension is not considered as mere gratuity
but actually forms part of the employee's compensation. [44] An employee acquires
a vested right to the benefits that have become due upon reaching the
compulsory age of retirement.[45] Thus, the beneficiaries of the retired employee
are entitled to the pension even after the retired employee's death. [46]

The second and third types of retirement plans are voluntary. They may not even
require the employee to contribute to a pension fund. The second type of
retirement plan is by agreement between the employer and the employee, usually
embodied in the CBA between them.[47] "The third type is one that is voluntarily
given by the employer, expressly as in an announced company policy or impliedly
as in a failure to contest the employee's claim for retirement benefits." [48]

The rules regarding the second and third types of retirement plans are provided
for in Article 302 [287] [49] of the Labor Code, as amended, [50] which read:

Article 302. [287] Retirement. - Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement

benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee's
retirement benefits under any collective bargaining and other agreements shall
not be less than those provided therein.

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the age
of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
However, these types of retirement plans are not meant to be a replacement to
the compulsory retirement scheme under social security laws but must be
understood as a retirement plan in addition to that provided by law. Llora Motors,
Inc. v. Drilon,[51] explained:

Article 287 of the Labor Code also recognizes that employers and employees may,
by a collective bargaining or other agreement, set up [a] retirement plan in
addition to that established by the Social Security law, but prescribes at the same
time that such consensual additional retirement plan cannot be substituted for or
reduce the retirement benefits available under the compulsory scheme
established by the Social Security law. Such is the thrust of the second paragraph
of Article 287 which directs that the employee shall be entitled to receive
retirement benefits earned "under existing laws and any collective bargaining or
other agreement."[52]
Unlike the fixed retirement ages in social security laws, Article 302 [287] of the
Labor Code allows employers and employees to mutually establish an early
retirement age option. The rationale for optional retirement is explained
in Pantranco North Express v. National Labor Relations Commission:[53]

In almost all countries today, early retirement, i.e., before age 60, is considered a
reward for services rendered since it enables an employee to reap the fruits of his
labor - particularly retirement benefits, whether lump-sum or otherwise at an
earlier age, when said employee, in presumably better physical and mental
condition, can enjoy them better and longer. As a matter of fact, one of the
advantages of early retirement is that the corresponding retirement benefits,
usually consisting of a substantial cash windfall, can early on be put to productive
and profitable uses by way of income-generating investments, thereby affording a
more significant measure of financial security and independence for the retiree
who, up till then, had to contend with life's vicissitudes within the parameters of
his fortnightly or weekly wages. Thus we are now seeing many CBAs with such
early retirement provisions.[54]
Optional retirement may even be done at the option of the employer [55] for as long
as the option was mutually agreed upon by the employer and the employee. Thus:

Acceptance by the employees of an early retirement age option must be explicit,

voluntary, free, and uncompelled. While an employer may unilaterally retire an
employee earlier than the legally permissible ages under the Labor Code, this
prerogative must be exercised pursuant to a mutually instituted early retirement
plan. In other words, only the implementation and execution of the option may be
unilateral, but not the adoption and institution of the retirement plan containing
such option. For the option to be valid, the retirement plan containing it must be
voluntarily assented to by the employees or .at least by a majority of them
through a bargaining representative.[56]
III

The issue in this case concerns the second type of retirement plan, or that which
was provided under the employer and employees' CBA. To wit, the CBA between
the parties provides:

ARTICLE XI
RETIREMENT AND SEVERANCE PAY

SECTION 1. RETIREMENT AND SEVERANCE PAY. The CENTER shall grant each
employee retirement and severance pay in accordance with law. It shall also
continue its present policy on optional retirement.[57]
The terms and conditions of a CBA "constitute the law between the
parties."[58] However, this CBA does not provide for the terms and conditions of
the "present policy on optional retirement." Leonila merely alleged before the
Labor Arbiter that petitioner "grants an employee a retirement or separation
equivalent to eleven (11) days per year of service after serving for at least twenty
(20) years,"[59]which was not disputed by petitioner. Therefore, doubt arises as to
what petitioner's optional retirement package actually entails.

It is settled that doubts must be resolved in favor of labor. [60] Moreover,

"retirement laws should be liberally construed and administered in favor of the
persons intended to be benefited and all doubts as to the intent of the law should
be resolved in favor of the retiree to achieve its humanitarian purposes." [61]

Optional, by its ordinary usage, is the opposite of compulsory. It requires the

exercise of an option. For this reason, petitioner insists that respondent Cesario
would not have been entitled to his optional retirement benefits as he failed to
exercise the option before his untimely death.

However, retirement encompasses even the concept of death. [62] This Court has
considered death as a form of disability retirement as "there is no more
permanent or total physical disability than death." [63] Compulsory retirement and
death both involve events beyond the employee's control. [64]

Petitioner admits that respondent Cesario was already qualified to receive his
retirement benefits, having been employed by petitioner for 23 years. [65] While the
choice to retire before the compulsory age of retirement was within respondent
Cesario's control, his death foreclosed the possibility of him making that choice.

Petitioner's optional retirement plan is premised on length of service, not upon

reaching a certain age. It rewards loyalty and continued service by granting an
employee an earlier age to claim his or her retirement benefits even if the
employee has not reached his or her twilight years. It would be the height of
inequity to withhold respondent Cesario's retirement benefits despite being
qualified to receive it, simply because he died before he could apply for it. In any
case, the CBA does not mandate that an application must first be filed by the
employee before the right to the optional retirement benefits may vest. Thus, this
ambiguity should be resolved in favor of the retiree.

Retirement benefits are the property interests of the retiree and his or her
beneficiaries.[66] The CBA does not prohibit the employee's beneficiaries from
claiming retirement benefits if the retiree dies before the proceeds could be
released. Even compulsory retirement plans provide mechanisms for a retiree's
beneficiaries to claim any pension due to the retiree.[67] Thus, Leonila, being the
surviving spouse of respondent Cesario, [68] is entitled to claim the optional
retirement benefits on his behalf.

WHEREFORE, the Petition is DENIED. The June 21, 2013 Decision and October 4,
2013 Resolution of the Court of Appeals in CA-G.R. SP No. 126781 are AFFIRMED.
Petitioner United Doctors Medical Center is ordered to pay respondent Cesario
Bernadas, through his beneficiary Leonila Bernadas, optional retirement benefits
in the amount of P98,252.55 as provided by the Labor Code.

SO ORDERED.

31. G.R. No. 195163

ERGONOMIC SYSTEMS PIIlLIPPINES, INC., PHILLP C. NG and MA. LOURMINDA O. NG, Petitioners
vs.
EMERITO C. ENAJE, BENEDICTO P. ABELW, ALEX M MALA YLA Y, FRANCISCO Q. ENCABO, JR., RICO SAMSON,
ROWENA BETITIO, FELIPE N. CUSTOSA, JAIME A. JUATAN, LEOVINO J. MULINTAPANG, NELSON L ONTE,
EMILIANO P. RONE, ROLIETO LLAMAOO, AMORPIO R. ADRIANO, JIMMY ALCANTARA, BERNARDO ANTONI,
HERMINITO BEDRIJO, ROMEO BELARMINO, YOLANDA CANOPIN, ALMELITO CUABO, RICARDO DEL PILAR,
ELMER DESQUITADO, WINEFREDO DESQUITADO, DEMETRIO DIAZ, ERICK ECRAELA, QUINTERO ENRIQUEZ,
CRISANTO FERNANDEZ, ROMMEL FWRES, NELSON FRIAS, PEDRITO GIRON, DOMINADOR C. GUIMALDO, JR.,
AMBROSIO HENARES, TERENCIO HENARES, ALBERT LACHICA, ALBERTO LORENW, JOEL MALAYLAY, SUSAN
MALBAS, ROLANDO MAMARIL, TEDDY MONTIBLE, FERNANDO OFALDA, RONNIE V. OLIVAY, RAUL
PAGOWNG, WRENW RANIEGO, AMADO V. SAMSON IV, ROEL P. SORIANO, JONA1HAN SUALIBIO, ESTEBAN
SUMICAO, JOSEPH TABADAY, EPIFANIO TABAREZ, REGIE TOTING, REYNALDO TOTING, NORMAN
VALENZUELA, ROLANDO YONSON, DIOSCORO BALAJADIA, NERRY BALINAS, NOEL BALMEO, ARNALDO A.
CASTRO, GERONCIO DELA CUEVA, ALBERTO GAPASIN, JULIUS GENOVA, WRETO GRACILLA, JR., ROBERTO S.
INGIENTE, ROQUE JO VEN, PATERNO LINOGO, ISAGANI MASANGKA, ANGELITO MONTILLA, PECIFICO
NIGPARANON, NOBE SALVADOR, MANUEL OAVENGA, REYNADO ORTIZ, ROMEO QUINTANA, JERNALD
REMOTIN, REYNALDO ROBLESA, SAMUEL ROSALES, ROBERTO SANTOS, RONALDO M SANTOS, ROCKY
TALOWNG, EMILIO TONGA, BERNARDO VALDEZ, DANTE L VELASCO, RENE V. VICENTE, JAIME BENTUCO,
MARINO CACAO, CARLITO DELA CERNA, CHRISTOPHER MASAGCA, CHRISTOPHER PALOMARES, ROLANDO
PATOTOY, ASER PESADO, JR., LEONIW RICAFORT, FELIX SANCHEZ and FRANCIS 0. ZANTUA, Respondents

DECISION

MARTIRES, J.:
This is a petition for review on certiorari assailing the Decision, dated 21 September 2010, and
1

Resolution, dated 14 January 2011, of the Court of Appeals (CA), in CA-G.R. SP No. 102802, which affirmed
2

with modification the decision, dated 31 October 2007, and resolution, dated 21 December 2007, of the
3 4

National Labor Relations Commission (NLRC) in NLRC NCR No. RAB IV-01-16813-03-L. The NLRC, in turn,
affirmed the decision, dated 31 January 2005, of Labor Arbiter Generoso V. Santos (LA) in NLRC NCR No. RAB
5

IV-01-16813-03-L, a case for illegal dismissal and unfair labor practice.

THE FACTS

Respondents were union officers and members of Ergonomic System Employees Union-Workers Alliance
Trade Unions (local union). On 29 October 1999, the local union entered into a Collective Bargaining
Agreement (CBA) with petitioner Ergonomic Systems Philippines, Inc. (ESPJ), which was valid for five (5) years
6 7

or until October 2004. The local union, which was affiliated with Workers Alliance Trade Unions-Trade Union
Congress of the Philippines (Federation), was not independently registered. Thus, on 15 November 2001,
before the CBA expired, the union officers secured the independent registration of the local union with the
Regional Office of the Department of Labor and Employment (DOLE). Later on, the union officers were
charged before the Federation and investigated for attending and participating in other union's seminars and
activities using union leaves without the knowledge and consent of the Federation and ESPI as well as in
initiating and conspiring in the disaffiliation before the freedom period.
8

On 10 January 2002, the Federation rendered a decision finding respondents-union officers Emerito C. Enaje,
9

Benedicto P. Abello, Alex M. Malaylay, Francisco G. Encabo, Jr., Rico Samson, Rowena Betitio, Felipe N.
Custosa, Jaime A. Juatan, Leovino Mulintapang, Nelson L. Onte, Emiliano P. Rone, and Rolieto Llamado guilty
of disloyalty. They were penalized with immediate expulsion from the Federation. 10

On 11 January 2002, the Federation furnished ESPI with a copy of its decision against respondents-union
officers and recommended the termination of their employment by invoking Sections 2 and 3, Article 2 of the
CBA.11

ESPI notified respondents-union officers of the Federation's demand and gave them 48 hours to explain.
Except for Nelson Onte, Emiliano Rone, and Rico Samson, the rest of the officers refused to receive the
notices. Thereafter, on 20 February 2002, respondents-union officers were issued letters of termination,
which they again refused to receive. On 26 February 2002, ESPI submitted to the DOLE a list of the dismissed
employees. On the same day, the local union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB). 12

From 21 February to 23 February 2002, the local union staged a series of noise barrage and "slow down"
activities. Meanwhile, on 22 February 2002, 40 union members identified as: Amorpio Adriano, Jimmy
Alcantara, Bernardo Antoni, Herminito Bedrijo, Romeo Belarmino, Yolanda Canopin, Almelito Cuabo, Ricardo
Del Pilar, Elmer Desquitado, Winefredo Desquitado, Demetrio Diaz, Erick Ecraela, Quintero Enriquez, Crisanto
Fernandez, Rommel Flores, Nelson Frias, Pedrito Geron, Dominador Guimaldo, Ambrosio Henarez, Terencio
Henares, Albert Lachica, Alberto Lorenzo, Joel Malaylay, Susan Malbas, Rolando Manaril, Teddy Montible,
Fernando Ofaldo, Ronie Olivay, Raul Pagolong, Lorenzo Raniego, Amado Samson-Ty, Roel Soriano, Jonathan
Sualibio, Esteban Sumicao, Joseph Tabaday, Epifanio Tabarez, Regie Toting, Reynaldo Toting, Norman
Valenzuela and Rolando Y onson ref used to submit their Daily Production Reports (DPRs).

On 26 February 2002, 28 union members namely Dioscoro Balajadia, Nerry Balinas, Noel Balmeo, Arnaldo
Castro, Geroncio Dela Cueva, Alberto Gapasin, Julius Genova, Loreto Gracilla, Roberto Ingiente, Jr., Roque
Joven, Paterno Linogo, Isagani Masangka, Angelito Montilla, Pecifico Nigparanon, Salvador Nobe, Manuel
Oavenga, Reynaldo Ortiz, Romeo Quintana, Jernard Remotin, Reynaldo Roblesa, Samuel Rosales, Roberto
Santos, Ronaldo Santos, Rocky Talolong, Emilio Tonga, Bernardo Valdez, Dante Velasco and Rene
Vicente abandoned their work and held a picket line outside the premises of ESPI.

Then, from 26 February 2002 to 2 March 2002, 10 union members, namely Jaime Bentuco, Marina Cacao,
Carlito Dela Cerna, Christopher Masagca, Christopher Palomares, Rolando Patotoy, Aser Pesado, Jr., Leonilo
Ricafort, Felix Sanchez and Francis Santua did not report for work without official leave. The union members
were required to submit their explanation why they should not be sanctioned for their refusal to submit DPRs
and abandonment of work, but they either refused to receive the notices or received them under protest.
Further, they did not submit their explanation as required. Subsequently, for refusal to submit DPRs and for
abandonment, respondents-union members were issued letters of termination. 13

On 27 January 2003, the respondents filed a complaint for illegal dismissal and unfair labor practice against
ESPI, Phillip C. Ng, and Ma. Lourminda O. Ng (petitioners).14

The Labor Arbiter’s Ruling

In a decision, dated 31 January 2005, the LA held that the local union was the real party in interest and the
Federation was merely an agent in the CBA; thus, the union officers and members who caused the implied
disaffiliation did not violate the union security clause. Consequently, their dismissal was unwarranted.
Nevertheless, the LA ruled that since ESPI effected the dismissal in response to the Federation's demand
which appeared to be justified by a reading of the union security clause, it would be unjust to hold ESPI liable
for the normal consequences of illegal dismissal.

The LA further opined that there was no ground for the dismissal of the union members because the refusal
to submit DPRs and failure to report for work were meant to protest the dismissal of their officers, not to
sever employer-employee relationship. He added that neither ESPI nor the respondents were at fault for they
were merely protecting their respective interests. In sum, the LA ordered all the respondents to return to
work but without back wages. The fallo reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the complainants to report back to
their former jobs within ten (10) days from receipt of this Decision and the respondent company is in turn
directed to accept them back but without back wages. In the event however, that this is no longer possible,
the respondent company is ordered to pay the complainants their separation pay computed at one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months to be considered as one (1) whole
year. The respondent is likewise ordered to pay complainants attorney's fees equivalent to ten (10%) percent
of the total thereof as attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED. 15

Unconvinced, petitioners and respondents appealed before the NLRC.

The NLRC Ruling

In a decision, dated 31 October 2007, the NLRC affirmed the ruling of the LA. It adjudged that the dismissal of
the union officers was effected only in response to the demand of the Federation and to comply with the
union security clause under the CBA. The NLRC concluded that since there was no disloyalty to the union, but
only disaffiliation from the Federation which was a mere agent in the CBA, the cause for the respondents'
dismissal was non-existent. It disposed the case in this wise:

WHEREFORE, premises considered, the appeals separately filed by complainants and respondents from the
Decision of Labor Arbiter Generoso V. Santos dated January 31, 2005 are both DISMISSED for lack of merit.

The appeal filed by complainants from the Order dated January 4, 2007 is likewise DISMISSED for lack of
merit.

The assailed Orders are hereby AFFIRMED.

SO ORDERED. 16

Undeterred, petitioners and respondents moved for reconsideration. Their motions, however, were denied by
the NLRC in a resolution, dated 21 December 2007.

The CA Ruling

In its decision, dated 21 September 2010, the CA affirmed with modification the NLRC ruling. It held that ESPI
and the respondents acted in good faith when the former dismissed the latter and when the latter, in turn,
staged a strike without complying with the legal requirements. The CA, however, pronounced that the
concept of separation pay as an alternative to reinstatement holds true only in cases wherein there is illegal
dismissal, a fact which does not exist in this case. The dispositive portion reads:

WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision of the Labor Arbiter, as sustained by
the National Labor Relations Commission, reverting the employer-employee position of the parties to the
status quo ante is AFFIRMED, with MODIFICATION, in that the provision on the award of separation pay in lieu
of reinstatement is deleted.

SO ORDERED. 17

Aggrieved, petitioners and respondents moved for reconsideration but the same was denied by the CA in a
resolution, dated 14 January 2011.

Hence, this petition.

ISSUES

I. WHETHER THE FEDERATION MAY INVOKE THE UNION SECURITY CLAUSE IN DEMANDING THE
RESPONDENTS' DISMISSAL;

II. WHETHER THE STRIKE CONDUCTED BY THE RESPONDENTS COMPLIED WITH THE LEGAL REQUIREMENTS;

III. WHETHER THE RESPONDENTS’ DISMISSAL FROM EMPLOYMENT WAS VALID.

The petitioners argue that the respondents failed to comply with two (2) of the procedural requirements for a
valid strike, i.e., taking of a strike vote and observance of the seven-day period after submission of the strike
vote report; that mere participation of union officers in the illegal strike is a ground for termination of
employment; that the union members committed illegal acts during the strike which warranted their
dismissal, i.e., obstruction of the free ingress to and egress from ESPI' s premises and commission of acts of
violence, coercion or intimidation; that the respondents are not entitled to reinstatement or separation pay
because they were validly dismissed from employment; that the union members who unjustly refused to
submit their DPRs and abandoned their work were rightfully terminated because their acts constituted
serious misconduct or willful disobedience of lawful orders; and that reinstatement is no longer possible
because the industrial building owned by Ergo Contracts Philippines, Inc. was totally destroyed by fire on 6
February 2005. 18

In their comment, the respondents counter that they were not legally terminated because the grounds relied
19

upon by the petitioners were nonexistent; that as ruled by the NLRC, they merely disaffiliated from the
Federation but they were not disloyal to the local union; that reinstatement is not physically impossible
because it was the industrial building owned by Ergo Contracts Philippines, Inc. that was gutted down by fire,
not that of ESPI; that even if the manufacturing plant of ESPI was indeed destroyed by fire, the petitioners
have other offices around the country where the respondents may be reinstated; and that having failed to
comply with the order to reinstate them and having ceased operations, the petitioners must be ordered to
pay their separation pay.

In their reply, the petitioners aver that the respondents violated the union security clause under the CBA;
20

that their termination was effected in response to the Federation's demand to dismiss them; that they did not
comply with the requisites of a valid strike; that they refused to submit their DPRs and abandoned their work;
and that the award of separation pay had no basis because the respondents had been legally dismissed from
their employment.

THE COURT’S RULING

Only the local union may

invoke the union security
clause in the CBA.

The controversy between ESPI and the respondents originated from the Federation’s act of expelling the
union officers and demanding their dismissal from ESPI. Thus, to arrive at a proper resolution of this case, one
question to be answered is whether the Federation may invoke the union security clause in the CBA.

"Union security is a generic term, which is applied to and comprehends 'closed shop, "union shop,’
‘maintenance of membership,' or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is union shop
when all new regular employees are required to join the union within a certain period as a condition for their
continued employment. There is maintenance of membership shop when employees, who are union
members as of the effective date of the agreement, or who thereafter become members, must maintain
union membership as a condition for continued employment until they are promoted or transferred out of
the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely
comprised of or of which the employees in interest are a part." 21

Before an employer terminates an employee pursuant to the union security clause, it needs to determine and
prove that: (1) the union security clause is applicable; (2) the union is requesting the enforcement of the
union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to
expel the employee from the union. 22

In this case, the primordial requisite, i.e., the union is requesting the enforcement of the union security
provision in the CBA, is clearly lacking. Under the Labor Code, a chartered local union acquires legal
personality through the charter certificate issued by a duly registered federation or national union and
reported to the Regional Office. "A local union does not owe its existence to the federation with which it is
23

affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. Mere
affiliation does not divest the local union of its own personality, neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a contract of agency, where the former
acts in representation of the latter. Hence, local unions are considered principals while the federation is
deemed to be merely their agent." 24

The union security clause in the CBA between ESPI and the local union provides:

SECTION 1. Union Shop. All regular, permanent employees covered by this Agreement who are members of
the UNION as of the date of effectivity of this Agreement as well as any employees who shall subsequently
become members of the UNION during the lifetime of this Agreement or any extension, thereof, shall as a
condition of continued employment, maintain their membership in the UNION during the term of this
Agreement or any extension thereof.

x x xx

SECTION 3. The COMPANY shall terminate the services of any concerned employee when so requested by the
UNION for any of the following reasons:

a. Voluntary Resignation from the Union during the term of this Agreement or any extension thereof;

b. Non-payment of membership fee, regular monthly dues, mutual aid benefit and other assessments
submitted by the UNION to the COMPANY;

c. Violation of the UNION Constitution and Bylaws. The UNION shall furnish the COMP ANY a copy of their
Constitution and Bylaws and any amendment thereafter.

d. Joining of another Union whose interest is adverse to the UNION, AWATU, during the lifetime of this
Agreement.

e. Other acts which are inimical to the interests of the UNION and AWATU. 25

There is no doubt that the union referred to in the foregoing provisions is the Ergonomic Systems Employees
Union or the local union as provided in Article I of the CBA. A perusal of the CBA shows that the local union,
26

not the Federation, was recognized as the sole and exclusive collective bargaining agent for all its workers and
employees in all matters concerning wages, hours of work, and other terms and conditions of employment.
Consequently, only the union may invoke the union security clause in case any of its members commits a
violation thereof. Even assuming that the union officers were disloyal to the Federation and committed acts
inimical to its interest, such circumstance did not give the Federation the prerogative to demand the union
officers' dismissal pursuant to the union security clause which, in the first place, only the union may rightfully
invoke. Certainly, it does not give the Federation the privilege to act independently of the local union. At
most, what the Federation could do is to refuse to recognize the local union as its affiliate and revoke the
charter certificate it issued to the latter. In fact, even if the local union itself disaffiliated from the Federation,
the latter still has no right to demand the dismissal from employment of the union officers and members
because concomitant to the union’s prerogative to affiliate with a federation is its right to disaffiliate
therefrom which the Court explained in Philippine Skylanders, Inc. v. NLRC, viz 27

The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case
law. In the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., we upheld the
right of local unions to separate from their mother federation on the ground that as separate and voluntary
associations, local unions do not owe their creation and existence to the national federation to which they are
affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective
action, the common bargaining power of local unions for the effective enhancement and protection of their
interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided
by other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own interests subject to the
restraints imposed by the constitution and bylaws of the national federation, and free also to renounce the
affiliation upon the terms laid down in the agreement which brought such affiliation into existence. 28

In sum, the Federation could not demand the dismissal from employment of the union officers on the basis of
the union security clause found in the CBA between ESPI and the local union.

A strike is deemed illegal for

failure to take a strike vote and
to submit a report thereon to
the NCMB.

A strike is the most powerful weapon of workers in their struggle with management in the course of setting
their terms and conditions of employment. As such, it either breathes life to or destroys the union and its
members. 29

Procedurally, for a strike to be valid, it must comply with Article 278 of the Labor Code, which requires that:
30

(a) a notice of strike be filed with the NCMB 30 days before the intended date thereof, or 15 days in case of
unfair labor practice; (b) a strike vote be approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in a meeting called for that purpose; and (c) a notice be
given to the NCMB of the results of the voting at least seven days before the intended strike. These
requirements are mandatory, and the union's failure to comply renders the strike illegal. 31

The union filed a notice of strike on 20 February 2002. The strike commenced on 21 February 2002. The
32 33

strike vote was taken on 2 April 2002 and the report thereon was submitted to the NCMB on 4 April
34

2002. Indeed, the first requisite or the cooling-off period need not be observed when the ground relied upon
35

for the conduct of strike is unionbusting. Nevertheless, the second and third requirements are still
36

mandatory. In this case, it is apparent that the union conducted a strike without seeking a strike vote and
without submitting a report thereon to the DOLE. Thus, the strike which commenced on 21 February 2002
was illegal.

Liabilities of union officers

and members

Article 279(a) of the Labor Code provides:

37
Art. 279. Prohibited activities. - (a) x x x

x x xx

Any union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the employer
during such lawful strike.

In the determination of the consequences of illegal strikes, the law makes a distinction between union
members and union officers. The services of an ordinary union member cannot be terminated for mere
participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during
the strike. A union officer, on the other hand, may be dismissed, not only when he actually commits an illegal
act during a strike, but also if he knowingly participates in an illegal strike.
38

In the present case, respondents-union officers stand to be dismissed as they conducted a strike despite
knowledge that a strike vote had not yet been approved by majority of the union and the corresponding
strike vote report had not been submitted to the NCMB.

With respect to respondents-union members, the petitioners merely alleged that they committed illegal acts
during the strike such as obstruction of ingress to and egress from the premises of ESPI and execution of acts
of violence and intimidation. There is, however, a dearth of evidence to prove such claims. Hence, there is no
basis to dismiss respondents-union members from employment on the ground that they committed illegal
acts during the strike.

Dismissed respondents-union
members are not entitled to
back wages.

While it is true that the award of back wages is a legal consequence of a finding of illegal dismissal, in G
& S Transport Corporation v. Infante, the Court pronounced that the dismissed workers are entitled only to
39

reinstatement considering that they did not render work for the employer during the strike, viz:

With respect to back wages, the principle of a "fair day's wage for a fair day's labor" remains as the basic
factor in determining the award thereof. If there is no work performed by the employee there can be no
wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed or otherwise illegally prevented from working. While it was found that respondents
expressed their intention to report back to work, the latter exception cannot apply in this case. In Philippine
Marine Officers' Guild v. Compania Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila
Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the
strike be legal, a situation that does not obtain in the case at bar. (emphases supplied)
40

Thus, in the case at bar, respondents-union members' reinstatement without back wages suffices for the
appropriate relief. Fairness and justice dictate that back wages be denied the employees who participated in
the illegal concerted activities to the great detriment of the employer.
41

Nevertheless, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances,
like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or
because of the realities of the situation; (b) reinstatement is inimical to the employer's interest; (c)
reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties
involved; (e) the employer is prejudiced by the workers' continued employment; (f) facts that make execution
unjust or inequitable have supervened; or (g) strained relations between the employer and employee. 42

Given the lapse of considerable time from the occurrence of the strike, the Court rules that the award of
separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order. This relief
strikes a balance between the respondents-union members who may not have known that they were
participating in an illegal strike but who, nevertheless, have rendered service to the company for years prior
to the illegal strike which caused a rift in their relations, and the employer who definitely suffered losses on
account of respondents-union members' failure to report to work during the illegal strike.

WHEREFORE, the petition is PARTIALLY GRANTED. The 21 September 2010 Decision and 14 January 2011
Resolution of the Court of Appeals in CA-G.R. SP No. 102802 are AFFIRMED with MODIFICATION in that
petitioners are hereby ORDERED to pay each of the above-named individual respondents, except union
officers who are hereby declared validly dismissed, separation pay equivalent to one (1) month salary for
every year of service. Whatever sums already received from petitioners under any release, waiver or
quitclaim shall be deducted from the total separation pay due to each of them.

SO ORDERED.
32. G.R. No. 228701-02

MEHITABEL, INC., Petitioner

vs.
JUFHEL L. ALCUIZAR, Respondent

DECISION

VELASCO, J.:

Nature of the Case

For the Court's consideration is the Petition for Review on Certiorari under Rule 45 of the Rules of Court
challenging the May 19, 2016 Decision and October 19, 2016 Joint Resolution of the Court of Appeals (CA) in
1

CAG. R. CEB SP Nos. 07302 and 07321, which reversed the July 31, 2012 Decision of the National Labor
Relations Commission (NLRC), and consequently ruled that respondent Jufhel L. Alcuizar was illegally
2

dismissed from employment.

The Facts

Petitioner Mehitabel, Inc. is a duly registered corporation engaged in manufacturing high-end furniture for
export. The company’s Purchasing Department is composed of only four (4) persons: one (1) Purchasing
3

Manager, one (1) Purchasing Officer handling local purchases, one (1) QC Inspector, and one (1) Expediter. On
4

August 31, 2010, the company hired respondent as its Purchasing Manager. 5

Respondent was able to earn a satisfactory rating during his first few months in the company, but beginning
March 2011, his immediate supervisor, Rossana J. Arcenas (Arcenas), started receiving complaints on his work
ethics. Petitioner averred that respondent's dismal work performance resulted in delays in the production and
delivery of the company’s goods.6

To address these issues, Arcenas talked to respondent and counselled him to improve. As months passed,
however, the complaints against respondent's performance have exacerbated to the point that even the top
level officers of the company have expressed their dissatisfaction over his ineptitude.
7
Sensing no improvement from the respondent and the rising complaints, Arcenas decided to sit down and
talk with respondent anew sometime in early August 2011 to encourage the latter to shape up. She advised
respondent that should he fail to heed her advice, she may be forced to initiate disciplinary proceedings
against him for gross inefficiency.

Arcenas then alleged that respondent left the premises of petitioner's company on August 10, 2011 and gave
word that he was quitting his job. Arcenas' narration was corroborated by Sherrie Mae A. Canete (Canete) and
Wilma R. Molina (Molina), the company's Human Resource Officer and security personnel, respectively, both
of whom were personally informed by respondent of his intention to sever the ties with the company. On 8

even date, petitioner wrote to respondent via registered mail to inform him that the company decided to
treat his act of leaving the office as a violation of its code of conduct, specifically ·on the provision of
abandonment. The letter adverted to reads:

Mr. Alcuizar,

This morning, you left the office without asking permission from your direct superior, Rosanna J. Arcenas, and
only left word with Sherrie Canete, Acting HR Officer, and the guard that you are quitting your job.

You are already aware that your leaving during working hours is a violation of our company rules and
regulations, particularly # 1 of Section B (Behavior at Work) of our Code of Conduct which says:

"Abandoning work place or company premises during working hours without prior permission from superior."

In view thereof, you are hereby advised to report back to work immediately upon receipt hereof and
thereupon submit your written explanation as to why you should not be disciplined for committing the above
violation. Failure to submit said written explanation shall be deemed a waiver of your right to present your
side and shall constrain us to decide on your case based on available evidence.
9

Despite respondent’s receipt of the afore-quoted letter, he neither reported back to work nor submitted his
written explanation. Instead of receiving a reply, petitioner received summons pertaining to a labor dispute
10

that respondent had filed, docketed as NLRC-RAB VI108-1241-2011.

Unbeknownst then to petitioner, respondent lodged a complaint for illegal dismissal, non-payment of salary,
13th month pay, damages and attorney's fees with claims for reinstatement and backwages against the
company and its president, Robert L. Booth (Booth). Respondent emphasized that as early as May 29, June
10, and June 28, 2011,. petitioner caused the publication in a newspaper and online a notice of a vacant
position for Purchasing Manager, the very same item he was occupying in the company. Subsequently, he was
allegedly advised by Arcenas on August 10, 2011 that the company no longer required his services for his
failure to satisfactorily meet the company’s performance standards, and that he should turn over his work to
the newly-hired Purchasing Manager, Zardy Enriquez (Enriquez). It was further alleged that Booth confirmed
that respondent was being replaced.

Seeking to absolve themselves from the charge, petitioner and Booth countered that respondent was not
illegally dismissed, and that it was actually the latter who abandoned his post. Anent the published job
11

opening, petitioner countered that it was a product of sheer inadvertence; that what was actually vacant was
the position of Purchasing Officer, not Purchasing Manager. Respondent was allegedly informed of this
inadvertence.

Ruling of the Labor Arbiter

On January 12, 2012, ·the Labor Arbiter Butch Donabel RagasBilocura, before whom the case was pending,
rendered a Decision dismissing the complaint for lack of merit. She found that respondent failed to establish
12

by substantial evidence the fact of dismissal-a precondition before the burden to prove that the dismissal is
for a valid or authorized cause can be shifted onto petitioner.

Ruling of the NLRC

On appeal, the NLRC, in its July 31, 2012 Decision, reversed the ruling of the Labor Arbiter and ruled thusly:
13 14

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby REVERSED AND SET ASIDE and
a NEW ONE ENTERED declaring validity in the dismissal of complainant. However, for respondent's failure to
observe due process, complainant is entitled to be paid indemnity in the form of nominal damages in the
amount of ₱10,000.00

SO ORDERED.

Essentially, the NLRC held that there was dismissal for just cause. It noted that while respondent was
repeatedly informed of his below par performance, he remained indolent, thereby causing needless delays in
production, customer complaints, lost shipments, and delivery issues. Petitioner was then well within its right
in dismissing complainant. Nevertheless, while there exists a substantive ground for an employees' dismissal,
respondent is entitled to nominal damages for petitioner's failure to observe procedural due process in
terminating him from work.

Both parties moved for reconsideration, but the NLRC maintained its posture. Hence, they filed separate
petitions for certiorari before the CA, which were eventually consolidated.

Ruling of the CA

On May 19, 2016, the CA promulgated its assailed Decision, the dispositive portion of which reads: 15

IN LIGHT OF ALL THE FOREGOING, the petition for certiorari filed by petitioner Jufhel L. Alcuizar, docketed as
CA-G.R. SP No. 07302 is PARTLY GRANTED while the petition for certiorari filed by petitioner Mehitabel, Inc.
and Robert L. Booth, docketed as CA-G.R. SP No. 07321, is DENIED. The Decision dated July 31, 2012 and the
Resolution dated September 24, 2012 of the National Labor Relations Commission, Seventh Division, Cebu
City, in NLRC Case No. V AC-05- 000342-2012, are REVERSED and SET ASIDE.

A new decision is hereby rendered declaring petitioner Jufhel L. Alcuizar as having been illegally dismissed.
Consequently, Mehitabel, Inc. is hereby ordered to reinstate Jufhel L. Alcuizar to his former position without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances and benefits,
form the date he was illegally dismissed on August 10, 2011 up to the time of his actual reinstatement.
Mehitabel, Inc. is also ordered to pay Jufuel L. Alcuizar attorney’s fees equivalent to 10% of his monetary
award.

Let this case be remanded to the Labor Arbiter for the proper computation of Jufhel L. Alcuizar’s monetary
awards, which Mehitabel, Inc. should pay without delay.

SO ORDERED.
In reversing the NLRC, the appellate court applied Art. 4 of the Labor Code, which prescribes that all doubts in
the implementation and interpretation of the provisions of the Code, including its implementing rul.es and
regulations, shall be resolved in favor of labor. It ruled that as between the divergent claims of the parties,
more probative weight is to be accorded to respondent's contention.

Based on the circumstances of the case, so the CA ruled, it was more likely that respondent was verbally
notified of the termination of his employment on August 9, 2011; that a day after, or on August 10, 2011,
Booth confirmed the dismissal; and that feeling aggrieved, respondent instantaneously filed an illegal
dismissal case.

The CA could not appreciate petitioner's defense of abandonment, absent proof of deliberate and unjustified
refusal on the part of respondent to resume his employment. It found self-serving the affidavits of the
company’s human resource officer and security guard who testified that respondent allegedly told them that
he was quitting his job. On the other hand, respondent’s immediate filing of the complaint for illegal dismissal
negated petitioner's theory of abandonment.

Hence, the CA found no abuse of discretion, let alone one that is grave, that can be attributed to the NLRC
insofar as the latter's factual finding that petitioner was actually dismissed.

Be that as it may, the appellate court, nonetheless, pronounced that there was insufficient evidence to
establish that the dismissal was for just cause. The NLRC Decision upholding the validity of the dismissal was
therefore reversed, which reversal in turn became the basis for respondent's entitlement to the benefits
under Art. 279 of the Labor Code. Meanwhile, Booth was absolved from liability for lack of proof of gross
negligence or bad faith on his part.

Petitioner moved for reconsideration from the afore-quoted Decision of the CA, but the appellate court was
unconvinced.

This brings us to the instant recourse.

The Issues

Petitioner relies on the following grounds to support its postulation that respondent was not illegally
dismissed:16

I.

THE HONORABLE COURT OF APPEALS (20th Division) COMMITTED SERIOUS REVERSIBLE ERROR IN APPL YING
THE RULE AS ENUNCIATED IN ARTICLE 4 OF THE LABOR CODE ON AMBIGUITY IN EVIDENCE IN SUPPORT OF
ITS RULING THAT RESPONDENT ALCUIZAR WAS DISMISSED FROM HIS EMPLOYMENT

II.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN HOLDING THAT
RESPONDENT DID NOT ABANDON HIS EMPLOYMENT WITH PETITIONER COMP ANY

III.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN DECLARING THAT
RESPONDENT WAS ILLEGALLY DISMISSED FROM HIS EMPLOYMENT

IV.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN ORDERING PETITIONER
COMP ANY TO REINSTATE RESPONDENT ALCUIZAR TO HIS FORMER POSITION WITHOUT LOSS OF SENIORITY
RIGHTS AND OTHER PRIVILEGES WITH FULL BACKW AGES

V.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN ADJUDGING PETITIONER
COMP ANY LIABLE IN PA YING THE RESPONDENT HIS CLAIM FOR ATTORNEY'S FEES

Petitioner stresses that the rule on the ambiguity in evidence can only be invoked if there exists doubt in the
evidence between the employee and the employer. There being no substantial evidence on the part of
respondent establishing the fact of dismissal, petitioner claims that Art. 4 of the Labor Code cannot then find
application herein. It adds that the CA’s finding that "it is more likely that [respondent] was verbally notified
of the termination of his employment" is not anchored on evidence but purely on surmises and conjectures.

On the issue of abandonment, petitioner advances the theory that respondent's intention to sever his
employment with petitioner was established through the sworn statements of the company's human
resource officer and security guard. It was error for the CA to have so casually dismissed their statements as
self-serving since there was no showing that there were factors or circumstances, other than a truthful
account of what transpired, that impelled the witnesses to give their testimonies. There is also the matter of
the logbook entry bearing the notation that respondent declared that he is quitting his job, and the notice to
report back to work that respondent ignored, which were both overlooked by the CA.

Given the two circumstances above, petitioner would convince the Court to reinstate the Labor Arbiter’s
finding that respondent was not illegally dismissed-for not only did he fail to prove the fact of dismissal, it was
he who abandoned his work. Petitioner also postulates that respondent is consequently not entitled to
reinstatement, full backwages, and to the other benefits under Art. 279 of the Labor Code. Finally, petitioner
likewise questions the basis for the award of attorney's fees.

In his Comment, respondent focuses on the unceremonious manner of his dismissal from service. He directs
Our attention to the newspaper clippings and printout of online postings regarding the purported vacancy of
the position in the company that he occupied. He reiterates that his dismissal was confirmed by Arcenas and
Booth, and that, upon inquiry, he was advised to make a proper turnover of his work to the new purchasing
manager. Thus, it is his contention that he never abandoned his post, but was actually illegally dismissed from
service. His immediate filing of a complaint for illegal dismissal is evidence that he had no intention to sever
the employer-employee relation. He, therefore, prays for the dismissal of the instant petition.

The Court’s Ruling

The petition is meritorious.

The respondent failed to establish the

fact of dismissal
Ei incumbit probatio qui dicit, non qui negat. The burden of proof is on the one who declares, not on one who
denies. A party alleging a critical fact must support his allegation with substantial evidence, for any decision
based on unsubstantiated allegation cannot stand without offending due process. And in illegal termination
17

cases, jurisprudence had underscored that the fact of dismissal must be established by positive and overt acts
of an employer indicating the intention to dismiss before the burden is shifted to the employer that the
18

dismissal was legal.

19

In the extant case, the records are bereft of any evidence that would corroborate respondent's claim that he
was actually dismissed from employment. His asseveration that Arcenas instructed him to turnover his
functions to Enriquez remains to be a naked claim. Apart from his bare self-serving allegation, nothing in the
records even hints of him being severed from employment by petitioner.

The publication of the purported vacancy for Purchasing Manager does not bolster respondent's claim of
dismissal. We find more credible petitioner's assertion that said publications were made through sheer
inadvertence, and that the vacancy is actually for the position of Purchasing Officer, rather than
Purchasing Manager. This version is corroborated by the fact that petitioner caused an earlier
publication, dated February 6, 2011, advertising the vacancy for Purchasing Officer, but with
qualifications strikingly similar with, if not an almost verbatim reproduction of, those subsequently
published on the May 29, June 10, and June 28, 2011 notices for Purchasing Manager in, to wit:

Qualifications for Purchasing Officer 20

Qualifications for Purchasing Manager 21

• Must be a graduate of a business- related • Must be a graduate of a business- related

course from a reputable university course from a reputable university

•With five years experience in a manufacturing •With five years experience in a manufacturing
industry, with at least three years of industry, with at least three years of
management experience management experience

•Must be able to communicate effectively in •Must be able to communicate effectively in

oral and written English, self-motivated, highly- oral and written English, able to relate and
organized, resourceful and can work effectively coordinate well within all the levels of the
in high-pressured environment organization

• Able to support the search and accreditation • A critical thinker, self-motivated, and
of highly potential and qualified contractors or resourceful.
supplier for the company
•Able to support the search and accreditation
• Able to relate and coordinate well within all of highly potential and qualified contractors or
the levels of the organization supplier for the company

• Quality conscious and must have a sense of • Quality conscious and detail oriented, must
urgency have sense of urgency, and can work effectively
in high-pressured environment

The theory of petitioner is further supported by the affidavit of its Human Resource Officer, Canete, who
admitted to committing the erratum thusly:
5. I caused the publication of the position of Purchasing Officer in SunStar Cebu on February 6, 2011 right
after [April Lyn Indab (Indab), then Purchasing Officer,] informed us that she will not be staying long with
Mehitabel, as she was just waiting for a call from her prospective employer from Bahrain. Alcuizar was fully
aware of Indab’s intention to leave the company because, prior to putting out the advertisement for
Purchasing Officer, I asked him if he had someone in mind who could replace Indab;

6. Unable to get qualified applicants for the position of Purchasing Officer and because of the constant
reminder by Indab of her impending resignation, I again caused the publication of the same position in the
same local newspaper on May 29, 2011;

7. Not able to get any applicant from the recent newspaper advertisement, we decided to post the vacancy of
Indab's position on-line or on the web. In line with this decision, I instructed our On-the-Job Trainee then,
Samantha Lagcao, sometime in the latter part of June 2011 to post the ad out on Mynimo.com and
Jobstreet.com.ph. Unaware of the typographical error on the job position that I just published in Sunstar
Cebu, I innocently instructed Lagcao to use that particular advertisement on May 29, 2011 as her template for
the on-line announcement.

8. It was only when my attention was called by our HR Director, when she received the job applications on-
line, that I realized that there was a mistake in the designation of the vacant position advertised in SunStar
Cebu on May 29, 2011. Instead of Purchasing Officer, what erroneously appeared in said newspaper was
Purchasing Manager. It was also at that time that I realized that what were also posted by Lagcao on the
websites were erroneous.

9. Alcuizar knew about this error in the ads because I personally informed him about it at the time when he
asked me to immediately look for a replacement for Indab after he received the latter’s resignation letter on
July 20, 2011. In fact, I can vividly recall that incident because Alcuizar demanded that I should expedite the
hiring of Indab’s replacement as he dreaded dealing with local purchases, which Indab was assigned to do. 22

Grave as the mistake in the designation of the position published might have been, it remains that Alcuizar
was informed of the error committed, and that it was made clear to him that he was never terminated from
service at that time in spite of his poor performance. With these considerations, the Court cannot readily
treat the publications, by themselves, as sufficient substantial proof of the fact of dismissal.

Respondent abandoned his employment

In contrast, petitioner herein issued a Return to Work order to respondent, which the latter received through
registered mail. This circumstance bears more weight and effectively negates respondent’s self-serving
asseveration that he was dismissed from employment; it more than implies that the company still considered
respondent as its employee on August 10, 2011.

Respondent's non-compliance with the directive in the Return to Work to Our mind, signifies his intention to
sever the employment relation with petitioner, and gives credence to the latter’s claim that it was respondent
who abandoned his job. Moreover, such omission substantiates the testimonies of Canete and Molina who
positively attested to the fact of respondent's desertion. In Cañete’s affidavit, for instance, she stated under
oath the following circumstances:

4. On August 10, 2011, at or about 9:30 a.m., Alcuizar dropped by my office and surprisingly said to me, ‘Ako
nang gibilin ang company phone and other company properties sa akong desk, pero dalhon lang nako ang
USB kay akoni.’ (I already left the company phone and other company properties, save for the USB since it’s
mine.) Reacting to his statements, I then asked him, ‘Unsaon man pag reach nimo if biyaan nimo ang
company cellphone?’ (How can we reach you if you will leave the company cellphone?) Alcuizar did not make
any response and simply left;

5. Puzzled by Alcuizar's actuations and curious as to where he was going, I called up Wilma Molina, the guard
assigned at the company's entrance gate, and asked if she happened to see Alcuizar leaving. It was during my
inquiry with Molina that I learned that Alcuizar had already quit his job. 23

And in Molina's narration:

5. Upon approaching the gate, I asked Alcuizar for his exit pass, since it is our company policy that no one
should leave the company premises during working hours unless proper permission is secured. Alcuizar
replied by saying, ‘Dili na nakinahanglan hasta ang exit logbook coz I’m quitting my job!’ (It's no longer
necessary and also the exit logbook because I’m quitting my job!);

6. Surprised by what I just heard from Alcuizar, I answered by remarking, ‘Ah, binuang sir.’ (You're kidding, sir),
to which he replied, ‘Gi-surrender nanako ang company cellphone ug ubang company properties. Dalhon ni
nakong USB kay ako ni. Kahibawo na ani si Ma’am Canete.’ (I already surrendered the company cellphone and
other company properties. I am bringing with me my USB as I own this. Ma' am Cañete already knows this.)

7. Realizing that he was serious, I decided to let him out of the company gate. And to record what had
transpired, I immediately wrote on the exit logbook the following notations, '13. Alcuizar Jufhel 811 9:3 7- - I
am quietting [sic] my job/no exit pass. 24

Evident from the foregoing is that there is no dismissal to speak of, let alone one that is illegal. Instead, it was
respondent who clearly demonstrated his lack of interest in resuming his employment with petitioner,
culminating in abandonment.

Respondent cannot harp on the fact that he filed a complaint for illegal dismissal in proving that he did not
abandon his post, for the filing of the said complaint does not ipso facto foreclose the possibility of
abandonment. It is not the sole indicator in determining whether or not there was desertion, and to declare
as an absolute that the employee would not have filed a complaint for illegal dismissal if he or she had not
really been dismissed is non sequitur. 25

Apart from the filing of the complaint, the other circumstances surrounding the case must be taken into
account in resolving the issue of whether or not there was abandonment. This was the teaching in Basay v.
Hacienda Consolacion wherein the Court can be quoted saying:

We are not persuaded by petitioners' contention that nothing was presented to establish their intention of
abandoning their work, or that the fact that they filed a complaint for illegal dismissal negates the theory of
abandonment.

It bears emphasizing that this case does not involve termination .of employment on the ground of
abandonment. As earlier discussed, there is no evidence showing that petitioners were actually dismissed.
1âwphi1

Petitioners’ filing of a complaint for illegal dismissal, irrespective of whether reinstatement or separation pay
was prayed for, could not by itself be the sole consideration in determining whether they have been illegally
dismissed. All circumstances surrounding the alleged termination should also be taken into account. 26
In the case at bar, there is sufficient basis for the NLRC’s finding that respondent had been indolent in his job.
The-narration of Arcenas in her affidavit detailing the specific circumstances wherein respondent was remiss
on his duties was substantiated by the electronic correspondences between respondent and his supervisors.
A perusal of the emails revealed the clear dissatisfaction of the company officers with respondent's dismal
performance that led to missed shipments, delayed deliveries, and lost clientele.

In turn, it is beyond quibbling that a slothful work attitude falls squarely within the ambit of gross and
habitual neglect of duty, which is one of the grounds for termination enumerated under Art. 297 (b) of the
Labor Code, to wit:

Article 297. Termination by employer. An employer may terminate an employment for any of the following
causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing. (emphasis added)

From these circumstances, it can be gathered that respondent's departure on August 10, 2011 was merely a
precursor to his scheme to turn the table against petitioner. Realizing that his employment was at serious risk
due to his habitual neglect of his duties, respondent jumped the gun on petitioner by lodging a baseless
complaint for illegal dismissal even though it was he who abandoned his employment.

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED. The May 19, 2016 Decision
and October 19, 2016 Joint Resolution of the Court of Appeals in CA-G.R. CEB SP Nos. 07302 and 07321 are
hereby REVERSED and SETASIDE. The January 12, 2012 Decision of Labor Arbiter Butch Donabel Ragas-
Bilocura in NLRC-RAB VI108-1241-2011, dismissing the complaint for lack of merit, is hereby REINSTATED.

SO ORDERED.
33. G.R. No. 190944

ADVAN MOTOR, INC., Petitioner

vs.
VICTORIANO G. VENERACION, Respondent

DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Revised Rules of Court seeking to
reverse and set aside the September 30, 2009 Decision and the January 13, 2010 Resolution of the Court of
1 2

Appeals in CA-G.R. SP No. 103744, which affirmed and modified the April 30, 2007 Decision of the National
3

Labor Relations Commission (NLRC) of Quezon City.

The facts as summarized by the NLRC and quoted by the Court of Appeals are quoted below:

Records show that [respondent Victor G. Veneracion] started working sometime in September 1999 in
[petitioner Ad van Motor, Inc.] company's business of selling and repairing cars manufactured by General
Motors Automative Phils., as Sales Consultant. In a letter dated May 21, 2001, he was informed of the
termination of his services "effective May 2, 2001 for the reason of repeated AWOL violations for more than
six consecutive days and management's loss of trust and confidence in you for your repeated abandonment
of your office duties and responsibilities." xxx

Aggrieved, [respondent] filed a complaint for constructive dismissal on July 13, 2001. The complaint was
subsequently amended by changing [respondent's] causes of action into actual illegal dismissal and including
underpayment of salaries.

[Respondent] alleged that sometime in December 2000, he was suspected of planning to organize a union,
that henceforth, he was harassed by management by being forced to resign in exchange for a financial
package and treated unfairly when his purchase orders and sub-dealership agreement with an interested
party were not acted upon or sabotaged by management; that unlike the others, his salary was not adjusted
although he had been regularized and given the run-around with regard to the giving of promo discounts to
buyers. [Respondent] also averred that for the month of March 2001, including the succeeding months, [he]
was no longer given any duty date, show room, nor phone and was again pressured to resign; that in April
2001 he applied for a leave of absence which was verbally approved but later denied; that his salaries for
April 2001 and the months thereafter were withheld; and, that contemplating on filing an action, [petitioner]
jumped the gun on him by serving him with the letter terminating his services.
In [its] defense, [petitioner] contended that [respondent] was oftentimes absent or tardy and failed to meet
his sales quota of three (3) cars a month; that he went on an unannounced leave from March 28-31, 2001
and, later, by just handing to the security guard his request for vacation leave from April 2-18, 2001; that on
April 20, 2001, he informed the Personnel Officer that he would no longer report for work, prompting
management to issue a notice of termination on May 21, 2001.

In ruling for the [respondent], the Labor Arbiter observed that:

"Clearly, [respondent’s] termination from his employment was based on AWOL amounting to a violation of
company rules and regulation[s] and on attendance for repeated abandonment of office duties and
responsibilities and management loss of trust and confidence in him. Specifically, as indicated, management
claims that [respondent] x x x"[was on] AWOL since April 10, 2001" xxx.

It appears that [petitioner] predicated as basis of [its] decision to terminate [respondent’s] employment when
he x x x" just handed to the security guard his request for vacation leave from April 2 to 18, 2001 without
informing his immediate superior or even the Personnel Department x x x. This does not persuade. Besides
being denied by [respondent], who claimed that hex xx "left it with HRD Manager, who earlier, verbally gave
permission to [respondent] to go on leave." x x x, there is no showing on record of any to substantiate this
claim. If indeed, it is true, [petitioner] should have notified the [respondent], in the first place. The Sworn
Statement of [the] security guard who received the same request for leave alluded to was not presented to
[this] effect. Even his name was not noted. Neither was there any statement to this effect from the Personnel
Department concerned presented, at least.

Simply [petitioner’s] claim remains an allegation. It is a rule well settled [in] this jurisdiction that the employer
has the burden of proving the lawful cause sustaining the dismissal of employee. Equipoise is not enough. The
employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause x x
x."
4

Advan Motor, Inc. (petitioner) claimed that on December 10, 1999, Victoriano Veneracion (respondent)
received a copy of the manual issued by the former, which provides the company’s general personnel
5

policies. Item No. 6 of the said manual provides:

6. Absenteeism

You are expected to notify the office if you are unable to report for work for any reason. Failure to notify the
office on the day's absence shall be considered unauthorized and is subject to corresponding sanctions.
Unauthorized Leave of Absence (LoA) of five (5) working days will be construed as abandonment of work and
is subject to possible termination of service.

Unauthorized Absence (Absence Without Official Leave)

An employee may be considered as Absent Without Official Leave (AWOL) if he/she fails to report for work:

• For whatever reason without personally or thru his/her immediate superior or the Personnel Department
the reason for such absence, within twenty-four (24) hours from the occurrence of such absence.

• For unacceptable reasons even if he/she has notified his/her immediate superior before such absence
occurs, likewise in the case of absenting from work without prior authorization .
• After the expiration of his/her approved leave of absence.

Procedure for Filing Authorized Absences:

For purposes of procedure and to ensure that the absence is considered authorized, employees are required
to observe the following guidelines:

• Secure the Request for Leave of Absence Form from the Personnel Department.

• Fill-in all necessary information as required by the form. As much as possible, the request must be filed not
less than three (3) days before the intended leave so as not to disrupt operations and to enable the
immediate superior to monitor the absences properly.

• Inform immediate superior of the intended leave and secure his/her endorsement signature; forward
request to the Department Head for approval.

• Send all copies of the form to the Personnel Department for filing and endorsement to the Accounting
Department.

• If the reason for such absence is sickness or injury, the medical certificate shall be attached to the request
form. Approval of the said leave shall be based on the Administrative/Personnel Department's verification.

Penalties for Unauthorized Absence

FREQUENCY PENALTY
One (1) day Written warning & entry m
employee's 201 file
Two (2) to four (4) days 10 days suspension
consecutive days
Five (5) consecutive days or Termination
more

Habitual Unauthorized Absences

If, within a period of two (2) months, an employee incurs at least three (3) AWOL violations, he/she shall be
considered habitually AWOL and a consequence thereof, the next higher penalty shall be applicable to the
third and succeeding violations within the said two (2) month period. 6

Petitioner alleged that respondent was fully aware that this rule was designed by the company to ensure its
uninterrupted operation, without being disrupted or hampered by the absence of one employee. This policy
was adopted by the company to plan ahead and properly redesign its operation in case an employee intends
to take a vacation. Petitioner further alleged that respondent failed to reach his sales quotas and committed
7

gross neglect of duty and wanton violation of company policies. Specifically, petitioner claimed that
respondent failed to reach the sales quota of at least three units of motor vehicles a month. On several
occasions, petitioner issued notices to respondent reminding him of his poor sales performances, frequent
tardiness and absences during his floor duty, and prolonged unauthorized absences, which seriously
hampered and impaired the sales operations and business plans of the petitioner. Therefore, petitioner
concluded that there was a valid and legal ground to dismiss the respondent.

On January 14, 2002, the respondent filed an amended complaint for actual illegal dismissal, underpayment
of salaries/wages with damages, attorney’s fees, and a prayer for reinstatement and payment of full
backwages. On September 30, 2004, Labor Arbiter Daniel J. Cajilig rendered his Decision, stating as follows:
8 9

WHEREFORE, judgment is hereby rendered declaring complainant's dismissal from his employment as illegal.

Accordingly, respondent-firm [petitioner company] is hereby ordered to pay complainant his backwages
amounting to THREE HUNDRED FORTY-TWO THOUSAND FOUR HUNDRED EIGHTYNINE PESOS AND
SEVENTY-FOUR (Php342,489.74) CENTAVOS as above stated, and THIRTY-EIGHT THOUSAND AND TWENTY
(Php38,020.00) PESOS, representing his separation pay in lieu of reinstatement and TEN (10) PERCENT as
attorney’s fees.

Other claims are DENIED for lack of merit. 10

Petitioner appealed the Labor Arbiter's decision to the NLRC, while respondent filed his partial appeal. On
April 30, 2007, the NLRC affirmed the decision of the Labor Arbiter.

Both parties filed their respective Motions for Reconsideration, but in its Resolution promulgated on
11

February 29, 2008, the NLRC denied both motions for lack of merit.

On May 29, 2008, the respondent, by way of a Petition for Certiorari submitted the Resolution of the NLRC to
12

the Court of Appeals for judicial review on the ground that it was tainted with grave abuse of discretion
amounting to lack or excess of jurisdiction. The appellate court partially granted the petition of the
respondent and ordered the company to reinstate the respondent to his former position and to pay the latter
his backwages.

The Court of Appeals affirmed the NLRC decision with modifications, as quoted below:

WHEREFORE, premises considered, the instant petition is PARTIALLYGRANTED and the assailed decision
dated April 30, 2007 is AFFIRMED with MODIFICATIONS, thus:

a) Private Respondent-Firm is hereby ORDERED to REINSTATE petitioner to his former

position without loss of seniority rights and other privileges;

b) Private Respondent-Firm is hereby ORDERED to PAY petitioner his BACKWAGES, computed

on the basis of minimum wage from 02 May 2001, or from the time that his compensation
was withheld from him, until actual reinstatement. The instant case is hereby remanded to
the Labor Arbiter for the proper computation of the said backwages;

c) The award of separation pay is hereby DELETED; and

d) The award of Ten [percent] (10%) Attorney’s fees 1s AFFIRMED. 13

Petitioner filed on October 22, 2009 a Motion for Partial Reconsideration of the September 30, 2009 decision
14

of the Court of Appeals. However, the appellate court was not persuaded and by way of Resolution
promulgated on January 13, 2010, denied the said motion.
Aggrieved, petitioner came to this Court seeking the reversal of the questioned decision and resolution of the
appellate court. Petitioner raises the following grounds:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR WHEN IT ORDERED
THE REINSTATEMENT OF RESPONDENT VENERACION TO HIS FORMER POSITION. 1âwphi1

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR WHEN IT ORDERED
THE AW ARD OF BACKW AGES. 15

The two issues for our consideration are the questions of reinstatement and backwages.

Under the first ground, petitioner argues that the order of reinstatement is not proper when the position
occupied is one vested with trust and confidence. Petitioner alleges that it placed a high level of trust and
confidence to the respondent as a Sales Consultant. Petitioner points out that respondent disregarded
company rules and regulations when he went AWOL for several consecutive days, which is a serious offense.
The offense committed, clearly, is "work-related" and to treat it lightly or let it pass will definitely set a bad
precedent for the company and will embolden the other sales agents. Petitioner claims that the business of a
car dealership largely rests on the sales agents representing the company in selling the products, who are
expected to translate these products into sales for the company, and as such should be considered
trustworthy. The petitioner argues that it is sufficient that the employer has reasonable ground to believe that
the employee is responsible for the misconduct, rendering him unworthy of the trust and confidence
demanded by his position. 16

We find that the Court of Appeals correctly ruled in favor of reinstatement, and agree with its reasoning that
respondent is a mere car sales agent/sales consultant whose function is precisely to sell cars for the company.
Said position is clearly not vested with complete trust and confidence from the employer as compared to, for
example, a managerial employee. In Dimabayao v. National Labor Relations Commission, this Court had
17

occasion to state that:

Strained relationship may be invoked only against employees whose positions demand trust and confidence,
or whose differences with their employer are of such nature or degree as to preclude reinstatement. In the
instant case, however, the relationship between petitioner, an ordinary employee, and management was
clearly on an impersonal level. Petitioner did not occupy such a sensitive position as would require complete
trust and confidence, and where personal ill will would foreclose his reinstatement. (Emphasis supplied.)

The Court of Appeals pointed as significant that "strained relationship: is a question of fact. In his pleadings,
respondent continually reiterated his plea to be reinstated. Petitioner did not allege in its position paper that
it could no longer employ respondent because of "strained relationship." The factual issue of "strained
relationship" was not an issue, hence, was not subject of proof before the Labor Arbiter.

The Court of Appeals correctly held that every labor dispute almost always results in "strained relations," and
the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can
never be reinstated. As to the finding of the NLRC that the respondent had convinced it that the relations
18

between him and management had become so strained by describing in detail that he was repeatedly being
offered a financial package in exchange for his resignation and his being treated unfairly, the Court of Appeals
found it absurd that the NLRC would utilize petitioner's own statements to prop up the existence of "strained
relationship" when in fact it was respondent who had been pleading and praying that he be reinstated. On
the contrary, this showed that despite the perceived animosity between the parties, respondent was still
willing to get back to work.

As to the finding that management had declared that it had lost its trust and confidence on complainant who,
as a Sales Consultant, was a front line employee in whom respondents had complete trust, we agree with the
Court of Appeals that a sales consultant is not a position of complete trust and confidence where personal ill
will could foreclose an employee’s reinstatement. Moreover, as it is one of the just causes for dismissal under
the Labor Code, to affirm the allegation of loss of trust and confidence would lead to an illogical conclusion
that respondent was validly dismissed from service. 19

As we have held, "[ s ]trained relations must be demonstrated as a fact. The doctrine of strained relations
should not be used recklessly or applied loosely nor be based on impression alone" so as to deprive an
20

illegally dismissed employee of his means of livelihood and deny him reinstatement. Since the application of
this doctrine will result in the deprivation of employment despite the absence of just cause, the
implementation of the doctrine of strained relationship must be supplemented by the rule that the existence
of a strained relationship is for the employer to clearly establish and prove in the manner it is called upon to
prove the existence of a just cause; the degree of hostility attendant to a litigation is not, by itself, sufficient
proof of the existence of strained relations that would rule out the possibility of reinstatement. 21

Thus, reinstatement is proper in this case under Article 294 of the Labor Code, which provides:
22

ARTICLE 294. Security of tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. (Emphasis ours.)
23

Since there was a conclusive finding that respondent was unjustly dismissed from work, we thus likewise
affirm the award of backwages, which are awarded to allow the employee to recover from the employer that
which he had lost by way of wages as a result of his dismissal. 24

The two reliefs of reinstatement and backwages have been discussed in Reyes v. RP Guardians Security
Agency, Inc. in the following manner:
25

Backwages and reinstatement are separate and distinct reliefs given to an illegally dismissed employee in
order to alleviate the economic damage brought about by the employee's dismissal. "Reinstatement is a
restoration to a state from which one has been removed or separated" while "the payment of backwages is a
form of relief that restores the income that was lost by reason of the unlawful dismissal." Therefore, the
award of one does not bar the other.

In the case of Aliling v. Feliciano, citing Golden Ace Builders v. Talde, the Court explained:

Thus, 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
1âwphi1

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.

The normal consequences of respondents' illegal dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time compensation was withheld up to the date of
actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one
(1) month salary for every year of service should be awarded as an alternative. The payment of separation pay
is in addition to payment of backwages.

Further discussing the normal consequences of illegal dismissal and providing the statutory intent on this
matter, in Tomas Claudio Memorial College, Inc. v: Court of Appeals, we held as follows:
26

The statutory intent on this matter is clearly discernible. Reinstatement restores the employee who was
unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while
the grant of backwages allows the same employee to recover from the employer that which he had lost by
way of wages as a result of his dismissal. These twin remedies reinstatement and payment of backwages -
make the dismissed employee whole who can then look forward to continued employment. Thus do these
two remedies give meaning and substance to the constitutional right of labor to security of tenure. The two
forms of relief are distinct and separate, one from the other. Though the grant of reinstatement commonly
carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it
the inappropriateness or non availability of the other ....

The payment of backwages is generally granted on the ground of equity. It is a form of relief that restores
the income that was lost by reason of the unlawful dismissal; the grant thereof is intended to restore the
earnings that would have accrued to the dismissed employee during the period of dismissal until it is
determined that the termination of employment is for a just cause. It is not private compensation or
damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it
a redress of a private right but rather in the nature of a command to the employer to make public
reparation for dismissing an employee either due to the former’s unlawful act or bad faith.

The award of backwages is not conditioned on the employee's ability or inability to, in the interim, earn any
income. x x x. (Emphasis added, citations omitted.)

WHEREFORE, the petition for review is DENIED. The Decision of the Court of Appeals dated September 30,
2009 and its Resolution dated January 13, 2010 in CA-G.R. SP No. 103744 are AFFIRMED.

SO ORDERED.
34. G.R. No. 228671

EXPEDITION CONSTRUCTION CORPORATION, SIMON LEE PAZ, and JORDAN JIMENEZ, Petitioners, *

vs.
ALEXANDER M. AFRICA, MARDY MALAPIT, JESUSESER, JACOB RONGCALES, JONAMEL CARO, ALFREDO
RILES, REYNALDO GARCIA, FREDDIE DEI.JA CRUZ, JUNIE AQUIBAN, CRISINCIO GARCIA, DINO AQUJBAN,
* *

SAMUEL PILLOS, JEFFREY A. VALENZUELA, ERWIN VELASQUEZ HALLARE and WILLIAM RAMOS
DAGDAG, Respondents.

DECISION

DEL CASTILLO, J.:

Before us is a Petition for Review on Certiorari with Application for Temporary Restraining Order and/or Writ
of Preliminary Injunction seeking to set aside the March 31, 2016 Decision of the Court of Appeals (CA) in CA
1 2

G.R. SP No. 142007, which dismissed the Petition for Certiorari filed therewith and affirmed with modification
3

the April 30, 2015 Resolution of the National Labor Relations Commission (NLRC) by ordering the
4

reinstatement and the payment of full back wages of respondents Alexander M. Africa, Mardy Malapit, Jesus
Eser, Jacob Rongcales, Jonamel Caro, Alfredo Riles, Reynaldo Garcia, Freddie Dela Cruz, Junie Aquiban,
Crisincio Garcia, Dino Aquiban, Samuel Pillos, Jeffrey A. Valenzuela, Erwin Velasquez Hallare, and William
Ramos Dagdag (respondents) for having been illegally dismissed. Likewise assailed is the December 9, 2016
Resolution of the CA denying petitioners' Motion for Reconsideration.
5 6

Factual Antecedents

Petitioner Expedition Construction Corporation (Expedition), with petitioners Simon Lee Paz and Jordan
Jimenez as its Chief Executive Officer and Operations Manager, respectively, is a domestic corporation
engaged in garbage collection/hauling. It engaged the services of respondents as garbage truck drivers to
collect garbage from different cities and transport the same to the designated dumping site.

Respondents filed separate cases (which were later on consolidated) against Expedition for illegal dismissal;
7

underpayment and non-payment of salaries/wages, holiday pay, holiday premium, rest day premium, service
incentive leave pay, 13th month pay, separation pay, and Emergency Cost of Living Allowance (ECOLA); illegal
deduction; moral and exemplary damages and attorney's fees. In their Position Paper, respondents alleged
8

that in August 2013, they were illegally terminated from employment when they were prevented from
entering the premises of Expedition without cause or due process. They claimed that they were regular
employees of Expedition; were required to work a minimum of 12 hours a day, seven days a week, even on
holidays, without rest or vacation; and, were not paid the minimum wage, holiday or premium pay, overtime
pay, service incentive leave pay and 13th month pay. They also averred that the costs of repair and
maintenance of the garbage trucks were illegally deducted from their salaries.

Expedition, in its Position Papcr, countered that respondents were not illegally dismissed. It averred that it
9

entered into separate contracts with the cities of Quezon, Mandaluyong, Caloocan, and Muntinlupa for the
collection and transport of their garbage to the dump site; that it engaged the services of respondents, as
dump truck drivers, who were oftentimes dispatched in Quezon City and Caloocan City that the need for
respondents' services significantly decreased sometime in 2013 after its contracts with Quezon City and
Caloocan City were not renewed; and, that it nonetheless tried to accommodate respondents by giving them
intermittent trips whenever the need arose.

Expedition denied that respondents were its employees. It claimed that respondents were not part of the
company's payroll but were being paid on a per trip basis. Respondents were not under Expedition's direct
control and supervision as they worked on their own, were not subjected to company rules nor were required
to observe regular/fixed working hours, and that respondents hired/paid their respective garbage collectors.
As such, respondents' money claims had no legal basis.

In their Reply, respondents insisted that they worked under Expedition's control and supervbion considering
10

that: (1) Expedition owned the dump trucks; (2) Expedition expressly instructed that the trucks should be
used exclusively to collect garbage in their assigned areas and transp01i the garbage to the dump site; (3)
Expedition directed them to park the dump trucks in the garage located at Group 5 Area Payatas, Quezon, City
after completion of each delivery; and (4) Expedition determined how, where, and when they would perform
their tasks.

Respondents also adverted to petitioners' counsel's manifestation during the mandatory conciliation
proceedings, regarding Expedition's willingness to accept them back to work, as proof of their status as
11

Expedition's regular employees. To further support their claim, respondents attached in their
Rejoinder affidavits of Eric Rosales (Rosales) and Roger A. Godoy (Godoy), both claiming to be former
12 13 14

employees of Dodge Corporation/Expedition Construction Corporation and attesting that respondents were
regular employees of Expedition.

Ruling of the Labor Arbiter

In a Decision dated June 26, 2014, the LA dismissed respondents' complaints and held that there was no
15

employer-employee relationship between Expedition and respondents. The LA did not find any substantial
proof that respondents were regular employees of Expedition. First, respondents had no fixed salary and
were compensated based on the total number of trips made. Next, Expedition had no power to terminate
respondents. More importantly, respondents performed their work independent of Expedition's control. The
LA ruled that respondents were independent contractors, contracted to do a piece of work according to their
own method and without being subjected to the control of Expedition except as to the results of their work.

Respondents appealed to the NLRC where they insisted that they were under Expedition's control and
supervision and that they were regular employees who worked continuously and exclusively for an
uninterrupted period ranging from four to 15 years and whose tasks were necessary and desirable in the
usual business of Expedition.

Ruling of the National Labor Relations Commission

In a Resolution dated September 30, 2014, the NLRC dismissed respondents' appeal and affirmed the ruling
16

of the LA. The NLRC similarly found no evidence of an employer-employee relationship between Expedition
and respondents. The NLRC did not consider as evidence the alleged admission of petitioners during the
mandatory conciliation conference since statements made in these proceedings are regarded as privileged
communication. Likewise, the affidavits of Rosales and Godoy did not help respondents' cause as the affiants
were not employees of Expedition but of some other company.

The NLRC opined that respondents were project employees hired for a specific undertaking of driving garbage
trucks, the completion and termination of which was conterminous with Expedition’s contracts with the Local
Government units (LGUs). As project employees, respondents were not dismissed from work but their
employment simultaneously ended when Expedition's contracts with Quezon City and Caloocan City expired.
There being no illegal dismissal, the NLRC found no basis in awarding respondents their money claims

Undaunted, respondents filed a 'Motion for Reconsideration arguing that they were not project employees
17

because the nature .of their work was necessary and desirable to Expedition's line of business and that their
continuous and uninterrupted employment reaffirmed their status as regular employees. They averred
further that there was no written contract evidencing project employment nor were they informed of their
status as project employees.· They stressed that Expedition's right of control over the performance of their
work was apparent when: (1) they were made to report everyday at the premises owned by Expedition; (2)
there was an express instruction to report from Monday to Sunday;· (3) they were not allowed to engage in
any other project; (4)" they were mandated to return the hauling truck and park the same at Expedition's
premises after the garbage collection was completed; (5) Expedition determined how, where, and when they
would perform their tasks; and, (6) they were not allowed to collect garbage beyond the area indicated by
Expedition.

In a Resolution dated April 30, 2015, the NLRC partly granted respondents' motion for reconsideration and
18

modified its earlier Resolution of September 30, 2014. This time, the NLRC ruled that respondents were
employees of Expedition in view of Expedition's admission that it hired and paid respondents for their
services. The NLRC was also persuaded that Expedition exercised control on when and how respondents
would collect garbage.

The NLRC, however, sustained its earlier finding that there was no illegal dismissal, ratiocinating that
respondents were merely placed on a floating status when the contracts; with Quezon City and Caloocan City
expired and thus were merely waiting to be re-assigned to other similar work. As there was no dismissal to
speak of, the NLRC ordered respondents' reinstatement but without the payment of back wages. However,
due to Jack of clients where respondents could be re-assigned, the NLRC opted to award separation pay in
lieu of reinstatement. The dispositive portion of the Resolution reads:

WHEREFORE complainants-appellants’ Motion for Reconsideration is hereby PARTLY GRANTED Our Resolution
dated 30 September 2014 is MODIFIED finding employer-employee relationship between complainants and
the respondents and concomitantly the latter is hereby ordered to pay complainants’ separation pay at the
rate of ½ month salary for every year of service a fraction of at least 6 months to be considered as one (1)
whole year in the following computed amounts.

1. Alexander M. Africa 426 x 13 x 12 = 66,456

2. Jesus Eser 426 x 13 x 10 = 55,380
3. Jonamel Caro 426 x 13 x 12 = 66,456
4. Reynaldo Garcia 426 x 13 x 15 = 83,070
5. Mardy Malapit 426 x 13 x 14 = 77,532
6. Jacob Rongcales 426 x 13 x 14 = 77,532
7. Alfredo Rilles 426 x 13 x 15 = 83,070
8. Freddie Dela Cruz 426 x 13 x 5 = 27,690
9. Junie Aquiban 426 x 13 x 5 = 27,690
 10. Dino Aquiban 426 x 13 x 4 = 22,152
11. Samuel G. Pillos 426 x 13 x 5 = 27,690
12. William Dagdag 426 x 13 x 14 = 77,532
13. Crisincio Garcia 426 x 13 x 12 = 66,456
14. Jeffrey A. Valenzuela 426 x 13 x 5 = 27,690
15. Erwin V. Hallare 426 x 13 x 9 = 49,842

The rest of Our resolution is hereby AFFIRMED.

SO ORDERED. 19

Expedition filed a Motion for Reconsideration attributing error on the NLRC in ruling that there was an
20

employer-employee relationship and in awarding separation pay despite the finding that there was no illegal
dismissal. Expedition also questioned the NLRC's computation of separation pay and sought the remand of
the case to the LA for proper determination of the correct amount. This motion, however, was denied by the
NLRC in its Resolution of June 30, 2015.
21

Expedition sought recourse to the CA via a Petition for Certiorari. 22

Ruling of the Court of Appeals

On March 31, 2016, the CA rendered a Decision dismissing Expedition’s Petition for Certiorari and ruling in
23

favor of respondents. The CA affirmed the April 30, 2015 Resolution of the NLRC insofar as the existence of an
employer-employee relationship between the parties. The CA noted that respondents were hired and paid by
Expedition. Further, Expedition exercised the power to provide and withhold work from respondents. Most
importantly, the power of control was evident since Expedition determined how, where and when
respondents would perform their tasks. The CA held that the respondents needed Expedition's instruction
and supervision in the performance of their duties. The likewise ruled that respondents were regular
employees entitled to security of tenure because they continuously worked for several years for the company,
an indication that their duties were necessary and desirable in the usual business of Expedition.

The CA, however, did not agree with the NLRC that respondents were on floating status since petitioners did
not adduce proof of any dire exigency justifying failure to give respondents any further assignments. The CA
observed that the irregular dispatch of respondents due allegedly to the decrease in the need for drivers led
to the eventual discontinuance of respondents' services and ultimately, their illegal termination. Accordingly,
the CA ruled that respondents were illegally dismissed when Expedition prevented them from working, and
consequently, ordered their reinstatement with full back wages. The dispositive portion of the Decision reads:

FOR THESE REASONS. the petition is DISMISSED. The Decision of the National Labor Relations Commission
dated April 10, 2015 is hereby AFFIRMED with MODIFICATIONS. The respondents were illegally dismissed, and
arc thus entitled to reinstatement with full backwages from the time of illegal dismissal up to the finality of
this Decision and attorney's fees equivalent to ten percent (10%) of the total monetary award. The monetary
awards herein granted shall earn legal interest at the rate of six percent (6%) per annum from the date of the
finality of this Decision until fully paid. The case is remanded to the Labor Arbiter for the computation of
respondents' monetary awards.
SO ORDERED. 24

Expedition filed a Motion for Reconsideration on the ground that the CA erred in finding that respondents
25

were its employees and that respondents were illegally dismissed. It impugned the award of reinstatement
and back wages in favor of respondents, submitting that an amount of financial assistance would be the more
equitable remedy for respondents' cause. It, then, manifested its willingness to offer financial assistance to
respondents in the amounts equivalent to the separation pay awarded to respondents in the April 30, 2015
NLRC Resolution.

Expedition's motion was, however, denied by the CA in its Resolution dated December 9, 2016.
26

Issues

Hence, Expedition filed this instant Petition presenting the following grounds for review:

[1.] THE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE NLRC'S FINDING THAT THERE WAS AN
EMPLOYER-EMPLOYEE RELATION SHIP BETWEEN PETITIONER CORPORATION AND RESPONDENTS.

[2.] EVEN ASSUMING ARGUENDO THAT THERE WAS EMPLOYER-EMPLOYEE RELATIONSHIP, THE COURT OF
APPEALS GRA. VEL Y ERRED IN RULING THAT RESPONDENTS WERE REGULAR EMPLOYEES.

[3.] THE COURT OF APPEALS GIV'\ VEL Y ERRED IN RULING THAT RESPONDENTS WERE ILLEGALLY DISMISSED.

[4.] AGAIN, EVEN ASSUMING THAT RESPONDENTS WERE REGULAR EMPLOYEES AND THAT THEY HAD BEEN
ILLEGALLY DISMISSED, THE COURT OF APPEALS GRAVELY ERRED WHEN IT A WARDED REINSTATEMENT WITH
FULL BACKWAGES INSTEAD OF SEPARATION PAY ONLY. 27

Expedition maintains that it did not exercise the power of selection or engagement, payment of wages,
dismissal, and control over respondents. The CA, thus, had no legal basis in finding that respondents were its
employees, much less had regular employment status with it. Expedition likewise insists that there was no ii
legal dismissal and that the CA erred in awarding reinstatement and backwages instead of separation pay,
which was prayed for by respondents.

Our Ruling

The Petition is partly granted.

Respondents were regular employees

of Expedition.

At the outset, it bears emphasis that the question of whether or not respondents were employees of
Expedition is a factual issue. It is settled that only questions of law may be raised in a petition for review
on certiorari tiled under Rule 45. However, there are also recognized exceptions to this rule, one of which is
28

when the factual findings of the labor tribunals are contradictory to each other, such as obtaining in the case
29

at bar.

Jurisprudence has adhered to the four-fold test in determining the existence of an employer-employee
relationship, to wit: "(l) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct, or the so-called ‘control test"'.
30
In ruling that respondents were employees of Expedition, the CA found all the elements of employer-
employee relationship to be present. As shown in the records, Expedition hired respondents as dump truck
drivers and paid them the amount of ₱620.00 per trip. The CA held that Expedition wielded the power to
dismiss respondents based on Expedition's admission that when the dispatch of drivers became irregular, it
tried to accommodate them by giving trips when the need arose. The control test was likewise established
because Expedition determined how, where, and when respondents would perform their tasks.

Expedition, however, proffers that the factual findings of the CA on this matter had no legal basis. It claims
that respondents were never hired but were merely engaged as drivers; that they worked on their own and
were not subjected to its control and supervision; that they were compensated based on output or number of
trips made in a day; that they selected their own garbage collectors, chose their own route and determined
the manner by which they would collect the garbage; and, that they performed their work at their own
pleasure without fear of being sanctioned if they chose not to report for work.

The Court finds Expedition's position untenable. First, as clearly admitted, respondents were engaged/hired
by Expedition as garbage truck drivers. Second, it is undeniable that respondents received compensation from
Expedition for the services that they rendered to the latter. The fact that respondents were paid on a per trip
basis is irrelevant in determining the existence of an employer-employee relationship because this was merely
the method of computing the proper compensation due to respondents Third, Expedition's power to dismiss
31

was apparent when work was withheld from respondents as a result of the termination of the contracts with
Quezon City and Caloocan City. Finally, Expedition has the power of control over respondents in the
performance of their work. It was held that "the power of control refers merely to the existence of the power
and not to the actual exercise thereof.'' As aptly observed by the CA, the agreements for the collection of
32

garbage were between Expedition and the various LGUs, and respondents needed the instruction and
supervision of Expedition to effectively perform their work in accordance with the stipulations of the
agreements.

Moreover, the trucks driven by respondents were owned by Expedition. There was an express instruction that
these trucks were to be exclusively used to collect and transport garbage. Respondents were mandated to
return the trucks to the premises of Expedition after the collection of garbage. Expedition determined the
clients to be served, the location where the garbage is to be collected and when it is to be collected. Indeed,
Expedition determined bow, where, and when respondents would perform their tasks.

Respondents were neither independent contractors nor project employees. The.re was no showing that
respondents have substantial capital or investment and that they were performing activities which were not
directly related to Expeditions business to be qualified as independent contractors. There was likewise no
33

written contract that can prove that respondents were project employees and that the duration and scope of
such employment were specified at the time respondents were engaged. Therefore, respondents should be
accorded the presumption of regular employment pursuant to Article 230 of the Labor Code which provides
that "employees who have rendered at least one year of service? whether such service is continuous or
broken x x x shall be considered [as] regular employees with respect to the activity in which they are
employed and their employment shall continue while such activity exists." Furthermore, the fact that
34

respondents were performing activities which were directly related to the business of Expedition confirms the
conclusion that respondents were indeed regular employees. 35

Having gained regular status, respondents were entitled to security of tenure and could only be dismissed for
just or authorized cause after they had been accorded due process. Thus, the queries: Were respondents
dismissed? Were they dismissed in accordance with law?

There was no illegal dismissal.

In illegal dismissal cases, the employer has the burden of proving that the termination was for a valid or
authorized cause. However, it is likewise incumbent upon an employee to first establish by substantial
evidence the fact of his dismissal from employment by positive and overt acts of an employer indicating the
36

intention to dismiss. It must also be stressed that the evidence must be clear, positive and convincing. Mere
37 38

ailegation is not proof or evidence.

39

In this case, there was no positive or direct evidence to substantiate respondents' claim that they were
dismissed from employment. Aside from mere assertions, the record is bereft of any indication that
respondents were barred from Expedition's premises. If at all, the evidence on record showed that Expedition
intended to give respondents new assignments as a result of the termination of the garbage hauling contracts
with Quezon City and Caloocan City where respondents were regularly dispatched. Despite the loss of some
clients, Expedition tried to accommodate respondents and offered to engage them in other garbage hauling
projects with other LGUs, a fact which respondents did not refute. However, instead of returning and waiting
for their next assignments, respondents instituted an illegal dismissal case against Expedition. Note that even
during the mandatory conciliation and mediation conference between the parties, Expedition manifested its
willingness to accept respondents back to work. Unfortunately, it was respondents who no longer wanted to
return to work. In fact, in their complaints, respondents prayed for the payment of separation pay instead of
reinstatement.

Here, there was no sufficient proof that respondents were actually laid off from work. Thus, the CA had no
basis in ruling that respondents' employment was illegally terminated since the fact of dismissal was not
adequately supported by substantial evidence. There being no dismissal, the status quo between respondents
and Expedition should be maintained. However, it cannot be denied that their relationship has alret1dy been
ruptured in that respondents are no longer willing to be reinstated anymore. Under the circumstances, the
Court finds that the grant of separation pay as a form of financial assistance is deemed equitable.

As a measure of social justice, the award of separation pay/financial assistance has been upheld in some
cases even if there is no finding of illegal dismissal. The Court, in Eastern Shipping Lines, Inc. v. Sedan, had
40 41

this to say:

x x x We are not unmindful of the rule that financial assistance is allowed only in instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character. Neither are we unmindful of this Court's pronouncements in Arc-Men Food Industries Corporation
v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where the Court ruled that when there is no dismissal to
speak of, an award of financial assistance is not in order.

But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the
words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social
justice [under] exceptional circumstances, and as an equitable concession. The instant case equally calls for
balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel
calls justice in its secular sense.

In a Manifestation submitted before the CA, Expedition expressed willingness to extend gratuitous assistance
42

to respondents and to pay them the amounts equivalent to the separation pay awarded to each respondent
in the April 30, 2015 NLRC Resolution. In view of this and taking into account respondents' long years of
service ranging from four to 15 years, the Court finds that the grant of separation pay at the rate of one-
half (Yi) month's salary for every year of service, as adjudged in the April 30, 2015 Resolution of the NLRC, is
proper.
WHEREFORE, the Petition for Review on Certiorari is PARTLY GRANTED. The assailed Decision dated March 3
l, 2016 and Resolution dated December 9, 2016 of the Court of Appeals in CA-G.R. SP No. 142007
are AFFIRMEDwith MODIFICATION that the awards of reinstatement, back wages, attorney's fees and legal
interest are DELETEDthere being no illegal dismissal. The award of separation pay, as a form of financial
assistance, in the National Labor Relations Commission's Resolution dated April 30, 2015 is REINSTATED.

SO ORDERED.