CASES OF JUSTICE

PERLAS-BERNABE
LABOR LAW AND SOCIAL LEGISLATION

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 LABOR LAW AND SOCIAL LEGISLATION
I. GENERAL PROVISIONS
A. Basic policy on labor
B. Construction in favor of labor
C. Constitutional and Civil Code provisions relating to Labor Law

II. PRE-EMPLOYMENT
A. Recruitment and placement of local and migrant workers (Labor Code and RA
8042, as amended by RA 10022
1. Illegal recruitment and other prohibited activities
a. Elements
b. Types of illegal recruitment
c. Illegal recruitment vs. estafa
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, – versus - ERLINDA RACHO Y SOMERA,
Accused-Appelant.
GR No. 227505, SECOND DIVISION, Oct 02, 2017
The elements of the offense are: (a) the offender has no valid license or authority to enable him to
lawfully engage in recruitment and placement of workers; (b) he undertakes any of the activities
within the meaning of "recruitment and placement" under Article 13(b) of the Labor Code or any
prohibited practices enumerated under Section 6 of RA 8042; and (c) he commits the same against
three or more persons, individually or as a group. Illegal recruitment when committed by a
syndicate or in large scale shall be considered an offense involving economic sabotage. Thus,
Racho's act of offering and promising to deploy the complainants to East Timor for work and
collecting placement fees from more than three persons, despite not being authorized to do so,
renders her liable for Illegal Recruitment in Large Scale.
FACTS:
During the period from November 2004 up to February 2005, accused-appellant Erlinda Racho
y Somera, without first obtaining a license or authority to recruit workers for overseas
employment from the POEA, recruited and promised employment/job placement and collected
fees from complainants as contract workers, without any license/authority from the POEA or by
the DOLE to recruit workers for overseas employment. The said accused by false pretenses or
fraudulent acts committed prior to or simultaneously with the commission of the fraud, to the
effect that she can recruit workers for overseas employment and deploy complainant as
construction worker in East Timor for a fee.
During trial, the prosecution presented the testimonies of Bella Diaz, a senior Labor and
Employment Officer from the POEA, and confirmed that Racho was neither licensed nor
authorized to recruit workers for employment abroad.
The RTC found Racho guilty beyond reasonable doubt of: (a) Illegal Recruitment in Large Scale;
and (b) six counts of Estafa. The CA affirmed in toto.
ISSUE:
1. Whether or not Racho is guilty of Illegal Recruitment in Large Scale and Estafa. (YES)

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RULING:
YES. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three
(3) or more persons conspiring or confederating with one another. It is deemed committed in
large scale if committed against three (3) or more persons individually or as a group.
The elements of the offense are: (a) the offender has no valid license or authority to enable him
to lawfully engage in recruitment and placement of workers; (b) he undertakes any of the
activities within the meaning of "recruitment and placement" under Article 13(b) of the Labor
Code or any prohibited practices enumerated under Section 6 of RA 8042; and (c) he commits
the same against three or more persons, individually or as a group. Illegal recruitment when
committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage.
In this case, all these elements are present. The POEA certification, as confirmed by Bella Diaz,
sufficiently established that Racho is neither licensed nor authorized to recruit workers for
overseas employment. Clearly, a person or entity engaged in recruitment and placement
activities without the requisite authority is engaged in illegal recruitment.
The definition of "recruitment and placement" under Article 13(b) of the Labor Code includes
promising or advertising for employment, locally or abroad, whether for profit or not, provided,
that any person or entity which, in any manner, offers or promises for a fee, employment to two
or more persons shall be deemed engaged in recruitment and placement.
Thus, Racho's act of offering and promising to deploy the complainants to East Timor for work
and collecting placement fees from more than three persons, despite not being authorized to do
so, renders her liable for Illegal Recruitment in Large Scale. In this relation, her defense of denial
cannot overcome complainants' categorical and positive testimonies against her.
Estafa by means of deceit is committed when these elements concur: (a) the accused used
fictitious name or false pretense that he possesses power, influence, qualifications, property,
credit, agency, business or imaginary transactions, or other similar deceits; (b) he used such
deceitful means prior to or simultaneous with the commission of the fraud; (c) the offended
party relied on such deceitful means to part with his money or property; and (d) the offended
party suffered damage.
It is well-established in jurisprudence that a person may be charged and convicted for both
illegal recruitment and estafa. The reason therefor is not hard to discern: illegal recruitment is
malum prohibitum, while estafa is mala in se. In the first, the criminal intent of the accused is
not necessary for conviction. In the second, such intent is imperative.
Records show that Racho defrauded complainants by representing that she can provide them
with jobs in East Timor even though she had no license to recruit workers for employment
abroad. She even collected the irrelevant documents and placement fees of varying amounts.
Although complainants were able to fly to East Timor, they remained unemployed there due to
Racho's failure to obtain their working visas. Undeniably, the prosecution was able to prove
beyond reasonable doubt that Racho committed Estafa against the five complainants.

2. Liability of local recruitment agency and foreign employer

a. Solidary liability
b. Theory of imputed knowledge

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 3. Termination of contract of migrant worker without just or valid cause
4. Ban on direct hiring
B. Employment of non-resident aliens

III. LABOR STANDARDS

A. Conditions of employment
1. Coverage
2. Hours of work
a. Normal hours of work; hours worked
b. Meal periods
c. Night-shift differential
d. Overtime work
e. Computation of additional compensation (rates only); facilities
vs. supplements
3. Weekly rest periods
4. Holidays
5. Service incentive leaves
6. Service charges
7. 13th month pay
B. Wages
1. Payment of wages

TOYOTA PASIG, INC., Petitioner, -versus- VILMA DE PERALTA, Respondent.

G.R. No. 213488, FIRST DIVISION, November 7, 2016, PERLAS-BERNABE, J.

In the case of Iran v. NLRC, the court ruled that this definition explicitly includes
commissions as part of wages. While commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a little more industry on the jobs particularly
assigned to them, still these commissions are direct remunerations for services rendered.

In this case, respondent's monetary claims, such as commissions, tax rebates for achieved
monthly targets, and success share/profit sharing, are given to her as incentives or forms of
encouragement in order for her to put extra effort in performing her duties as an ISE. Clearly,
such claims fall within the ambit of the general term "commissions" which in turn, fall within
the definition of wages pursuant to prevailing law and jurisprudence. Thus, respondent's
allegation of nonpayment of such monetary benefits places the burden on the employer, i.e.,
petitioner, to prove with a reasonable degree of certainty that it paid said benefits and that the
employee, i.e., respondent, actually received such payment or that the employee was not
entitled thereto. Indubitably, petitioner failed to discharge its afore-described burden.

FACTS:
Vilma De Peralta filed a complaint for illegal dismissal, illegal deduction, unpaid
commission, annual profit sharing, damages and attorney’s fees against Toyota Pasig,
Inc. (Toyota). De Peralta alleged that Toyota originally hired her as a cashier.
Subsequently, she was promoted as the Insurance Sales Executive.

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 However, things turned sour when Toyota allegedly dismissed the officials of
Toyota Shaw-Pasig Workers Union-Automotive Industry Workers Alliances (TSPWU-
AIWA), which include petitioner’s husband. Thereafter, Toyota started harassing De
Peralta for her husband’s active participation in the union, which resulted to the
issuance of a Notice to Explain accusing her of "having committed various acts" relative
to the processing of insurance of three (3) units as "outside transactions" and claiming
commissions therefor, instead of considering the said transactions as "new business
accounts" under the dealership's marketing department. Subsequently, she received a
Notice of Termination.

In their defense, Toyota maintained that respondent was dismissed from service
for just cause and with due process. Petitioner alleged that De Peralta manifested acts of
dishonesty which is tantamount to serious misconduct, a just cause for dismissal.

The Labor Arbiter dismissed the complaint for lack of merit. The NLRC affirmed
the ruling of the LA. However, with regard to respondent's other monetary claims, the
NLRC held petitioner liable for the same as it failed to present documents showing that
respondent is not entitled to said claims, as per her computation.

Dissatisfied, the parties separately elevated the case to the CA via petitions for
certiorari. In their respective petitions before the CA, respondent assailed the legality of
her dismissal, while petitioner questioned NLRC's award of the amount of P617,248.08
in respondent's favor. Eventually, their separate petitions were consolidated.

However, the appellate court dismissed the consolidated petitions and affirmed
the NLRC ruling in toto. Hence, this petition filed by the petitioner.

ISSUE

Whether or not such monetary claims do partake of nature of unpaid wages as well as
the labor standard benefits of employees as provided by law hence the employer has the
burden to prove payment.(YES)

RULING

Article 97 (f) of the Labor Code states that "wage" paid to any employee shall
mean the remuneration of earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis. The aforesaid provision explicitly includes commissions as part of wages.

In the case of Iran v. NLRC, the court ruled that this definition explicitly includes
commissions as part of wages. While commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a little more industry on the jobs particularly
assigned to them, still these commissions are direct remunerations for services rendered.

In this case, respondent's monetary claims, such as commissions, tax rebates for achieved
monthly targets, and success share/profit sharing, are given to her as incentives or forms

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 of encouragement in order for her to put extra effort in performing her duties as an ISE.
Clearly, such claims fall within the ambit of the general term "commissions" which in
turn, fall within the definition of wages pursuant to prevailing law and jurisprudence.
Thus, respondent's allegation of nonpayment of such monetary benefits places the
burden on the employer, i.e., petitioner, to prove with a reasonable degree of certainty
that it paid said benefits and that the employee, i.e., respondent, actually received such
payment or that the employee was not entitled thereto.

Indubitably, petitioner failed to discharge its afore-described burden. Hence, it is bound

to pay the monetary benefits claimed by respondent. As aptly pointed out by the NLRC,
since respondent already earned these monetary benefits, she must promptly receive
the same, notwithstanding the fact that she was legally terminated from employment.

2. Prohibitions regarding wages

3. Wage distortion; concept
4. Non-diminution of benefits
C. Leaves
1. Service incentive leave

GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN vs.
FILIPINAS A. LAVANDERA

G.R. No. 177845, FIRST DIVISION, August 20, 2014, PERLAS-BERNABE, J

The Court, in the case of Elegir v. Philippine Airlines, Inc., has recently affirmed that "one-half
(1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the
13th month pay and the remaining 5 days for [SIL]." The Court sees no reason to depart from this
interpretation. GCHS’ argument therefore that the 5 days SIL should be likewise pro-rated to their
1/12 equivalent must fail.

FACTS:

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher.
On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment
of service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s
fees against GCHS6 and/or its principal,7 Dr. James Tan. She alleged that on May 11, 2001, she
was informed that her services were to be terminated effective May 31, 2001, pursuant to GCHS’
retirement plan which gives the school the option to retire a teacher who has rendered at least
20 years of service, regardless of age, with a retirement pay of one-half (½) month for every
year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She
pleaded with GCHS to allow her to continue teaching but her services were terminated, contrary
to the provisions of Republic Act No. (RA) 7641, otherwise known as the "Retirement Pay Law.

In a Decision, the Labor Arbiter dismissed the illegal dismissal complaint for lack of merit.
Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be
deficient vis-à -vis those provided under RA 7641, and, accordingly, awarded Filipinas retirement pay
differentials based on her latest salary. Dissatisfied, GCHS filed an appeal before the NLRC

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which set aside the LA’s award. The case was elevated to the CA which affirmed with
modification the NLRC’s Decision. It held that the Court, in the case of Capitol Wireless, Inc. v.
Sec. Confesor, has simplified the computation of "one-half month salary" by equating it to"22.5
days" which is "arrived at after adding 15 days plus 2.5 days representing one-twelfth of the
13th month pay, plus 5 days of [SIL]."

ISSUE: Whether or not the use of "22.5 days" as multiplier in computing the retirement pay
differentials of Filipinas is proper. (YES)

HELD:

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code,
providing for the rules on retirement pay to qualified private sector employees in the absence of
any retirement plan in the establishment. The said lawstates that "an employee’s retirement
benefits under any collective bargaining [agreement (CBA)] and other agreements shall not be
less than those provided" under the same – that is, at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole year – and
that "[u]nless the parties provide for broader inclusions, the term one-half (1/2) month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves."

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement
providing for retirement benefits to employees, or (b) there is a CBA or other applicable
agreement providing for retirement benefits but it is below the requirement set by law. Verily,
the determining factor in choosing which retirement scheme to apply is still superiority in terms
of benefits provided.

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which
gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of
age, with a retirement pay of one-half (1/2) month for every year of service. Considering,
however, that GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of
her 13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA
correctly ruled that Filipinas’ retirement benefits should be computed in accordance with
Article 287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement
scheme. They differ, however, in the resulting benefit differentials due to divergent
interpretations of the term "one-half (1/2) month salary" as used under the law.

The Court, in the case of Elegir v. Philippine Airlines, Inc., has recently affirmed that "one-half (1/2)
month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th
month pay and the remaining 5 days for [SIL]." The Court sees no reason to depart from this
interpretation. GCHS’ argument therefore that the 5 days SIL should be likewise pro-rated to their
1/12 equivalent must fail. The foregoing rules are, thus, clear that the whole 5 days of SIL are
included in the computation of a retiring employees’ pay, as correctly ruled by the CA.

2. Maternity leave
3. Paternity leave
4. Solo parent leave

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 5. Leave benefits for women workers under RA 9710 and RA 9262
D. Special groups of employees
1. Women
a. Discrimination
b. Stipulation against marriage
c. Prohibited acts
d. Sexual harassment (RA 7877)
2. Minors (RA 7610, as amended by RA 9231)
3. Kasambahay (RA 10361)
4. Homeworkers
5. Night workers
6. Apprentices and learners
7. Persons with Disabilities
a. Discrimination
b. Incentives for employers

IV. SOCIAL WELFARE LEGISLATION

A. SSS Law (RA 8282)

JORGE B. NAVARRA, Petitioner, – versus - PEOPLE OF THE PHILIPPINES, Respondent. G.R.

No. 224943, FIRST DIVISION, March 20, 2017

Prompt remittance of SSS contributions is mandatory. Any divergence from this rule subjects the
employer not only to monetary sanctions but also to criminal prosecution. If the act or omission be
committed by an association, partnership, corporation or any other institutions, its managing
head, directors or partners shall be liable to the penalties for the offense.

In this case, FENICS failed to remit its employees’ SSS contributions despite withholding such
amounts from their respective salaries. Therefore, Navarra’s conviction was correct.

FACTS:
An information was filed before the RTC charging Navarra of violation of Sec. 22 (a) in relation
to Sec. 28 (h) and (f) of RA 8282 for failure to remit the SSS contributions of the employees of
FENICS from July 1997 to June 2000. From 1995 to 2000, Jorge Navarra served as the President
and Chairman of the Board of Directors of FENICS.Despite numerous demands, FENICS failed to
pay its delinquencies, thus, SSS filed an Affidavit-Complaint against Navarra and FENICS.

Pending preliminary investigation proceedings, Navarra sent a letter to SSS, offering to

pay in installments FENICS’ delinquent remittances. However, he was not able to make good his
obligation. On trial, Navarra sent another letter to SSS, proposing a restructuring of FENICS’
account, but the SSS rejected such proposal. In his defense, Navarra averred that he never has
custody of the employees’ contributions, as it was the Human Resources Department that was
tasked to handle such matter. Further, he asserted that during the period when the alleged
delinquencies were incurred, FENICS had already shut down.

The RTC found Navarra guilty beyond reasonable doubt and sentenced him to suffer the
penalty of imprisonment and ordered him to pay the SSS the unpaid obligation plus interests. It

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did not give credence to Navarra’s claim that FENICS had already shut down considering that it
was not raised immediately from the moment the SSS sent its first demand letter to FENICS and
that the same is inconsistent with the letters Navarra himself made in an attempt to amicably
settle FENICS’s SSS delinquencies.Navarra appealed to the CA arguing that he cannot be held
liable for violations of Sec. 28 (h) of RA 8282 since under this provision, it is the employer, i.e.,
FENICS, that should be charged. The CA affirmed Navarra’s conviction and held that since
FENICS is a corporation, its failure to remit the SSS contributions of its employees subjects its
officers, such as Navarra, to liability, especially since FENICS had already been dissolved.

ISSUE:
1. Whether or not Navarra’s conviction for violation of Sec. 22 (a), in relation to Sec. 28 (h)
and (f), of RA 8282 was correct. (YES)

RULING:
Yes. Prompt remittance of SSS contributions is mandatory. Any divergence from this rule
subjects the employer not only to monetary sanctions but also to criminal prosecution if the
employer fails to: (a) register its employees with the SSS; (b) deduct monthly contributions from the
salaries/wages of its employees; or (c) remit to the SSS its employees’ SSS contributions and/or loan
payments after deducting the same from their respective salaries/wages.

In this regard, Sec. 28 (f) of RA 8282 explicitly provides that “if the act or omission is
penalized by this Act be committed by an association, partnership, corporation or any other
institutions, its managing head, directors or partners shall be liable to the penalties provided in
this Act for the offense.”

In this case, FENICS failed to remit its employees’ SSS contributions despite withholding
such amounts from their respective salaries. Therefore, Navarra’s conviction was correct.

1. Coverage and exclusions

2. Dependents and beneficiaries
3. Benefits
B. GSIS Law (RA 8291)
1. Coverage and exclusions
2. Dependents and beneficiaries
3. Benefits
C. Disability and death benefits
1. Labor Code
2. POEA-Standard Employment Contract

INTER-ORIENT MARITIME, INCORPORATED vs. CRISTINA CANDAVA

(G.R. No. 201251, SECOND DIVISION, June 26, 2013, PERLAS-BERNABE, J.)

An injury or accident is said to arise "in the course of employment" when it takes place within the
period of employment, at a place where the employee reasonably may be, and while he is fulfilling his
duties or is engaged in doing something incidental thereto. A meticulous perusal of the records reveals
that Joselito contracted his illness in the course of employment. It cannot also be denied that

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the same was aggravated during the same period. Thus, there was a clear causal connection
between such illness and his eventual death, making his death compensable.

FACTS:
In January 2002, petitioner Inter-Orient Maritime Incorporated (Inter-Orient) hired Joselito C.
Candava (Joselito) as an able-bodied seaman for its foreign principal, Tankoil Carriers Limited
(Tankoil). Joselito was then deployed to M/T Demetra for a contract period of nine (9) months.
Despite expiration of his contract period on October 28, 2002, Joselito continued to work aboard
the vessel due to the unavailability of a replacement and such work extension lasted until
February 2003.

On February 13, 2003, he complained of significant pain in the abdominal region and was
rushed to a hospital. Joselito was diagnosed to be suffering from "direct inguinal hernia
strangulated right" and "acute appendicitis." The doctors further discovered that the tumor in
Joselito’s right inguinal canal "corresponded to a tumor formation dependent on the right
testicle" which appeared oncogenic. As a result thereof, Joselito was repatriated to Manila.

On March 28, 2003, Joselito filed a complaint for recovery of sick wages and reimbursement of
medical expenses before the NLRC – National Capital Region (NLRC-NCR). However, on even date,
Joselito sought for its Dismissal in consideration of the sum of ₱29,813.04 and releasing Tankoil and
Inter-Orient from any claim arising from the appendicitis and inguinal hernia he suffered.

A month later, Joselito was diagnosed to have testicular tumor. Thus, on August 11, 2003,
Joselito filed another complaint for medical benefits before the NLRC – San Pablo City. Similarly,
on even date, Joselito sought for the dismissal of his complaint in consideration of the amount of
₱77,000.00 and executed a Receipt and Release, releasing Tankoil and Inter-Orient from any
claim arising from his employment. In both complaints, orders of dismissal were issued.

On October 9, 2003, Joselito passed away. Respondent Cristina sent a Letter dated December 17,
2003 to petitioner Inter-Orient, demanding payment of death benefits but her pleas fell on deaf
ears. As such, Cristina filed a complaint for death and other monetary benefits against
petitioners before the NLRC-NCR.

ISSUE:
Whether Joselito’s death is compensable as to entitle Cristina to claim death benefits? (YES)

RULING:
The prevailing rule under the 1996 POEA-SEC was that the illness leading to the eventual death
of seafarer need not be shown to be work-related in order to be compensable, but must be
proven to have been contracted during the term of the contract. Neither is it required that there
be proof that the working conditions increased the risk of contracting the disease or illness. An
injury or accident is said to arise "in the course of employment" when it takes place within the
period of employment, at a place where the employee reasonably may be, and while he is
fulfilling his duties or is engaged in doing something incidental thereto. A meticulous perusal of
the records reveals that Joselito contracted his illness in the course of employment. It cannot
also be denied that the same was aggravated during the same period. Thus, there was a clear
causal connection between such illness and his eventual death, making his death compensable.

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Verily, Joselito complained of significant pain in the abdominal region while aboard M/T
Demetra and during the extended period of his employment. Upon undergoing different medical
procedures, the doctors discovered that the tumor in Joselito’s right inguinal canal
"corresponded to a tumor formation dependent on the right testicle."

Moreover, Joselito’s Death Certificate stated respiratory failure as the immediate cause of his
death, with pulmonary metastasis as antecedent cause. The underlying cause for his death was
germ cell tumor which may be found, among others, in the testes and the center back wall of the
abdominal cavity. The World Health Organization defines an underlying cause as the disease or
injury that initiated the train of events leading directly to death, or circumstances of the
accident or violence that produced the fatal injury. Perforce, there existed a clear causal
connection between Joselito’s illness which he contracted during employment and his eventual
death.

Neither may the execution of release documents in petitioners’ favor detract from the
compensability of Joselito’s death. While the documents appear to have been executed
voluntarily, they were the result of a predesignated scheme to evade payment of disability
benefits due to Joselito, whose medical condition gradually regressed despite the company
designated physician’s declaration that he was fit to work.

Anent the release documents that Joselito executed in favor of petitioners, records show that
Joselito’s two (2) previous complaints were actually "walk-in settlements," thus explaining his
actions of filing such complaints and eventual motions to dismiss, as well as the execution of
release documents, all on the same day.

The foregoing facts, coupled with Joselito’s failing health, negate his voluntariness in executing
his complaints, motions to dismiss, and release documents and give life to the truism that
"necessitous men are not, truly speaking, free men; but to answer a present emergency, will
submit to any terms that the crafty may impose upon them." Besides, as a rule, quitclaims,
waivers, or releases are looked upon with disfavor and are largely ineffective to bar recovery of
the full measure of a worker’s rights, and the acceptance of benefits therefrom does not amount
to estoppel.

MARTIN K. AYUNGO vs.

BEAMKO SHIPMANAGEMENT CORPORATION, EAGLE MARITIME RAK FZE, AND JUANITO G.
SALVATIERRA, JR.
(G.R. No. 203161, SECOND DIVISION, February 23, 2014, PERLAS-BERNABE, J.)

Not only must the seafarer establish that his injury or illness rendered him permanently or
partially disabled, it is equally pertinent that he shows a causal connection between such injury or
illness and the work for which he had been contracted.

As for Ayungo’s Hypertension, suffice it to state that he did not disclose that he had been suffering
from the same and/or had been actually taking medications therefor during his pre-employment
medical examination.

FACTS:

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Ayungo entered into a twelve (12) month Contract of Employment with Beamko on behalf of its
foreign principal, Eagle Maritime, whereby he was engaged as Chief Engineer for the vessel M/V
World Star.

Prior to his embarkation, Ayungo underwent a pre-employment medical examination in which

he disclosed that he had Diabetes Mellitus but when asked if he suffered from Hypertension, he
answered in the negative. With these representations, Ayungo was cleared to work and declared
“fit for sea duty” by the company physician.

While on duty, Ayungo suddenly lost his sense of hearing. He continued to work as the vessel
was about to reach the port of Yokohama, Japan. There, he was confined and was eventually
repatriated to the Philippines for further medical treatment. The company physician reported
that Ayungo’s hypertension and diabetes are both pre-existing and not work-related.

Unconvinced, Ayungo consulted another physician, and he was declared to be suffering from
hypertension, diabetes and coronary heart disease which render him unfit for work, the status
thereof being that of a permanent total disability. In this regard, Ayungo filed before the NLRC a
complaint for the payment of permanent total disability benefits, sickness allowance,
reimbursement of medical expenses, damages and attorney’s fees against the respondents. He
alleged that his hypertension was aggravated by the conditions of his employment and his
employer assumed the risk of liability arising from his weakened condition when it employed
him despite his declaration during his medical exam that he has diabetes.

ISSUE:
Whether or not Ayungo is entitled to disability benefits? (NO)

RULING:
Not only must the seafarer establish that his injury or illness rendered him permanently or
partially disabled, it is equally pertinent that he shows a causal connection between such injury
or illness and the work for which he had been contracted. Indeed, despite the pre-existing
nature of his Diabetes Mellitus and the concomitant disputable presumption that it is work-
related, Ayungo still had the burden to prove the causal link between his Diabetes Mellitus and
his duties as Chief Engineer.
As for Ayungo’s Hypertension, suffice it to state that he did not disclose that he had been
suffering from the same and/or had been actually taking medications therefor during his pre-
employment medical examination. As the records would show, the existence of Ayungo’s
Hypertension was only revealed after his repatriation, as reflected in the Medical Report and
reinforced by subsequent medical reports. To the Court’s mind, Ayungo’s non-disclosure
constitutes fraudulent misrepresentation which, pursuant to Section 20(E) of the 2000 POEA-
SEC, disqualifies him from claiming any disability benefits from his employer.

INC SHIPMANAGEMENT, INC., CAPTAIN SIGFREDO E. MONTERROYO AND/OR

INTERORIENT NAVIGATION LIMITED vs. ALEXANDER L. MORADAS (G.R. No. 178564,
SECOND DIVISION, January 15, 2014, PERLAS-BERNABE, J.)

The employer may be exempt from liability if he can successfully prove that the cause of the seaman’s
injury was directly attributable to his deliberate or willful act as provided under Section 20 (D)

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thereof. Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim
that the Moradas’s injury was caused by his willful act with the requisite quantum of evidence.

FACTS:
Moradas was employed as wiper for the vessel MV Commander by petitioner INC
Shipmanagement, Inc. for its principal, Interorient Navigation. Moradas claimed that while he
was disposing of the garbage in the incinerator room of the vessel, certain chemicals splashed
all over his body because of an explosion. As a result, he was diagnosed to have sustained
thermal burns for which he underwent debridement. The attending physician reported that the
respondent’s thermal burns were healing well and that they were estimated to fully heal within
a period of 3 to 4 months.

Claiming that the burns rendered him permanently incapable of working again as a seaman,
Moradas demanded for the payment of his full disability benefits under Section 20 (B) in
relation to Sections 30 and 30-A of POEA-SEC, which petitioners refused to heed. Thus, Moradas
filed a complaint against petitioners for the same, seeking as well moral and exemplary
damages, including attorney’s fees. Petitioners denied respondent’s claims, contending that his
injury was self-inflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC.

The LA dismissed Moradas's complaint and gave more credence to the corroborating
testimonies of the petitioners’ witnesses. This decision was sustained by the NLRC. On appeal,
the CA rendered that grave abuse of discretion tainted the NLRC ruling. Hence, this petition.

ISSUE:
Whether or not the CA erred in finding that the NLRC gravely abused its discretion when it
denied respondent’s claim for disability benefits? (YES)

RULING:
The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and benefits
for injury or illness was that an employer shall be liable for the injury or illness suffered by a
seafarer during the term of his contract. There was no need to show that such injury was work-
related except that it must be proven to have been contracted during the term of the contract.
The rule, however, is not absolute and the employer may be exempt from liability if he can
successfully prove that the cause of the seaman’s injury was directly attributable to his
deliberate or willful act as provided under Section 20 (D) thereof. Hence, the onus probandi falls
on the petitioners herein to establish or substantiate their claim that the Moradas’s injury was
caused by his willful act with the requisite quantum of evidence.

In view of the above-discussed considerations and after a judicious scrutiny of the facts on
record, the Court holds that the CA erred in attributing grave abuse of discretion on the part of
the NLRC in affirming the LA’s dismissal of respondent’s complaint. This is based on the Court’s
observation that the NLRC had cogent legal bases to conclude that petitioners have successfully
discharged the burden of proving by substantial evidence that respondent’s injury was directly
attributable to himself.

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 ATTY. FORTUNATO PAGDANGANAN, JR., ATTY. ABIGAIL D. SUAREZ, and EUGENIO A.
VILLANUEVA vs. FLORENTINO P. SARMIENTO G.R. No. 206555, FIRST DIVISION, September
17, 2014, PERLAS-BERNABE, J

The rule is that when a party is represented by counsel in an action in court, notices of all kinds
including motions, pleadings and orders must be served on the counsel. And notice to such counsel
is notice to the client. Notice sent to counsel of record is binding upon the client and the neglect or
failure of counsel to inform him of an adverse judgment resulting in the loss of his right to appeal is
not a ground for setting aside a judgment, valid and regular on its face.

FACTS:
On May 8, 2008, Sea Gem Maritime International, Inc., on behalf of its foreign principal, Corinthian
Maritime S. A., hired Sarmiento as Chief Mate of the vessel M/T Intuitionfor an initial period of seven
(7) months. Upon the expiration of the contract, the same was extended for another two
(2) months; thereafter, Sarmiento was transferred to the vessel M/T Setubal Iwhere he was also
assigned as its Chief Mate.

While M/T Setubal I was docked at Nigeria, Sarmiento felt a loss of strength in his left arm and
fingers. Upon examination at the Adeiza Clinic in Lagos, Nigeria, he was diagnosed to have Mild
Cardiovascular Stroke, Disused Atrophy of the Left Hand, and Hypertension, for which his
repatriation was recommended. Hence, Sarmiento was repatriated to the Philippines and
referred to the MRI Diagnosis Center. Subsequently Sarmiento filed a complaint against herein
petitioners for the collection of: (a) his unpaid salaries; (b) disability benefits; (c) sickness
allowance; and (d) reimbursement of his medical expenses.
The Labor Arbiter granted Sarmiento’s money claims. Petitioner appealed to the NLRC. Pending
petitioners’ appeal, Atty. Jay T. Borromeo entered his appearance as counsel for Sarmiento and
simultaneously filed pleadings on his behalf. The NLRC then rendered its Decision affirming LA’s
Ruling with modification. Dissatisfied, Sarmiento moved for reconsideration which the NLRC
denied in a Resolution dated December, 30, 2010 (December 30, 2010 Resolution). On January
12, 2011, Atty. Borromeo was duly notified of the said December 30, 2010 Resolution, as
evidenced by the registry return receipt issued by the Bureau of Posts.

Subsequently, Sarmiento, personally and on his own behalf, filed a petition for certiorari before
the CA, imputing grave abuse of discretion on the part of the NLRC in modifying the LA Decision
by absolving petitioners from liability. In the said petition, Sarmiento claimed that he was
personally notified of the December 30, 2010 Resolution only on February 10, 2011, thus, it was
seasonably filed.

In a Decision, the CA did not address the issue raised by petitioners regarding the timeliness of
the filing of Sarmiento’s CA petition. Instead, it ascribed grave abuse of discretion on the part of
the NLRC and thereby ordered the reinstatement of the LA Decision, effectively finding
petitioners jointly and severally liable for Sarmiento’s money claims.

ISSUE: Whether or not the CA erred when it found grave abuse of discretion on the part of the
NLRC in absolving petitioners from liability in connection with Sarmiento’s money claims
notwithstanding the fact that Sarmiento’s petition challenging the NLRC Decision was filed out
of time. (YES)

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HELD:
In the present case, and as correctly pointed out by petitioners, the 60-day reglementary period
for the purpose of filing a petition for certiorari should be reckoned from January 12, 2011, the
date Atty. Borromeo, Sarmiento’s then counsel of record, had the notice of the December 30,
2010 Resolution, and not February 10, 2011, the date when Sarmiento was personally notified
thereof. This is inconsonance with the well-settled rule that if a litigant is represented by
counsel, notices of all kinds, including court orders and decisions, must be served on said
counsel, and notice to him is considered notice to his client. As declared in the case of GCP-
Manny Transport Services, Inc. v. Hon. Principe:

The rule is that when a party is represented by counsel in an action in court, notices of all kinds
including motions, pleadings and orders must be served on the counsel. And notice to such
counsel is notice to the client. Notice sent to counsel of record is binding upon the client and the
neglect or failure of counsel to inform him of an adverse judgment resulting in the loss of his
right to appeal is not a ground for setting aside a judgment, valid and regular on its face.

ANITA N. CANUEL, for herself and on behalf of her minor children, namely: CHARMAINE,
CHARLENE, and CHARL SMITH, all surnamed CANUEL vs.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE, and KOTANI
SHIPMANAGEMENT LIMITED
G.R. No. 190161, FIRST DIVISION, October 13, 2014, PERLAS-BERNABE, J

That Nancing was suffering from lung cancer, which was found to have been pre-existing, hardly
impels a contrary conclusion since – as the LA herein earlier noted – the February 20, 2007 injury
actually led to the deterioration of his condition. As held in More Maritime Agencies, Inc. v. NLRC,
"[i]f the injury is the proximate cause of [the seafarer’s] death or disability for which compensation
is sought, [his] previous physical condition x x x is unimportant and recovery may be had for injury
independent of any pre-existing weakness or disease," viz.: “Compensability x x x does not depend
on whether the injury or disease was pre-existing at the time of the employment but rather if the
disease or injury is work-related or aggravated his condition xxx”

[Also] the Court t[ook the] opportunity to clarify that while the general rule is that the seafarer’s
death should occur during the term of his employment, the seafarer’s death occurring after the
termination of his employment due to his medical repatriation on account of a work-related injury
or illness constitutes an exception thereto.

FACTS:
Nancing R. Canuel (Nancing) was hired by respondent Magsaysay Maritime Corporation
(Magsaysay) as Third Assistant Engineer for its foreign principal, respondent Kotani Ship
management Limited (Kotani), to be deployed on board the vessel M/V North Sea (vessel).
However, Nancing figured in an accident while in the performance of his duties on board the
vessel, and, as a result, injured the right side of his body. He was brought to Shanghai Seamen’s
Hospital in Shanghai, China where he was diagnosed to have suffered "bilateral closed traumatic
hemothorax." He was then medically repatriated and immediately admitted to the Manila
Doctor’s Hospital under the care of a team of medical doctors led by Dr. Benigno A. Agbayani, Jr.,

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Magsaysay’s Medical Coordinator. Due to his worsening condition, Nancing was placed at the
hospital’s intensive care unit but eventually died. Nancing’s death certificate indicated the
immediate cause of his death as acute respiratory failure, with lung metastasis and r/o bone
cancer as antecedent cause and underlying cause, respectively.

Nancing’s widow, Anita, for herself and on behalf of their children, filed a complaint against
respondents before the National Labor Relations Commission (NLRC) seeking to recover death
benefits, death compensation of minor children, burial allowance, damages, and attorney’s fees.
In their defense, respondents denied any liability and contended that the said illness is not
work-related per advise of their company doctor, Dr. Marie Cherry Lyn Samson- Fernando,
hence, not compensable.

In a Decision, the Labor Arbiter (LA) ruled in favor of petitioners which was affirmed by the
NLRC but reversed by the CA. Hence, the present petition.

ISSUE: Whether or not the death of Nancing is compensable despite his death occurring after
his medical repatriation (YES)

HELD:
The provisions currently governing the entitlement of the seafarer’s beneficiaries to death benefits
are found in Section 20 of the 2000 POEASEC. Part A (1) thereof states that the seafarer’s
beneficiaries may successfully claim death benefits if they are able to establish that the seafarer’s
death is (a) work-related, and (b) had occurred during the term of his employment contract.

Integral as they are for a valid claim for death compensation, the Court examines this case
according to the above-stated dual requirements.

First Requirement: The Seafarer’s Death Should Be Work-Related.

As the records show, Nancing suffered a work-related injury within the term of his employment
contract when he figured in an accident while performing his duties as Third Assistant Engineer
at cylinder number 7 of the vessel on February 20, 2007. The foregoing circumstances aptly fit
the legal attribution of the phrase "arising out of and in the course of employment" which the
Court, in the early case of Iloilo Dock & Engineering Co. v. Workmen’s Compensation
Commission, pronounced as follows:

The two components of the coverage formula – "arising out of" and "in the course of employment"
– are said to be separate tests which must be independently satisfied; however, it should not be
forgotten that the basic concept of compensation coverage is unitary, not dual, and is best
expressed in the word, "work-connection," because an uncompromising insistence on an
independent application of each of the two portions of the test can, in certain cases, exclude
clearly work-connected injuries. The words "arising out of" refer to the origin or cause of the
accident, and are descriptive of its character, while the words "in the course of" refer to the
time, place, and circumstances under which the accident takes place.

As a matter of general proposition, an injury or accident is said to arise "in the course of
employment" when it takes place within the period of the employment, at a place where the

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employee reasonably may be, and while he is fulfilling his duties or is engaged in doing
something incidental thereto.
That Nancing was suffering from lung cancer, which was found to have been pre-existing, hardly
impels a contrary conclusion since – as the LA herein earlier noted – the February 20, 2007
injury actually led to the deterioration of his condition. As held in More Maritime Agencies, Inc.
v. NLRC, "[i]f the injury is the proximate cause of [the seafarer’s] death or disability for which
compensation is sought, [his] previous physical condition x x x is unimportant and recovery may
be had for injury independent of any pre-existing weakness or disease," viz.: “Compensability x x
x does not depend on whether the injury or disease was pre-existing at the time of the
employment but rather if the disease or injury is work-related or aggravated his condition xxx”

Second Requirement: The Seafarer’s Death Should Occur During The Term Of Employment.

With respect to the second requirement for death compensability, the Court takes this
opportunity to clarify that while the general rule is that the seafarer’s death should occur during
the term of his employment, the seafarer’s death occurring after the termination of his
employment due to his medical repatriation on account of a work-related injury or illness
constitutes an exception thereto. This is based on a liberal construction of the 2000 POEA-SEC
as impelled by the plight of the bereaved heirs who stand to be deprived of a just and reasonable
compensation for the seafarer’s death, notwithstanding its evident work-connection. The
present petition is a case in point.

CONCHITA J. RACELIS vs. UNITED PHILIPPINE LINES, INC. and/or HOLLAND AMERICA
LINES, INC.,* and FERNANDO T. LISING
G.R. No. 198408, FIRST DIVISION, November 12, 2014, PERLAS-BERNABE, J.

Among other basic provisions, the POEA-SEC stipulates that the beneficiaries of a deceased seafarer
may be able to claim death benefits for as long as they are able to establish that (a) the seafarer’s death
is work-related, and (b) such death had occurred during the term of his employment contract.

While it is true that Brainstem (pontine) Cavernous Malformation is not listed as an occupational
disease under Section 32-A of the 2000 POEA-SEC, Section 20 (B) (4) of the same explicitly provides
that “[t]he liabilities of the employer when the seafarer suffers work-related injury or illness
during the term of his contract are as follows: (t)hose illnesses not listed in Section 32 of this
Contract are disputably presumed as work related.” Also, while the general rule is that the
seafarer’s death should occur during the term of his employment, the seafarer’s death occurring
after the termination of his employment due to his medical repatriation on account of a work-
related injury or illness constitutes an exception thereto.

FACTS:

Rodolfo L. Racelis was recruited and hired by respondent United Philippine Lines, Inc. for its
principal, respondent Holland America Lines, Inc. to serve as "Demi Chef De Partie" on board the
vessel MS Prinsendam. In the course of his last employment contract, Rodolfo experienced severe
pain in his ears and high blood pressure causing him to collapse while in the performance of his
duties. He consulted a doctor in Argentina and was medically repatriated on for further medical

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treatment. Upon arrival in Manila, he was immediately brought to Medical City, Pasig City,
where he was seen by a company-designated physician, Dr. Gerardo Legaspi, and was diagnosed
to be suffering from Brainstem (pontine) Cavernous Malformation. He underwent surgery twice
for the said ailment but developed complications and died.

Rodolfo’s surviving spouse, herein petitioner, sought to claim death benefits pursuant to the
International Transport Workers’ Federation- Collective Bargaining Agreement (ITWF-CBA), of
which her husband was a member, but to no avail. Consequently, she filed a Complaint for death
benefits, burial assistance, moral and exemplary damages, and attorney’s fees against herein
respondents before the NLRC. In their defense, respondents maintained that petitioner is not
entitled to death benefits under Section 20 (A) (1) of the 2000 Philippine Overseas Employment
Administration Standard Employment Contract (2000 POEA-SEC). They averred that Rodolfo’s
illness, i.e., Brainstem (pontine) Cavernous Malformation, was not work-related, considering
that said illness is not listed as an occupational disease under the 2000 POEASEC. They likewise
pointed out that Rodolfo’s death did not occur during the term of his employment contract in
view of his prior repatriation, hence, was non-compensable.

In a Decision, the Labor Arbiter ruled in favor of petitioner which was affirmed by the NLRC.
However, the same was reversed by the CA hence, the present petition.

ISSUE: Whether or not petitioner is entitled to a grant of death benefits (YES)

HELD:

Deemed incorporated in every seafarer’s employment contract, denominated as the POEA-SEC

or the Philippine Overseas Employment Administration-Standard Employment Contract, is a set
of standard provisions determined and implemented by the POEA, called the "Standard Terms
and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels,"
which are considered to be the minimum requirements acceptable to the government for the
employment of Filipino seafarers on board foreign ocean-going vessels.
Among other basic provisions, the POEA-SEC stipulates that the beneficiaries of a deceased
seafarer may be able to claim death benefits for as long as they are able to establish that (a) the
seafarer’s death is work-related, and (b) such death had occurred during the term of his
employment contract.

After an assiduous examination of the records, and as will be expounded on below, the Court,
similar to both the LA and the NLRC, finds that the above-stated requirements positively attend
petitioner’s claim for death benefits.

I. The Death of the Seafarer is Work-Related.

Case law explains that "[t]he words ‘arising out of’ refer to the origin or cause of the accident,
and are descriptive of its character, while the words ‘in the course of’ refer to the time, place,
and circumstances under which the accident takes place. As a matter of general proposition, an
injury or accident is said to arise ‘in the course of employment’ when it takes place within the
period of the employment, at a place where the employee reasonably may be, and while he is
fulfilling his duties or is engaged in doing something incidental thereto."

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In other words, the 2000 POEA-SEC "has created a disputable presumption in favor of
compensability [,] saying that those illnesses not listed in Section 32 are disputably presumed as
work-related. This means that even if the illness is not listed under Section 32-Aof the POEA-SEC
as an occupational disease or illness, it will still be presumed as work-related, and it becomes
incumbent on the employer to overcome the presumption." This presumption should be
overturned only when the employer’s refutation is found to be supported by substantial
evidence, which, as traditionally defined is "such relevant evidence as a reasonable mind might
accept as sufficient to support a conclusion."

II. The Seafarer’s Death Occurred During the Term of Employment.

While it is true that a medical repatriation has the effect of terminating the seafarer’s contract of
employment, it is, however, enough that the work-related illness, which eventually becomes the
proximate cause of death, occurred while the contract was effective for recovery to be had. A
further exposition is apropos.

With respect to the second requirement for death compensability, the Court takes this
opportunity to clarify that while the general rule is that the seafarer’s death should occur during
the term of his employment, the seafarer’s death occurring after the termination of his
employment due to his medical repatriation on account of a work-related injury or illness
constitutes an exception thereto. This is based on a liberal construction of the 2000 POEA-SEC
as impelled by the plight of the bereaved heirs who stand to be deprived of a just and reasonable
compensation for the seafarer’s death, notwithstanding its evident work-connection.

BAHIA SHIPPING SERVICES, INC., FRED OLSEN CRUISE LINE, and MS. CYNTHIA C.
MENDOZA v. JOEL P. HIPE, JR.
G.R. No. 204699, FIRST DIVISION, November 12, 2014, PERLAS-BERNABE, J.

Two (2) elements must concur for an injury or illness of a seafarer to be compensable: (a) the
injury or illness must be work-related; and (b) that the work-related injury or illness must have
existed during the term of the seafarer’s employment contract.

In the present case, Hipe was made to continuously perform work aboard the vessel beyond his six-
month contract without the benefit of a formal contract. Consequently, the injury suffered by Hipe
was a work-related injury and his eventual repatriation on August 5, 2008, for which he was
treated/rehabilitated can only be considered as a medical repatriation.

FACTS:

Hipe had been continuously hired by petitioner Bahia Shipping Services, Inc. for its foreign
principal, Fred Olsen Cruise Line and deployed to the latter’s various vessels under seven (7)
consecutive contracts. He was last employed by Bahia as plumber for the vessel M/S Braemar
(vessel) under a six-month contract.

Despite the lapse of the six-month contract, Hipe continued to work aboard the vessel without
any new contract. In the course of the performance of his duties as plumber, he sustained a back
injury while carrying heavy equipment for use in his plumbing job. He was advised to rest and

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perform only light jobs, and was given the assurance that he will be repatriated at the next
convenient port. After one (1) month, however, he claimed that his condition worsened and,
upon his request, he was repatriated to Manila.
Upon Hipe’s arrival, he was examined by the company-designated physician, Dr. Robert Lim who
issued a medical assessment that "[Hipe] still has had considerable improvement with less pain and
negligible tenderness at the lumbosacral area," and that, per advise of the attending orthopedic
surgeon, Hipe was to continue his rehabilitation and medications, and to return on October 9, 2008
"for reevaluation and possible resumption of sea duties." On the latter date, Hipe was declared fit to
work, and thus executed the corresponding Certificate of Fitness for Work.

Subsequently, Hipe, however, sought a second opinion from Dr. Venancio P. Garduce, Jr. of the
UPPGH Medical Center who declared him unfit to work as seaman-plumber, and assessed his
disability rating at Grade 5. Thereafter, Hipe filed a complaint before the Labor Arbiter for the
payment of permanent disability compensation, sick wages, reimbursement of medical and
transportation expenses, moral and exemplary damages, and attorney’s fees against Bahia, its
President, Cynthia C. Mendoza, and its foreign principal, Olsen.

In a Decision, the LA ordered respondents to jointly and severally pay Hipe, whereas the NLRC
reversed and set aside the LA Ruling and dismissed Hipe’s complaint for permanent disability
compensation which the CA upheld in toto.

ISSUE: Whether or Not Hipe is entitled to the benefits (NO)

RULING:

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 all in contemplation of law.

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. The onus
probandi falls on the seafarer to establish his claim for disability benefits by the requisite
quantum of evidence to justify the grant of relief.

Guided by the foregoing considerations, the Court finds that the CA committed reversible error
in granting Hipe’s certiorari petition since the NLRC did not gravely abuse its discretion in
dismissing the complaint for permanent disability benefits for Hipe’s failure to establish his
claim through substantial evidence.

The issue of whether the seafarer can legally demand and claim disability benefits from the
employer/manning agency for an injury or illness suffered may be determined from the pertinent
provisions of Section 20 (B) of the 2000 POEA-SEC which enumerates the duties of an employer to
his employee who suffers a work-related injury or disease during the term of his employment.

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Two (2) elements must concur for an injury or illness of a seafarer to be compensable: (a) the
injury or illness must be work-related; and (b) that the work-related injury or illness must have
existed during the term of the seafarer’s employment contract.

In the present case, Hipe was made to continuously perform work aboard the vessel beyond his
six-month contract without the benefit of a formal contract. Considering that any extension of
his employment is discretionary on the part of respondents and that the latter offered no
explanation why Hipe was not repatriated when his contract expired on June 5, 2008, the CA
correctly ruled that he was still under the employ of respondents when he sustained an injury
on June 22, 2008. Consequently, the injury suffered by Hipe was a work-related injury and his
eventual repatriation on August 5, 2008, for which he was treated/rehabilitated, can only be
considered as a medical repatriation.

Nonetheless, Hipe was subsequently declared fit to work by the company-designated physician
merely 65 days after his repatriation, thus negating the existence of any permanent disability
for which compensability is sought. Said fit-to-work certification must stand for two (2)
reasons:
First, while Hipe’s personal doctor disagreed with the above mentioned assessment, opining
that "it would be impossible for him to work as seaman-plumber" and recommending a
disability grade of five, records show, however, that such opinion was not supported by any
diagnostic tests and/or procedures as would adequately refute the fit-to-work assessment, but
merely relied on a review of Hipe’s medical history and his physical examination; and
Second, Hipe failed to comply with the procedure laid down under Section 20 (B) (3) of the
2000 POEA-SEC with regard to the joint appointment by the parties of a third doctor whose
decision shall be final and binding on them in case the seafarer’s personal doctor disagrees with
the company-designated physician’s fit-to-work assessment. In Philippine Hammonia Ship
Agency, Inc. v. Dumadag, the Court held that the seafarer’s non-compliance with the said conflict
resolution procedure results in the affirmance of the fit-to-work certification of the company-
designated physician.

The filing of the complaint constituted a breach of [the seafarer’s] contractual obligation to have
the conflicting assessments of his disability referred to a third doctor for a binding opinion. x x x
Thus, the complaint should have been dismissed, for without a binding third opinion, the fit-to-
work certification of the company-designated physician stands.

BENJAMIN C. MILLAN, vs. WALLEM MARITIME SERVICES, INC., REGINALDO A. OBEN

AND/OR WALLEM SHIPMANAGEMENT, LTD., (G.R. No. 195168, SECOND DIVISION, November
12, 2012, PERLAS-BERNABE, J.)

Consequently, despite the lapse of the 120-day period, petitioner was still considered to be under a
state of temporary total disability at the time he filed his complaint on August 29, 2003, 184 days
from the date of his medical repatriation which is well-within the 240-day applicable period in this
case. Hence, he cannot be said to have acquired a cause of action for total and permanent
disability benefits. To stress, the rule is that a temporary total disability only becomes permanent
when the company-designated physician, within the 240-day period, declares it to be so, or when
after the lapse of the same, he fails to make such declaration.

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FACTS:
Benjamin C. Millan was deployed by the Wallem Maritime Services, Inc. for its foreign principal,
Wallem Shipmanagement, Ltd., as a messman. While carrying the ship’s provisions, he slipped
and injured his left arm. After examination, he was diagnosed to have suffered "fracture on left
ulnar shaft" and was medically repatriated.

Millan underwent operation and completed his physical therapy program under the company-
designated physician. However, when Millan learned that he still has to undergo a physical
capacity test to evaluate his fitness to work, he filed a complaint against Wallem Maritime
Services, Inc., et al. for medical reimbursement, sickness allowance, permanent disability
benefits, compensatory damages, exemplary damages and attorney’s fees.

In their defense, Wallem Maritime Services, Inc., et al. denied any liability contending that proper
treatment and management were afforded Millanbut he deliberately ignored his medical program by
failing to appear on his scheduled appointment with the company-designated physician.

In the Decision, the LA held that since the company-designated physician failed to make any
pronouncement on Millan’s fitness to resume sea service within 120 days as required by law, his
disability is deemed permanent and total.

On appeal, the NLRC reversed and set aside the findings of the Labor Arbiter, ruling that the
assessments made with respect to the degree of Millan’s disability by the two independent
doctors who examined him only once cannot prevail over the extensive medical examinations
conducted by the company-designated physician. It pointed out that under the POEA Standard
Employment Contract, the post-employment medical examination and degree of disability must
be performed and declared by the company-designated physician.

Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before the
CA. In its assailed Decision, the CA set aside the NLRC’s conclusions and held that while Millan’s
disability has exceeded 120 days, there was no showing that his "earning power was wholly
destroyed and he is still capable of performing remunerative employment."Hence, the instant
petition.

ISSUE:
Whether or not the CA committed reversible error in granting petitioner only partial permanent
disability Grade 10 despite his inability to work for more than 120 days? (NO)

RULING:
A seafarer’s inability to resume his work after the lapse of more than 120 days from the time he
suffered an injury and/or illness is not a magic wand that automatically warrants the grant of
total and permanent disability benefits in his favor.

In the recent case of C.F. Sharp Crew Management, Inc. v. Taok, the Court enumerated the
following instances when a seafarer may be allowed to pursue an action for total and permanent
disability benefits, to wit:

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 (a) The company-designated physician failed to issue a declaration as to his fitness to
engage in sea duty or disability even after the lapse of the 120-day period and there is no
indication that further medical treatment would address his temporary total disability,
hence, justify an extension of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company-designated
physician;
(c) The company-designated physician declared that he is fit for sea duty within the 120-
day or 240-day period, as the case may be, but his physician of choice and the doctor
chosen under Section 20-B(3) of the POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially permanently
disabled but other doctors who he consulted, on his own and jointly with his employer,
believed that his disability is not only permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently
disabled but there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition is not
compensable or work-related under the POEA-SEC but his doctor-of-choice and the third
doctor selected under Section 20-B(3) of the POEA-SEC found otherwise and declared
him unfit to work;
(g) The company-designated physician declared him totally and permanently disabled
but the employer refuses to pay him the corresponding benefits; and
(h) The company-designated physician declared him partially and permanently disabled
within the 120-day or 240-day period but he remains incapacitated to perform his usual
sea duties after the lapse of said periods.

None of the foregoing circumstances is extant in this case. Records show that from the time
petitioner was repatriated, 129 days had lapsed when he last consulted with the company-
designated physician and 181 days had passed on the day he last visited his physiatrist on.
Concededly, said periods have already exceeded the 120-day period under Section 20(B) of the
POEA-SEC and Article 192 of the Labor Code.

However, it cannot be denied that the company-designated physician had determined as early
as March 5, 2003 or even before his discharge from the hospital that petitioner’s condition
required further medical treatment in the form of physical therapy sessions, which he had
subsequently completed per Dr. Estrada’s Memo dated July 5, 2003, thus, justifying the
extension of the 120-day period.

Consequently, despite the lapse of the 120-day period, petitioner was still considered to be
under a state of temporary total disability at the time he filed his complaint on August 29, 2003,
184 days from the date of his medical repatriation which is well-within the 240-day applicable
period in this case. Hence, he cannot be said to have acquired a cause of action for total and
permanent disability benefits. To stress, the rule is that a temporary total disability only
becomes permanent when the company-designated physician, within the 240-day period,
declares it to be so, or when after the lapse of the same, he fails to make such declaration.

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 JAKERSON G. GARGALLO, Petitioner, -versus- DOHLE SEAFRONT CREWING (MANILA),
INC., DOHLE MANNING AGENCIES, INC., AND MR. MAYRONILO B. PADIZ, Respondents.
G.R. No. 215551, SPECIAL FIRST DIVISION, August 17, 2016, PERLAS-BERNABE, J.

If the physician appointed by the seafarer disagrees with the company-designated

physician's assessment, the opinion of a third doctor may be agreed jointly between the employer
and the seafarer to be the decision final and binding on them. Non-compliance with this procedure
would lead to the consclusion that the determination of the company-designated physician would
prevail.
In this case, the filing of the complaint is premature and should be dismissed for lack of
cause of action considering that petitioner was still under the medical treatment of the company-
designated physicians within the allowable 240-day period. Moreover, petitioner failed to comply
with the prescribed procedure under the afore-quoted Section 20 (A) (3) of the 2010 POEA-SEC on
the joint appointment by the parties of a third doctor, in case the seafarer's personal doctor
disagrees with the company-designated physician's fit-to-work assessment.
FACTS:
Petitioner Gargallo filed a complaint for permanent total disability benefits against
respondents before the National Labor Relations Commission (NLRC). Gargallo claimed that he
accidentally fell on deck while lifting heavy loads of lube oil drum, that he remained
permanently unfit despite major surgery, and that his permanent total unfitness to work was
duly certified by his chosen physician whose certification must prevail over the palpably self-
serving and biased assessment of the company-designated physicians.
For their part, respondents countered that the fit-to-work findings of the company-
designated physicians must prevail over that of petitioner's independent doctor because
petitioner failed to comply with the conflict-resolution procedure under the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC). In addition, the claim
is premature because the petitioner is still undergoing medical treatment within the allowable
240-day period.
The Labor Arbiter (LA) and the NLRC gave more credence to the medical report of
petitioner's independent doctor.On appeal the CA dismissed the petition on the ground that it is
premature because the 240-day period during which he is considered temporary disable has not
yet lapse. It also gave more credence to the company physician.
The Decision of the Supreme Court upheld the CA's dismissal of petitioner's claim for
permanent total disability benefits, but ordered Dohle Seafront and Dohle Manning, jointly and
severally, to pay petitioner the income benefit arising from his temporary total disability.
ISSUE:
1. Whether or not petitioner Gargallo should be considered permanently disabled. (NO)
2. Whether or not Padiz should be solidarily liable with Dohle. (YES)

1. Gargallo should not be considered permanently disabled .

If the physician appointed by the seafarer disagrees with the company-designated physician's
assessment, the opinion of a third doctor may be agreed jointly between the employer and the
seafarer to be the decision final and binding on them. Non-compliance with this procedure
would lead to the consclusion that the determination of the company-designated physician
would prevail.

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The filing of the complaint is premature and should be dismissed for lack of cause of action
considering that petitioner was still under the medical treatment of the company-designated
physicians within the allowable 240-day period. Moreover, petitioner failed to comply with the
prescribed procedure under the afore-quoted Section 20 (A) (3) of the 2010 POEA-SEC on the
joint appointment by the parties of a third doctor, in case the seafarer's personal doctor
disagrees with the company-designated physician's fit-to-work assessment. The well-settled
rule is that the seafarer's non-compliance with the mandated conflict-resolution procedure
under the POEA-SEC and the CBA militates against his claims, and results in the affirmance of
the fit-to-work certification of the company-designated physician.

2. Padiz is solidarily liable with Dohle Seafront and Dohle Manning for the payment
of the income benefit arising from his temporary total disability.

Section 10 of the Migrant Workers Act provides:

“If the recruitment/placement agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarity liable with the
corporation or partnership for the aforesaid claims and damages”

JOSE RUDY L. BAUTISTA, Petitioner, -versus- ELBURG SHIPMANAGEMENT PHILIPPINES,

INC., AUGUSTEA SHIPMANAGEMENT ITALY, AND/OR CAPTAIN ANTONIO S.
NOMBRADO,Respondents.
G.R. No. 206032, FIRST DIVISION, August 19, 2015, PERLAS-BERNABE, J.

Sec. 20 (B) (6), of the 2000 POEA-SEC provides that two (2) elements must concur for an
injury or illness to be compensable: first, that the injury or illness must be work-related; and
second, that the work-related injury or illness must have existed during the term of the seafarers
employment contract. 2000 POEA-SEC expressly considers Cardiovascular Disease (CVD) as an
occupational disease if it was contracted under any of the given instances, one of which is (c) If a
person who was apparently asymptomatic before being subjected to strain at work showed signs
and symptoms of cardiac injury during the performance of his work and such symptoms and signs
persisted, it is reasonable to claim a causal relationship.
In this case, absent any showing that petitioner had a pre-existing cardiovascular ailment
prior to his embarkation, the reasonable presumption is that he acquired his hypertensive
cardiovascular disease in the course of his employment pursuant to Section 32-A (11) (c) of the
2000 POEA-SEC, which recognizes a "causal relationship" between a seafarer's CVD and his job,
and qualifies his CVD as an occupational disease. In effect, the said provision of law establishes in
favor of a seafarer the presumption of compensability of his disease.

FACTS:
Petitioner Bautista entered into a nine (9)-month Contract of Employment with respondent
Elburg Shipmanagement Philippines, Inc. (Elburg) on behalf of its foreign principal, respondent
Augustea Shipmanagement Italy (Augustea), as Chief Cook on board the vessel "MV Lemno." Prior to
his embarkation, petitioner underwent a Pre-Employment Medical Examination (PEME), and was
certified as fit for sea duty by the company-designated physician. He then boarded the vessel. During
petitioner's employment, he complained of breathing difficulty,

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weakness, severe fatigue, dizziness, and grogginess. After several tests, he was diagnosed with
"Hypertensive Cardiovascular Disease" and "Diabetes Mellitus II,".
Bautista filed a complaint against respondents seeking to recover disability benefits
applicable to officers amounting to US$118,800.00 pursuant to their CBA alleging that the
illnesses are occupational diseases. Elburg maintained that they are not work-connected.
LA and the NLRC ruled in favour of Bautista as his condition was undoubtedly
contracted during the term of his contract when he experienced the symptoms of his ailment,
considering that he was declared fit for sea duty in his PEME.
CA reversed and ruled that petitioner failed to prove, through substantial evidence, that
his Hypertension and Cardiovascular Disease were suffered during the effectivity of his
employment, and that they were connected to his work as Chief Cook.
ISSUE:
Whether or not petitioner is entitled to disability benefits. (YES)
HELD:
The entitlement of overseas seafarers to disability benefits is a matter governed, not
only by medical findings, but also by law and contract.
In this case, petitioner executed his employment contract with respondents on August 7,
2008. Accordingly, the provisions of the 2000 POEA-SEC are applicable and should govern their
relations. Sec. 20 (B) (6), of the 2000 POEA-SEC provides that two (2) elements must concur for
an injury or illness to be compensable: first, that the injury or illness must be work-related; and
second, that the work-related injury or illness must have existed during the term of the seafarers
employment contract. 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,".

2000 POEA-SEC expressly considers Cardiovascular Disease (CVD) as an occupational

disease if it was contracted under any of the given instances, one of which is (c) If a person who
was apparently asymptomatic before being subjected to strain at work showed signs and
symptoms of cardiac injury during the performance of his work and such symptoms and signs
persisted, it is reasonable to claim a causal relationship.
Petitioner's condition was apparently asymptomatic since he manifested no signs and
symptoms of any cardiac injury prior to his deployment onboard MV Lemno and was, in fact,
declared fit for sea duty following his PEME. Notably, petitioner's physical discomforts on-board
the vessel already bore the hallmarks of CVD for which he was eventually diagnosed upon his
repatriation. The said diagnosis was recognized by both the company-designated doctors and
petitioner's own doctor, and was well-documented. Thus, absent any showing that petitioner
had a pre-existing cardiovascular ailment prior to his embarkation, the reasonable presumption
is that he acquired his hypertensive cardiovascular disease in the course of his employment
pursuant to Section 32-A (11) (c) of the 2000 POEA-SEC, which recognizes a "causal
relationship" between a seafarer's CVD and his job, and qualifies his CVD as an occupational
disease. In effect, the said provision of law establishes in favor of a seafarer the presumption of
compensability of his disease.

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 JEBSENS MARITIME, INC., SEA CHEFS LTD., and ENRIQUE ABOITIZ, Petitioners, -versus-
FLORVIN RAPIZ, Respondents.
G.R. No. 218871, FIRST DIVISION, January 11, 2017, PERLAS-BERNABE, J.

In Ace Navigation Company v. Garcia, it was ruled that 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.

Here, records reveal that respondent was medically repatriated for what was initially diagnosed
by the ship doctor as Tendovaginitis DeQuevain. Just 102 days from repatriation, the company-
designated physician had already given his final assessment on respondent when he diagnosed the
latter with Flexor Carpi Radialis Tendinitis, Right; Sprain, Right thumb; ExtensorCarpi Ulnaris
Tendinitis, Right and gave a final disability rating of Grade 11. In view of the final disability rating
made by the company-designated physician classifying respondent's disability as merely
permanent and partial- which was not refuted by the independent physician except that
respondent's condition was classified as a Grade 10 disability - it is plain error to award
permanent and total disability benefits to respondent.

FACTS:
On behalf of its foreign principal Sea Chefs, Jebsens engaged the services of Florvin Rapiz
to work on board the M/V Mercury as a buffet cook for a period on 9 months. Subsequently,
Rapiz experienced excruciating pain and swelling on his right wrist while lifting a heavy load of
meat. The ship doctor revealed that Rapiz was suffering from severe Tendovaginitis De Quevain
which caused his medical repatriation.

When Rapiz was repatriated to the Philippines, he underwent therapy with the company-
designated physician. After a lengthy treatment, the company-designated physician issued a medical
report diagnosing Rapiz with FlexorCarpi Radialis Tendinitis, Right; Sprain, Right thumb; Extersor
CarpiUlnaris Tendinitis, Right and classifying his condition as a Grade 11 disability. Dissatisfied, Rapiz
consulted an independent physician who classified his disability as Grade 10.

Rapiz requested that petitioners should pay him total and permanent disability benefits,
which the latter did not heed. Respondent argued, inter alia, that while both the company-
designated and independent physicians gave him disability ratings of Grade 11 and 10,
respectively, he is nevertheless entitled to permanent and total disability benefits as he was
unable to work as a cook for a period of 120 days from his medical repatriation. On the other
hand, petitioners maintained that respondent is only entitled to Grade 11 disability benefits
pursuant to the classification made by the company-designated physician.

The VA and CA ruled in favor of respondent. The lower courts contended that
respondent's disability should be considered permanent and total because he was unable to
continue his work as a seaman for more than 120 days from his medical repatriation.

ISSUE

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Whether or not the CA correctly held that respondent is entitiled to permanent and total
disability benefits. (YES)

RULING
In Ace Navigation Company v. Garcia, it was ruled that 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 Elburg Shipmanagement Phils., Inc. v. Quiogue, Jr., the Court further clarified that for
the company-designated physician to avail of the extended 240-day period, he must first
perform some significant act to justify an extension (e.g., that the illness still requires medical
attendance beyond the initial 120 days but not to exceed 240 days); otherwise, the seafarer's
disability shall be conclusively presumed to be permanent and total.

Here, records reveal that respondent was medically repatriated for what was initially
diagnosed by the ship doctor as Tendovaginitis DeQuevain. Just 102days from repatriation, the
company-designated physician had already given his final assessment on respondent when he
diagnosed the latter with Flexor Carpi Radialis Tendinitis, Right; Sprain, Right thumb;
ExtensorCarpi Ulnaris Tendinitis, Right and gave a final disability rating of Grade 11. In view of
the final disability rating made by the company-designated physician classifying respondent's
disability as merely permanent and partial- which was not refuted by the independent physician
except that respondent's condition was classified as a Grade 10 disability - it is plain error to
award permanent and total disability benefits to respondent.

MAGSAYSAY MARITIME CORPORATION v. ROMEO V. PANOGALINOG

G.R. No. 212049, FIRST DIVISION, July 15, 2015, PERLAS-BERNABE, J

Jurisprudence provides that “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.” Considering that the company-designated physicians
declared respondent fit to work on September 15, 2010, or well within the 240-day period, respondent
cannot be said to have acquired a cause of action for permanent total disability benefits.

FACTS:
Respondent was employed by petitioner Magsaysay Maritime Corporation (MMC) for its foreign
principal, Princess Cruise Lines, Ltd. (PCL) as Mechanical Fitter on board the vessel "Star
Princess" under a ten (10) month contract with a basic salary of US$508.00 per month, exclusive
of overtime and other benefits.

On April 27, 2010, respondent suffered injuries when he hit his right elbow and forearm on a pipe
during a maintenance work conducted on board the vessel. He was immediately provided medical
treatment at the ship's clinic and was diagnosed by the ship doctor. However, despite treatment, his
condition did not improve. He was medically repatriated, and, thus, the latter was advised to
undergo physical therapy. After the company-designated physicians declared him fit to work on

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September 15, 2010, respondent sought the services of an independent physician who, on the
other hand, found him "physically unfit to go back to work.

Later, respondent filed a complaint for the payment of permanent total disability compensation
in accordance with the parties' CBA, medical expenses and other benefits provided by law and
the CBA against MMC and its foreign principal, PCL, before the LA. For their part, petitioners
maintained that respondent is not entitled to the payment of permanent total disability benefits
since he was declared fit to work by the company-designated physician.

The LA held that since the treatment of respondent's work-related injury and declaration of
fitness to work exceeded the 120-day period under the POEA Standard Employment Contract,
and considering further that he was not anymore rehired, respondent was entitled to
permanent total disability benefits in accordance with the CBA. The NLRC reversed and set
aside the appealed LA decision and instead, dismissed respondent's complaint. It held that the
medical certificate of the independent physician, Dr. Jacinto, in support of respondent's claim for
permanent total disability benefits cannot prevail over the medical reports of the company-
designated physicians who treated him

ISSUE: Whether or not the awarding of the permanent total disability benefits is proper. (NO)

RULING:
It is doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter
governed not only by medical findings but by law and by contract.

In this case, the parties entered into a contract of employment in accordance with the POEA-SEC
which, as borne from the records, was covered by a CBA, that was effective from January 1, 2010
until December 31, 2010. Since respondent's injury on board the vessel that caused his eventual
repatriation was sustained during the effectivity of the CBA, his claim for the payment of
permanent total disability compensation shall be governed by the CBA.
Based on the CBA, a seafarer shall be entitled to the payment of the full amount of disability
compensation only if his injury, regardless of the degree of disability, results in loss of
profession, i.e., his physical condition prevents a return to sea service. It was also provided that
the seafarer shall submit himself to a post-employment medical examination by a company-
designated physician

Moreover, jurisprudence provides that “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”

Considering that the company-designated physicians declared respondent fit to work on

September 15, 2010, or well within the 240-day period, respondent cannot be said to have
acquired a cause of action for permanent total disability benefits.

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 BAHIA SHIPPING SERVICES v. CARLOS L. FLORES
G.R. No. 207639, FIRST DIVISION, July 01, 2015, PERLAS-BERNABE, J.

It is well-settled by jurisprudence that the company-designated physician is given a leeway of 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. Thus, it is
only upon the lapse of 240 days from repatriation, or when so declared by the company-designated
physician, that a seafarer may be deemed totally and permanently disabled.

In this case, the company-designated physician neither issued to respondent a fit-to-work

certification nor a final disability rating on or before December 14, 2009, the 240 th day since
respondent's repatriation.

FACTS:

Petitioner Bahia Shipping Services (Bahia Shipping) hired herein Respondent on board the
vessel Front Fighter for a period of 9 months, covered by an employment contract, and a CBA.
On 15 April 2009, and while on board the vessel, a spring valve flew and hit the left side of the
face of Respondent causing severe injuries to his teeth and multiple abrasions on his face. He
was then taken to a hospital in Singapore and was later declared unfit to return to ship then was
repatriated to the Philippines.

Upon repatriation, Respondent went to Bahia Shipping’s accredited doctors for treatment. The
company-designated physician gave Respondent an interim disability rating of Grade 7. On 04
September 2009, Respondent sought a second opinion from an independent physician who then
diagnosed him and certified that he cannot work as a seafarer in any capacity. Thus, Respondent
filed a complaint against Bahia Shipping for disability benefits, among others.

The LA ruled in respondent’s favor; founding Respondent to be suffering from a permanent total
disabilitygiven that from the time of his repatriation until the case was decided, there was no
declaration from either the company-designated or the independent physicians that respondent
was fit to work. According to the LA, the fact that respondent was never again summoned by
petitioners for another sea duty bolsters the notion that he is indeed permanently and totally
disabled.

The NLRC affirmed the LA’s ruling and held that the failure of the company-designated
physician to make an assessment of respondent's condition within the 120-day period from his
repatriation deemed his disability to be permanent and total, and thus, he must be given the
corresponding benefits in accordance with the CBA.

ISSUE: Whether or not Respondent is suffering from a permanent total disability and hence,
entitling him to disability benefits. (YES)

RULING:

It is well-settled by jurisprudence that the company-designated physician is given a leeway of an

additional 120 days, or a total of 240 days from repatriation, to give the seafarer further treatment

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and, thereafter, make a declaration as to the nature of the latter's disability. Thus, it is only upon
the lapse of 240 days from repatriation, or when so declared by the company-designated
physician, that a seafarer may be deemed totally and permanently disabled.

Records reveal that after respondent was repatriated on April 18, 2009, he underwent
continuous medical care from the company-designated physician. He was even given an interim
disability rating of Grade 7 (moderate residual or disorder) on July 17, 2009, and thereafter,
went through further tests and procedures. However, after October 12, 2009, respondent's
treatment stopped without him recovering from his ailment. Notably, the company-designated
physician neither issued to respondent a fit-to-work certification nor a final disability rating on
or before December 14, 2009, the 240th day since respondent's repatriation.

ACE NAVIGATION COMPANY v. SANTOS D. GARCIA

G.R. No. 207804, FIRST DIVISION, July 17, 2015, PERLAS-BERNABE, J.

Inability to obtain gainful employment for more than 120 days does not ipso facto render a
disability total and permanent. It has been settled by jurisprudence that the company-designated
physician is given a leeway of 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. Thus, it is only upon the lapse of 240 days, or when so declared by the company-
designated physician, that a seafarer may be deemed totally and permanently disabled.

FACTS:

Ace Navigation hired Garcia to work aboard the vessel Capricorn Star for a period of 8 months
and was covered by a CBA. On 9 February 2010, Garcia slipped and fell while doing grinding
work which caused him pain in his right arm, shoulder, and chest. He then underwent medical
consultation and was later on repatriated to the Philippines.

Upon repatriation, Garcia was then diagnosed by company-designated physician to be suffering

from a work-related shoulder injury as well as a non-work-related kidney ailment and was
given treatment therefor. An injury on his spine was also discovered thereafter.

On 08 November 2010, Garcia filed a claim for total and permanent disability benefits against
Ace Navigation and in support of his claim, he averred that he consulted an independent
physician who diagnosed him with a work-related total and permanent injury on his cervical
spine, rendering him unfit to be a seaman in whatever capacity. In their defense, petitioners
asserted that Garcia’s illnesses are not work-related, and he was already declared fit to work on
October 28, 2010 by his urologist.

The LA found that Garcia is entitled to permanent total disability benefits given that his physical
condition prevented him from resuming his trade as a seaman since his repatriation on May 20,
2010 until the present, or for a period of more than 120 days. The LA gave credence to the
findings of the independent physician over that of the company-designated physician opining
that the assessment and declarations of a company-designated physician should not prejudice
Garcia’s claim for disability benefits

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However, the NLRC overturned the LA’s ruling. Contrary to the findings of the LA, the NLRC found
that since the company-designated physician, Dr. Cruz, assessed Garcia with a Grade 10 disability
rating and that no other disability rating appears on record, Garcia was, thus, bound thereto.

ISSUE: Whether or not Garcia is suffering from a permanent total disability and hence,
entitling him to disability benefits. (NO)

RULING:

Records reveals that Garcia was indeed unable to obtain any gainful employment for more than
120 days after his repatriation; however, this fact does not ipso facto render his disability total
and permanent.

It has been settled by jurisprudence that the company-designated physician is given a leeway of
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. Thus, it is
only upon the lapse of 240 days, or when so declared by the company-designated physician, that
a seafarer may be deemed totally and permanently disabled.

OSCAR GAMBOA, Petitioner, – versus - MANULAD TRANS, INC AND/OR RAINBOW

MARITIME CO., LTD AND CAPT. FAJARDO, Respondents. GR No. 232905, SECOND DIVISION,
August 20, 2018

Case law states that without a valid final and definitive assessment from the company-designated
physician within the 120/240-day period, the law already steps in to consider petitioner's
disability as total and permanent. Thus, a temporary total disability becomes total and permanent
by operation of law.

Being an interim disability grade, the declaration was merely an initial determination of
petitioner's condition for the time being and therefore cannot be considered as a definite
prognosis. Notwithstanding the temporariness of his findings, the company-designated physician,
however, failed to indicate the need for further treatment/rehabilitation or medication, and
provide an estimated period of treatment to justify the extension of the 120-day treatment period.

FACTS:
Oscar Gamboa entered into a 9-month contract with Maunlad Trans Inc (MTI). MTI is in behalf
of its principal Rainbow Maritime (RMCL). After undergoing the required pre-employment
medical examination (PEME) where he was declared fit for duty, Gamboa disembarked and
joined the vessel MV Oriente Shine.

Gamboa assisted in the unloading of raw logs from the vessel, as well as in the clean-up of the
debris and log residue. Gamboa could not withstand the strong odor of the logs and was gasping
for breath, the latter asked for leave which was granted, and as such, was excused from the

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activity. However, the incident already triggered an asthma attack on Gamboa which initially
started as a cough that was later accompanied by wheezing breath.

Later, during the voyage Gamboa slipped and lost his footing while going down the galley which
caused a writhing pain on the upper left side of his back. During the rigging operation, Gamboa
experienced back pain and difficulty in breathing that prompted the Captain to disembark him
for medical consultation.

On February 15, 2014, Gamboa was medically repatriated and brought to Marine Medical
Services where he was seen by a company-designated physician, Dr. Mylene Cruz-Balbon, who
confirmed his bronchial asthma. Subsequent check-ups further disclosed that Gamboa was
suffering from "Degenerative Changes, Thoracolumbar Spine" and was found to have a "metallic
foreign body on the anterior cervical area noted on x-ray," which, as pointed out by the
company-designated physician, was not related to the cause of his repatriation. Gamboa was
thereafter referred to orthopedic doctors for evaluation.

On May 14, 2014, the company designated physician Dr. Karen Frances Hao-Quan issued a
medical report stating that Gamboa still has occasional asthma attacks that have not been totally
controlled despite three (3) months of maintenance medication. The physician also noted that
Gamboa still has tenderness and muscle spasm on his left paraspinal muscle. As such, the
company-designated physician gave an interim assessment of "Grade 8 (orthopedic) - 2/3 loss
of lifting power and Grade 12 - (pulmonary) slight residual or disorder."

Gamboa was recommended to undergo MRI. However, the MRI could only be done after the
removal of the foreign bodies in Gamboa’s neck area. MTI refused to shoulder the extraction
procedure as it was not part of the cause of repatriation

On June 4, 2014, Gamboa filed a complaint for non-payment of sickness allowance, medical
expense and rehabilitation fees against MTI. The complaint was amended on June 18, 2014 to
include a claim for permanent total disability.

On June 20, 2014, Gamboa’s pulmonologist, Dr. Edgardo 0. Tanquieng, issued a note to the
company-designated physician suggesting Gamboa's disability to be "Grade 12 - slight residual
or disorder. " On the other hand, Gamboa's orthopedic specialist, Dr. Chuasuan, in his letter
dated July 10, 2014, explicated that Gamboa’s degenerative changes may have occurred
overtime and could not have developed during his 22-day stay on board the vessel, hence, was a
pre-existing condition.

MTI denied liability Their defense was anchored that the complaint was premature given that
the 120-day period had not yet expired at the time the complaint was filed (June 4). Further, the
illness was not compensable considering that a specialist declared it to be pre-existing

ISSUE:
1. Whether or not the disability is pre-existing. (NO)
2. Whether or not the disability is permanent by virtue of the 120-day period. (YES)
3. Whether or not the complaint is premature. (NO)

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RULING
1. No, there are conditions that should be met before an illness, such as degenerative
changes of the spine, can be considered as pre-existing under the 2010 POEA-SEC,
namely: (a) the advice of a medical doctor on treatment was given for such continuing
illness or condition; or (b) the seafarer had been diagnosed and has knowledge of such
illness or condition but failed to disclose the same during PEME, and such cannot be
diagnosed during the PEME. None of which had been established in this case.

2. Yes, the disability is permanent. In Elburg Shipmanagement Philippines, Inc. v. Quiogue, Jr,
the court summarized the rules regarding the company-designated physician's duty to issue a
final medical assessment on the seafarer's disability grading, as follows:

1. The company-designated physician must issue a final medical assessment on the seafarer's
disability grading within a period of 120 days from the time the seafarer reported to him;

2. If the company-designated fails to give his assessment within the period of 120 days, without
any justifiable reason, then the seafarer's disability becomes permanent and total;

3. If the company-designated physician fails to give his assessment within the 120 days with a
sufficient justification (e.g., seafarer required further medical treatment or seafarer was
uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The
employer has the burden to prove that the company-designated physician has sufficient
.iustification to extend the period; and

4. If the company-designated physician still fails to give his assessment within the extended
period of 240 days, then the seafarer's disability becomes permanent and total, regardless of
any justification.
Case law states that without a valid final and definitive assessment from the company-
designated physician within the 120/240-day period, the law already steps in to consider
petitioner's disability as total and permanent. 90 Thus, a temporary total disability becomes
total and permanent by operation of law.

In the case at bar, there is no dispute that the company-designated physician issued an "interim"
assessment on May 14, 2014, or just 88 days from petitioner's repatriation on February 15,
2014. Being an interim disability grade, the declaration was merely an initial determination of
petitioner's condition for the time being and therefore cannot be considered as a definite
prognosis. Notwithstanding the temporariness of his findings, the company-designated
physician, however, failed to indicate the need for further treatment/rehabilitation or
medication, and provide an estimated period of treatment to justify the extension of the 120-day
treatment period. In fact, while petitioner had subsequent follow-up sessions, the company-
designated physician still failed to arrive at a definitive assessment within the 120-day period or
indicate the need for further medical treatment. Evidently, without the required final medical
assessment declaring petitioner fit to resume work or the degree of his disability, the
characterization of the latter's condition after the lapse of the 120-day period as total and

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permanent ensued in accordance with law, since the ability to return to one's accustomed work
before the applicable periods elapse cannot be shown. Thus, because of these circumstances,
petitioner should be entitled to permanent total disability benefits by operation of law.

3. No, the complaint is not premature. It should be made clear that what was filed on June 4,
2014 was for non-payment of sickness allowance, medical expenses, and rehabilitation fees.
Petitioner only sought permanent total disability benefits when he filed his amended complaint
therefor on June 18, 2014. At that time, the 120-day period within which the company-
designated physician should have issued a final assessment of petitioner's condition already
lapsed. As aptly ruled in C.F Sharp Crew Management, Inc. v. Taok, "a seafarer may pursue an
action for total and permanent disability benefits if x x x the company-designated physician
failed to issue a declaration as to his fitness to engage in sea duty or disability even after the
lapse of the 120-day period and there is no indication that further medical treatment would
address his temporary total disability, hence, justify an extension of the period to 240 days xx x,”

MELCHOR BARCENAS DEOCARIZA, Petitioner, – versus - FLEET

MANAGEMENT SERVICES PHILIPPINES, INC., MODERN ASIA
SHIPPING CORPORATION, A.B.F. GAVIOLA, JR., and MA. CORAZON
CRUZ, Respondents.

GR No. 229955, SECOND DIVISION, July 23, 2018

The burden is on the employer to prove such concealment of a pre-existing illness or condition on
the part of the seafarer to be discharged from any liability. In this regard, an illness shall be
considered as pre-existing if prior to the processing of the POEA contract, any of the following
conditions is present, namely: (a) the advice of a medical doctor on treatment was given for such
continuing illness or condition; or ( b) the seafarer had been diagnosed and has knowledge of such
illness or condition but failed to disclose the same during the PEME, and such cannot be diagnosed
during the PEME.

If indeed petitioner was implanted with a mechanical heart valve, it could have been easily
detected by the respondents in the course thereof.

FACTS:

Deocariza was hired in 2010 as Chief Officer by Fleet Management Services Philippines., Inc., for and
in behalf of its principal, Modem Asia Shipping Corporation on board the vessel, M.V. Morning Carina.
On June 15, 2011 he was rehired for the same position under a 6-month contract. After undergoing
the required pre-employment medical examination (PEME), where the company-designated
physician declared him fit for sea duty, Deocariza boarded the vessel on July 19, 2011.

In the course of his employment, or on December 3, 2011, petitioner complained of bruises on both
thighs, rashes on his neck, delayed healing of abrasion wound on his left forearm, fever, sore throat,
and loss of appetite. Thus, on December 18, 2011, he was brought to the Seacare Maritime Medical
Center Pte., Ltd. (Seacare Maritime) in Singapore, where he was noted to have "decreased
hemoglobin, total white cell count and platelet count on complete blood count" for which reason he
was declared a "[h]igh-risk patient with mechanical heart valves. He was medically repatriated

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on December 26, 2011 and was, consequently, referred to a company-designated physician at
the Metropolitan Medical Center (MMC) who diagnosed him to be suffering from "Aplastic
Anemia." In the medical report, the specialist opined that that exposure to benzene and its
compound derivatives may predispose to development of such condition.

Claiming his illness rendered him incapacitated to resume work as a seafarer for more than 240
days, Deocariza filed a complaint for the payment of total and permanent disability benefits.

Fleet Management denied liability claiming that the Deocariza was disqualified as he knowingly
concealed and failed to disclose during his PEME that he had "mechanical heart valves" or
artificial heart valves that rendered him a "high-risk" worker, a vital information that would
have been considered in hiring him. .Fleet management further contend that the illness was not
work-related. According to Fleet, while the cars loaded in the vessel contained gasoline which is
said to have benzene elements, the cars' engines were nonetheless always "OFF" during the
voyage and turned " ON" only during the loading and unloading of the vehicles in the vessel; as
such, petitioner could not have accumulated benzene elements in his body given that the vessel
was equipped with many big exhaust fans that drive away the toxic fumes.

ISSUE:

1. Whether or not the disability is pre-existing. (NO)

2. Whether or not the disability is work-related. (YES)

RULING

1. No, the disability is not pre-existing. The fact of Gamboa having a mechanical heart
valve not duly proven

The burden is on the employer to prove such concealment of a pre-existing illness or condition
on the part of the seafarer to be discharged from any liability. In this regard, an illness shall be
considered as pre-existing if prior to the processing of the POEA contract, any of the following
conditions is present, namely: (a) the advice of a medical doctor on treatment was given for
such continuing illness or condition; or ( b) the seafarer had been diagnosed and has knowledge
of such illness or condition but failed to disclose the same during the PEME, and such cannot be
diagnosed during the PEME.

Records show that aside from the company-designated physician's diagnosis of Aplastic Anemia,
a rare and serious condition wherein there is a reduction in the production of both red and
white blood cells from the bone marrow in humans, petitioner was also declared by a foreign
doctor at Seacare Maritime in Singapore to have "mechanical heart valves." While the company-
designated physician confirmed petitioner's A plastic Anemia in the 2nd Medical Report dated
January 6, 2012 after having undertaken a bone marrow aspiration biopsy, the said report failed
to confirm the latter's mechanized heart valves. In fact, there is nothing in the records to
support such declaration given that mechanized heart valves are implanted in patients with
valvular heart disease.

Further, the tests conducted during the PEME were chest x-ray, a common type of exam that
reveals, among others, the size and outline of a heart and blood vessels, and 2D echogram, a test

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in which ultrasound technique is used to take excellent images of the heart, paracardiac structures
and the great vessels. Therefore, if indeed petitioner was implanted with a mechanical heart valve, it
could have been easily detected by the respondents in the course thereof.

2. Yes, the disability is work related.

A work-related illness is defined as "any sickness as a result of an occupational disease listed

under Section 32-A of this Contract with the conditions therein satisfied."

In this case, petitioner was medically repatriated and diagnosed by the company-designated
physician to be suffering from "Aplastic Anemia." In denying petitioner's disability claims,
respondents argued that his illness was not a listed disease under Section 32-A of the 2010
POEA-SEC, adding too that the former was not able to present substantial evidence to prove the
work-relation of the illness.

Contrary to the claim of respondents, petitioner's illness is an occupational disease listed under
Sub-Item Number 7 of Section 32-A of the 2010 PO EA-SEC, which provides:

7. Ionizing radiation disease, inflammation, ulceration or malignant disease of the skin

or subcutaneous tissues of the bones or leukemia, or anemia of the aplastic type due to
x-rays, ionizing particle, radium or other radioactive substances

To be considered as work-related, Aplastic Anemia should be contracted under the condition

that there should be exposure to x-rays, ionizing particles of radium or other radioactive
substances or other forms of radiant energy. As borne out by the records, it was not disputed
that petitioner, as Chief Officer of M.V. Morning Carina, actively supervised the loading and
unloading operations of cars/motor vehicles in every voyage that constantly exposed him to an
atmosphere of cargoes with nearly 6,000 cars in just one voyage alone. Benzene, an important
component of gasoline, is emitted from the engines of these cars in the course of their loading
and unloading. Since studies show that Benzene is highly volatile, and exposure occurs mostly
through inhalation, it cannot be denied that petitioner was constantly exposed to the hazards of
benzene in the course of his employment.

PHILSYNERGY MARITIME INC AND/OR TRMURTI SHIPMANAGEMENT LTD,

Petitioners, – versus - COLUMBANO PAGUNSAN GALLANO JR., Respondent.

GR No. 228504, SECOND DIVISION, June 6, 2018

In Kestrel Shipping Co., Inc. v. Munar, the Court emphasized that: A seafarer's compliance with such
procedure presupposes that the company-designated physician came up with an assessment as to his
fitness or unfitness to work before the expiration of the 120-day or 240day periods. Alternatively put,
absent a certification from the company-designated physician, the seafarer has nothing to contest and
the law steps in to conclusively characterize his disability as total and permanent.

In this case, there is no showing that respondent received a timely conclusive and definitive
assessment of his ailment.

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FACTS:

Gallano was employed by Philsynergy Maritime (Philsynergy) for and in behalf of petitioner
Trimurti Shipmanagement Ltd as Ship Master on board the vessel M.V. Pearl Halo under a six
(6)-month employment contract. After undergoing the required pre-employment medical
examination (PEME) where the company-designated physician declared him fit for sea duty,
respondent, who was then 62 years old, boarded the vessel on October 5, 2012

One evening while in the performance of his duties, Gallano felt a sudden numbness on the left
side of his body and noticed that his speech was slurred. Gallano took on an Isordil tablet which
he personally brought to the vessel. On the next day his symptoms recurred, but which did not
improve despite taking another dose of Isordil. This promted Gallano to be brought to a hospital
in New Caledonia. His CT scan revealed " middle cerebral artery deep right infarct without
associated hemorrhagic alteration," while his MRI showed "ischemic cerebrovascular accident
stroke ischemique, right middle deep lobe."

Gallano was repatriated on October 23, 2012 for further medical treatment and referred to a
company-designated physician, who diagnosed him to be suffering from "Cerebrovascular
Infarct Middle Cerebral Artery, Right [and] Hypertension". In a Medical Report dated March 9,
2013, noted that respondent's treadmill stress test already showed normal results and his blood
pressure controlled. In addition, the company-designated physician opined that his
cardiovascular condition has stabilized, but nonetheless advised him to continue home
exercises/rehabilitation and medication.

The company-designated Cardiologist in a letter opined that Gallano was already experiencing
symptoms prior to his embarking as evinced by the fact he brought an Isordil along.

Gallano claiming that his physical condition did not improve, and more than 120 days has lapsed
from the time he was repatriated, sought for the payment of total disability benefits. Philsynergy
denied the claim and raised that Gallano fraudulently concealed a previously diagnosed medical
condition for which he was prescribed medication (Isordil), and which he failed to disclose
during his PEME. Philsynergy further raised the issue that Gallano did not contest the medical
report dated March 9, 2013 by resorting to the joint appointment of a third doctor. Since
according to the finding of the company physician, Gallano is already on his way to recovery, he
could not claim such benefits.

ISSUE:

1. Whether or not the disability is pre-existing. (NO)

2. Whether or not the failure to resort to the joint appointment of a third doctor is a
ground to disqualify the claim. (NO)

RULING:

1. No, Pursuant to the 2010 POEA-SEC, an illness shall be considered as pre-existing if prior to
the processing of the POEA contract, any of the following conditions is present: (a) the advice
of a medical doctor on treatment was given for such continuing illness or condition; or (b)
the seafarer had been diagnosed and has knowledge of such illness or condition but

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 failed to disclose the same during the PEME, and such cannot be diagnosed during the
PEME. In this case, the evidence on record is devoid of any indication that any of the
conditions is present.

Isordil (isosorbide dinitrate) tablets are taken for the prevention of angina pectoris or chest
pain due to coronary artery diseases. It is, however, not a medication directly used for
hypertension, which illness petitioners claim respondent to be suffering from prior to his
engagement, as well as the reason for his repatriation.

At any rate, it is well to note that had respondent been suffering from a pre-existing hypertension at
the time of his PEME, the same could have been easily detected by standard/routine tests conducted
during the said examination, i.e., blood pressure test, electrocardiogram, chest xray, and/or blood
chemistry. However, respondent's PEME showed normal blood pressure with no heart problem,
which led the company-designated physician to declare him fit for sea duty.

2. No, it is clear when a seafarer suffers a work-related injury or illness while on board the
vessel, his fitness or degree of disability shall be initially determined by the company-
designated physician. However, the seafarer is not absolutely 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. In case of disagreement between the findings of the company-
designated physician and the seafarer's private physician, the parties shall jointly agree to
refer the matter to a third doctor whose findings shall be final and binding on both.

In Kestrel Shipping Co., Inc. v. Munar, the Court emphasized that: A seafarer's compliance with
such procedure presupposes that the company-designated physician came up with an
assessment as to his fitness or unfitness to work before the expiration of the 120-day or 240 day
periods. Alternatively put, absent a certification from the company-designated physician, the
seafarer has nothing to contest and the law steps in to conclusively characterize his disability as
total and permanent.

In this case, there is no showing that respondent received a timely conclusive and definitive
assessment of his ailment. As borne from the records, the company-designated physician's last
medical report was issued on March 9, 2013, 65 or way beyond the 120-day period reckoned
from the time of respondent's repatriation on October 23, 2012.

TEODORO V. VENTURA, Petitioner, - versus - CREWTECH SHIPMANAGEMENT

PHILIPPINES, Respondent.
GR No. 225995, SECOND DIVISION, Nov 20, 2017
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. Nevertheless, should it not be classified as
occupational in nature, Section 20(A) paragraph 4 provides that such diseases are disputably
presumed as 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. Petitioner's general
averments that he was exposed to stressful demands of his duties and responsibilities and
subjected

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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.
FACTS:
Petitioner Teodoro Ventura, Jr. was employed by respondent Crewtech Shipmanagement
Philippines, Inc., for its principal, Rizzo-Bottiglieri-De Carlini Armatori, as Chief Cook on board
the vessel MV Maria Cristina Rizzo. After undergoing the pre-employment medical examination
(PEME) where he was declared fit for sea duty, petitioner boarded the vessel. The vessel was
transferred to respondent Elburg Shipmanagement Phils., Inc. which assumed full responsibility
for all contractual obligations to its seafarers.
On 2014, Petitioner complained that he was having a hard time urinating that was accompanied
by lower abdominal pain. Petitioner was brought to a specialist and was diagnosed to have
"prostatitis." Petitioner disclosed to the foreign doctor that he: (a) has a history of prostatitis
that occurred three years ago; (b) was treated for kidney stone in August 2013; and (c) was not
under any regular medication.
Petitioner was medically repatriated and referred to a company-designated physician for
further evaluation and treatment. The company-designated physician diagnosed petitioner's
illnesses to be "Cystitis with Cystolithiases and Benign Prostatic Hyperplasia (BPH)," which he
declared to be not work-related.
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.
Petitioner was compelled to seek an independent physician of his choice, Dr. Tan, who declared
him to be permanently disabled. Petitioner filed a complaint for total permanent disability
benefits, sickness allowance, transportation and medical expenses, damages and attorney's fees
against respondents.
Respondents denied petitioner's claim for disability benefits, since he failed to disclose his
previous medical history of prostatitis during his last PEME, and contended that petitioner's
ailments were not work-related. They added petitioner's failure to observe the procedure for
the joint appointment of a third doctor.
The LA dismissed the complaint. The NLRC reversed. The CA set aside the NLRC Decision.
ISSUE:
1. Whether or not the petitioner concealed his medical condition. (NO)
2. Whether or not the petitioner was entitled to total and permanent disability benefits.
(NO)
3. Whether or not the failure to observe the third-doctor-referral provision negates the
claim for the disability benefits. (YES)

RULING:

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1. NO. 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. Section
20(E) mandates the seafarer to disclose all his pre-existing illnesses in his PEME, failing which,
shall disqualify him from receiving the same.
Here, there was no concealment on the part of petitioner. 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 which showed all of his
past illnesses.
2. NO. Section 20(A) 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.
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. Nevertheless, should it not be classified as
occupational in nature, Section 20(A) paragraph 4 provides that such diseases are disputably
presumed as 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.
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. 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 bare allegations do not suffice to discharge the required quantum of
proof, as in this case.
3. YES. 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. 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.

ROBELITO MALINIS TALAROC, Petitioner, - versus - ARPAPHIL SHIPPING CORPORATION,

EPIDAURUS S.A., AND/OR NATIVIDAD PAPPAS, Respondents.
G.R. No. 223731, SECOND DIVISION, August 30, 2017
A temporary total disability lasting continuously for more than 120 days, except as otherwise
provided, is considered as a total and permanent disability. The exception pertains to a situation

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when the sickness "still requires medical attendance beyond the 120 days but not to exceed 240
days" in which case the temporary total disability period is extended up to a maximum of 240 days.
However, for the company-designated physician to avail of the extended 240-day period, he must
first perform some significant act to justify an extension; otherwise, the seafarer's disability shall
be conclusively presumed to be permanent and total.
In this case, there was no sufficient justification for the extension of petitioner's treatment from
the initial 120-day period to 240 days.
FACTS:
Petitioner Robelito Malinis Talaroc was employed by respondent Arpaphil Shipping Corporation
(ASC) for its foreign principal Epidaurus S.A. as Third Officer on board the vessel MV Exelixis.
Petitioner claimed that while he was collecting the mooring rope, he felt a sudden click in his
lower back accompanied with pain.
Petitioner was referred to the company-designated physician of ASC, Dr. Go. After undergoing
examinations, petitioner was found to be suffering from gastric ulcer, duodenitis, and
hypertension. He was advised by Dr. Go to undergo rehabilitation and continue his medications.
Dr. Go reported that the etiology/cause of Hypertension is not work-related. The disc bulge and
disc protrusion is degenerative in nature. Petitioner’s estimated length of further treatment is
approximately 3 more months before he reached his maximum medical improvement.
Petitioner was cleared by the specialist, Dr. Lim, of his gastric ulcer and gastro-intestinal
disorder.Petitioner consulted an independent physician, Dr. Magtira, who found him unfit to
return to work as a seafarer.
Petitioner filed a complaint for a claim for total and permanent disability benefits, in view of Dr.
Magtira's independent medical report finding petitioner unfit to resume his usual work as a
seafarer. Respondents maintained that petitioner's action was premature as the 240-day
extended medical treatment has not yet expired at the time he filed his complaint and that he
failed to comply with the provisions of the POEA-SEC in case of conflict in medical findings by
the parties' respective doctors.
The LA dismissed the complaint for lack of cause of action, holding that the claim for disability
benefits was filed before the lapse of the allowable 240-day extended medical treatment period.
The NLRC set aside the LA decision, ruling that the 240-day extended medical treatment was not
an automatic application in case of disability claim. The CA reinstated the LA's Decision.
ISSUES:
1. Whether or not the petitioner was entitled to total and permanent disability benefits.
(YES)
2. Whether or not the petitioner’s injury is work related. (YES)
3. Whether or not the failure to observe the third-doctor-referral provision negates the
claim for the disability benefits. (NO)

RULING:
1. YES. The Labor Code and the Amended Rules on Employees Compensation provide that the
seafarer is declared to be on temporary total disability during the 120-day period within which
the seafarer is unable to work. However, a temporary total disability lasting continuously for

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more than 120 days, except as otherwise provided in the Rules, is considered as a total and
permanent disability.
The exception referred to above pertains to a situation when the sickness "still requires medical
attendance beyond the 120 days but not to exceed 240 days" in which case the temporary total
disability period is extended up to a maximum of 240 days.
However, for the company-designated physician to avail of the extended 240-day period, he
must first perform some significant act to justify an extension; otherwise, the seafarer's
disability shall be conclusively presumed to be permanent and total.
In this case, there was no sufficient justification for the extension of petitioner's treatment from
the initial 120-day period to 240 days.
A total disability does not require that the employee be completely disabled, or totally paralyzed.
What is necessary is that the injury must be such that the employee cannot pursue his or her usual
work and earn from it. On the other hand, a total disability is considered permanent if it lasts
continuously for more than 120 days. What is crucial is whether the employee who suffers from
disability could still perform his work notwithstanding the disability he incurred.
2. YES. As a rule, a seafarer shall be entitled to compensation if he suffers from a work-related
injury or illness during the term of his contract. Under the 2010 POEA-SEC, a "work-related
illness" is defined as "any sickness as a result of an occupational disease listed under Section 32-
A of this Contract with the conditions set therein satisfied." Corollarily, Section 20 (A) (4)
thereof further provides that "[t]hose illnesses not listed in Section 32 of this Contract are
disputably presumed as work-related."
Records reveal that petitioner's back pain only while he was on board the vessel. The company
doctor acknowledged that the illness may be aggravated by heavy work or lifting/pushing or
pulling of heavy objects. Since there was no proof to show that these activities were not
performed by petitioner while he was on board or were not part of his duties, it can be safely
concluded that the nature of his job may have caused or at least aggravated his condition more
so since he was declared fit to work prior to his deployment, hence, work-related.
3. NO. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor
may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall
be final and binding on both parties.
In Philippine Hammonia Ship Agency, Inc. v. Dumadag, the Court held that the seafarer's non-
compliance with the said conflict-resolution procedure results in the affirmance of the fit-to-
work certification of the company-designated physician.
However, it should be pointed out that "[a] seafarer's compliance with such procedure
presupposes that the company-designated physician came up with an assessment as to his
fitness or unfitness to work before the expiration of the 120-day or 240-day periods."
In this case, there was no showing that petitioner duly received a conclusive and definitive
assessment for his lumbar spondylosis. The medical report was a confidential document, which
was not shown to have been received by him. Respondents did not respond to his initial query
regarding the true state of his condition and whether or not he would be able to return to his
pre-injury capacity and resume work despite his back pain.

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Although petitioner did consult an independent physician regarding his illness, the lack of a
conclusive and definite assessment from respondents left him nothing to properly contest and
perforce, negates the need for him to comply with the third-doctor referral provision under
Section 20 (A)(3) of the 2010 POEA-SEC. As case law states, without a valid final and definite
assessment from the company-designated physician, the law already steps in to consider
petitioner's disability as total and permanent.

BENEDICT N. ROMANA, Petitioner, – versus - MAGSAYSAY MARITIME CORPORATION,

Respondent.
GR No. 192442, SECOND DIVISION, Aug 09, 2017
For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied: (1) The seafarer's work must involve the risks described
herein; (2) The disease was contracted as a result of the seafarer's exposure to the described risks;
(3) The disease was contracted within a period of exposure and under such other factors necessary
to contract it; and (4) There was no notorious negligence on the part of the seafarer.
In fine, petitioner's claim for disability benefits should be denied, considering that respondents
were able to successfully debunk the presumption of work-relatedness and concomitantly,
petitioner failed to prove by substantial evidence his compliance with the conditions for
compensability set forth under Section 32-A of the 2000 POEA-SEC.
FACTS:
Petitioner was employed by respondents Magsaysay Maritime Corporation as a Mechanical
Fitter and boarded the vessel M/V Golden Princess. He claimed that while he was walking along
the ship alley, the metal ceiling fell and wounded his head. He experienced persisting headache
and blurring of vision. He was referred to a specialist and was found to have a tumor at the left
side of his brain.
He was repatriated, and the company-designated physician issued a finding that petitioner's
illness is not work-related given that the same is an "abnormal growth of tissues in the brain's
blood vessels."
Petitioner then consulted an independent physician who declared his illness to be work-related.
As a result, petitioner filed a complaint seeking disability benefits, illness allowance,
reimbursement of medical expenses, damages, and attorney's fees.
The LA dismissed the complaint, since petitioner failed to establish that his illness is work-related.

Petitioner appealed, contending that Section 20 (B)(4) of the 2000 POEA-SEC expressly
provides that his illness shall be disputably presumed to be work-related, and that it is
compensable since the nature of his work constantly exposed him to harmful chemicals,
extreme changes of temperature in the engine room, as well as to harsh sea weather conditions.
The NLRC affirmed the LA. The CA dismissed the certiorari petition for lack of substantiation.
ISSUE:
1. Whether or not petitioner is entitled to disability benefits pursuant to the 2000 POEA-
SEC. (NO)

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RULING:
NO. Under the 2000 POEA-SEC, "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" is deemed to be a "work-related illness."
On the other hand, Section 20 (B)(4) of the 2000 POEA-SEC declares that "[t]hose illnesses not
listed in Section 32 of this Contract are disputably presumed as work related." The presumption
is only limited to the "work-relatedness" of an illness. It does not cover and extend to
compensability. In this sense, there exists a fine line between the work-relatedness of an illness
and the matter of compensability.
The former concept merely relates to the assumption that the seafarer's illness, albeit not listed as an
occupational disease, may have been contracted during and in connection with one's work, whereas
compensability pertains to the entitlement to receive compensation and benefits upon a showing
that his work conditions caused or at least increased the risk of contracting the disease.
For an occupational disease and the resulting disability or death to be compensable, all of the
following conditions must be satisfied: (1) The seafarer's work must involve the risks described
herein; (2) The disease was contracted as a result of the seafarer's exposure to the described
risks; (3) The disease was contracted within a period of exposure and under such other factors
necessary to contract it; and (4) There was no notorious negligence on the part of the seafarer.
As differentiated from the matter of work-relatedness, no legal presumption of compensability
is accorded in favor of the seafarer. As such, he bears the burden of proving that these
conditions are met.
In Licayan v. Seacrest Maritime Management, Inc., the Court held that the disputable
presumption does not signify an automatic grant of compensation and/or benefits claim, and
that while the law disputably presumes an illness not found in Section 32-A to be also work-
related, the seafarer/claimant nonetheless is burdened to present substantial evidence that his
work conditions caused or at least increased the risk of contracting the disease and only a
reasonable proof of work-connection, not direct causal relation is required to establish its
compensability. The proof of work conditions referred thereto effectively equates with the
conditions for compensability imposed under Section 32-A of the 2000 POEA-SEC.
In fine, petitioner's claim for disability benefits should be denied, considering that respondents
were able to successfully debunk the presumption of work-relatedness and concomitantly,
petitioner failed to prove by substantial evidence his compliance with the conditions for
compensability set forth under Section 32-A of the 2000 POEA-SEC.

TOMAS P. ATIENZA, Petitioner, – versus - OROPHIL SHIPPING INTERNATIONAL CO., INC.,

ENGINEER TOMAS N. OROLA and/or HAKUHO KISEN CO., LTD., Respondent. G.R. No.
191049, SECOND DIVISION, August 7, 2017

While the law disputably presumes an illness not found in Sec. 32-A to be also work-related, the
seafarer/claimant nonetheless is burdened to present substantial evidence that his work
conditions caused or at least increased the risk of contracting the disease and only a reasonable
proof work-connection, not direct causal relation is required to establish compensability.

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Records show that Atienza experienced major symptoms of THS in the exercise of his functions as
an Able Seaman. Clearly, while the exact cause of THS was unknown, it is reasonable to conclude
that Atienza’s illness was most probably aggravated due to the peculiar nature of his work that
required him to be on-call 24 hours a day to observe and keep track of weather conditions and
keep watch at sea during navigation.

FACTS:
Tomas Atienza was employed as an Able Seaman by Orophil on behalf of its principal. Hakuho,
and was assigned at the M/V Cape Apricot. In the course of his employment contract, Atienza
complained of severe headaches, nausea, and double vision which the foreign port doctors
diagnosed to be right cavernous sinus inflammation or Tolosa Hunt Syndrome (THS).

As a result, Atienza was repatriated and referred to company-designated physician, Dr.

Cruz, who confirmed the findings and advised him to continue the medication prescribed by the
foreign doctors. Thereafter, Dr. Cruz issued a certification declaring Atienza fit to resume work.

Dissatisfied, Atienza consulted an independent physician, Dr. Pasco, who, on the other
hand, assessed his illness as a Grade IV disability and declared him unfit for sea duty.
Consequently, Atienza filed a complaint against Orophil, Engr. Orola, and Hakuho before the
NLRC for payment of disability benefits, reimbursement of medical expenses, damages, and
attorney’s fees.

For their part, Orophil, et al. opposed the claim for disability benefits, asserting that Atienza
was declared fit to work by the company-designated physician and that his illness is not work-
related, adding too that he maliciously concealed the fact that he has previously suffered from THS
that effectively barred him from claiming disability benefits under the 2000 POEA-SEC.

ISSUE:
1. Whether or not Atienza is entitled to total and permanent disability benefits pursuant to
the 2000 POEA-SEC. (YES)

RULING:
Yes. While the law disputably presumes an illness not found in Sec. 32-A to be also work-related, the
seafarer/claimant nonetheless is burdened to present substantial evidence that his work conditions
caused or at least increased the risk of contracting the disease and only a reasonable proof work-
connection, not direct causal relation is required to establish compensability.

Records show that Atienza experienced major symptoms of THS in the exercise of his functions
as an Able Seaman. Clearly, while the exact cause of THS was unknown, it is reasonable to
conclude that Atienza’s illness was most probably aggravated due to the peculiar nature of his
work that required him to be on-call 24 hours a day to observe and keep track of weather
conditions and keep watch at sea during navigation. Accordingly, it is apparent that while
Atienza’s illness appears to have been pre-existing, his work exposed him to the risk of
aggravating the same.

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V. LABOR RELATIONS
A. Right to self-organization
1. Coverage
2. Ineligibility of managerial employees; right of supervisory employees
3. Effect of inclusion as employees outside of the bargaining unit
4. Non-abridgement
B. Bargaining unit
C. Bargaining representative

SLORD DEVELOPMENT CORPORATION, Petitioners, – versus - BENERANDO NOYA,

Respondent.
GR No. 232687, SECOND DIVISION, February 4, 2019

In Tanduay Distillery Labor Union v. NLRC,the Court ruled that the organization by union
members of a rival union outside the freedom period, without first terminating their membership
in the union and without the knowledge of the officers of the latter union, is considered an act of
disloyalty, for which the union members may be sanctioned. This requirement ceases to be binding
only during the sixty (60)-day freedom period immediately preceding the expiration of the CBA,
which enjoys the principle of sanctity or inviolability of contracts guaranteed by the Constitution.

In the case at hand, Noya formed a new union outside of the freedom period.

FACTS:
Benerando Noya was employed as a welder by Slord Development Corporation (Slord). His
contract was covered by a CBA effective April 14, 2009 to April 15, 2014. The exclusive
bargaining representative is NLM-Katipunan. The CBA contains a union security clause (closed-
shop agreement), the pertinent provision reads:

Section 3. Dismissal. - Any new employee covered by the bargaining unit, who attains
regular status in the COMP ANY but fails to join the UNION mentioned in Section 2
hereof, and any union member who is expelled from the UNION or fails to maintain their
membership in the UNION,

Sometime in 2013, Noya asked some employees to affix their signature on a yellow sheet for the
purpose of forming a new union. The new union was formed and subsequently registered on
February 20, 2014

NLM-Katipunan commenced an expulsion proceeding against Noya for disloyalty. Noya failed to
appear and participate in the proceeding before the union. On the strength of the testimonies
and affidavit signed by the other members that Noya was actively seeking signature to form a
new union, a notice of expulsion was issued against Noya. NLM Katipunan then requested Slord
to terminate Noya pursuant to the union security clause. Slord terminated the employment after
notifying Noya of the decision to expel him and showing him all the documents attached to the
union's demand for his dismissal.

Noya contends that his dismissal was illegal. He raises that the new union was formed during
the freedom period.

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 ISSUES:
1. Whether or not Noya commited acts of disloyalty to the union. (YES)
2. Whether or not the dismissal on the ground of union security clause is valid. (YES)
3. Whether or not procedural due process was observed. (NO)

RULING
1. Yes, Noya committed acts of disloyalty.

In Tanduay Distillery Labor Union v. NLRC,the Court ruled that the organization by union
members of a rival union outside the freedom period, without first terminating their
membership in the union and without the knowledge of the officers of the latter union, is
considered an act of disloyalty, for which the union members may be sanctioned. As an act of
loyalty, a union may require its members not to affiliate with any other labor union and to
consider its infringement as a reasonable cause for separation, pursuant to the union
security clause in its CBA. This requirement ceases to be binding only during the sixty (60)-
day freedom period immediately preceding the expiration of the CBA, which enjoys the
principle of sanctity or inviolability of contracts guaranteed by the Constitution

In the case at hand, Noya formed a new union outside the freedom period.

2. Yes, dismissal on the ground of union security clause is valid.

Case law recognizes that dismissal from employment due to the enforcement of the
union security clause in the CBA is another just· cause for termination of employment.
Similar to the enumerated just causes in the Labor Code, the violation of a union security
clause amounts to a commission of a wrongful act or omission out of one's own volition;
hence, it can be said that the dismissal process was initiated not by the employer but by
the employee's indiscretion. Further, a stipulation in the CBA authorizing the dismissal
of employees is of equal import as the statutory provisions on dismissal under the Labor
Code, since a CBA is the law between the company and the union and compliance
therewith is mandated by the express policy to give protection to labor.

To validly terminate the employment of an .employee through the enforcement of the

union ·security clause, the following requisites must concur: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence to support the decision of the
union to expel the employee from the union.

All requisites are met. The CBA contains a closed-shop agreement. NLM-Katipunan
requested the enforcement of the union security clause by demanding the dismissal of
Noya from employment.

3. No, procedural due process was not observed.

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In Distribution & Control Products, Inc. v. Santos, the Court has explained that procedural due
process consists of the twin requirements of notice and hearing. The employer must furnish
the employee with two (2) written notices before the termination of employment can be
effected: (1) the first apprises the employee of the particular acts or omissions for which his
dismissal is sought; and (2) the second informs the employee of the employer's decision to
dismiss him. The requirement of a hearing is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual hearing was conducted.

Here, records fail to show that petitioner accorded respondent ample opportunity to
defend himself through written notices and subsequent hearing. However, it is settled
that in cases involving dismissals for just cause but without observance of the twin
requirements of notice and hearing, the validity of the dismissal shall be upheld, but the
employer shall be ordered to pay nominal damages.

D. Rights of labor organizations

1. Check off, assessments, and agency fees

PENINSULA EMPLOYEES UNION (PEU), Petitioner, -versus- MICHAEL ESQUIVEL, et.

al., Respondents.
G.R. No. 218454, FIRST DIVISION, December 1, 2016, PERLAS-BERNABE, J.

Case law interpreting Article 250 (n) and (o) of the Labor Code, as amended, mandates the
submission of three (3) documentary requisites in order to justify a valid levy of increased
union dues. These are: (a) an authorization by a written resolution of the majority of all
the members at the general membership meeting duly called for the purpose; (b) the
secretary's record of the minutes of the meeting, which shall include the list of all members
present, the votes cast, the purpose of the special assessment or fees and the recipient of
such assessment or fees; and (c) individual written authorizations for check-off duly signed
by the employees concerned.

In the present case, however, PEU-NUWHRAIN failed to show compliance with the
foregoing requirements. While the matter of implementing the two percent (2%) union
dues was taken up during the PEU-NUWHRAIN's 8th General Membership Meeting on
October 28, 2008, there was no sufficient showing that the same had been duly deliberated
and approved.

FACTS:
Peninsula Employees Union’s (PEU) Board of Directors passed a resolution authorizing
(a) the affiliation of PEU with National Union of Workers in Hotel Restaurants and Allied
Industries (NUWHRAIN), and the direct membership of its individual members; (b) the
compliance with all the requirements; and (c) the Local President to sign the affiliation
agreement with NUWHRAIN upon acceptance of such affiliation. On the same day, the said
act was submitted to the general membership, and was duly ratified by 223 PEU members.

Brought by its affiliation, PEU-NUWHRAIN sought to increase the union dues

from one percent to two percent of the rank and file employees' monthly salaries.

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 PEU-NUWHRAIN requested the OSEC for Administrative Intervention for
Dispute Avoidance (AIDA) to the issue of its entitlement to collect increased agency fees
from the non-PEU members.

The non-PEU members objected to the assessment of increased agency fees arguing
that:
(a) the new CBA is unenforceable since no written CBA has been formally signed and
executed by PEU-NUWHRAIN and the Hotel; (b) the 2% agency fee is exorbitant and
unreasonable; and (c) PEU-NUWHRAIN failed to comply with the mandatory
requirements for such increase.

The OSEC upheld PEU-NUWHRAIN's right to collect agency fees from the non-PEU
members in accordance with Article 4, Section 2 of the expired CBA, which was declared
to be in full force and effect but only at the rate of one percent (1%), and denied its bid
to increase the agency fees to two percent (2%) for failure to show that its general
membership approved the same.

Dissatisfied, PEU-NUWHRAIN moved for reconsideration. The OSEC partially granted

the motion for reconsideration, and declaring it entitled to collect two percent agencies
fees from non-members. The Court of Appeals set aside the latest decision the the OSEC.
It ruled that PEU-NUWHRAIN failed to prove compliance with the requisites for a valid
check-off since the minutes do not show that the increase in union dues was duly
approved by its general membership.

ISSUE:

Whether or not the CA committed reversible error in ruling that PEU-NUWHRAIN had
no right to collect the increased agency fees. (NO)

RULING

The recognized collective bargaining union which successfully negotiated the CBA with
the employer is given the right to collect a reasonable fee called "agency fee" from non-
union members who are employees of the appropriate bargaining unit, in an amount
equivalent to the dues and other fees paid by union members, in case they accept the
benefits under the CBA.

In the present case, PEU-NUWHRAIN's right to collect agency fees is not disputed.
However, the rate of agency fees it seeks to collect from the non-PEU members is
contested.

Case law interpreting Article 250 (n) and (o) of the Labor Code, as amended,
mandates the submission of three (3) documentary requisites in order to justify a valid levy
of increased union dues. These are: (a) an authorization by a written resolution of the
majority of all the members at the general membership meeting duly called for the purpose;
(b) the secretary's record of the minutes of the meeting, which shall include the list of all
members present, the votes cast, the purpose of the special assessment or fees

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 and the recipient of such assessment or fees; and (c) individual written authorizations
for check-off duly signed by the employees concerned.

In the present case, however, PEU-NUWHRAIN failed to show compliance with

the foregoing requirements. While the matter of implementing the two percent (2%)
union dues was taken up during the PEU-NUWHRAIN's 8th General Membership
Meeting on October 28, 2008, there was no sufficient showing that the same had been
duly deliberated and approved.

Having failed to establish due deliberation and approval of the increase in union
dues from one percent (1%) to two percent (2%), as well as the deduction of the two
percent (2%) union dues during PEU-NUWHRAIN's 8th General Membership Meeting on
October 28, 2008, there was nothing to confirm, affirm, or ratify through the July 1, 2010
GMR. Contrary to the ruling of the OSEC in its March 6, 2012 Order, the July 1, 2010
GMR, by itself, cannot justify the collection of two percent (2%) agency fees from the
non-PEU members beginning July 2010. The Assembly was not called for the purpose of
approving the proposed increase in union dues and the corresponding check-off, but
merely to "confirm and affirm" a purported prior action which PEU-NUWHRAIN,
however, failed to establish.

2. Collective bargaining

ANGELITO CASTRO, RAYMUNDO SAURA AND RAMONITO FANUNCION, vs.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND
MANUEL V. PANGILINAN
(G.R. No. 191792, THIRD DIVISION, August 22, 2012, PERLAS-BERNABE, J.)

Settled is the rule that the benefits of a CBA extend only to laborers and employees who are
members of the collective bargaining unit.

Consequently, petitioners were no longer employees of PLDT nor members of the collective bargaining
unit represented by MKP when the CBA was signed on March 14, 2001 or when it became effective on
November 9, 2000 and are, thus, not entitled to avail of the benefits under the new CBA. Accordingly,
the Court finds no reversible error on the part of the CA in directing each of the petitioners to return the
amount of P133,000.00 which they respectively received from respondents.

FACTS:
Castro, et al. were among the ninety-four (94) union officers and members who were dismissed
by Philippine Long Distance Telephone Company (PLDT) due to their participation in the strike
staged by the Manggagawa ng Komunikasyon sa Pilipinas (MKP), the collective bargaining agent
of all rank and file employees of PLDT.

Meanwhile, during the pendency of the case before the NLRC, the striking employees were
admitted back to work subject to the outcome of the pending case. The strike was, thereafter,
declared illegal and the employees' dismissals were adjudged valid in a Resolution rendered by
the NLRC to which the case was certified for compulsory arbitration. NLRC Resolution was

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subsequently upheld by the Court in a Resolution, which eventually attained finality and
accordingly entered in the Book of Entries of Judgments.

Consequently, the concerned employees including Castro, et al. were notified of their
termination for cause citing the above Resolutions of the NLRC and the Court. Aggrieved, they
filed separate complaints for illegal dismissal, money claims and damages against PLDT. They
claimed that PLDT’s acts of voluntarily extending the benefit of redundancy/early retirement
program and even promotions constituted supervening events or voluntary acts amounting to a
waiver/condonation of the effects of the illegality of strike.

In the Decision, LA rejected the claim of res judicata and declared the dismissal of the concerned
employees illegal. NLRC, however, vacated the above decision holding that the intent to
waive/condone the effects of the illegal strike was not sufficiently established by the cited
circumstances. CA dismissed the petition.

Meanwhile, MKP and PLDT signed a new CBA, among others, granting all PLDT employees the
amount of P133,000.00 each in lieu of wage increases during the first year of the CBA. The CBA
was made effective November 9, 2000, the day immediately following the expiration of the old
CBA. The concerned employees filed motions for execution before the LA seeking payment of
salaries and other benefits granted under the new CBA.

LA adjudged the entitlement of the employees to the payment of the amount of P133,000.00
each granted under the CBA. NLRC sustained the above order in the Resolution, holding that the
said grant is no different from the other benefits that were received by petitionersas a
consequence of their reinstatement pending appeal.

CA vacated the NLRC Decision and ordered each petitioner to return the amount of P133,000.00
they received by virtue of the April 18, 2002 Order of LA,finding that the concerned employees
were no longer employees at the time of the signing of the CBA notwithstanding that its
effectivity was made retroactive. Thus, not being members of the bargaining unit, they cannot
claim benefits under the CBA.

ISSUE:
Whether or not petitioners are entitled to the payment of the CBA-imposed P133,000.00
because the CBA became effective on November 9, 2000 prior to the NLRC Decision that
declared their dismissal as valid? (NO)

RULING:
Settled is the rule that the benefits of a CBA extend only to laborers and employees who are
members of the collective bargaining unit.

In the present case, the Court's August 3, 1998 Resolution sustaining petitioners' dismissal as a
consequence of their participation in the illegal strike became final on January 18, 1999. Accordingly,
PLDT informed them of their termination for cause on the basis of the said Resolution. While they
challenged their dismissals upon a claim that supervening events evincing an intent on the part of
PLDT to waive/condone the effects of the illegal strike had set in which rendered the final Resolution
of the Court moot and academic, the Court, in the Resolution dated

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January 16, 2006 in G.R. Nos. 170607-08, ruled out the presence of supervening events. As such,
it is only proper to reckon the termination of petitioners' employment with PLDT to January 18,
1999.

Consequently, petitioners were no longer employees of PLDT nor members of the collective
bargaining unit represented by MKP when the CBA was signed on March 14, 2001 or when it
became effective on November 9, 2000 and are, thus, not entitled to avail of the benefits under
the new CBA. Accordingly, the Court finds no reversible error on the part of the CA in directing
each of the petitioners to return the amount of P133,000.00 which they respectively received
from respondents.

VISAYAN ELECTRIC COMPANY EMPLOYEES UNION AND CASMERO MAHILUM v. VISAYAN

ELECTRIC COMPANY, INC.
G.R. No. 205575, FIRST DIVISION, July 22, 2015, PERLAS-BERNABE, J.

True, it is a fundamental DOCTRINE OF THE CASE in labor law that the CBA is the law between the
parties and they are obliged to comply with its provisions. If the provisions of the CBA seem clear
and unambiguous, the literal meaning of their stipulations shall control.

However, as in this case, when general and specific provisions of the CBA are inconsistent, the
specific provision shall be paramount to and govern the general provision.

FACTS:
Respondent Visayan Electric Company, Inc. (VECO) is a corporation engaged in the supply and
distribution of electricity in Cebu City and its neighboring cities, municipalities, and barangays.
The Union is the exclusive bargaining agent of VECO's rank-and-file employees, and Mahilum
was the Union's president.

It was claimed that, before Mahilum was elected as union officer, he was transferred from
VECO's Public Relations Section to its Administrative Services Section without any specific work.
At the time of his election as union president, VECO management allegedly terminated active
union members without going through the grievance machinery procedure prescribed under
the Collective Bargaining Agreement (CBA); and refused to implement the profit-sharing
scheme provided under the same CBA, among others.

Thereafter, the union members marched on the streets to protest VECO’s refusal to comply with
the provisions of the CBA simultaneously handing out a document containing their greivances.
Following said incident, Mahilum was asked to explain why he should not be terminated from
service due to loss of trust and confidence, as well as in violating the Company Code of
Discipline, for causing the publication of what VECO deemed as a libelous article.

Consequently, the union officers were notified of the administrative investigation to be conducted
relative to the charges against them. During the scheduled investigation, the Union's counsel initially
raised its objection to the proceedings and insisted that the investigation should be

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conducted through the grievance machinery procedure, as provided in the CBA. VECO carried
on with the investigation and henceforth terminated Mahilum.

Afterwards, the Union filed another Notice of Strike with the NCMB against VECO on the
grounds of unfair labor practice, specifically union busting for the dismissal and/or suspension
of its union president and officers, refusal to bargain collectively, as well as non-observance of
the grievance procedure in their CBA.To avert any work stoppage that will prejudice VECO's
power distribution activity, the Secretary of Labor intervened and issued an Order certifying the
labor dispute to the NLRC for compulsory arbitration.

The NLRC found VECO to have acted within the bounds of law when it administratively investigated
the terminated employees and union officers, instead of subjecting their respective cases to the
grievance machinery procedure. In resolving apparently conflicting provisions in the CBA, the NLRC
applied the specific provision found in Section 13 of Article XIV that disciplinary actions shall be
governed by the rules and regulations promulgated by the company. Since the administrative
investigations conducted by VECO were found to have complied with procedural due process
requirements, there was no unfair labor practice to speak of.

Upon a certiorari petition, the CA dismissed the same for having been filed "one day behind the
reglementary period."

ISSUE
1. Is VECO correct in not subjecting the respective cases to the grievance machinery
procedure in the CBA? (YES)
2. Should the certiorari petition be admitted even if filed one day behind the reglementary
period? (NO)

RULING
1. Yes. True, it is a fundamental DOCTRINE OF THE CASE in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. If the provisions of the
CBA seem clear and unambiguous, the literal meaning of their stipulations shall control.
However, as in this case, when general and specific provisions of the CBA are inconsistent, the
specific provision shall be paramount to and govern the general provision.

Under Section 13, Article XIV, "(t)he Company agrees that henceforth there shall be a fair
and uniform application of its rules and regulations. It is understood that disciplinary
actions imposed on employee or laborer shall be governed by the rules and regulations
promulgated by the Company as well as those provided for by existing laws on the
matter."

2. The fact that the delay in the filing of the petition for certiorari was only one day is
not a legal justification for non-compliance with the rule requiring that it be filed not
later than sixty (60) days from notice of the assailed judgment, order or resolution.
The Court cannot subscribe to the theory that the ends of justice would be better
subserved by allowing a petition for certiorari filed only one-day late. When the law
fixes sixty (60) days, it cannot be taken to mean also sixty-one (61) days.

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 E. Unfair Labor Practices
1. Nature, aspects
2. By employers
3. By labor organizations
F. Peaceful concerted activities
1. Strikes
2. Picketing
3. Lockouts
4. Assumption of jurisdiction by the DOLE Secretary
5. Injunctions

VI. POST-EMPLOYMENT
A. Employer-employee relationship
1. Tests to determine existence
2. Kinds of employment
a. Regular

OMNI HAULING SERVICES, INC., LOLITA FRANCO, and ANICETO FRANCO v. BERNARDO
BON, et al.
G.R. No. 199388, FIRST DIVISION, September 03, 2014, PERLAS-BERNABE, J

According to jurisprudence, the principal test for determining whether particular employees are
properly characterized as “project employees” as distinguished from “regular employees,” is
whether or not the employees were assigned to carry out a “specific project or undertaking,” the
duration (and scope) of which were specified at the time they were engaged for that project.

The determination that respondents are regular and not merely project employees resultantly
means that their services could not have been validly terminated at the expiration of the project,
or, in this case, the service contract of Omni with the Quezon City government. As regular
employees, it is incumbent upon petitioners to establish that respondents had been dismissed for a
just and/or authorized cause.

FACTS:

Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners Lolita and
Aniceto Franco (petitioners), was awarded a one (1) year service contract by the local
government of Quezon City to provide garbage hauling services for the period July 1, 2002 to
June 30, 2003. For this purpose, Omni hired respondents as garbage truck drivers and paleros
who were then paid on a per trip basis.

When the service contract was renewed for another year, petitioners required each of the
respondents to sign employment contracts which provided that they will be “re-hired” only for the
duration of the same period. However, respondents refused to sign the employment contracts,
claiming that they were regular employees since they were engaged to perform activities which were
necessary and desirable to Omni’s usual business or trade.For this reason, Omni terminated the
employment of respondents which, in turn, resulted in the filing of cases for illegal dismissal,
nonpayment of Emergency Cost of Living Allowance (ECOLA) and 13th month pay, and actual,

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moral, and exemplary damages. During the mandatory conference before the Labor Arbiter
(LA), Omni offered to re-employ respondents on the condition that they sign the employment
contracts but respondents refused such offer.

In a Decision, the LA ruled in favor of petitioners, finding that respondents were not illegally
dismissed. NLRC affirmed, CA reversed.

ISSUE: Whether or not respondents were illegally dismissed (YES)

HELD:
A project employee is assigned to a project which begins and ends at determined or
determinable times. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as “project
employees” may be lawfully terminated at the completion of the project.

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

Even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and
scope of their work and their status as project employees. As held in Hanjin Heavy Industries
and Construction Co., Ltd. v. Ibañez, citing numerous precedents on the matter, where no other
evidence was offered, the absence of the employment contracts raises a serious question of
whether the employees were properly informed of their employment status as project
employees at the time of their engagement. In this case, records are bereft of any evidence to
show that respondents were made to sign employment contracts explicitly stating that they
were going to be hired as project employees, with the period of their employment to be co-
terminus with the original period of Omni’s service contract with the Quezon City government.

The determination that respondents are regular and not merely project employees resultantly
means that their services could not have been validly terminated at the expiration of the project,
or, in this case, the service contract of Omni with the Quezon City government. As regular
employees, it is incumbent upon petitioners to establish that respondents had been dismissed
for a just and/or authorized cause. However, petitioners failed in this respect; hence,
respondents were illegally dismissed.

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ISIDRO QUEBRAL, et. al., Petitioners, -versus- ANGBUS CONSTRUCTION, INC. and ANGELO
BUSTAMANTE, Respondents.
G.R. No. 221897, FIRST DIVISION, November 7, 2016, PERLAS-BERNABE, J.

Employers claiming that their workers are project-based employees have the burden to
prove that these two requisites concur: (a) the employees were assigned to carry out a specific
project or undertaking; and (b) the duration and scope of which were specified at the time they
were engaged for such project.
The Court previously ruled that although the absence of a written contract does not by
itself grant regular status to the employees, it is evidence that they were informed of the duration
and scope of their work and their status as project employees at the start of their engagement.
When no other evidence is offered, the absence of employment contracts raises a serious question
of whether the employees were sufficiently apprised at the start of their employment of their status
as project employees. Absent such proof, it is presumed that they are regular employees, thus, can
only be dismissed for just or authorized causes upon compliance with procedural due process.
In this case, Angbus failed to discharge its burden to prove that petitioners were project
employees, the NLRC correctly ruled that they should be considered as regular employees. Thus,
the termination of petitioners' employment should have been for a just or authorized cause, the
lack of which, as in this case, amounts to illegal dismissal.

FACTS:
Isidro Quebral, et. al. alleged that Angbus employed them as construction workers on
various dates from 2008 to 2011. They claimed to be regular employees because they have
rendered services to Angbus’ construction business for several years already. However, they
were summarily dismissed from work without any just cause and due process. Thus, they filed
consolidated cases for illegal dismissal with prayer for reinstatement.

For their part, respondents alleged that the petitioners were hired only for two project
employment contracts. Respondents further stated that a long period of time between the first
project employment and the other intervened, which meant that petitioners were not re-hired
repeatedly and continuously.

However, respondents failed to present petitioners' employment contracts, payrolls, and

job application documents. They averred that these documents were completely damaged by
the flood.

The Labor Arbiter found that petitioners were not illegally dismissed. The NLRC revered
the LA’s ruling and declared that petitioners were regular employees who were illegally
dismissed. The CA held that NLRC gravely abused its discretion when it ruled that petitioners
were regular employees of Angbus.

ISSUE

Whether or not the CA erred in declaring petitioners as project employees of Angbus and
consequently, holding their dismissal to be valid. (YES)

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RULING

Articled 295 of the Labor Code states that 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
services to be performed is seasonal in nature and the employment is for the duration of the
season.

A project-based employee is assigned to a project which begins and ends at determined

or determinable times. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as project-
based employees may be lawfully terminated at the completion of the project.

To safeguard the rights of workers against the arbitrary use of the word "project" to
preclude them from attaining regular status, jurisprudence provides that employers claiming that
their workers are project-based employees have the burden to prove that these two requisites
concur: (a) the employees were assigned to carry out a specific project or undertaking; and (b) the
duration and scope of which were specified at the time they were engaged for such project.

The Court previously ruled that although the absence of a written contract does not by
itself grant regular status to the employees, it is evidence that they were informed of the
duration and scope of their work and their status as project employees at the start of their
engagement. When no other evidence is offered, the absence of employment contracts raises a
serious question of whether the employees were sufficiently apprised at the start of their
employment of their status as project employees. Absent such proof, it is presumed that they are
regular employees, thus, can only be dismissed for just or authorized causes upon compliance
with procedural due process.

In addition, it is clear that the submission of the termination report to the DOLE "may be
considered" only as an indicator of project employment. By the provision's tenor, the
submission of this report, by and of itself, is therefore not conclusive to confirm the status of the
terminated employees as project employees, especially in this case where there is a glaring
absence of evidence to prove that petitioners were assigned to carry out a specific project or
undertaking, and that they were informed of the duration and scope of their supposed project
engagement, which are, in fact, attendant to the first two (2) indicators of project employment
in the same DOLE issuance above-cited.

In this case, Angbus failed to discharge this burden.Since Angbus failed to discharge its burden
to prove that petitioners were project employees, the NLRC correctly ruled that they should be
considered as regular employees. Thus, the termination of petitioners' employment should have
been for a just or authorized cause, the lack of which, as in this case, amounts to illegal dismissal.

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 UNIVERSITY OF SANTO TOMAS (UST), Petitioners, – versus - SAMAHANG MANGGAGAWA
NG UST, FERNANDO PONTESOR, RODRIGO CLACER, SANTIAGO BUISA, JR., and JIMMY
NAZARETH, Respondents.
G.R. No. 184262, FIRST DIVISION, April 24, 2017

If the employee has been performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the
business. Employers claiming that their workers are project-based employees should not only
prove that the duration and scope of the employment was specified at the time they were engaged,
but also, that there was indeed a project. Pontesor, et al. fall under the second category of regular
employees under Article 295 of the Labor Code.

FACTS:

A complaint for regularization and illegal dismissal was filed by SamahangManggagawa ng UST
and Pontesor, et al. against UST before the NLRC. Pontesor, et al. alleged that on the years 1990-
1999, UST repeatedly hired them to perform various maintenance duties within its campus.
Thus, they insist that they should be deemed regular employees of UST as their services are
necessary and desirable to its business. While UST admitted its repeated rehiring ofPontesor, et
al., it nevertheless maintained that they were merely hired on a per-project basis, as evidenced
by the Contractual Employee Appointments (CEAs) signed by them. As such, the termination of
Pontesor, et al.’s employment with UST was validly made due to the completion of the specific
projects for which they were hired.

The LA ruled in Pontesor, et al.’s favor and found that they are regular employees of UST and
therefore illegally dismissed. The NLRC vacated said ruling and dismissed the complaint of Pontesor,
et al. for lack of merit. It ruled that Pontesor, et al. cannot be considered regular employees as they
knowingly and voluntarily entered into fixed term contracts of employment with UST and thus, were
classified as mere fixed term casual employees. The CA reversed and set aside the NLRC ruling and
held that Pontesor, et al. cannot be considered as merely fixed term or project employees,
considering that: (a) they performed work that is necessary and desirable to the business of UST, as
evidenced by their repeated rehiring and UST’s continued need for their services; and (b) the specific
undertaking or project for which they were employed were not clear as the project description set
forth in their CEAs were either too general or too broad.

ISSUE:
1. Whether or not Pontesor, et al. are regular employees and, consequently, were illegally
dismissed. (YES)

RULING:
Yes. If the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists. Thus, Pontesor, et al. fall under the second category
of regular employees under Article 295 of the Labor Code.

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 Further, employers claiming that their workers are project-based employees should not
only prove that the duration and scope of the employment was specified at the time they were
engaged, but also, that there was indeed a project. Pontesor, et al. could not be considered as
project employees because the specific undertakings or projects for which they were employed
were not clearly delineated. They were engaged to perform all-around maintenance services
throughout the various facilities/installations in the campus of UST. Thus, it seems that UST,
though the CEAs, merely attempted to compartmentalize Pontesor, et al.’s various tasks into
purported “projects” so as to make it appear that they were hired on a per-project basis.

Being regularized casual employees who enjoy, inter alia, security of tenure, Pontesor, et
al. cannot be terminated from employment without any just and/or authorized cause, which
unfortunately, UST was guilty of doing in this case.

b. Casual
c. Probationary

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA

OLIVIA T. YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR vs. PEARLIE
ANN F. ALCARAZ
(G.R. No. 192571, EN BANC, July 23, 2013, PERLAS-BERNABE, J.)

An employer is deemed to have made known the standards that would qualify a probationary
employee to be a regular employee when it has exerted reasonable efforts to apprise the employee
of what he is expected to do or accomplish during the trial period of probation. Abbott clearly
conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during
the time of her engagement, and the incipient stages of her employment.

FACTS:
Abbott employed Alcaraz as Medical and Regulatory Affairs Manager on probationary basis.
Alcaraz signed an employment contract which stated, inter alia, that she was to be placed on
probation for a period of six (6) months. In line with this, she received an email containing
Abbott’s organizational chart and a job description of her work. Further, during Alcaraz’s pre-
employment orientation, she was briefed on her duties and responsibilities as Regulatory
Affairs Manager,

However, later on, Alcaraz was terminated for allegedly failing to meet the regularization
standards for the said position. Alcaraz felt that she was unjustly terminated from her
employment and thus, filed a complaint for illegal dismissal and damages against Abbott and its
officers. She claimed that she should have already been considered as a regular and not a
probationary employee given Abbott’s failure to inform her of the reasonable standards for her
regularization upon her engagement as required under Article 295 of the Labor Code. In this
relation, she contended that while her employment contract stated that she was to be engaged
on a probationary status, the same did not indicate the standards on which her regularization
would be based.

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On the contrary, petitioners maintained that Alcaraz was validly terminated from her
probationary employment given her failure to satisfy the prescribed standards for her
regularization which were made known to her at the time of her engagement.

ISSUE:
Whether or not Alcaraz was sufficiently informed of the reasonable standards to qualify her as a
regular employee? (YES)

RULING:
An employer is deemed to have made known the standards that would qualify a probationary
employee to be a regular employee when it has exerted reasonable efforts to apprise the
employee of what he is expected to do or accomplish during the trial period of probation. Abbott
clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior
to, during the time of her engagement, and the incipient stages of her employment.

DE LA SALLE ARANETA UNIVERSITY, INC., Petitioner, - versus - DR. ELOISA G.

MAGDURULANG, Respondent.
G.R. No. 224319, SECOND DIVISION, November 20, 2017
For 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 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.
In this case, 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
FACTS:
Respondent Dr. Magdurulang alleged that petitioner De La Salle Araneta University, Inc. initially
hired her as a part-time faculty member for the latter's College of Business for the second
semester of SY 2007-2008 and the summer semester of SY 2008. For the second semester of SY
2008-2009, she was then appointed as a full-time faculty member, such designation being
renewed for the first and second semesters of SY 2009-2010.
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 consecutive semesters or nine consecutive trimesters of
satisfactory service," the University President issued a re-appointment to respondent as full-
time faculty member for the first and second semesters of SY 2010-2011, with a re-classified
ranking of Assistant Professor 4 and on contractual basis.
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 a full-time faculty member was likewise discontinued. Respondent insisted that she had

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already attained the status of a regular employee since she has been teaching for about three
years beginning in 2007 and considering too that the Acting Assistant Dean already
recommended her permanent appointment.
The LA dismissed the complaint for lack of merit. The NLRC reversed. The CA modified the ruling.

ISSUE:
1. Whether or not the respondent was a probationary employee. (YES)
2. Whether or not the respondent was constructively dismissed. (YES)

RULING:
1. YES. For 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 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.
Thus, upon the expiration 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.
In this case, 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 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
consecutive semesters as a full-time professor 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.
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 unmistakably show that an abbreviated probationary period has been
agreed upon, the default probationary term still governs, as in this case.
2. YES. 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

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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 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 be made liable to respondent for the latter's benefits appurtenant thereto.

d. Project

CRISPIN B. LOPEZ vs. IRVINE CONSTRUCTION CORP. and TOMAS SY SANTOS (G.R. No.
207253, SECOND DIVISION, August 20, 2014, PERLAS-BERNABE, J.)

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

Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-off
of Lopez was hardly justified considering the absence of any causal relation between the cessation
of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a regular and
not a project employee. Hence, the continuation of his engagement with Irvine, either in Cavite, or
possibly, in any of its business locations, should not have been affected by the culmination of the
Cavite project alone.

FACTS:
Respondent Irvine Construction Corp. initially hired Lopez as laborer in November 1994 and,
thereafter, designated him as a guard at its warehouse in Dasmarinas, Cavite in the year 2000, with a
salary of ₱238.00 per day and working hours from 7 o'clock in the morning until 4 o'clock in the
afternoon, without any rest day. On December 18, 2005, Lopez was purportedly terminated from his
employment, whereupon he was told "Jkaw ay lay-off muna." Thus, he filed a complaint for illegal
dismissal with prayer for the payment of separation benefits against Irvine.

For its part, Irvine denied Lopez's claims, alleging that he was employed only as a laborer who,
however, sometimes doubled as a guard. As laborer, Lopez's duty was to bring construction
materials from the suppliers' vehicles to the company warehouse when there is a construction
project in Cavite. As evidenced by an Establishment Termination Report dated December 28,
2005 which Irvine previously submitted before the Department of Labor and Employment
(DOLE), Lopez was, however, temporarily laid-off on December 27, 2005 after the Cavite project

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was finished. Eventually, Lopez was asked to return to work through a letter dated June 5, 2006
(return to work order), allegedly sent to him within the six (6) month period under Article 286
of the Labor Code which pertinently provides that "[t]he bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months x x x shall not terminate
employment." As such, Irvine argued that Lopez's filing of the complaint for illegal dismissal was
premature.

ISSUE:
Whether or not the CA erred in finding that the NLRC gravely abused its discretion in affirming
the LA's ruling that Lopez was illegally dismissed? (YES)

RULING:
Ruling on the propriety of Irvine's course of action in this case preliminarily calls for a
determination of Lopez's employment status - that is, whether Lopez was a project or a regular
employee.

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

As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only if a
just or authorized cause exists therefor.

Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-
off of Lopez was hardly justified considering the absence of any causal relation between the
cessation of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a
regular and not a project employee. Hence, the continuation of his engagement with Irvine,
either in Cavite, or possibly, in any of its business locations, should not have been affected by the
culmination of the Cavite project alone. In light of the well-entrenched rule that the burden to
prove the validity and legality of the termination of employment falls on the employer, Irvine
should have established the bona fide suspension of its business operations or undertaking that
would have resulted in the temporary lay-off of its employees for a period not exceeding six (6)
months in accordance with Article 286 of the Labor Code.

Due to the grim economic consequences to the employee, case law states that the employer
should also bear the burden of proving that there are no posts available to which the employee
temporarily out of work can be assigned.

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MA. CHARITO C. GADIA, et al. v. SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL
HENDERSON
G.R. No. 209499, FIRST DIVISION, January 28, 2015, PERLAS-BERNABE, J.

Verily, for an employee to be considered project-based, the employer must show compliance with
two (2) requisites, namely that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time they were
engaged for such project.

In this case, records reveal that Sykes Asia adequately informed petitioners of their employment
status at the time of their engagement, as evidenced by the latter’s employment contracts which
similarly provide that they were hired in connection with the Alltel Project, and that their positions
were "project-based and as such is co-terminus to the project." In this light, petitioners were
indeed project-based employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., "co-terminus with the project."

FACTS:
Sykes Asia is a corporation engaged in BPO. Alltel Communications, Inc., a United States-based
telecommunications firm, contracted Sykes Asia’s services to accommodate the needs and
demands of Alltel clients for its postpaid and prepaid services. Thus, on different dates, Sykes
Asia hired petitioners as customer service representatives, team leaders, and trainers for the
Alltel Project.

Services for the said project went on smoothly until Alltel sent two letters to Sykes Asia
informing the latter that it was terminating all support services provided by Sykes Asia related
to the Alltel Project. In view of this development, Sykes Asia sent each of the petitioners end-of-
life notices, informing them of their dismissal from employment due to the termination of the
Alltel Project. Aggrieved, petitioners filed separate complaints for illegal dismissal against
respondents praying for reinstatement, backwages, 13th month pay, service incentive leave pay,
night shift differential, moral and exemplary damages, and attorney’s fees. In their complaints,
petitioners alleged that their dismissal from service was unjust as the same was effected
without substantive and procedural due process.

In their defense, respondents averred that petitioners were not regular employees but merely
project-based employees, and as such, the termination of the Alltel Project served as a valid ground
for their dismissal. In support of their position, respondents noted that it was expressly indicated in
petitioners’ respective employment contracts that their positions are "project-based" and thus, "co-
terminus to the project." Respondents further maintained that they complied with the requirements
of procedural due process in dismissing petitioners by furnishing each of them their notices of
termination at least thirty (30) days prior to their respective dates of dismissal.

The LA ruled in favor of respondents, and accordingly, dismissed petitioners’ complaints for lack of
merit. It found that petitioners are merely project-based employees, as their respective employment
contracts indubitably provided for the duration and term of their employment, as well as the specific
project to which they were assigned, i.e., the Alltel Project. Dissatisfied, petitioners appealed to the
NLRC. The NLRC modified the LA Decision, ruling that petitioners are

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regular employees but were validly terminated due to redundancy; hence, declared that they
were legally dismissed from service and were only entitled to receive their respective
separation pay. Respondents moved for reconsideration, which was, however, denied.
Unconvinced, Sykes Asia elevated the case to the CA on certiorari. The CA annulled and set aside
the ruling of the NLRC, and accordingly, reinstated that of the LA. Petitioners moved for
reconsideration, which was denied, hence, this petition.

ISSUE: Whether or not the CA correctly granted respondents’ petition for certiorari, thereby
setting aside the NLRC’s decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based employees, and thus,
validly dismissed from service. (YES)

RULING:
The petition is without merit.

Verily, for an employee to be considered project-based, the employer must show compliance
with two (2) requisites, namely that: (a) the employee was assigned to carry out a specific
project or undertaking; and (b) the duration and scope of which were specified at the time they
were engaged for such project.

In this case, records reveal that Sykes Asia adequately informed petitioners of their employment
status at the time of their engagement, as evidenced by the latter’s employment contracts which
similarly provide that they were hired in connection with the Alltel Project, and that their
positions were "project-based and as such is co-terminus to the project." In this light, the CA
correctly ruled that petitioners were indeed project-based employees, considering that: (a) they
were hired to carry out a specific undertaking, i.e., the Alltel Project; and (b) the duration and
scope of such project were made known to them at the time of their engagement, i.e., "co-
terminus with the project."

As regards the second requisite, the CA correctly stressed that "[t]he law and jurisprudence
dictate that ‘the duration of the undertaking begins and ends at determined or determinable
times’" while clarifying that "[t]he phrase ‘determinable times’ simply means capable of being
determined or fixed." In this case, Sykes Asia substantially complied with this requisite when it
expressly indicated in petitioners’ employment contracts that their positions were "co-terminus
with the project." To the mind of the Court, this caveat sufficiently apprised petitioners that
their security of tenure with Sykes Asia would only last as long as the Alltel Project was
subsisting. In other words, when the Alltel Project was terminated, petitioners no longer had
any project to work on, and hence, Sykes Asia may validly terminate them from employment.
Further, the Court likewise notes the fact that Sykes Asia duly submitted an Establishment
Employment Report and an Establishment Termination Report to the Department of Labor and
Employment Makati-Pasay Field Office regarding the cessation of the Alltel Project and the list
of employees that would be affected by such cessation. As correctly pointed out by the CA, case
law deems such submission as an indication that the employment was indeed project-based.

In sum, respondents have shown by substantial evidence that petitioners were merely project-
based employees, and as such, their services were lawfully terminated upon the cessation of the
Alltel Project.

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 DIONISIO DACLES v. MILLENIUM ERECTORS CORP.
G.R. No. 209822, FIRST DIVISION, July 08, 2015, PERLAS-BERNABE, J

Art. 294 of the Labor Code states that, “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.” Thus, for an employee to be considered project-based, the
employer must show that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time the employee was
engaged for such project.

Being assigned to a project or a phase thereof which begins and ends at determined or
determinable times, the services of project employees may be lawfully terminated at the
completion of such project or phase.

FACTS:
Petitioner Dacles (Petitioner) claimed that he was hired as a Mason by Millenium Erectors Corp.
(MEC) in 1998. On June 2010, while he was working on a project in Quezon City, he was advised
by an MEC officer to move to another site which was also in Quezon City. However, upon arrival
at the said site, he was instructed to return to his former job site. When he requested for a new
project, he was told not to report to work anymore, which prompted him tom file a complaint
for illegal dismissal.

MEC countered that Petitioner was merely a project employee whose contract expired upon the
completion of the project on June 2010. MEC further denied the claim as to the aspect of hiring
because, according to MEC, they only organized and started their business operations in
February 2000. That after the completion of a project, Petitioner applies for a new one and was
consequently hired. Also, according to MEC, the termination of Petitioner was duly reported to
the DOLE.

The LA dismissed the complaint ruling that Petitioner cannot claim that he was illegally
dismissed because his separation was a consequence of the completion of his contract.
However, the NLRC reversed the LA ruling and held that Petitioner was a regular employee
performing tasks which are necessary and desirable to MEC. Later, on a petition for review on
certiorari, the CA annulled and set aside the ruling of NLRC and reinstated the LA’s ruling.

ISSUE: Whether or not there was illegal dismissal. (NO)

RULING:

Art. 294 of the Labor Code states that, “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.”

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 Thus, for an employee to be considered project-based, the employer must show that: (a) the
employee was assigned to carry out a specific project or undertaking; and (b) the duration and
scope of which were specified at the time the employee was engaged for such project. Being
assigned to a project or a phase thereof which begins and ends at determined or determinable
times, the services of project employees may be lawfully terminated at the completion of such
project or phase.

In this case, records reveal that petitioner was adequately informed of his employment status (as
project employee) at the time of his engagement. To the Court's mind, said contracts sufficiently
apprised petitioner that his security of tenure with MEC would only last as long as the specific
project or a phase thereof to which he was assigned was subsisting.On the other hand, the records
are bereft of any substantial evidence to support petitioner's claim that he had been continuously
rehired by respondent as a mason for 22 years as to accord him with a regular employment status.

e. Seasonal
f. Fixed-term

LORALEI P. HALILI, Petitioner, -versus- JUSTICE FOR CHILDREN INTERNATIONAL, ROB

MORRIS, AND GUNDELINA A. VELAZCO, Respondents. G.R. No. 194906, FIRST DIVISION,
September 09, 2015, PERLAS-BERNABE, J.

Applicable laws form part of, and are read into, contracts without need for any express reference
thereto; more so, when it pertains to a labor contract which is imbued with public interest.

In this case, it is undisputed that the contract entered into by JFCI and Halili is a fixed-term
employment contract, covering a period of one (1) year. The peculiar feature, however, of this
contract lies in its termination clause which reads that either party may terminate the same "at
anytime by giving four (4) weeks written notice". While said clause is silent on the requirement
of a legal cause for the same to be operative, the fundamental principle — as above-stated — is
that the law is read into every contract. Hence, the contract's termination clause should not be
interpreted as a form of blanket-license by which each of the parties may just abdicate the
contract at will. Rather, it is a clause which allows any of the parties to pre-terminate the
employment contract within the stipulated fixed-term period of one year, provided that the party
invoking the same has: (a) a legal cause for terminating it; and (b) notifies the other party in
writing four (4) weeks prior to the intended date of termination.

FACTS:
JFCI is an international non-governmental organization whose primary thrust is to
provide aftercare to sexually trafficked children. On April 18, 2006, it hired Halili as its
Consultant Program Coordinator. Respondents Velazco and Morris in their respective capacities
as Director and President, executed an employment contract with Halili for a term of one (1)
year, with the condition that either party may terminate the same "at anytime by giving four (4)
weeks written notice" (termination clause).
On July 13, 2006, JFCI enforced the termination clause by informing Halili that they are
terminating her services as Consultant Program Coordinator, effective August 16, 2006. Claiming
that she was illegally dismissed, Halili filed a complaint against respondents. She averred that in her
termination, JFCI failed to observe the twin requirements of due process. Respondents claim

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that there’s no illegal dismissal considering that her employment was for a term that lapsed
when she was given a notice of termination.
LA and NLRC ruled that JFCI cannot simply rely on the termination clause in dismissing
Halili, but instead on a valid cause and with observance of procedural due process.
CA reversed with the rationale that Halili voluntarily signed to the contract and that the
contract has the force of law and the stipulations contained therein must be observed.

ISSUE:
Whether or not Halili was illegally dimissed. (YES)

HELD:
Applicable laws form part of, and are read into, contracts without need for any express reference
thereto; more so, when it pertains to a labor contract which is imbued with public interest.
In this case, it is undisputed that the contract entered into by JFCI and Halili is a fixed-term
employment contract, covering a period of one (1) year. The peculiar feature, however, of this
contract lies in its termination clause which reads that either party may terminate the same " at
anytime by giving four (4) weeks written notice":

While said clause is silent on the requirement of a legal cause for the same to be operative, the
fundamental principle — as above-stated — is that the law is read into every contract. Hence, the
contract's termination clause should not be interpreted as a form of blanket-license by which each of
the parties may just abdicate the contract at will. Rather, it is a clause which allows any of the parties
to pre-terminate the employment contract within the stipulated fixed-term period of one year,
provided that the party invoking the same has: (a) a legal cause for terminating it; and (b) notifies
the other party in writing four (4) weeks prior to the intended date of termination.

Here, it is clear that the first requisite of legal cause was not complied with by JFCI. No just or
authorized cause was proven by substantial evidence in support of its invocation of the
termination clause stated in its contract with Halili. As such, the pre-termination of the contract
was infirm.

OKS DESIGNTECH, INC. REPRESENTED BY ZAMBY O. PONGAD v. MARY JAYNE L. CACCAM

G.R. No. 211263, FIRST DIVISION, August 05, 2015, PERLAS-BERNABE, J

There is nothing essentially contradictory between a definite period of employment and the nature
of the employee's duties. The decisive determinant in fixed-term employment should not be the
activities that the employee is called upon to perform, but the day certain agreed upon by the
parties for the commencement and termination of their employment relationship.

Caccam was hired as a fixed-term employee. Having been hired under a valid fixed-period
employment contract, respondent's employment was lawfully terminated upon its expiration on
June 21, 2009 without need of any further notice. There is nothing essentially contradictory
between a definite period of employment and the nature of the employee's duties. The decisive
determinant in fixed-term employment should not be the activities that the employee is called
upon to perform, but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship.

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FACTS:

OKS DesignTech, Inc. hired Caccam as an accountant under a Contract of Employment for a
Fixed Period from January 21, 2008 to June 21, 2008. Thereafter, the contract was renewed for
the period June 22, 2008 to June 21, 2009.

On June 8, 2009, Caccam received a letter dated June 6, 2009 signed by the Company Manager
Engr. Pongad informing her of the expiration of her contract on June 21, 2009. She was also
given the option to consume her 19 days of unused leave credits.

Caccam filed a complaint for illegal dismissal. She claimed that she was a regular employee,
arguing that the nature of her work was necessary and desirable in the usual business of
petitioner, and that she was merely imposed a fixed-term employment with an understanding
that her contract would just be renewed upon its expiration. Hence, in view of her regular
status, and petitioner's failure to afford her the opportunity to be heard before terminating her
employment, she asserted that she was illegally dismissed.

OKS denied the allegation of illegal dismissal, it averred that the complaint was used only in
retaliation to the criminal complaint for Qualified Theft and Falsification of Private Documents
that was filed against Caccam.

The LA ruled that there’s illegal dismissal. The LA ruled that since the latter signed the first
contract only on April 21, 2008 and not on January 21, 2008, the date she was hired, the said
contract was deemed a probationary contract, and that by extending it for another year, she
attained the status of a regular employee who may be dismissed only for just or authorized
cause. The NLRC reversed the LA ruling and observed that none of the parties assailed the fixed
period employment, adding that the nature of respondent's work, even if necessary and
desirable in the usual trade or business of petitioner, and the fact that the period of her
employment extended for more than one year were not decisive indicators for regularity of
employment in a fixed period employment.

CA concurred with the LA that Caccam was a regular employee, despite the existence of a fixed-
term contract of employment, since said contract, despite purportedly beginning on January 21,
2008, was actually executed only on April 21, 2008, and extended for another year, during
which Caccam was performing tasks that were usually necessary and desirable in the usual
trade or business of OKS.

ISSUE: Whether or not Caccam was illegally dismissed. (NO)

HELD:
Caccam was not illegally dismissed.
Caccam was hired as a fixed-term employee. Having been hired under a valid fixed-period
employment contract, respondent's employment was lawfully terminated upon its expiration on
June 21, 2009 without need of any further notice.

An employee is said to be under a fixed-term employment when he is hired under a contract

which specifies that the employment will last only for a definite period.

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The case of Brent School, Inc. v. Zamora sustained the validity of fixed-term employment
contracts and gives the following indicators under which fixed-term employment could not be
construed as a circumvention of the law on security of tenure:
(a) The fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
(b) It satisfactorily appears that the employer and the employee dealt with each other on more
or less equal terms with no moral dominance exercised by the former or the latter.

An examination of the contracts entered into by Caccam reveals that her employment was
clearly limited to a fixed period and did not go beyond such period. She, however, asserted that
she is deemed a regular employee in view of the nature of her employment as an accountant, an
activity that is necessary and desirable in the usual business or trade of the company. This
notwithstanding, case law dictates that even if an employee is engaged to perform activities that
are necessary or desirable in the usual trade or business of the employer, the same does not
preclude the fixing of employment for a definite period.

There is nothing essentially contradictory between a definite period of employment and the
nature of the employee's duties. The decisive determinant in fixed-term employment should not
be the activities that the employee is called upon to perform, but the day certain agreed upon by
the parties for the commencement and termination of their employment relationship.

Here, Caccam undisputedly executed a first employment contract which clearly states on its face
that it was for a fixed period of five (5) months beginning from January 21, 2008 to June 21,
2008. While it appears that the said contract was actually signed only on April 21, 2008, the fact
remains that respondent was made well-aware of the fixed period undertaking from the time of
her engagement on January 21, 2008.

g. Security guards
h. Floating status

VICENTE C. TATEL, Petitioner, -versus- JLFP INVESTIGATION SECURITY AGENCY, INC. et.
al., Respondents.
G.R. No. 206942, FIRST DIVISION, February 25, 2015, PERLAS-BERNABE, J.

Temporary "off-detail" or "floating status" is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post until
they are transferred to a new one. It takes place when the security agency's clients decide not to renew
their contracts with the agency, resulting in a situation where the available posts under its existing
contracts are less than the number of guards in its roster. It also happens in instances where contracts
for security services stipulate that the client may request the agency for the replacement of the guards
assigned to it even for want of cause, such that the replaced security guard may be placed on
temporary "off-detail" if there are no available posts under the agency's existing contracts. During such
time, the security guard does not receive any salary or any financial assistance provided by law. It does
not constitute a dismissal, as the assignments primarily depend on the contracts

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entered into by the security agencies with third parties, so long as such status does not continue
beyond a reasonable time. When such a "floating status" lasts for more than six (6) months, the
employee may be considered to have been constructively dismissed.
In this regard, the Court concurs with the finding of the NLRC that respondents failed to
establish that Tatel abandoned his work. To constitute abandonment, two elements must concur:
(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, with the second element as the more
determinative factor and being manifested by some overt acts. Mere absence is not sufficient. 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. Abandonment is incompatible with
constructive dismissal.

FACTS:
Respondent JLFP Investigation Security Agency, Inc. (JLFP), a business engaged as a
security agency, hired Tatel as one of its security guards.
Tatel alleged that he was last posted at BaggerWerken Decloedt En Zoon
(BaggerWerken). He was required to work twelve (12) hours everyday from Mondays through
Sundays and received only Pl2,400.00 as monthly salary. Tatel filed a complaint before the NLRC
against JLFP and its officer for underpayment of salaries and wages, non-payment of other
benefits, 13th month pay, and attorney's fees (underpayment case).
Tatel was placed on "floating status"; after the lapse of six (6) months therefrom,
without having been given any assignments, he filed another complaint against JLFP and its
officers for illegal dismissal, reinstatement, backwages, refund of cash bond deposit amounting
to ₱25,400.00, attorney's fees, and other money claims (illegal dismissal case).
In their defense, respondents denied that Tatel was dismissed and averred that they
removed the latter from his post at BaggerWerken because of several infractions he committed
while on duty. Thereafter, he was reassigned at SKI, and last posted at IPVG.
Notwithstanding the pendency of the underpayment case, respondents sent a
Memorandum directing Tatel to report back to work. However, despite receipt of the said
memorandum, respondents averred that Tatel ignored the same and failed to appear; hence, he
was deemed to have abandoned his work.
In his reply, Tatel admitted having received Memorandum directing him to report back
to work for reassignment. However, when he went to the JLFP office, he was merely advised to
"wait for possible posting." He repeatedly went back to the office for reassignment, but to no
avail. He likewise refuted respondents' claim that he abandoned his work, insisting that after
working for JLFP for more than eleven (11) years, it was illogical for him to refuse any
assignments, more so, to abandon his work and security of tenure without justifiable reasons.
The LA dismissed Tatel's illegal dismissal complaint for lack of merit. The LA did not
give credence to Tatel' s allegation of dismissal in light of the inconsistent statements he made
under oath in the two (2) labor complaints he had filed against the respondents. The LA noted
that said inconsistent statements "relate not only to the dates that he was hired and supposedly
fired but, more glaringly, to the amount of his monthly salaries." It also observed that Tatel
failed to explain said inconsistencies. Aggrieved, Tatel appealedto the NLRC.
The NLRC reversed and set aside the LA's Decision and found Tatel to have been illegally
dismissed. In so ruling, the NLRC rejected respondents' defense that Tatel abandoned his work,

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finding no rational explanation as to why an employee, who had worked for more than ten (10)
years for his employer, would just abandon his work and forego whatever benefits were due
him for the length of his service. Similarly, it debunked the claim of abandonment for failure of
respondents to prove by substantial evidence the elements thereof.
Respondents' motion for reconsideration was denied. Dissatisfied, they elevated the
case to the CA via petition for certiorari.
The CA reversed and set aside the NLRC's Decision and reinstated the LA's Decision
dismissing the illegal dismissal complaint filed by Tatel. The CA found that Tatel ignored the
Memorandum directing him to report to work for possible reassignment signifying that he
abandoned his work and that, consequently, there was no dismissal to begin with. That he was
given subsequent postings clearly manifest that there was no intention to dismiss him, hence,
he could not have been illegally dismissed.
Tatel moved for reconsideration, which was denied; hence, this petition.

ISSUE:
Whether or not the Tatel was illegally dismissed. (YES)

RULING:
At the core of this petition is Tatel' s insistence that he was illegally dismissed when,
after he was put on "floating status", respondents no longer gave him assignments or postings,
and the period therefor had lasted for more than six (6) months. On the other hand, respondents
maintained that Tatel abandoned his work, and that his inconsistent statements before the labor
tribunals regarding his work details rendered his claim of illegal dismissal suspect.
After a judicious perusal of the records, the Court is convinced that Tatel was
constructively, not actually, dismissed after having been placed on "floating status" for more
than six (6) months.
Temporary "off-detail" or "floating status" is the period of time when security guards are
in between assignments or when they are made to wait after being relieved from a previous
post until they are transferred to a new one. It takes place when the security agency's clients
decide not to renew their contracts with the agency, resulting in a situation where the available
posts under its existing contracts are less than the number of guards in its roster. It also
happens in instances where contracts for security services stipulate that the client may request
the agency for the replacement of the guards assigned to it even for want of cause, such that the
replaced security guard may be placed on temporary "off-detail" if there are no available posts
under the agency's existing contracts. During such time, the security guard does not receive any
salary or any financial assistance provided by law. It does not constitute a dismissal, as the
assignments primarily depend on the contracts entered into by the security agencies with third
parties, so long as such status does not continue beyond a reasonable time. When such a
"floating status" lasts for more than six (6) months, the employee may be considered to have
been constructively dismissed.
Relative thereto, constructive dismissal exists when an act of clear discrimination,
insensibility, or disdain, on the part of the employer has become so unbearable as to leave an
employee with no choice but to forego continued employment, or when 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 this case, respondents themselves claimed that after having removed Tatel from his
post at BaggerWerken due to several infractions committed thereat, they subsequently

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reassigned him to SKI. Thereafter, and until Tatel filed the instant complaint for illegal dismissal
six (6) months later, he was not given any other postings or assignments. While it may be true
that respondents summoned him back to work, which Tatel acknowledged to have received,
records are bereft of evidence to show that he was given another detail or assignment. As the
"off-detail" period had already lasted for more than six (6) months, Tatel is therefore deemed to
have been constructively dismissed.
In this regard, the Court concurs with the finding of the NLRC that respondents failed to
establish that Tatel abandoned his work. To constitute abandonment, two elements must concur:
(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, with the second element as the more
determinative factor and being manifested by some overt acts. Mere absence is not sufficient.
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. Abandonment is
incompatible with constructive dismissal.
The charge of abandonment in this case is belied by the high improbability of Tatel
intentionally abandoning his work, taking into consideration his length of service and,
concomitantly, 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 sufficiently 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.
Moreover, Tatel refuted respondents' allegation that he did not heed their directive to
return to work following his receipt of the memorandum. The Court finds no compelling reason
not to give credence to such rebuff, especially in light of the filing of the instant complaint for
illegal dismissal. 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. As the Court sees
it, it is simply incongruent for Tatel to refuse any offer of an assignment and thereafter, seek
redress by filing a case for illegal dismissal.

RAFAEL B. QUILLOPA, Petitioner, -versus- QUALITY GUARDS SERVICES AND

INVESTIGATION AGENCY and ISMAEL BASABICA, JR., Respondents.
G.R. No. 213814, FIRST DIVISION, December 2, 2015, PERLAS-BERNABE, J.

Placing a security guard in temporary "off-detail" or "floating status" is part of

management prerogative of the employer-security agency and does not, per se, constitute a
severance of the employer-employee relationship. However, being an exercise of management
prerogative, it must be exercised 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 special laws or under valid agreements. Moreover, due to the grim economic
consequences to the security guard in which he does not receive any salary while in temporary
"off-detail" or "floating status," the employer-security agency should bear the burden of proving
that there are no posts available to which the security guard temporarily out of work can be
assigned. Furthermore, the security guard must not remain in such status for a period of more
than six (6) months; otherwise, he is deemed terminated.

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 In the case at bar, it is undisputed that for a total of more than 11 months, petitioner was
placed on a temporary "off-detail" or "floating status" without any salary or benefits whatsoever.
In fact, despite repeated follow-ups at the QGSIA Office, he failed to get a new post or assignment
from respondents purportedly for lack of vacancy. However, records are bereft of any indication or
proof that there was indeed no posts available to which petitioner may be assigned. Therefore, in
view of their unjustified failure to place petitioner back in active duty within the allowable six (6)-
month period and to discharge the burden placed upon it by prevailing jurisprudence, the Court is
constrained to hold respondents liable for petitioner's constructive dismissal.

FACTS:
QGSIA hired petitioner as a security guard and gave him various assignments, the last of
which was at the West Burnham Place Condominium in Baguio City. Then, the deputy manager
of QGSIA visited petitioner at his post and told the latter that he would be placed on a floating
status, but was assured that he would be given a new assignment. At the same time, petitioner
was ordered to report to the QGSIA Office the next day for further instructions. Despite such
assurance and his repeated trips for follow up to the QGSIA Office, petitioner was not given any
new assignment as there was allegedly no vacancy yet. Hence, he remained on floating status.

Petitioner filed a complaint for money claims such as wages, overtime pay, premium pay
for holidays and rest days, night shift differentials, 13th month pay, and service incentive leave
pay against respondents before the NLRC. However, the parties were able to amicably settle the
controversy, as evidenced by a Waiver/Quitclaim and Release, which provides, among others,
that petitioner is withdrawing his complaint against respondents and that he received a total of
P10,000.00 from respondents "for and [in] consideration of the settlement of all [petitioner's]
claims which might have arisen as consequence of [petitioner's] employment." On even date, the
Labor Arbiter (LA) issued an Order approving and granting the amicable settlement and
ordering the dismissal of the First Complaint with prejudice.

However, petitioner filed another complaint, this time, for illegal dismissal with prayer
for payment of full backwages, separation pay, and attorney's fees, against respondents before
the NLRC. In his Position Paper, petitioner alleged that after the settlement of the First
Complaint, he waited for a new posting or assignment, but to no avail. In this relation, petitioner
contended that respondents' continued failure to reinstate him to his previous assignment or to
give him a new one should be construed as a termination of his employment, considering that he
had been on floating status for almost one (1) year.

In their defense, respondents essentially countered that the Waiver/Quitclaim and

Release already terminated the employer-employee relationship between them and petitioner,
and thus, the latter had no more ground to file the Second Complaint.

The LA ruled in petitioner's favor. The LA found that the settlement of the First Complaint
through the execution of a Waiver/Quitclaim and Release cannot bar petitioner from filing the
Second Complaint against respondents, since such settlement referred only to petitioner's money
claims reflected in the First Complaint, and does not cover the complaint for illegal dismissal which
is the crux of the Second Complaint. Further, the LA ruled that while security guards, such as
petitioner, may be placed in an "off-detail" or "floating status," such status should not exceed a

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period of six (6) months; otherwise, he is deemed to be constructively dismissed without just
cause and without due process.

Dissatisfied, respondents appealed to the NLRC.

The NLRC affirmed the LA ruling. It held that since illegal dismissal was not included as a
cause of action in the First Complaint, the execution of the Waiver/Quitclaim and Release did
not preclude petitioner from filing the Second Complaint for illegal dismissal. It further held that
petitioner was indeed constructively dismissed from service given that he was placed on
floating status beyond the allowable period under the law.

Respondents moved for reconsideration which was, however, denied. Undaunted, they
filed a petition for certiorari before the CA.

The CA reversed and set aside the NLRC ruling, and accordingly, dismissed the Second
Complaint. Contrary to the findings of the LA and the NLRC, the CA held that the Waiver/Quitclaim
and Release operated to sever the employer-employee relationship between respondents and
petitioner. As such, petitioner had no more cause of action against respondents when he filed the
Second Complaint more than seven (7) months later, or on September 14, 2011.

Aggrieved, petitioner moved for reconsideration, but was denied.; hence, this petition.

ISSUE:

Whether or not Rafael Quillopa is illegally dismissed. (YES)

RULING:

Case law provides that the concept of temporary "off-detail" or "floating status" of
security guards employed by private security agencies - a form of a temporary retrenchment or
lay-off - relates to the period of time when security guards are in between assignments or when
they are made to wait after being relieved from a previous post until they are transferred to a
new one. This takes place when the security agency's clients decide not to renew their contracts
with the agency, resulting in a situation where the available posts under its existing contracts
are less than the number of guards in its roster. It also happens in instances where contracts for
security services stipulate that the client may request the agency for the replacement of the
guards assigned to it, even for want of cause, such that the replaced security guard may be
placed on temporary "off-detail" if there are no available posts under the agency's existing
contracts. As the circumstance is generally outside the control of the security agency or
employer, the Court has ruled that when a security guard is placed on a "floating status," he or
she does not receive any salary or financial benefit provided by law.

To clarify, placing a security guard in temporary "off-detail" or "floating status" is part of

management prerogative of the employer-security agency and does not, per se, constitute a
severance of the employer-employee relationship. However, being an exercise of management
prerogative, it must be exercised in good faith - that is, one which is intended for the advancement

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of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements. Moreover, due to the grim economic
consequences to the security guard in which he does not receive any salary while in temporary
"off-detail" or "floating status," the employer-security agency should bear the burden of proving
that there are no posts available to which the security guard temporarily out of work can be
assigned. Furthermore, the security guard must not remain in such status for a period of more
than six (6) months; otherwise, he is deemed terminated.

In the case at bar, it is undisputed that for a total of more than 11 months, petitioner was
placed on a temporary "off-detail" or "floating status" without any salary or benefits whatsoever. In
fact, despite repeated follow-ups at the QGSIA Office, he failed to get a new post or assignment from
respondents purportedly for lack of vacancy. However, records are bereft of any indication or proof
that there was indeed no posts available to which petitioner may be assigned. Therefore, in view of
their unjustified failure to place petitioner back in active duty within the allowable six
(6)-month period and to discharge the burden placed upon it by prevailing jurisprudence, the
Court is constrained to hold respondents liable for petitioner's constructive dismissal.

3. Legitimate subcontracting vs. labor-only contracting

NESTLE PHILIPPINES, INC. Petitioner, -versus- BENNY A. PUEDAN, JR., et al., Respondents.
G.R. No. 220617, FIRST DIVISION, January 30, 2017, PERLAS-BERNABE, J.

The imposition of minimum standards concerning sales, marketing, finance and operations is
nothing more than an exercise of sound business practice to increase sales and maximize profits
for the benefit of both Nestle and its distributors. For as long as these requirements do not impinge
on a distributor’s independence, then there is nothing wrong with placing reasonable expectations
on them.
In this case, the stipulations in the Distributorship Agreement do not operate to control or
fix the methodology on how ODSI should do its business as a distributor of Nestle products, but
merely provide rules of conduct or guidelines towards the achievement of a mutually desired result
– which in this case is the sale of Nestle products to the end consumer.

FACTS:
Puedan, Jr., et al. alleged that on various dates, Ocho de Septiembre, Inc. (ODSI) and
Nestle Philippines hired them to sell various Nestle products in the assigned covered area. After
some time, they demanded that they be considered regular employees of Nestle, but they were
directed to sign contracts of employment with ODSI instead. When they refused to comply,
Nestle and ODSI terminated them from their positions. Thus, they were constrained to file the a
complaint, claiming that: (a) ODSI is a labor-only contractor and thus, they should be deemed
regular employees of Nestle; and (b) there was no just or authorized cause for their dismissal.

For its part, ODSI averred that it is a company engaged in the business of buying, selling,
distributing, and marketing of goods and commodities of every kind and it enters into all kinds of
contracts for the acquisition thereof. ODSI admitted that on various dates, it hired Puedan, Jr., et

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al., as its employees and assigned them to execute the Distributorship Agreement it entered with
Nestle. However, the business relationship between Nestle and ODSI turned sour which
eventually resulted in Nestle downsizing its marketing and promotional support from ODSI and,
subsequently, the closure of ODSI’s Nestle unit due to the termination of the Distributorship
Agreement. ODSI argued that Puedan, Jr., et al., were not dismissed but merely put in floating
status.

The LA dismissed the complaint for lack of merit. The NLRC, on the other hand, reversed
and set aside the LA ruling and held: (a) that ODSI failed to prove that their closure was due to
serious business losses as no financial statements to corroborate its claims were presented as
evidence; and (b) that ODSI is a labor-only contractor of Nestle. Thus, it deemed Nestle to be
Puedan, Jr., et al.’s true employer. The CA affirmed the NLRC ruling.

ISSUE:
Whether or not ODSI is a labor-only contractor of Nestle. (NO)

RULING:
The imposition of minimum standards concerning sales, marketing, finance and
operations is nothing more than an exercise of sound business practice to increase sales and
maximize profits for the benefit of both Nestle and its distributors. For as long as these
requirements do not impinge on a distributor’s independence, then there is nothing wrong with
placing reasonable expectations on them.

A closer examination of the Distributorship Agreement reveals that the relationship of

Nestle and ODSI is not that of a principal and a contractor (regardless of whether labor-only or
independent), but that of a seller and a buyer/re-seller.Contrary to the CA's findings, the
stipulations in the Distributorship Agreement hardly demonstrate control on the part of Nestle
over the means and methods by which ODSI performs its business, nor were they intended to
dictate how ODSI shall conduct its business as a distributor. Otherwise stated, the stipulations in
the Distributorship Agreement do not operate to control or fix the methodology on how ODSI
should do its business as a distributor of Nestle products, but merely provide rules of conduct or
guidelines towards the achievement of a mutually desired result – which in this case is the sale
of Nestle products to the end consumer.

Thus, the foregoing circumstances show that ODSI was not a labor-only contractor of
Nestle, hence, the latter cannot be deemed the true employer of Puedan, Jr., et al.

PHILIPPINE PIZZA INC., Petitioner, – versus - JENNY PORRAS CAYETANO, RIZALDO

G. AVENIDO, PEE JAY T. GURION, RUMEL A. RECTO, ROGELIO T. SUMBANG, JR., and JIMMY
J. DELOSO, Respondents.
GR No. 230030, SECOND DIVISION, August 29, 2018

Although not a conclusive proof of legitimacy, the certification nonetheless prevents the
presumption of labor-only contracting from arising. It gives rise to a disputable presumption that
the contractor's operations are legitimate.

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 CBMI is presumed to have complied with all the requirements of a legitimate job
contractor, considering the Certificates of Registration issued to it by the DOLE.

FACTS:
Respondents Cayetano et al were hired by CBMI, a job contractor. CBMI provides
kitchen, delivery, sanitation, and allied services to PPI's 8 Pizza Hut chain of restaurants (Pizza
Hut). Cayetano et al were thereafter deployed to the various branches of Pizza Hut

Cayetano et al rendered work for Pizza Hut ranging from seven to eleven years.
Cayetano et al are alleging that they have been initially hired by Pizza Hut but were
subsequently transferred to CBMI so as to prevent them from attaining their regular
employment status. Despite the said transfer, however, they were still under the direct
supervision of the managers of Pizza Hut and had been using its tools and machines for work.

Pizza Hut and CBMI denied such allegations. CBMI contends that it is a independent job
contractor evinced by its registration. Further CBMI clamis that it has substantial capital based
on its GIS which shows that it has an authorized capital stock in the amount of Pl 0,000,000.00
and subscribed capital stock in the amount of P5,000,000.00, P3,500,000.00 of which had
already been paid-up. Additionally, its audited financial statement show that it has considerable
current and non-current assets amounting to P85,518,832.00.

CBMI further claims that it retained control over Cayetano et al because a CBMI supervisor in
each Pizza Hut branch is assigned. The supervisors are tasked: to oversee, monitor, and ensure CBMI
employees' compliance with company policies, rules, and regulations; to ensUre that CBMI
employees perform their tasks and functions in the manner that CBMI mandates; to track and to
confirm the attendance and punctuality of CBMI employees. CBMI further offered memoranda
evincing that Cayetano et al are subject to to its disciplinary sanctions.

ISSUE:
1. Whether or not CBMI is a legitimate job contractor. (YES)

RULING
Yes, CBMI is presumed to have complied with all the requirements of a legitimate job
contractor, considering the Certificates of Registration issued to it by the DOLE. Although not a
conclusive proof of legitimacy, the certification nonetheless prevents the presumption of labor-
only contracting from arising. It gives rise to a disputable presumption that the contractor's
operations are legitimate.

The substantial capital requirement is also met evinced by the GIS and audited financial
statement. More importantly, CBMI retained control over Cayetano et al as shown by the
deployment of CBMI supervisor. The existence of the element of control can also be inferred
from CBMI' s act of subjecting Cayetano et al to disciplinary sanctions for violations of company
rules and regulations as evidenced by the various Offense Notices and Memoranda issued to
them. From all indications, the Court finds that CBMI is a legitimate job contractor, and thus, the
employer of respondents.

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 a. Elements
b. Trilateral relationship
c. Solidary liability
B. Termination by employer

FORTUNATO R. BARON, MANOLO B. BERSABAL, AND RECTO A. MELENDRES, Petitioners, -

versus- EPE TRANSPORT, INC. AND/OR ERNESTO P. ENRIQUEZ, Respondents. G.R. No.
202645, FIRST DIVISION, August 05, 2015, PERLAS-BERNABE, J.

Article 277 (b) of the Labor Code puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer. It should be noted that the said
provision of law does not distinguish whether the employer admits or does not admit the dismissal.
Here, petitioners asserted that they were unceremoniously dismissed after they charged
respondents of violating the CBA before the NLRC. Notably, respondents did not refute such
absence from work but averred that it was petitioners that went on AWOL and abandoned their
jobs after they filed their unfair labor practice complaint.
However, mere absence or failure to report for work is not tantamount to abandonment of work.
In this case, no proof was adduced by respondents to prove their theory of abandonment. Nothing
on record would show that petitioners' absence from work was deliberate and unjustified, with a
clear intent to sever the employment relationship.
FACTS:
EPE is a domestic corporation engaged in the operation of taxi units. Petitioners were
employed as EPE's taxi drivers and were paid on boundary system. They were members of the
EPE Transport, Inc. Drivers' Union-Filipinong Samahang Manggagawa (FSM), the exclusive
bargaining agent of the taxi drivers in EPE.
Sometime in August 2008, Bersabal sought inquiry from the company regarding the
boundary rates imposed, claiming that the same were not in accordance with the Collective
Bargaining Agreement (CBA). Instead of clarifying the matter, Bersabal was purportedly told
that he was free to go if he did not want to follow company policy, and that anyway, he has no
more use to the company.As a result, Bersabal, together with the other EPE's taxi drivers, filed
complaint for violation of the CBA, unfair labor practice, refund of overcharged boundary, and
money claims against EPE. Baron and Melendres equally questioned the company about the
overcharging of boundary and also received the same response. Thus, they also filed a similar
complaint(unfair labor practice case).
Three (3) days after petitioners claimed that they were no longer allowed to use their
taxi units and prevented from entering EPE's premises. Consequently, petitioners filed another
complaint,this time for illegal dismissal, unfair labor practice, separation pay, and attorney's
fees, against respondents (illegal dismissal case).
The complaint in the unfair labor practice case was dismissed without prejudice, and the
case was recommended to be resolved before the grievance machinery. In response to the
complaint in the illegal dismissal case, respondents denied that petitioners were dismissed as
the latter themselves failed to return to work or suddenly went AWOL, when they were asked to
explain about the “shortages” in boundary.
LA dismissed petitioners' illegal dismissal case for lack of jurisdiction over the subject
matter and lack of cause of action. The LA gave more credence to respondents' claim that it was
petitioners who failed to return to work after they filed their respective complaints, noting that
the latter had even invoked the use of the CBA's grievance machinery for the resolution.

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 NLRC reversed LA and found that the petitioners were illegally dismissed noting that
the intent to abandon work was negated by the filing of petitioners' previous complaints to
correct what they perceived were errors in the administration of the CBA.
The CA concurred with the LA that petitioners' complaint in the illegal dismissal case
failed to sufficiently establish the fact of their dismissal.
ISSUE:
Whether or not the petitioners were illegally dismissed. (YES)
HELD:
In a catena of cases, the Court has held that the onus of proving that an employee was not
dismissed or, if dismissed, his dismissal was not illegal fully rests on the employer; the failure
to discharge such onus would mean that the dismissal was not justified and, therefore, illegal.
Article 277 (b) of the Labor Code puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer. It should be noted that the
said provision of law does not distinguish whether the employer admits or does not
admit the dismissal.
It is a well-known maxim in statutory construction that where the law does not distinguish, the
court should not distinguish.
Time and again we have ruled that where there is no showing of a clear, valid, and legal cause
for termination of employment, the law considers the case a matter of illegal dismissal. The
burden is on the employer to prove that the termination of employment was for a valid and legal
cause. For an employee's dismissal to be valid, (a) the dismissal must be for a valid cause and (b)
the employee must be afforded due process.
Here, petitioners asserted that they were unceremoniously dismissed after they charged
respondents of violating the CBA before the NLRC. Notably, respondents did not refute such
absence from work but averred that it was petitioners that went on AWOL and abandoned
their jobs after they filed their unfair labor practice complaint.
However, mere absence or failure to report for work is not tantamount to abandonment of
work. In this case, no proof was adduced by respondents to prove their theory of abandonment.
Nothing on record would show that petitioners' absence from work was deliberate and
unjustified, with a clear intent to sever the employment relationship. On the contrary, such
intention is belied by the fact that they filed an illegal dismissal case, and even prior to than an
unfair labor case, which seeks to enforce their right under the CBA.

1. Just causes

PHILIPPINE PLAZA HOLDINGS, INC., vs. MA. FLORA M. EPISCOPE

(G.R. No. 192826, SECOND DIVISION, February 27, 2013, PERLAS-BERNABE, J.)

Among the just causes for termination is the employer’s loss of trust and confidence in its
employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an employer
may terminate the services of an employee for fraud or willful breach of the trust reposed in him.
But in order for the said cause to be properly invoked, certain requirements must be complied with
namely, (1) the employee concerned must be holding a position of trust and confidence and
(2) there must be an act that would justify the loss of trust and confidence.

As may be readily gleaned from the records, Episcope was involved in the handling of company funds,
and is undeniably considered an employee occupying a position of trust and confidence and as such,

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was expected to act with utmost honesty and fidelity. Anent the second requisite, records likewise
reveal that Episcope committed an act which justified her employer’s (PPHI’s) loss of trust and
confidence in her.

FACTS:
Ma. Flora M. Episcope was employed by Philippine Plaza Holdings, Inc. (PPHI) as a service
attendant in its Café Plaza. It was discovered that Episcope issued a receipt reflecting an
undiscounted amount while the Hotel’s copy of the receipt bore a discount.

Finding Episcope to have failed to sufficiently explain the questionable discount application, her
employment was terminated for committing acts of dishonesty, as well as for willful
disobedience, serious misconduct and loss of trust and confidence.

Aggrieved, Episcope filed a complaint for illegal dismissal with prayer for payment of damages
and attorney's fees against PPHI before the NLRC. LA dismissed Episcope's complaint for illegal
dismissal. On appeal, the NLRC affirmed the LA's decision. Episcope's motion for
reconsideration was likewise denied.

On certiorari, the CA gave due course to the petition and reversed the NLRC's Decision, finding
the report submitted by the auditors grossly insufficient to support the conclusion that
Episcope was guilty of the charges imputed against her. Dissatisfied, PPHI moved for
reconsideration which was, however, denied. Hence, the instant petition.

ISSUE:
Whether or not the CA erred and ruled contrary to law and jurisprudence when it ordered the
reinstatement of the respondent and payment of backwages? (YES)

RULING:
Among the just causes for termination is the employer’s loss of trust and confidence in its
employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an employer
may terminate the services of an employee for fraud or willful breach of the trust reposed in
him. But in order for the said cause to be properly invoked, certain requirements must be
complied with namely, (1) the employee concerned must be holding a position of trust and
confidence and (2) there must be an act that would justify the loss of trust and confidence.
As may be readily gleaned from the records, Episcope was involved in the handling of company
funds, and is undeniably considered an employee occupying a position of trust and confidence
and as such, was expected to act with utmost honesty and fidelity.

Anent the second requisite, records likewise reveal that Episcope committed an act which
justified her employer’s (PPHI’s) loss of trust and confidence in her. It remains unrefuted that
Episcope tendered the check bearing the amount of P2,306.65 and received the amount of
P2,400.00 as payment but the check receipt on file with the Hotel for the same transaction
reflected only the amount of P1,400.20 in view of the application of a certain Starwood Privilege
Discount Card.

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It must be observed that though the receipts were prepared by the cashier. Prudence dictates that
Episcope should have at least known why there was a shortage in remittance. Yet when asked,
Episcope could not offer any plausible explanation but merely shifted the blame to the cashier.

Finally, with respect to Episcope's other monetary claims, namely, service incentive leave
credits and 13th month pay, the Court finds no error on the part of the LA when it denied the
foregoing claims considering that Episcope failed to proffer any legitimate basis to substantiate
her entitlement to the same.

PNOC-ENERGY DEVELOPMENT CORPORATION AND/OR PAUL A. AQUINO, FRANCIS A.

PALAFOX vs. JOSELITO L. ESTRELLA
(G.R. No. 197789, SECOND DIVISION, July 8, 2013, PERLAS-BERNABE, J.)

Fundamental is the rule that an employee can be dismissed from employment only for a valid
cause. Serious misconduct is one of the just causes for termination under Article 282 of the Labor
Code. However, not every form of misconduct can be considered as a just cause for termination.
The law explicitly qualifies that the misconduct must be both serious and made in connection with
the employee’s work.

Thus, for these reasons, it cannot be gainsaid that Estrella’s mistake, if any, hardly qualifies as
serious misconduct as contemplated by law, denying his employer’s right to dismiss him based on
the same.

FACTS:
Estrella was the Senior Logistics Assistant at the Materials Control Department of petitioner
PNOC-Energy Development Corporation (PNOC-EDC), then a government-owned and controlled
corporation engaged in the exploration and utilization of renewable energy resources. As Senior
Logistics Assistant, Estrella’s duties included initiating and handling the terms and conditions
for the bidding of heavy and support equipment rentals for PNOC-EDC’s project locations, and
evaluating and recommending bid contracts for management approval.

Records show that PNOC-EDC opened the technical and financial bids for its 2004 Annual
Contract on Heavy/Support Equipment Rental for SNGPF (EDC 03-191) (2004 Contract) on
December 4, 2003 and February 14, 2004, respectively.

As part of the bidding process, Estrella carried out an inspection on May 13, 2004 wherein JR
Car Services, owned by Dumaguete-based contractor Remigio S. P. Jacobe (Jacobe), qualified as
the first priority contractor for the Asian Utility Vehicle (AUV) Category, having offered three (3)
units for lease at the rental rate of ₱1,250.00 per day. Accordingly, the vehicles of JR Car Services
were included in the bid summary for the 2004 Contract (Bid Summary).

On January 20, 2005, Jacobe executed an Affidavit charging Estrella with irregularities in
dealing with JR Car Services’ bid.

Prompted by Jacobe’s Affidavit, PNOC-EDC’s Senior Manager, petitioner Francis A. Palafox,

formed an audit committee to investigate the charges. The audit committee discovered that the
bid of JR Car Services in the AUV Category was altered from three (3) units to one (1) unit in the

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field copy of the Bid Summary, to which Estrella affixed his initials. However, in the final copy of
the Bid Summary, no alterations were reflected. Estrella was also found to have accepted bids
from a certain EGS Enterprises despite non-compliance with the required bid specifications and
non-submission of competent proofs of ownership.

Thus, Estrella was charged to have committed willful acts of dishonesty, consisting of his
alteration and/or tampering of lessors’ bids, acceptance of disqualified bids, manipulation of bid
summary, and extortion.

On July 5, 2005, Estrella was dismissed, prompting him to file a complaint for illegal dismissal,
with prayer for reinstatement and payment of full backwages and exemplary damages, against
petitioners.

ISSUE:
Whether Estrella had been illegally dismissed? (NO)
RULING:
Fundamental is the rule that an employee can be dismissed from employment only for a valid
cause. Serious misconduct is one of the just causes for termination under Article 282 of the
Labor Code. However, not every form of misconduct can be considered as a just cause for
termination. The law explicitly qualifies that the misconduct must be both serious and made in
connection with the employee’s work.

While Estrella himself admitted that he did alter JR Car Services’ bid from three (3) vehicles to
one (1) in the Bid Summary which he himself initialed, he provided a reasonable excuse therefor
– that is, he only did so to reflect the results of his second inspection where he found that only one
vehicle was available for lease. It is well to stress that the alteration was only made in a field copy
which, as Estrella explains, was acquired by his supervisor and sent to the accounting department
without his knowledge. Although PNOC-EDC remarked that the fact that Estrella initialed the said
field copy proved his intent to make the alteration official, this supposition, bereft of any substantial
evidence to corroborate such a conclusion, remains highly-speculative and thus, cannot be given
credence. Besides, as it turned out, the alleged alterations did not appear in the final copy of the Bid
Summary, negating any complications on the company’s bidding process. In fact, PNOC-EDC
eventually engaged two (2) more of JR Car Services’ vehicles in August 2004.

Thus, for these reasons, it cannot be gainsaid that Estrella’s mistake, if any, hardly qualifies as
serious misconduct as contemplated by law, denying his employer’s right to dismiss him based
on the same.

JOEL N. MONTALLANA v. LA CONSOLACION COLLEGE MANILA, SR. IMELDA A. MORA, and

ALBERT D. MANALILI
G.R. No. 208890, FIRST DIVISION, December 8, 2014, PERLAS-BERNABE, J.

“Willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work" is one of the just causes to terminate an employee under Article 296 (a)
(formerly Article 282 [a]) of the Labor Code. In order for this ground to be properly invoked as a just
cause for dismissal, the conduct must be willful or intentional, willfulness being characterized by a

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wrongful and perverse mental attitude. It is well to stress that it is the employer who bears the
burden of proving, through substantial evidence, that the aforesaid just cause – or any other
authorized cause for that matter – forms the basis of the employee’s dismissal from work. Failing
in which, the dismissal should be adjudged as illegal.

In the case at bar, it was not proved by substantial evidence, that Montallana’s non-compliance
with the directive to apologize was "willful or intentional." The disobedience attributed to
Montallana could not be justly characterized as "willful" within the contemplation of Article 296 of
the Labor Code, in the sense above-described.

FACTS:

Montallana was a faculty member of La Consolacion’s College of Arts and Sciences. On January
16, 2009, Mrs. Nerissa D. Del Fierro-Juan, the Assistant Dean of the College of Arts and Sciences
and the immediate superior of Montallana, filed a formal administrative complaint with La
Consolacion against Montallana, charging him of: (a) oral defamation; (b) disorderly conduct in
the school premises; and (c) discourteous/indecent behavior or using profane or obscene
language in addressing co-employees, superiors, or anybody within the school premises.

The said complaint arose from an incident that occurred in the faculty room resulting in a
heated altercation that ended with Montallana walking out of the room while Juan was still
talking to him. After due investigation, La Consolacion’s fact-finding committee found
Montallana guilty of serious misconduct in making derogatory and insulting remarks about his
superior, aggravated by the fact that he made such remarks in a loud voice so that Juan would
hear them. While noting that the foregoing may be considered as a just cause for Montallana’s
termination, the committee observed thatit was his first offense and stressed on the reformative
and redemptive facets of the case. In fine, Montallana was only meted the penalty of suspension
without pay for a period of two (2) months and directed him to submit a written public apology
to Juan in a tenor satisfactory to her and La Consolacion’s Human Resource Department.

In a letter, Montallana sought reconsideration of his suspension and explained that a written public
apology was inappropriate at that time in view of the pendency of a criminal complaint for grave oral
defamation filed by Juan against him before the City Prosecutor’s Office. He mentioned that his
issuance of a written public apology while the criminal case was being heard might incriminate
himself, adding too that it was his lawyer who advised him to invoke his right against self-
incrimination. The request having been denied by La Consolacion’s President, respondent Sr. Imelda
A. Mora, in her letter, Montallana filed a complaint for illegal suspension and unfair labor practice,
with prayer for payment of salaries during the period of suspension, and moral and exemplary
damages against respondents La Consolacion and Mora before the NLRC.

In a Decision the LA ruled in favor of Montallana, holding that his actions did not constitute
serious misconduct. Hence, Montallana’s suspension from employment was declared illegal. On
appeal, however, the NLRC disagreed with the findings of the LA and found Montallana’s acts to
be constitutive of serious misconduct and against the rule of honor and decency expected of any
teacher. While it found sufficient basis to impose the penalty of termination, the NLRC
nonetheless sustained the two (2)-month suspension in deference to the school’s prerogative to

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discipline its employees. Montallana moved for reconsideration but was denied. Montallana no
longer elevated the matter to the CA and the NLRC’s decision became final and executory.

Thereafter, on June 1, 2011, La Consolacion, through its HRD Director, respondent Albert D.
Manalili, directed Montallana to explain in writing why he should not be dismissed for failure to
submit his written public apology which formed part of the disciplinary sanction that was
sustained with finality by the NLRC. In a letter, Montallana begged for La Consolacion’s
indulgence, explaining that he had no intention of defying the directive to submit a written
public apology and that his inability to comply therewith was, to reiterate, only in view of the
pendency of the criminal case against him. He, nonetheless, expressed his willingness to comply
with the directive once the said case was resolved with finality. Finding Montallana’s written
explanation unsatisfactory, Manalili terminated him from work on June 13, 2011.
Asserting that his dismissal for failure to submit a written public apology was unjustified and
was, in fact, connected to his position as an officer of La Consolacion’s newly formed and
recognized Union, Montallana filed a complaintfor illegal dismissal with money claims against
respondents La Consolacion, Mora, and Manalili. In respondents’ defense, they contended that
since the directive to apologize was part of the penalty imposed on Montallana, his refusal
and/or failure to comply merited further sanctions. They denied having dismissed Montallana
for his union activities, pointing out that even the Union President agreed to his suspension for
his misbehavior.

The LA dismissed Montallana’s complaint, holding that his refusal to apologize – in light of his
chosen profession as a teacher and La Consolacion’s right to maintain a certain standard of
behavior among its faculty, who serve as models for its students – was tantamount to serious
misconduct and, hence, warranted his termination. Aggrieved, Montallana filed an appeal 43
before the NLRC. The NLRC reversed and set aside the LA’s verdict, and thus, ordered
respondents to reinstate Montallana and to pay him backwages from the time he was illegally
dismissed up to his reinstatement. Respondents moved for reconsideration. The NLRC denied
respondents’ motion. This prompted the filing of a petition for certiorari before the CA. In a
Decision, the CA gave due course to respondents’ petition and eventually reversed and set aside
the NLRC’s Decision. It found that Montallana deliberately refused to obey the directive of the
respondents to apologize and that the pendency of the criminal case against him was not
sufficient justification to excuse him from compliance. It observed that the said directive was an
integral part of his punishment for serious misconduct, which had already been sustained with
finality by the NLRC in the illegal suspension case. Dissatisfied, Montallana moved for
reconsideration, which was denied, hence, this petition.

ISSUE: Whether or not Montallana’s termination from work was lawful and justified. (NO)

RULING:
The petition is meritorious.

"Willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work" is one of the just causes to terminate an employee under Article 296
(a) (formerly Article 282 [a]) of the Labor Code. In order for this ground to be properly invoked
as a just cause for dismissal, the conduct must be willful or intentional, willfulness being
characterized by a wrongful and perverse mental attitude. It is well to stress that it is the

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employer who bears the burden of proving, through substantial evidence, that the aforesaid just
cause – or any other authorized cause for that matter – forms the basis of the employee’s
dismissal from work. Failing in which, the dismissal should be adjudged as illegal.

In the case at bar, respondents failed to prove, by substantial evidence, that Montallana’s non-
compliance with respondents’ directive to apologize was "willful or intentional." The Court finds
itself in complete agreement with the NLRC that the disobedience attributed to Montallana
could not be justly characterized as "willful" within the contemplation of Article 296 of the
Labor Code, in the sense above-described.

As culled from the records, aside from the administrative complaint filed by Juan against
Montallana for his serious misconduct, the former also filed a criminal complaint for grave oral
defamation for the utterances he made arising from the same incident before the Manila City
Prosecutor’s Office. In the honest belief that issuing a letter of apology would incriminate him in
the said criminal case – and upon the advice of his own lawyer at that – Montallana wrote to
respondents and voluntarily communicated that he was willing to issue the required apology,
but only had to defer the same in view of his legal predicament. As the Court sees it, the tenor of
his letters, and the circumstances under which they were taken, at the very least, exhibited
Montallana’s good faith in dealing with respondents. This, therefore, negates the theory that his
failure to abide by respondents’ directive to apologize was attended by a "wrong and perverse
mental attitude rendering the employee’s act inconsistent with proper subordination," which
would warrant his termination from employment.
Besides, even on the assumption that there was willful disobedience, still, the Court finds the
penalty of dismissal too harsh. It bears to stress that not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal. The penalty to be
imposed on an erring employee must be commensurate with the gravity of his offense. To the
Court’s mind, the case of an employee who is compelled to apologize for a previous infraction
but fails to do so is not one which would properly warrant his termination, absent any proof
that the refusal was made in brazen disrespect of his employer.

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

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 MAERSK-FILIPONAS CREWING v. TORIBIO C. AVESTRUZ
GR No. 207010, FIRST DIVISION, February 18, 2015, PERLAS-BERNABE, J

Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at
least two requisites: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties which he had
been engaged to discharge.

In this case, it was not established that Avestruz's conduct had been willful, or characterized by a
wrongful and perverse attitude.

FACTS:

On April 28, 2011, Maersk-Filipinas Crewing, Inc. on behalf of its foreign principal, A.P. Moller
Singapore Pte. Ltd., hired Avestruz as Chief Cook on board the vessel M/V Nedlloyd Drake for a
period of six (6) months. Avestruz boarded the vessel on May 4, 2011.

On June 22, 2011, in the course of the weekly inspection of the vessel's galley, Captain Charles C.
Woodward noticed that the cover of the garbage bin in the kitchen near the washing area was
oily. As part of Avestruz's job was to ensure the cleanliness of the galley, Captain Woodward
called Avestruz and complained about the oily cover of the trash bin. Shocked, Avestruz
remarked, "Sir if you are looking for [dirt], you can find it[;] the ship is big. Tell us if you want to
clean and we will clean it." Captain Woodward replied by shoving Avestruz's chest, to which the
latter complained and said, "Don't touch me," causing an argument to ensue between them.

Later that afternoon, Captain Woodward summoned and required Avestruz to state in writing
what transpired in the galley that morning. Avestruz complied and submitted his written
statement on that same day. Captain Woodward likewise asked Messman Jomilyn P. Kong to
submit his own written statement regarding the incident, to which the latter immediately
complied. On the very same day, Captain Woodward informed Avestruz that he would be
dismissed from service and be disembarked in India. On July 3, 2011, Avestruz was
disembarked in Colombo, Sri Lanka and arrived in the Philippines on July 4, 2011.

Subsequently, he filed a complaintfor illegal dismissal, payment for the unexpired portion of his
contract, damages, and attorney's fees against Maersk, A.P. Moller, and Jesus Agbayani, an
officerof Maersk. He alleged that no investigation or hearing was conducted nor was he given
the chance to defend himself before he was dismissed, and that Captain Woodward failed to
observe the provisions under Section 17 of the Philippine Overseas Employment Administration
Standard Employment Contract on disciplinary procedures. Also, he averred that he was not
given any notice stating the ground for his dismissal.

In their defense, Maersk, A.P. Moller, and Agbayani claimed that during his stint on the vessel,
Avestruz failed to attend to his tasks, which prompted Captain Woodward to issue weekly
reminders. Unfortunately, despite the reminders, Avestruz still failed to perform his duties properly.
When again asked to comply with the aforesaid duty, Avestruz became angry and snapped, retorting
that he did not have time to do all the tasks required of him. As a result, Captain

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Woodward initiated disciplinary proceedings and informed Avestruz during the hearing of the
offenses he committed. Thereafter, he was informed of his dismissal from service due to
insubordination. Relative thereto, Captain Woodward sent two e-mails to Maersk explaining the
decision to terminate Avestruz's employment and requesting for Avestruz's replacement.
Avestruz was discharged from the vessel and arrived in the Philippines on July 4, 2011.
Petitioners maintained that Avestruz was dismissed for a just and valid cause and is, therefore,
not entitled to recover his salary for the unexpired portion of his contract. Hence, they prayed
that the complaint be dismissed for lack of merit.

Labor Arbiter (LA) dismissed Avestruz's complaint for lack of merit. In support of its finding, the
LA cited the CBA between the parties which considers the act of insulting a superior officer by
words or deed as an act of insubordination. Aggrieved, Avestruz appealed to the NLRC. The
NLRC sustained the validity of Avestruz's dismissal but found that petitioners failed to observe
the procedures laid down in Section 17 of the POEA-SEC.

Avestruz moved for reconsideration of the aforesaid Decision, which was denied. Dissatisfied, he
elevated the matter to the CA via petition for certiorari. The CA reversed and set aside the
rulings of the NLRC and instead, found Avestruz to have been illegally dismissed. Petitioners
moved for reconsideration, which the CA denied, hence, this petition.

ISSUE: Whether or not the CA erred when it reversed and set aside the ruling of the NLRC
finding that Avestruz was legally dismissed and accordingly, dismissing the complaint, albeit
with payment of nominal damages for violation of procedural due process (NO)

RULING:

The petition is devoid of merit.

It is well-settled that the burden of proving that the termination of an employee was for a just or
authorized cause lies with the employer. If the employer fails to meet this burden, the
conclusion would be that the dismissal was unjustified and, therefore, illegal. In order to
discharge this burden, the employer must present substantial evidence, which is defined as that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion, and not based on mere surmises or conjectures.

After a punctilious examination of the evidence on record, the Court finds that the CA did not err
in reversing and setting aside the factual conclusions of the labor tribunals that Avestruz's
dismissal was lawful. Instead, the Court finds that there was no just or valid cause for his
dismissal, hence, he was illegally dismissed.

Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence
of at least two requisites: (1) the employee's assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties which he had
been engaged to discharge.

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In this case, the contents of Captain Woodward's e-mails do not establish that Avestruz's
conduct had been willful, or characterized by a wrongful and perverse attitude. The Court
concurs with the CA's observation that Avestruz's statement regarding the incident in the galley
deserves more credence, being corroboratedby Kong, a messman who witnessed the same.

As in this case, it was incumbent upon the petitioners to present other substantial evidence to
bolster their claim that Avestruz committed acts that constitute insubordination as would
warrant his dismissal. At the least, they could have offered in evidence entries in the ship's
official logbook showing the infractions or acts of insubordination purportedly committed by
Avestruz, the ship's logbook being the official repository of the day-to-day transactions and
occurrences on board the vessel. Having failed to do so, their position that Avestruz was lawfully
dismissed cannot be sustained.

Similarly, the Court affirms the finding of the CA that Avestruz was not accorded procedural due
process, there being no compliance with the provisions of Section 17 of the POEA-SEC, which
requires the "two-notice rule."

In this case, there is dearth of evidence to show that Avestruz had been given a written notice of the
charge against him, or that he was given the opportunity to explain or defend himself. The statement
given by Captain Woodward requiring him to explain in writing the events that transpired at the
galley in the morning of June 22, 2011 hardly qualifies as a written notice of the charge against him,
nor was it an opportunity for Avestruz to explain or defend himself. Neither was Avestruz given a
written notice of penalty and the reasons for its imposition. Instead, Captain Woodward verbally
informed him that he was dismissed from service and would be disembarked from the vessel. It
bears stressing that only in the exceptional case of clear and existing danger to the safety of the crew
or vessel that the required notices may be dispensed with, and, once again, records are bereft of
evidence showing that such was the situation when Avestruz was dismissed.

ST. LUKE’S MEDICAL CENTER v. MARIA THERESA SANCHEZ

G.R. No. 212054, FIRST DIVISION, March 11, 2015, PERLAS-BERNABE, J

For an employee to be validly dismissed on this ground, the employer's orders, regulations, or
instructions must be: (1) reasonable and lawful, (2) sufficiently known to the employee, and (3) in
connection with the duties which the employee has been engaged to discharge.

In this case, the said act is obviously connected with Sanchez's work, who, as a staff nurse, is tasked
with the proper stewardship of medical supplies. Significantly, records show that Sanchez made a
categorical admission in her handwritten letter. Whatever maybe the justification behind the
violation of the company rules regarding excess medical supplies is immaterial since it has been
established that an infraction was deliberately committed.

FACTS:

Sanchez was hired by petitioner St. Luke's Medical Center, Inc. (SLMC) as a nurse, and was
eventually assigned at SLMC, Quezon City's Pediatric Unit until her termination on July 6, 2011

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for her purported violation of SLMC's Code of Discipline, i.e., Robbery, Theft, Pilferage, and
Misappropriation of Funds.

In May 2011, upon passing the exit, Sanchez was subjected to the standard inspection and in the
course thereof, the Security Guard noticed a pouch in her bag and asked her to open the same.
When opened, said pouch contained the following assortment of medical stocks which were
subsequently confiscated. She was later required to write an Incident Report giving an
explanation.

Consequently, Sanchez was placed under preventive suspension until the conclusion of the
investigation by SLMC which required her to explain why she should not be terminated from
service for "acts of dishonesty" due to her possession of the questioned items in violation of the
Code of Discipline. After hearing her side, SLMC, on July 4, 2011, informed Sanchez of its
decision to terminate her employment.

This prompted her to file a complaint for illegal dismissal where she maintained her innocence
claiming that she had no intention of bringing outside the SLMC's premises the questioned items
since she merely inadvertently left the pouch containing them in her bag as she got caught up in
work that day. She further asserted that she could not be found guilty of pilferage since the
questioned items found in her possession were neither SLMC's nor its employees' property. For
its part, SLMC contended that Sanchez was validly dismissed for just cause as she had
committed theft

The LA ruled that Sanchez was validly dismissed for intentionally taking the property of SLMC's
clients for her own personal benefit, which constitutes an act of dishonesty as provided under
SLMC's Code of Discipline. The fact that the items she took were neither SLMC's nor her co-
employees' property was not found by the LA to be material since the SLMC Code of Discipline
clearly provides that acts of dishonesty committed to SLMC, its doctors, its employees, as well as
its customers, are punishable by a penalty of termination from service. Finally, the LA pointed
out that SLMC's non-filing of a criminal case against Sanchez did not preclude a determination of
her serious misconduct.

However, the NLRC overturned the ruling of the LA. The NLRC declared that the alleged violation of
Sanchez was a unique case, considering that keeping excess hospital stocks or "hoarding" was an
admitted practice amongst nurses in the Pediatric Unit which had been tolerated by SLMC
management for a long time. The NLRC held that while Sanchez expressed remorse for her
misconduct in her handwritten letter, she manifested that she only "hoarded" the questioned items
for future use in case their medical supplies are depleted, and not for her personal benefit.

ISSUE: Whether or not Sanchez was illegally dismissed. (NO)

RULING:

The right of an employer to regulate all aspects of employment, aptly called "management
prerogative," gives employers the freedom to regulate, according to their discretion and best
judgment, all aspects of employment, including work assignment, working methods, processes to

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be followed, working regulations, transfer of employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of workers.
Among the employer's management prerogatives is the right to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or concern, to provide certain
disciplinary measures to implement said rules and to assure that the same would be complied
with. At the same time, the employee has the corollary duty to obey all reasonable rules, orders,
and instructions of the employer; and willful or intentional disobedience thereto, as a general
rule, justifies termination of the contract of service and the dismissal of the employee.

Note that for an employee to be validly dismissed on this ground, the employer's orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently known to the
employee, and (3) in connection with the duties which the employee has been engaged to
discharge.

The said act is obviously connected with Sanchez's work, who, as a staff nurse, is tasked with the
proper stewardship of medical supplies. Significantly, records show that Sanchez made a
categorical admission in her handwritten letter. Whatever maybe the justification behind the
violation of the company rules regarding excess medical supplies is immaterial since it has been
established that an infraction was deliberately committed.

MELVIN P. MALLO, Petitioner, –versus- SOUTHEAST ASIAN COLLEGE, INC. AND EDITA
ENATSU, Respondents.
G.R. No. 212861, FIRST DIVISION, October 14, 2015, PERLAS-BERNABE, J.

In termination cases, the onus of proving that an employee was not dismissed or, if
dismissed, his dismissal was not illegal fully rests on the employer; the failure to discharge such
onus would mean that the dismissal was not justified and, therefore, illegal.

In this case, the records readily show that SACI already assigned Mallo a teaching load for
the First Semester of SY 2011-2012. Unfortunately, Mallo failed the qualifying tests at NCMH twice,
thus, virtually disqualifying him from performing his work as SACFs Clinical Instructor thereat.
Despite these developments, respondents were able to remedy the situation, albeit belatedly, by
assigning Mallo as a Clinical Instructor at UDMC instead. In view of the giving of teaching load to
Mallo, the Court holds that SACI never dismissed Mallo from his job.

FACTS:
Mallo alleged that SACI first hired him as a Probationary Full-Time Faculty Member of its
College of Nursing and Midwifery with the rank of Assistant Professor C for the Second Semester
of School Year (SY) 2007-2008 and, thereafter, his employment was renewed for the succeeding
semesters until the Summer Semester of SY 2010-2011.

In June 2011, claiming that he was already a permanent employee of SACI, having been a
professor of SACI for almost four (4) years since his first teaching assignment in November
2007, Mallo demanded that he be given his corresponding teaching load. However, the Dean
simply retorted that the school was under no obligation to give him any teaching loads for the
semester because he was merely a contractual employee.

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 SACI denied dismissing Mallo. It claimed that it already gave Mallo his teaching schedule.
Unfortunately, Mallo twice failed the qualifying test required for the job. This notwithstanding,
SACI endeavored to give Mallo a teaching load. However, Mallo did not attend his classes
because the schedule conflicted with his new employment.

The LA and NLRC ruled that Mallo was illegally dismissed. Both ruled that Mallo already
attained the status of regular employee. LA added that the failure to give teaching load amounts
to illegal dismissal. The NLRC found that there is no evidence that Mallo abandoned his work.

The CA, on the other hand, held that while Mallo had indeed attained the status of a
regular employee, there was no illegal dismissal to speak of as the evidence on record failed to
show any overt or positive act on respondents' part to terminate his employment.

ISSUE:

Whether or not there is illegal dismissal and that Mallo abandoned his job. (NO)

HELD:

Mallo was not illegally dismissed nor did he abandoned his work.

The LA, NLRC and CA all agreed that Mallo is a regular employee; they only differ on whether
Mallo was illegally dismissed or had abandoned his job.

In termination cases, the onus of proving that an employee was not dismissed or, if
dismissed, his dismissal was not illegal fully rests on the employer; the failure to discharge such
onus would mean that the dismissal was not justified and, therefore, illegal.

The records readily show that SACI already assigned Mallo a teaching load for the First
Semester of SY 2011-2012. Unfortunately, Mallo failed the qualifying tests at NCMH twice, thus,
virtually disqualifying him from performing his work as SACFs Clinical Instructor thereat.
Despite these developments, respondents were able to remedy the situation, albeit belatedly, by
assigning Mallo as a Clinical Instructor at UDMC instead. In view of the giving of teaching load to
Mallo, the Court holds that SACI never dismissed Mallo from his job.

However, the Court found that Mallo never abandoned his job. Article 296 of the Labor
Code provides: To constitute abandonment, 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.

In this case, records are bereft of any indication that Mallo's absence from work was
deliberate, unjustified, and with a clear intent to sever his employment relationship with SACI. There
is no proof that Mallo was informed of such assignment. More importantly, Mallo's filing of

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a complaint for illegal dismissal, coupled with his prior acts of actively inquiring about his
teaching load, negate any intention on his part to sever his employment.

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.

BUENAFLOR CAR SERVICES, INC., Petitioner, -versus- CEZAR DURUMPILI DAVID, JR.
Respondent.
G.R. No. 222730, FIRST DIVISION, November 7, 2016, PERLAS-BERNABE, J.

For serious misconduct to be a just cause for dismissal, the concurrence of the following elements is
required: (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. On the other hand, for loss of
trust to be a ground for dismissal, the employee must be holding a position of trust and confidence,
and there must be an act that would justify the loss of trust and confidence.

It is crucial to point out that the questioned checks would not have been issued if there weren't any
spurious purchase orders. As per company policy, the procurement process of petitioner begins
with the preparation of purchase orders by the Purchasing Officer, De Guzman. These purchase
orders have to be approved by respondent himself before the delivery and payment process
can even commence. It is only after the issuance of the approved purchase orders that
petitioner's suppliers are directed to deliver the ordered goods/supplies, and from there, requests
for payment and the issuance of checks (through Del Rosario) would be made. Thus, being the
approving authority of these spurious purchase orders, respondent cannot disclaim any culpability
in the resultant issuance of the questioned checks.

FACTS:
Cezar David was employed as Service Manager by Buenaflor Car Services, Inc. In such
capacity, he was in charge of the overall day-to-day operations of petitioner, including the
authority to sign checks, check vouchers, and purchase orders. It was company policy that all
checks should be issued in the name of the specific supplier and not in “cash”.

Meanwhile, Chinabank called the petitioner saying that it had cleared several checks
issued by petitioner bearing the words “or cash” indicated after the payee’s name. As a result,
David, together with three employees, were placed under preventive suspension and directed to
submit their written explanations. For his part, David claimed that he has no control over
company’s billing operations. Subsequently, David and his co-workers were served their notices
of termination. Aggrieved, they filed a complaint for illegal dismissal.

The Labor Arbiter ruled that David was illegally dismissed. The NLRC affirmed the ruling
of the LA. Likewise, the CA found no grave abuse of discretion on the part of the NLRC in holding
that the respondent was illegally dismissed.

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ISSUE

Whether or not the CA committed reversible error in upholding the NLRC’s ruling that
respondent was illegally dismissed. (YES)

RULING
Fundamental is the rule that an employee can be dismissed from employment only for a
valid cause. The burden of proof rests on the employer to prove that the dismissal was valid,
failing in which, the law considers the matter a case of illegal dismissal.

In the case at bar, respondent's termination was grounded on his violation of

petitioner's Code of Conduct and Behavior, which was supposedly tantamount to (a) serious
misconduct and/or (b) willful breach of the trust reposed in him by his employer as stated in
Art. 297 of the Labor Code.

For serious misconduct to be a just cause for dismissal, the concurrence of the following
elements is required: (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. On the other hand, for
loss of trust to be a ground for dismissal, the employee must be holding a position of trust and
confidence, and there must be an act that would justify the loss of trust and confidence. While
loss of trust and confidence should be genuine, it does not require proof beyond reasonable
doubt, it being sufficient that there is some basis for the misconduct and that the nature of the
employee's participation therein rendered him unworthy of the trust and confidence demanded
by his position.

While there is no denying that respondent holds a position of trust as he was charged with the
overall day-to-day operations of petitioner, and as such, is authorized to sign checks, check
vouchers, and purchase orders, he argues, in defense, that he had no control over the company's
finance and billing operations, and hence, should not be held liable. Moreover, he asserts that he
had no power to instruct Del Rosario to make any check alterations, which changes, if any, must
be made known to Vasay or Buenaflor.

Although respondent's statements may be true, the Court, nonetheless, observes that it is highly
unlikely that respondent did not have any participation in the above-mentioned scheme to defraud
petitioner. It is crucial to point out that the questioned checks would not have been issued if there
weren't any spurious purchase orders. As per company policy, the procurement process of petitioner
begins with the preparation of purchase orders by the Purchasing Officer, De Guzman. These
purchase orders have to be approved by respondent himself before the delivery and payment
process can even commence. It is only after the issuance of the approved purchase orders that
petitioner's suppliers are directed to deliver the ordered goods/supplies, and from there, requests
for payment and the issuance of checks (through Del Rosario) would be made. Thus, being the
approving authority of these spurious purchase orders, respondent cannot disclaim any culpability
in the resultant issuance of the questioned checks. Clearly, without the approved purchase orders,
there would be no delivery of goods/supplies to petitioner, and consequently, the payment
procedure would not even begin. These purchase

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orders were, in fact, missing from the records, and respondent, who had the primary authority
for their approval, did not, in any manner, account for them.

Case law states that "labor suits require only substantial evidence to prove the validity of the
dismissal." Based on the foregoing, the Court is convinced that enough substantial evidence exist
to support petitioner's claim that respondent was involved in the afore-discussed scheme to
defraud the company, and hence, guilty of serious misconduct and/or willful breach of trust
which are just causes for his termination. Substantial evidence is defined as such amount of
relevant evidence that a reasonable mind might accept as adequate to justify a conclusion,
which evidentiary threshold petitioner successfully hurdled in this case. As such, the NLRC
gravely abused its discretion in holding that respondent was illegally dismissed.

XAVIER C. RAMOS vs. BPI FAMILY SAVINGS BANK INC. and/or ALFONSO L. SALCEDO, JR.
(G.R. No. 203186, SECOND DIVISION, December 04, 2013, PERLAS-BERNABE, J.)

Two (2) reasons impel the foregoing conclusion: First, as correctly observed by the NLRC, BPI Family
was not able to substantially prove its imputation of negligence against Ramos. Well-settled is the rule
that the burden of proof rests upon the party who asserts the affirmative of an issue. Second, as
similarly observed by the NLRC, Ramos merely followed standing company practice when he issued the
PO and ATD without prior approval from the bank’s Credit Services Department.

FACTS:
During Ramos’s tenure, Acosta entered into and obtained several auto and real estate loans
from BPI which were duly approved and promptly paid.Later on, Acosta purportedly secured
another auto loan from BPI for the purchase of a vehicle which had remained unpaid. As it
turned out, Acosta did not authorize nor personally apply for the subject loan, rendering the
transaction fraudulent.

After investigation, BPI discovered that: (a) a person misrepresented herself as Acosta and
succeeded in obtaining the delivery of a vehicle, pursuant to the Purchase Order (PO) and
Authority to Deliver (ATD) issued by Ramos; (b) Ramos released these documents without the
prior approval of BPI’s credit committee; and (c) Ramos was grossly remiss in his duties since
his subordinates did not follow the bank’s safety protocols.

As a consequence, BPI lost its income, which amount was divided between Ramos and his three
(3) other subordinates. The said mount was subsequently deducted from Ramos’ benefits which
accrued upon his retirement. Claiming that the deductions made by BPI Family were illegal,
Ramos filed a complaint for underpayment of retirement benefits against BPI.

The NLRC reversed the LA holding that the deduction complained of was "illegal and
unreasonable” for the reason that the alleged negligence committed by Ramos was not
substantially proven. However, the CA affirmed the finding of negligence on the part of Ramos,
holding that Ramos was remiss in his duty. But it also attributed negligence on the part of BPI.

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Thus, finding BPI’s negligence to be concurrent with Ramos, the CA equitably reduced the
amount deducted to Ramos’s retirement benefit.

ISSUE:
Whether or not the CA erred in attributing grave abuse of discretion on the part of the NLRC
when it found the deduction made from Ramos’s retirement benefits to be illegal and
unreasonable? (YES)

RULING:
In labor disputes, the NLRC’s findings are said to be tainted with grave abuse of discretion when
its conclusions are not supported by substantial evidence. The requirement that the NLRC’s
findings should be supported by substantial evidence is clearly expressed in Section 5, Rule 133
of the Rules of Court which provides that "in cases filed before administrative or quasi- judicial
bodies, a fact may be deemed established if it is supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.” Applying the foregoing considerations, the Court finds the CA to have erred in
attributing grave abuse of discretion on the part of the NLRC in finding that the deduction made
from Ramos’s retirement benefits was improper.

Two (2) reasons impel the foregoing conclusion: First, as correctly observed by the NLRC, BPI
Family was not able to substantially prove its imputation of negligence against Ramos. Well-
settled is the rule that the burden of proof rests upon the party who asserts the affirmative of an
issue. Second, as similarly observed by the NLRC, Ramos merely followed standing company
practice when he issued the PO and ATD without prior approval from the bank’s Credit Services
Department.

JINKY STA. ISABEL, Petitioner, -versus- PERLA COMPANIA DE SEGUROS, INC., Respondent
G.R. No. 219430, FIRST DIVISION, November 7, 2016, PERLAS-BERNABE, J.

Willful disobedience or insubordination, as a just cause for the dismissal of an employee,

necessitates the concurrence of at least two (2) requisites, namely: (a) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (b)
the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge.

In this case, Sta. Isabel's failure or refusal to comply with the foregoing directives (Notice
to Explain) should only be deemed as a waiver of her right to procedural due process in connection
with the Ricsons incident, and is not tantamount to willful disobedience or insubordination.

FACTS:
Perla, engaged in the insurance business, hired Jinky Sta. Isabel as a Claims Adjuster.
Later on, Perla discovered that Sta. Isabel owned a separate insurance agency known as JRS
Insurance Agency. Pending the resolution of the JRS issue, Sta, Isabel received a Notice to
Explain why no disciplinary action should be taken against her for her poor services towards
the clients of PAIS Insurance Agency.

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 Subsequently, Sta. Isabel received another Notice to Explain why no disciplinary action
should be taken against her for her poor services towards the clients of Ricsons Consultants and
Insurance Brokers, Inc. Because Sta. Isabel failed to submit a written explanation, Perla issued a
Final Written Warning that any repetition of the same offense shall warrant a drastic
disciplinary action including the penalty of Termination.

Perla issued a Notice of Termination dismissing Sta. Isabel on the grounds of

insubordination. Thus, Sta. Isabel filed the instant complaint on the grounds of illegal dismissal.

The Labor Arbiter dismissed the complaint for lack of merit but ordered Perla to pay
Sta. Isabel’s unpaid salary and service incentive leave pay. However, the NLRC granted Sta.
Isabel’s appeal arguing that Sta. Isabel's refusal to report to the Head Office was not willful
disobedience, considering that the directives were in connection with the administrative
proceedings against her and, as such, her failure to appear was only tantamount to a waiver of
her opportunity to be heard. Hence, she cannot be dismissed on such cause, which incidentally,
was the sole ground for her termination

The Court of Appeals nullified and set aside the NLRC ruling and reinstated that of the LA.

ISSUE

Whether or not the CA correctly ascribed grave abuse of discretion on the part of the NLRC in
ruling that Sta. Isabel's dismissal was illegal. (YES)

RULING
The Court finds that the CA committed reversible error in granting Perla's certiorari
petition considering that the NLRC's finding that Sta. Isabel was illegally dismissed from
employment is supported by substantial evidence.

Since Sta. Isabel was actually dismissed on the ground of insubordination, there is a
need to determine whether or not there is sufficient basis to hold her guilty on such ground.
Insubordination or willful disobedience, is a just cause for termination of employment listed
under Article 297 of the Labor Code.
Willful disobedience or insubordination, as a just cause for the dismissal of an employee,
necessitates the concurrence of at least two (2) requisites, namely: (a) the employee's assailed
conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and
(b) the order violated must have been reasonable, lawful, made known to the employee, and
must pertain to the duties which he had been engaged to discharge.

As correctly pointed out by the labor tribunals, Sta. Isabel's failure or refusal to comply
with the foregoing directives (Notice to Explain) should only be deemed as a waiver of her right
to procedural due process in connection with the Ricsons incident, and is not tantamount to
willful disobedience or insubordination.

CEBU PEOPLE’S MULTI-PURPOSE COOPERATIVE, Petitioner, -versus- NICERATO E.

CARBOILLA, JR., Respondent.

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 G.R. No. 212070, FIRST DIVISION, January 20, 2016, PERLAS-BERNABE, J.

Case law characterizes misconduct as 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 injudgment. For misconduct to be considered as a just cause for termination,
the following requisites 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.
All of the foregoing requisites have been duly established in this case. Records reveal that
Carbonilla, Jr. 's serious misconduct consisted of him frequently exhibiting disrespectful and
belligerent behavior, not only to his colleagues, but also to his superiors. He even used his stature
as a law graduate to insist that he is "above" them, often using misguided legalese to weasel his
way out of the charges against him, as well as to strong-arm his colleagues and superiors into
succumbing to his arrogance. Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and
superiors is serious in nature as it is not only reflective of defiance but also breeds of antagonism in
the work environment. Surely, within the bounds of law, management has the rightful prerogative
to take away dissidents and undesirables from the workplace.

FACTS:
CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager. Then, CPMPC underwent
a reorganization whereby Carbonilla, Jr. was also assigned to perform the duties of Human
Resources Department (HRD) Manager. He was then appointed as Legal Officer and
subsequently, held the position of Legal and Collection Manager.

However, beginning February 2008, CPMPC sent various memoranda to Carbonilla, Jr.
seeking explanation on the various infractions he allegedly committed, to which Carbonilla
replied.

CPMPC scheduled several clarificatory hearings, but the former failed to attend despite
due notice. Later, CPMPC conducted a formal investigation where it ultimately found Carbonilla,
Jr. to have committed acts prejudicial to CPMPC's interests. As such, CPMPC sent Carbonilla, Jr. a
Notice of Dismissal informing the latter of his termination on the grounds of: (a) loss of trust
and confidence; (b) gross disrespect; (c) serious misconduct; (d) gross negligence; and (e)
committing acts highly prejudicial to the interest of the cooperative.

Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal against CPMPC,
before the NLRC. In support of his claims, Carbonilla, Jr. denied the administrative charges
against him, asserting that the Management and Board of Directors of CPMPC merely
orchestrated means to unjustly dismiss him from employment.

In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was
sufficient to warrant his dismissal, and that it had complied with the procedural due process in
terminating him.

ISSUE:
1. Whether or not Carbonilla, Jr. 's dismissal was valid. (YES)

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RULING:
Carbonilla, Jr.’s dismissal was valid. Basic is the rule that an employer may validly terminate the
services of an employee for any of the just causes enumerated under Article 296 (formerly
Article 282) of the Labor Code, namely:
(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.
As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that
Carbonilla, Jr.'s employment was terminated on the grounds of, among others, serious
misconduct and loss of trust and confidence.
On the first ground, case law characterizes misconduct as 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 injudgment. For misconduct to be considered as
a just cause for termination, the following requisites 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.
All of the foregoing requisites have been duly established in this case. Records reveal
that Carbonilla, Jr. 's serious misconduct consisted of him frequently exhibiting disrespectful
and belligerent behavior, not only to his colleagues, but also to his superiors. He even used his
stature as a law graduate to insist that he is "above" them, often using misguided legalese to
weasel his way out of the charges against him, as well as to strong-arm his colleagues and
superiors into succumbing to his arrogance.
Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious in
nature as it is not only reflective of defiance but also breeds of antagonism in the work environment.
Surely, within the bounds of law, management has the rightful prerogative to take away dissidents
and undesirables from the workplace. It should not be forced to deal with difficult personnel,
especially one who occupies a position of trust and confidence, else it be compelled to act against the
best interest of its business. Carbonilla, Jr.'s conduct is also clearly work-related as all were incidents
which sprung from the performance of his duties. Lastly, the misconduct was performed with
wrongful intent as no justifiable reason was presented to excuse the same.
For another, Carbonilla, Jr. 's dismissal was also justified on the ground of loss of trust and
confidence. According to jurisprudence, loss of trust and confidence will validate an employee's
dismissal when it is shown that: (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. There
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

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of the employer's money or property, and are thus classified as occupying positions of trust and
confidence.
Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was
employed as Credit and Collection Manager, and later on, as Legal and Collection Manager, tasked
with the duties of, among others, handling the credit and collection activities of the cooperative,
which included recommending loan approvals, formulating and implementing credit and collection
policies, and conducting trainings. With such responsibilities, it is fairly evident that Carbonilla, Jr. is
a managerial employee within the ambit of the first classification of employees afore-discussed. The
loss of CPMPC's trust and confidence in Carbonilla, Jr., as imbued in that position, was later justified
in light of the latter's commission of the following acts: (a) the forwarding of the mediation
settlements for notarization to a lawyer who was not the authorized legal retainer of CPMPC; (b) the
pull-out of important records and vital documents from the office premises, which were either lost
or returned already tampered and altered; and (c) the incurring of unliquidated cash advances
related to the notarial transactions of the mediation agreements.
The totality and gravity of Carbonilla, Jr. 's infractions throughout the course of his
employment completely justified CPMPC's decision to finally terminate his employment. 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 an employee 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
an employee 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.

GRACE R. ALUAG, Petitioners, - versus - BIR MULTI-PURPOSE COOPERATIVE, NORMA

LIPANA and ESTELITA DATU, Respondents.
GR No. 228449, SECOND DIVISION, Dec 06, 2017
BIRMPC alleged that Aluag's employment was terminated on the ground of loss of trust and
confidence under Article 297(c) 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. 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, as in this case.
FACTS:
Petitioner Grace Aluag alleged that she was employed as respondent BIR Multi-Purpose
Cooperative’s (BIRMPC) cashier. 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.

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Aluag received a letter temporarily relieving her from her position pending an investigation against
her and two loan processors involving several suspicious loans. After giving her a chance to explain
herself 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, BIRMPC terminated her employment 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.
She filed a complaint for illegal dismissal with the NLRC. The LA dismissed the complaint for
illegal dismissal for lack of merit. The NLRC reversed the LA ruling. The CA reinstated that of the
LA. It also held that BIRMPC complied with the two (2)-notice rule.
ISSUE:
1. Whether or not the CA correctly held that BIRMPC had just cause to terminate Aluag's
employment. (YES)
2. Whether or not procedural due process was complied with. (YES)

RULING:
1. YES. 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.

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) 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.
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."
Being a cashier charged with the collection of remittances and payments, Aluag undoubtedly
occupied a position of trust and confidence.
Regarding 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.
"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]."

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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.
2. YES. 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, to wit: For
termination of employment based on just causes as defined in 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.

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 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.

FABRICATOR PHILIPPINES, Petitioner, – versus - JEANIE ROSE Q. ESTOLAS, Respondent. GR

Nos. 224308-09, SECOND DIVISION, Sep 27, 2017
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.
In this case, 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.
FACTS:
Respondent Jeanie Estolas alleged that petitioner Fabricator Philippines, Inc. hired her as a
welder. Before break time, while waiting for a replacement part she requested to be installed on
the welding machine, respondent took a seat and rested. At that time, another employee,
Rosario Banayad, saw her sitting.
The matter was brought to the attention of Assembly Action Team Leader, Warlito Abaya, who
confronted respondent about the said incident. Thereafter, while Abaya and Banayad were
talking to each other, respondent engaged in a verbal tussle with Banayad.

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Respondent was issued a suspension order for a period of three days. Thereafter, respondent
was served a notice of termination, finding her guilty of serious misconduct. Hence, respondent
filed a complaint for illegal dismissal.
The LA ruled in favor of respondent and ordered petitioner to pay her separation pay and
backwages. The NLRC modifying the ruling by deleting the award of separation pay and
backwages and ordered respondent's reinstatement. The CA reinstated the LA ruling.

ISSUE:
1. Whether or not the CA correctly ruled that respondent was illegally dismissed. (YES)

RULING:
YES. 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, 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.
In this case, 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.
Moreover, it is well to stress that petitioner already issued an order suspending respondent for
a period of three days on account of her misconduct. Thus, petitioner could no longer subject
respondent to another disciplinary proceeding based on the same act of misconduct.
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."
However, "[u]nder the DOCTRINE OF THE CASE 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.”
In this case, 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 warrants the application of the DOCTRINE OF THE CASE of
strained relations.

2. Authorized causes

PEPSI-COLA PRODUCTS PHILIPPINES vs. ANECITO MOLON

(G.R. No. 175002, SECOND DIVISION, February 18, 2013, PERLAS-BERNABE, J.)

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The employer must prove the requirements for a valid retrenchment by clear and convincing
evidence, such as:
(a) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(b) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(c) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;
(d) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security of
tenure;
(e) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.

In due regard of these requisites, the Court observes that Pepsi had validly implemented its
retrenchment program. Records disclose that both the CA and the NLRC had already determined
that Pepsi complied with the requirements of substantial loss and due notice to both the DOLE and
the workers to be retrenched. Records also show that the respondents had already been paid the
requisite separation pay as evidenced by the September 1999 quitclaims signed by them.
Effectively, the said quitclaims serve inter alia the purpose of acknowledging receipt of their
respective separation pays. Contrary to the CA's observation that Pepsi had singled out members of
the LEPCEU-ALU in implementing its retrenchment program, records reveal that the members of
the company union (i.e., LEPCEU-UOEF#49) were likewise among those retrenched. Furthermore,
Pepsi did proceed to implement its rightsizing program based on fair and reasonable criteria
recommended by the company supervisors. Therefore, as all the requisites for a valid retrenchment
are extant, the Court finds Pepsi's rightsizing program and the consequent dismissal of
respondents in accord with law.

FACTS:
Pepsi adopted a company-wide retrenchment program denominated as Corporate Rightsizing
Program. To commence with its program, it sent a notice of retrenchment to the DOLE as well as
individual notices to the affected employees informing them of their termination from work.

LEPCEU-ALU filed a Notice of Strike before the NCMB due to Pepsi's alleged acts of union
busting/ULP, claiming that Pepsi's adoption of the retrenchment program was designed solely
to bust their union so that come freedom period, Pepsi's company union would garner the
majority vote to retain its exclusive bargaining status. Thereafter, LEPCEU-ALU went on strike.

Pepsi filed before the NLRC a petition to declare the strike illegal with a prayer for the loss of
employment status of union leaders and some union members. On even date, the DOLE
Secretary certified the labor dispute to the NLRC for compulsory arbitration. A return-to-work
order was also issued.

Incidentally, one of the respondents, Remandaban, failed to report for work within twenty-four
(24) hours from receipt of the said order. Because of this, he was served with a notice of loss of

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employment status which he challenged before the NLRC, asserting that his absence on that day
was justified because he had to consult a physician regarding the persistent and excruciating
pain of the inner side of his right foot.

Eventually, Pepsi and LEPCEU-ALU agreed to settle their labor dispute arising from the
company's retrenchment program and thus, executed an Agreement. Pursuant thereto,
respondents signed individual release and quitclaim, stating that Pepsi would be released and
discharged from any action arising from their employment. Notwithstanding the foregoing,
respondents still filed separate complaints for illegal dismissal with the NLRC.

NLRC rendered a Decision, absolving Pepsi of the charge of union busting/ULP; declaring
LEPCEU-ALU's strike as illegal for having been conducted without legal authority since LEPCEU-
ALU was not the certified bargaining agent of the company; ordering Pepsi to reinstate
Remandaban to his former position without loss of seniority rights but without backwages
considering the lack of evidence showing that he willfully intended to disregard the return-to-
work order.

Aggrieved, respondents filed a petition for certiorari before the CA. CA reversed and set aside
the NLRC's ruling. Hence, the instant petition.

ISSUES:
(1) Whether respondents' retrenchment was valid? (YES)
(2) Whether Pepsi committed ULP in the form of union busting? (NO)
(3) Whether respondents' execution of quitclaims amounted to a final settlement of
the case? (NO)
(4) Whether Remandaban was illegally dismissed? (NO)

RULING:
(1) Under Article 297 of the Labor Code, retrenchment is one of the authorized causes to validly
terminate an employment. Essentially, the prerogative of an employer to retrench its employees
must be exercised only as a last resort, considering that it will lead to the loss of the employees'
livelihood. Corollary thereto, the employer must prove the requirements for a valid
retrenchment by clear and convincing evidence, such as:

(a) That retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(b) That the employer served written notice both to the employees and to the Department
of Labor and Employment at least one month prior to the intended date of retrenchment;
(c) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is higher;
(d) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security of
tenure;
(e) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.

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In due regard of these requisites, the Court observes that Pepsi had validly implemented its
retrenchment program. Records disclose that both the CA and the NLRC had already determined
that Pepsi complied with the requirements of substantial loss and due notice to both the DOLE
and the workers to be retrenched. Records also show that the respondents had already been
paid the requisite separation pay as evidenced by the September 1999 quitclaims signed by
them. Effectively, the said quitclaims serve inter alia the purpose of acknowledging receipt of
their respective separation pays. Contrary to the CA's observation that Pepsi had singled out
members of the LEPCEU-ALU in implementing its retrenchment program, records reveal that
the members of the company union (i.e., LEPCEU-UOEF#49) were likewise among those
retrenched. Furthermore, Pepsi did proceed to implement its rightsizing program based on fair
and reasonable criteria recommended by the company supervisors. Therefore, as all the
requisites for a valid retrenchment are extant, the Court finds Pepsi's rightsizing program and
the consequent dismissal of respondents in accord with law.

(2) Under Article 276(c) of the Labor Code, there is union busting when the existence of the
union is threatened by the employer's act of dismissing the former's officers who have been
duly-elected in accordance with its constitution and by-laws.

On the other hand, the term unfair labor practice refers to that gamut of offenses defined in
the Labor Code which, at their core, violates the constitutional right of workers and employees
to self-organization, with the sole exception of Article 257(f) (previously Article 248[f]).

Mindful of their nature, the Court finds it difficult to attribute any act of union busting or ULP on
the part of Pepsi considering that it retrenched its employees in good faith. As earlier discussed,
Pepsi tried to sit-down with its employees to arrive at mutually beneficial criteria which would
have been adopted for their intended retrenchment. In the same vein, Pepsi's cooperation
during the NCMB-supervised conciliation conferences can also be gleaned from the records.

Furthermore, the fact that Pepsi's rightsizing program was implemented on a company-wide
basis dilutes respondents' claim that Pepsi's retrenchment scheme was calculated to stymie its
union activities, much less diminish its constituency. Therefore, absent any perceived threat to
LEPCEU-ALU's existence or a violation of respondents' right to self-organization as
demonstrated by the foregoing actuations Pepsi cannot be said to have committed union
busting or ULP in this case.

(3) A waiver or quitclaim is a valid and binding agreement between the parties, provided that it
constitutes a credible and reasonable settlement and the one accomplishing it has done so
voluntarily and with a full understanding of its import. It is provided under Article 232 of the
Labor Code that any compromise settlement voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor, shall be final and
binding upon the parties. This has the effect and authority of res judicata to labor cases even if
the compromise is not judicially approved.

In the present case, Pepsi claims that respondents have long been precluded from filing cases before
the NLRC to assail their retrenchment due to their execution of the September 1999 quitclaims. The
language of the September 17, 1999 Agreement is straightforward. The use of the

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term "subject" in the 3rd clause of the said agreement clearly means that the signing of the
quitclaim documents was without prejudice to the filing of a case with the NLRC. Hence, when
respondents signed the September 1999 quitclaims, they did so with the reasonable impression
that they were not precluded from instituting a subsequent action with the NLRC. Accordingly, it
cannot be said that the signing of the September 1999 quitclaims was tantamount to a full and
final settlement between Pepsi and respondents.

(4) He must be reinstated with payment of backwages. An illegally dismissed employee is

entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages.In certain cases, however, the Court has ordered the reinstatement of the
employee without backwages considering the fact that (1) the dismissal of the employee would
be too harsh a penalty; and (2) the employer was in good faith in terminating the employee.

As may be gathered from the September 11, 2002 NLRC Decision, while Remandaban was
remiss in properly informing Pepsi of his intended absence, the NLRC ruled that the penalty of
dismissal would have been too harsh for his infractions considering that his failure to report to
work was clearly prompted by a medical emergency and not by any intention to defy the return-
to-work order.

On the other hand, Pepsi's good faith is supported by the NLRC's finding that "the return-to-
work-order of the Secretary was taken lightly by Remandaban."In this regard, considering
Remandaban's ostensible dereliction of the said order, Pepsi could not be blamed for sending
him a notice of termination and eventually proceeding to dismiss him. At any rate, it must be
noted that while Pepsi impleaded Remandaban as party to the case, it failed to challenge the
NLRC ruling ordering his reinstatement to his former position without backwages. As such, the
foregoing issue is now settled with finality.

BENSON EMPLOYEES INDUSTRIES UNION-ALUTUCP and/or VILMA GENON, ED ISA

HORTELANO, LOURDES ARANAS, TONY FORMENTERA, RENEBOY LEYSON, MA. ALONA
ACALDO, MA. CONCEPCION ABAO, TERESITA CALINA WAN, NICIFORO CABANSAG, STELLA
BARON GO, MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO PARADERO,
DIOSDADO ANDALES, LUCENA ABESIA, and ARMANDO YBANEZ vs. BENSON INDUSTRIES,
INC.
(G.R. No. 200746, SECOND DIVISION, August 6, 2014, PERLAS-BERNABE, J.)

The postulation that Benson had closed its establishment and ceased operations due to serious
business losses cannot be accepted as an excuse to clear itself of any liability since the ground of
serious business losses is not, unlike Article 297 of the Labor Code, considered as an exculpatory
parameter under the aforementioned CBA. Clearly, Benson, with full knowledge of its financial
situation, freely and voluntarily entered into such agreement with petitioners.

FACTS:
Benson sent its employees, including herein petitioners, a notice informing them of their intended
termination from employment on the ground of closure and/or cessation of business operations.

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During the conciliation proceedings before the NCMB, the parties entered into an amicable
settlement whereby petitioners accepted Benson’s payment of separation pay, computed at 15
days for every year of service, as per the parties’ Memorandum of Agreement. This
notwithstanding, petitioners proffered a claim for the payment of additional separation pay at
the rate of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article
VIII of the existing collective bargaining agreement (CBA) executed by and between the Union
and Benson which states that “[Benson] shall pay to any employee/laborer who is terminated
from the service without any fault attributable to him, a ‘Separation Pay’ equivalent to not less
than nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the
employee/laborer concerned.” Benson opposed petitioners’ claim, averring that the separation
pay already paid to them was already more than what the law requires. Reaching an impasse on
the conflict, the parties referred the issue to voluntary arbitration.

The Voluntary Arbitration (VA) ruled in favour of the petitioners and ratiocinated that in
computing the amount of separation benefits due to petitioners, the basis should be the
provision of the existing CBA between Benson and the Union. Dissatisfied, Benson elevated the
matter on appeal before the CA.

The CA reversed and set aside the VA’s ruling. It held that despite the express provision in the
CBA, Benson cannot be compelled to do so considering its current financial status. Aggrieved,
petitioners moved for reconsideration, which was, however, denied by the CA. Hence, this
petition.

ISSUE:
Whether or not the CA correctly deleted the award to petitioners of additional separation
benefits equivalent to four (4) days of work for every year of service? (NO)

RULING:
The postulation that Benson had closed its establishment and ceased operations due to serious
business losses cannot be accepted as an excuse to clear itself of any liability since the ground of
serious business losses is not, unlike Article 297 of the Labor Code, considered as an
exculpatory parameter under the aforementioned CBA. Clearly, Benson, with full knowledge of
its financial situation, freely and voluntarily entered into such agreement with petitioners.
Hence, having failed to show that the subject CBA provision on separation benefits is contrary to
law, morals, public order or public policy, or that the same can be interpreted as one with a
condition, the Court is constrained to reinstate the VA Decision ordering Benson to pay each of
the petitioners the stipulated separation benefits.

3. Due process
a. Twin-notice requirement

SANG WOO PHILIPPINES, INC. and/or SANG IK JANG, JISSO JANG, WISSO JANG, and
NORBERTO TADEO vs. SANG WOO PHILIPPINES, INC. and/or SANG IK JANG, JISSO JANG,
WISSO JANG, and NORBERTO TADEO
SANG WOO PHILIPPINES, INC. EMPLOYEES UNION - OLALIA, represented by PORFERIA
SALIBONGCOGON vs. SANGWOO PHILIPPINES INC. and/or SANG IK JANG, JISSO JANG,
WISSO JANG, and NORBERTO TADEO,

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(G.R. No. 173154 & G.R. No. 173229, SECOND DIVISION, December 09, 2013, PERLAS-BERNABE,
J.)

Jurisprudence states that an employer’s act of posting notices to this effect in conspicuous areas in
the workplace is not enough. Verily, for something as significant as the involuntary loss of one’s
employment, nothing less than an individually-addressed notice of dismissal supplied to each
worker is proper.

FACTS:
During the CBA negotiations between SPEU and SPI, the latter filed with the DOLE a letter-notice
of temporary suspension of operations for one (1) month due to lack of orders from its buyers.

Thereafter, it successively filed two (2) letters with the DOLE, copy furnished SPEU, for the
extension of the temporary shutdown. Meanwhile, SPEU filed a complaint for unfair labor
practice, illegal closure, illegal dismissal, damages and attorney’s fees before the NLRC.
Subsequently, SPI posted, in conspicuous places within the company premises, notices of its
permanent closure and cessation of business operations due to serious economic losses and
financial reverses.

ISSUE:
Whether or not SPI complied with the notice requirement of Article 297 (formerly Article 283)
of the Labor Code? (NO)

RULING:
Article 297 of the Labor Code provides that before any employee is terminated due to closure of
business, it must give a one (1) month prior written notice to the employee and to the DOLE. In
this relation, case law instructs that it is the personal right of the employee to be personally
informed of his proposed dismissal as well as the reasons therefor; and such requirement of
notice is not a mere technicality or formality which the employer may dispense with. Since the
purpose of previous notice is to, among others, give the employee some time to prepare for the
eventual loss of his job, the employer has the positive duty to inform each and every employee
of their impending termination of employment. To this end, jurisprudence states that an
employer’s act of posting notices to this effect in conspicuous areas in the workplace is not
enough. Verily, for something as significant as the involuntary loss of one’s employment, nothing
less than an individually-addressed notice of dismissal supplied to each worker is proper.

SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC. vs. TEOFILO GONZAGA (G.R. No. 187722,
SECOND DIVISION, June 10, 2013, PERLAS-BERNABE, J.)

The statutory procedure for terminating an employee is found in Section 2 (III), Rule XXIII, Book V of
the Omnibus Rules Implementing the Labor Code (Omnibus Rules). The foregoing procedure consists of
(a) a first written notice stating the intended grounds for termination; (b) a hearing or conference
where the employee is given the opportunity to explain his side; and (c) a second written notice
informing the employee of his termination and the grounds therefor. Records disclose that petitioners
were able to prove that they sufficiently complied with these procedural requirements:

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First, petitioners have furnished Gonzaga a written first notice specifying the grounds on which his
termination was sought. As may be gleaned from the foregoing, not only was Gonzaga effectively
notified of the charge of cash shortage against him, he was also given an ample opportunity to
answer the same through written explanation. Notably, attached to Memorandum 34-01 are the
Summaries which particularly detail the discrepancies in Gonzaga’s collections vis-à-vis his
remittances.

Second, petitioners have conducted an informal inquiry in order to allow Gonzaga to explain his
side. To this end, SURNECO formed an investigation committee to investigate Gonzaga’s alleged
remittance shortages. After its formation, an invitation was sent to Gonzaga to attend the
investigation proceedings, in which he participated. Apropos to state, Gonzaga never denied his
participation during the said proceedings. Perforce, the second requirement had been equally
complied with.
Third, a second written notice was sent to Gonzaga informing him of the company’s decision to
relieve him from employment, as well as the grounds therefor. Records indicate that the Committee
tendered its report on August 9, 2001, finding Gonzaga guilty of gross and habitual neglect of
duties and responsibilities, misappropriation of REC funds and failure to remit collections/monies.
Subsequently, a notice of termination was served on Gonzaga on September 13, 2001, stating the
aforesaid grounds.

FACTS:
On October 13, 1993, petitioner Surigao Del Norte Electric Cooperative, Inc. (SURNECO) hired
Gonzaga as its lineman. On February 15, 2000, he was assigned as Temporary Teller at
SURNECO’s sub-office in Gigaquit, Surigao Del Norte.

On June 26, 2001, petitioner Danny Escalante (Escalante), General Manager of SURNECO, issued
Memorandum Order No. 34seeking an explanation from Gonzaga regarding his remittance
shortages in the total amount of ₱314,252.23, covering the period from February 2000 to May
2001.

SURNECO formed an Investigation Committee (Committee) to investigate Gonzaga’s alleged

remittance shortages. The Committee tendered its report, finding Gonzaga guilty of (a) gross
and habitual neglect of duty under Section 5.2.15 of the Code of Ethics and Discipline for Rural
Electric Cooperative (REC) Employees (Code of Ethics); (b) misappropriation of REC funds
under Section 7.2.1 of the Code of Ethics; and (c) failure to remit collections/monies under
Section 7.2.2 of the Code of Ethics. Thereafter, a notice of termination was served on Gonzaga on
September 13, 2001.Gonzaga sought reconsideration before SURNECO’s Board of Directors but
the latter denied the same after he presented his case. On October 25, 2001, another notice of
termination (Final Notice of Termination) was served on Gonzaga. Consequently, he was
dismissed from the service on November 26, 2001.

Gonzaga filed a complaint with the NLRC Regional Arbitration Branch No. XIII - Butuan City for illegal
dismissal with payment of backwages including damages and attorney’s fees, claiming that he was
denied due process and dismissed without just cause. He alleged that while he was asked in
Memorandum 34 to explain the ₱314,252.23 remittance shortage, he was nonetheless denied due
process since the actual grounds for his dismissal, i.e., gross and habitual neglect of duties

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and responsibilities, misappropriation of REC funds and failure to remit collections/monies,
were not indicated in the said memorandum.

ISSUES:
1. Whether the ground for dismissal is valid? (YES)
2. Whether Gonzaga was denied of due process? (NO)
3. Whether SURNECO should pay damages? (YES)

RULING:
1. The Court finds substantial evidence to prove that he committed serious misconduct and
gross and habitual neglect of duty to warrant his dismissal from employment. Such are just
causes for termination which are explicitly enumerated under Article 296 of the Labor Code.

It must be noted that Gonzaga had admitted that he failed to remit his collections daily in
violation of SURNECO’s company policy, rendering such fact conclusive and binding upon him.
Therefore, for his equal violation of Section 7.2.2 of the Code of Ethics (failure to remit
collections/monies), his dismissal is justified altogether.

2. The statutory procedure for terminating an employee is found in Section 2 (III), Rule XXIII,
Book V of the Omnibus Rules Implementing the Labor Code (Omnibus Rules). The foregoing
procedure consists of (a) a first written notice stating the intended grounds for termination; (b)
a hearing or conference where the employee is given the opportunity to explain his side; and (c)
a second written notice informing the employee of his termination and the grounds therefor.
Records disclose that petitioners were able to prove that they sufficiently complied with these
procedural requirements:

First, petitioners have furnished Gonzaga a written first notice specifying the grounds on which
his termination was sought.

As may be gleaned from the foregoing, not only was Gonzaga effectively notified of the charge of
cash shortage against him, he was also given an ample opportunity to answer the same through
written explanation. Notably, attached to Memorandum 34-01 are the Summaries which
particularly detail the discrepancies in Gonzaga’s collections vis-à -vis his remittances.

Second, petitioners have conducted an informal inquiry in order to allow Gonzaga to explain his
side. To this end, SURNECO formed an investigation committee to investigate Gonzaga’s alleged
remittance shortages. After its formation, an invitation was sent to Gonzaga to attend the
investigation proceedings, in which he participated. Apropos to state, Gonzaga never denied his
participation during the said proceedings. Perforce, the second requirement had been equally
complied with.

Third, a second written notice was sent to Gonzaga informing him of the company’s decision to
relieve him from employment, as well as the grounds therefor. Records indicate that the
Committee tendered its report on August 9, 2001, finding Gonzaga guilty of gross and habitual
neglect of duties and responsibilities, misappropriation of REC funds and failure to remit
collections/monies. Subsequently, a notice of termination was served on Gonzaga on September
13, 2001, stating the aforesaid grounds.

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3. Jurisprudence dictates that it is not enough that the employee is given an "ample opportunity
to be heard" if company rules or practices require a formal hearing or conference. In such
instance, the requirement of a formal hearing and conference becomes mandatory.

Records reveal that while Gonzaga was given an ample opportunity to be heard within the
purview of the foregoing principles, SURNECO, however, failed to show that it followed its own
rules which mandate that the employee who is sought to be terminated be afforded a formal
hearing or conference. As above-discussed, SURNECO remains bound by – and hence, must
faithfully observe – its company policy embodied in Section 16.5 of its own Code of Ethics which
reads:

16.5. Investigation Proper. The conduct of investigation shall be open to the public. If there is no
answer from the respondent, as prescribed, he shall be declared in default. Direct examination
of witnesses shall be dispensed with in the IAC. In lieu thereof, the IAC shall require the
complainant and his witnesses to submit their testimonies in affidavit form duly sworn to
subject to the right of the respondent or his counsel/s to cross-examine the complainant or his
witnesses. Cross examination shall be confined only to material and relevant matter. Prolonged
argumentation and other dilatory tactics shall not be entertained.

In this relation, case law states that an employer who terminates an employee for a valid cause
but does so through invalid procedure is liable to pay the latter nominal damages.

PNCC SKYWAY CORPORATION, Petitioner, -versus- THE SECRETARY OF LABOR AND

EMPLOYMENT AND PNCC SKYWAY CORPORATION EMPLOYEES UNION, Respondents.
G.R. No. 213299, FIRST DIVISION, April 19, 2016, PERLAS-BERNABE, J.

Art. 298 of the Labor Code states that closure of business is an authorized cause for
termination of employment. To properly effectuate termination on the ground of closure of
business these three requirements must be present: (1) service of a written notice to the
employees and to the DOLE at least one (1) month before the intended date of termination;
(2) the cessation of business must be bona fide in character; and (3) payment to the employees of
termination pay amounting to one (1) month pay or at least one-half month pay for every year of
service, whichever is higher.
In this case, as admitted by both parties, the PSC employees and the DOLE were notified on
December 28, 2007 that PSC intended to cease operations on January 31, 2008. The PSC employees
and the DOLE were, therefore, notified 34 days ahead of the impending closure of PSC. Clearly, the
mere fact that PSC turned over the operation and management of the Skyway to SOMCO and
ceased business operations on December 31, 2007, should not be taken to mean that the PSC
employees were ipso facto terminated on the same date.

FACTS:

The Republic of the Philippines, through the Toll Regulatory Board (TRB), and the
Philippine National Construction Corporation (PNCC) entered into a Toll Operation Agreement
(TOA) for the latter’s operation of the South Metro Manila Skyway (Skyway).

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 Subsequently, a Supplemental TOA (STOA) was executed. As a result, Philippine Skyway
Corporation (PSC) was incorporated as a subsidiary of PNCC on December 15, 1998 to operate
the Skyway on PNCC’s behalf. However, an Amended STOA (ASTOA) was agreed upon which
transferred the management of the Skyway from PSC to a new Replacement Operator, Skyway
O&M Corporation (SOMCO). A transition period of 5 1/2 months was provided commencing on
the date of signing of the ASTOA until December 31, 2007, during which period, PSC continued
to operate the Skyway.

Because of the transfer, PSC issued termination letters on December 28, 2007 to its
employees and filed a notice of closure with the DOLE, advising them that it shall cease to
operate the Skyway, and that the services of the employees would be consequently terminated
on January 31, 2008. On the same date, the PSC Employees Union (PSCEU) filed a Notice of
Strike on the ground of unfair labor practice resulting in union busting and dismissal of
workers.

The DOLE Secretary dismissed the charges of unfair labor practice and union busting.
However, the DOLE Secretary pointed out that PSC failed to comply with the 30-day procedural
notice requirement in terminating its employees as provided in Art. 298 of the Labor Code.
Likewise, the CA affirmed the DOLE Secretary’s ruling as regards to the non-compliance of the
30-day notice rule.

ISSUE

1. Whether or not PSC complied with the 30-day notice requirement. (YES)

RULING

Art. 298 of the Labor Code states that closure of business is an authorized cause for
termination of employment. To properly effectuate termination on the ground of closure of business
these three requirements must be present: (1) service of a written notice to the employees and
to the DOLE at least one (1) month before the intended date of termination;
(2) the cessation of business must be bona fide in character; and (3) payment to the employees
of termination pay amounting to one (1) month pay or at least one-half month pay for every
year of service, whichever is higher.
As admitted by both parties, the PSC employees and the DOLE were notified on
December 28, 2007 that PSC intended to cease operations on January 31, 2008. The PSC
employees and the DOLE were, therefore, notified 34 days ahead of the impending closure of
PSC. Clearly, the mere fact that PSC turned over the operation and management of the Skyway to
SOMCO and ceased business operations on December 31, 2007, should not be taken to mean
that the PSC employees were ipso facto terminated on the same date. The employees were
notified that despite the cessation of its operations on December 31, 2007 - which, as a
consequence thereof, would result in the needlessness of their services - the effective date of
their termination from employment would be on January 31, 2008.

ABBOTT LABORATORIES, PHILIPPINES vs. PEARLIE ANN F. ALCARAZ

(GR No. 192571, EN BANC, July 17, 2013, PERLAS-BERNABE, J.)

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In other words, the employer is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the regularization standards to the
probationary employee; and second, the employer must make such communication at the time of
the probationary employee’s engagement. If the employer fails to comply with either, the employee
is deemed as a regular and not a probationary employee.
In this case, petitioners contend that Alcaraz was terminated because she failed to qualify as a
regular employee according to Abbott’s standards which were made known to her at the time of
her engagement. Contrarily, Alcaraz claims that Abbott never apprised her of these standards and
thus, maintains that she is a regular and not a mere probationary employee.

FACTS:
On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) caused the publication in
a major broadsheet newspaper of its need for a Medical and Regulatory Affairs Manager
(Regulatory Affairs Manager) who would: (a) be responsible for drug safety surveillance
operations, staffing, and budget; (b) lead the development and implementation of standard
operating procedures/policies for drug safety surveillance and vigilance; and (c) act as the
primary interface with internal and external customers regarding safety operations and queries.
Alcaraz - who was then a Regulatory Affairs and Information Manager at Aventis Pasteur
Philippines, Incorporated (another pharmaceutical company like Abbott) – showed interest and
submitted her application on October 4, 2004.

On December 7, 2004, Abbott formally offered Alcaraz the abovementioned position which was
an item under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department. In
Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.

On February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that she
was to be placed on probation for a period of six (6) months beginning February 15, 2005 to
August 14, 2005.

On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa), Abbott’s Human Resources (HR)
Director, sent Alcaraz an e-mail which contained an explanation of the procedure for evaluating
the performance of probationary employees and further indicated that Abbott had only one
evaluation system for all of its employees. Alcaraz was also given copies of Abbott’s Code of
Conduct and Probationary Performance Standards and Evaluation (PPSE) and Performance
Excellence Orientation Modules (Performance Modules) which she had to apply in line with her
task of evaluating the Hospira ALSU staff.

Abbott’s PPSE procedure mandates that the job performance of a probationary employee should
be formally reviewed and discussed with the employee at least twice: first on the third month
and second on the fifth month from the date of employment

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was
informed that she failed to meet the regularization standards for the position of Regulatory
Affairs Manager. Thereafter, Walsh and Terrible requested Alcaraz to tender her resignation,
else they be forced to terminate her services.

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On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating
that her services had been terminated effective May 19, 2005.

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint
for illegal dismissal and damages against Abbott and its officers, namely, Misa, Bernardo,
Almazar, Walsh, Terrible, and Feist. She claimed that she should have already been considered
as a regular and not a probationary employee given Abbott’s failure to inform her of the
reasonable standards for her regularization upon her engagement as required under Article 295
of the Labor Code. She contended that while her employment contract stated that she was to be
engaged on a probationary status, the same did not indicate the standards on which her
regularization would be based. She further averred that the individual petitioners maliciously
connived to illegally dismiss her when: (a) they threatened her with termination; (b) she was
ordered not to enter company premises even if she was still an employee thereof; and (c) they
publicly announced that she already resigned in order to humiliate her.

ISSUES:
1. Whether or not Alcaraz was validly terminated from her employment? (YES)

2. Whether or not ABBOT laboratories is liable for nominal damages? (YES)

RULING:
1. Alcaraz was validly terminated from her employment.
A different procedure is applied when terminating a probationary employee; the usual two-notice
rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states
that "if the termination is brought about by the x x x failure of an employee to meet the standards of
the employer in case of probationary employment, it shall be sufficient that a written notice is served
the employee, within a reasonable time from the effective date of termination."

As the records show, Alcaraz's dismissal was effected through a letter dated May 19, 2005 which
she received on May 23, 2005 and again on May 27, 2005. Stated therein were the reasons for
her termination, i.e., that after proper evaluation, Abbott determined that she failed to meet the
reasonable standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the performance of her
functions as Regulatory Affairs Manager. Undeniably, this written notice sufficiently meets the
criteria set forth above, thereby legitimizing the cause and manner of Alcaraz’s dismissal as a
probationary employee under the parameters set by the Labor Code.

2. Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment

and Abbott’s compliance with the Labor Code termination procedure, it is readily apparent that
Abbott breached its contractual obligation to Alcaraz when it failed to abide by its own
procedure in evaluating the performance of a probationary employee.

Records show that Abbott’s PPSE procedure mandates, inter alia, that the job performance of a
probationary employee should be formally reviewed and discussed with the employee at least twice:
first on the third month and second on the fifth month from the date of employment. Abbott is also
required to come up with a Performance Improvement Plan during the third month review to bridge
the gap between the employee’s performance and the standards set, if any. In addition,

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a signed copy of the PPSE form should be submitted to Abbott’s HRD as the same would serve as
basis for recommending the confirmation or termination of the probationary employment.

Case law has settled that an employer who terminates an employee for a valid cause but does so
through invalid procedure is liable to pay the latter nominal damages. If the dismissal is based
on an authorized cause but the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was initiated by the employer’s exercise
of his management prerogative.

In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating
Alcaraz. For one, there lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was
submitted to the HRD. It was not even shown that a PPSE form was completed to formally assess
her performance. Neither was the performance evaluation discussed with her during the third
and fifth months of her employment. Nor did Abbott come up with the necessary Performance
Improvement Plan to properly gauge Alcaraz’s performance with the set company standards.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her
failure to meet the standards required for her regularization, and while it must be further
pointed out that Abbott had satisfied its statutory duty to serve a written notice of termination,
the fact that it violated its own company procedure renders the termination of Alcaraz’s
employment procedurally infirm, warranting the payment of nominal damages. A further
exposition is apropos.

JESSIE G. MARTINEZ vs.

CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELCO)
(G.R. No. 192306, SECOND DIVISION, July 15, 2013, PERLAS-BERNABE, J.)

To validly dismiss an employee on the ground of loss of trust and confidence under Article 296(c)
(formerly Article 282[c]) of the Labor Code, the following guidelines must be observed: (1) the
employee concerned must be holding a position of trust and confidence; and (2) there must be an
act that would justify the loss of trust and confidence.

Anent the first requisite, it is noteworthy to mention that there are two classes of positions of trust,
namely: (1) 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 (2) 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. Being an employee tasked to collect
payments and remit the same to CENPELCO, Martinez belongs to the latter class and thus, occupies
a position of trust and confidence.

Anent the second requisite, the audit report conducted on Martinez's cash count revealed that he
had a shortage in the amount of ₱44,846. 77 in his remittance for April 25, 2002. Perforce,
Martinez's failure to properly account for his shortage of such a significant amount is enough
reason for CENPELCO to lose trust and confidence in him.

FACTS:

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In 1991, CENPELCO employed Martinez on a contractual basis and in 1993, was subsequently
regularized as a billing clerk at the former's main office in San Carlos City, Pangasinan. On January 7,
2002, CENPELCO gave Martinez the position of teller at Area VI in Malasiqui, Pangasinan.

On April 26, 2002, CENPELCO’s Internal Audit Department (IAD) conducted a cash count audit
at its Area VI. Josefina Mandapat (Mandapat), the IAD Officer-in-Charge, analyzed the audit
results and concluded that there was an error in the count of Benjamin Madriaga (Madriaga),
cashier for Area VI, regarding the breakdown of collection turned over by Martinez for April 23,
2002. Specifically, Madriaga erroneously recorded that Martinez remitted 390 pieces of ₱500-
bills, instead of the correct number which was just 290, and issued a handwritten temporary
receipt for ₱406,130.31 instead of ₱360,447.13. Upon noting that Madriaga issued Official
Receipts Nos. 77365-77367 for the amount of₱360,447.13 with corresponding remittance stubs
for Martinez’s April 23, 2002 collections, Mandapat concluded that Martinez’s overage for the
same day in the amount of ₱45,682.58 is questionable.

In view of such audit, Mandapat recommended that Madriaga and Martinez be made to explain
why no disciplinary action should be taken against them. Thus, on May 15, 2002, Martinez filed
his letter-explanation, explaining that he submitted his collections and remittance stubs to
Madriaga who was the one tasked to make the report thereon and who may have mishandled
the proper listing and tallying of the money collected vis-à-vis the collection stubs. He further
admitted the existence of such shortage and tried to offset the same with his alleged overage on
April 23, 2002.

On November 26, 2002, Martinez was dismissed from service, prompting him to file a complaint
for illegal dismissal with money claims for 13th month pay, service incentive leave pay and
allowances, as well as moral and exemplary damages.

ISSUE:
Whether Martinez’s dismissal on the ground of loss of trust and confidence is valid? (YES)

RULING:
To validly dismiss an employee on the ground of loss of trust and confidence under Article
296(c) (formerly Article 282[c]) of the Labor Code, the following guidelines must be observed:
(1) the employee concerned must be holding a position of trust and confidence; and (2) there
must be an act that would justify the loss of trust and confidence.

Anent the first requisite, it is noteworthy to mention that there are two classes of positions of
trust, namely: (1) 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 (2) 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. Being an employee tasked to collect payments and remit the same to CENPELCO,
Martinez belongs to the latter class and thus, occupies a position of trust and confidence.

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Anent the second requisite, the audit report conducted on Martinez's cash count revealed that
he had a shortage in the amount of ₱44,846.77 in his remittance for April 25, 2002. When asked
to explain such shortage, Martinez not only admitted the same but even tried to exculpate
himself from liability by attempting to offset said shortage with his alleged overage on April 23,
2002 in the amount of ₱45,682.58. The Court agrees with the CA that this practice should never
be countenanced because it would allow the employees to patch up inaccuracies or even their
own wrongdoings and thus, the true revenues or losses of the company will never be correctly
identified. Verily, this irregular practice would be detrimental to the interests of the employer
whose bread and butter depends solely on realized profits. Perforce, Martinez's failure to
properly account for his shortage of such a significant amount is enough reason for CENPELCO
to lose trust and confidence in him.
b. Hearing
C. Termination by employee
1. Resignation versus constructive dismissal

MARIO B. DIMAGAN, vs.

DACWORKS UNITED, INCORPORATED AND/ORDEAN A. CANCINO
(G.R. No. 191053, THIRD DIVISION, November 28, 2011, PERLAS-BERNABE, J.)

As held in the case of Coca-Cola Bottlers Philippines, Inc. vs. Del Villar, the burden falls upon the
company to prove that the employee's assignment from one position to another was not
tantamount to constructive dismissal. In the case at bar, respondents failed to discharge said
burden. In fact, respondents never even disputed that petitioner was relegated from the position of
OIC to supervisor and, subsequently, to an ordinary technician. Clearly, the reduction in
petitioner's responsibilities and duties, particularly from supervisor to ordinary technician,
constituted a demotion in rank tantamount to constructive dismissal.

Similarly, the Court cannot concur with the finding of the CA that it was petitioner who abandoned
his employment by failing to report for work or having gone AWOL.

FACTS:
Mario B. Dimagan started working for Dacworks United, Inc. as Officer-in-Charge (OIC) for
mechanical installation. Sometime in 2002, Dimagan was downgraded from his post as OIC to
supervisor. Then, in March of the following year, he was made to work as a mere technician.
When he vocally expressed his concerns regarding his assignments, one Loida Aquino told him
not to report for work anymore. Thereafter, a certain Carlito Diaz, Operations Manager,
castigated Dimagan for not following Aquino's instruction to work as a technician. This
prompted Dimagan to file a complaint for illegal dismissal, non-payment of overtime pay,
holiday pay, service incentive leave and separation pay against respondents.

Dacworks United, Inc. and Cancino denied that Dimagan was illegally dismissed arguing that,
since April 4, 2003 up to the time of the filing of the complaint, he never reported for work and
continuously violated the company policy on absence without official leave (AWOL). They
allegedly sent a total of four (4) memoranda informing petitioner of his offenses.In reply,
Dimagan denied ever receiving any one of the four memoranda allegedly sent by respondents.

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LA rendered a decision in favor of Dimagan, ordering Dacworks to reinstate Dimagan to his
former position with full backwages. LA pointed out that there was no denial by respondents
that they relegated petitioner from the position of OIC to supervisor and then to ordinary
technician. The last assignment was meant to humiliate him and deprive him of his dignity as
stockholder of the company. Moreover, the immediate filing by petitioner of the complaint for
dismissal negated the defense of abandonment interposed by respondents.

On appeal, the NLRC rendered a Resolution affirming the LA's Decision in toto. Further, the
NLRC clarified that the phrase as of this date in the decretal portion of the Decision of the Labor
Arbiter signified that the computation of petitioner's backwages starts from the date when his
compensation was withheld from him until the date of his actual reinstatement, as provided in
Article 279 of the Labor Code.

Subsequently, respondents filed a petition for certiorari under Rule 65 of the same Rules before
the CA which reversed and set aside the Resolutions of the NLRC upon a finding that there was
no dismissal of petitioner to speak of, whether actual or constructive, considering the absence of
substantial evidence to prove that his services were, in fact, terminated by respondents; or that
there was a demotion in rank or a diminution of his salaries, benefits and privileges

Aggrieved, petitioner moved for reconsideration of the CA Decision, but it was denied in the
Resolution for lack of merit. Hence, the instant recourse.

ISSUE
Whether or not Dimagan was constructively dismissed? (YES)

RULING:

Constructive dismissal is defined as a quitting because continued employment is rendered

impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay.
The test of constructive dismissal is whether a reasonable person in the employee's position
would have felt compelled to give up his position under the circumstances. It is an act
amounting to dismissal but is made to appear as if it were not. Constructive dismissal is
therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of
employees in order to protect their rights and interests from the coercive acts of the employer.

As held in the case of Coca-Cola Bottlers Philippines, Inc. vs. Del Villar, the burden falls upon the
company to prove that the employee's assignment from one position to another was not
tantamount to constructive dismissal. In the case at bar, respondents failed to discharge said
burden. In fact, respondents never even disputed that petitioner was relegated from the position
of OIC to supervisor and, subsequently, to an ordinary technician. Clearly, the reduction in
petitioner's responsibilities and duties, particularly from supervisor to ordinary technician,
constituted a demotion in rank tantamount to constructive dismissal.

Similarly, the Court cannot concur with the finding of the CA that it was petitioner who
abandoned his employment by failing to report for work or having gone AWOL.

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Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.To constitute abandonment of work, two elements must concur: (1) the employee
must have failed to report for work or must have been absent without valid or justifiable
reason; and (2) there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act.The employer bears the burden
of proof to show the deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning.

In the case of Hodieng Concrete Products, Inc. v. Emilia, citing Samarca v. Arc-Men Industries, Inc.,
the Court has ruled thus:
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.

Abandonment is a matter of intention and cannot lightly be presumed from certain

equivocal acts. To constitute abandonment, there must be clear proof of deliberate and
unjustified intent to sever the employer-employee relationship. Clearly, the operative
act is still the employee’s ultimate act of putting an end to his employment.

Settled is the rule that mere absence or failure to report for work is not tantamount
to abandonment of work.
In this case, petitioner's failure to report for work was caused by the unwarranted demotion in
rank that was imposed upon him by respondents, not by any intention to sever employment ties
with them. And his filing of the instant complaint for illegal dismissal indubitably negates the
allegation of abandonment. Had petitioner intended to forsake his job, then he would not have
found it necessary to institute this case against respondents.

VICENTE C. TATEL v. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F.

PAMINTUAN, and/or PAOLO C. TURNO
G.R. No. 206942, FIRST DIVISION, February 25, 2015, PERLAS-BERNABE, J

Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on the
part of the employer has become so unbearable as to leave an employee with no choice but to
forego continued employment, or when 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.

To constitute abandonment, two elements must concur: (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, with the second element as the more determinative factor and being manifested by some
overt acts. Mere absence is not sufficient. The employer has the burden of proof to show a

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deliberate and unjustified refusal of the employee to resume his employment without any intention
of returning. Abandonment is incompatible with constructive dismissal.

In this case, respondents themselves claimed that after having removed Tatel from his post at due
to several infractions committed thereat, they subsequently reassigned him. Thereafter, and until
Tatel filed the instant complaint for illegal dismissal 6 months later, he was not given any other
postings or assignments. As the "off-detail" period had already lasted for more than six 6 months,
Tatel is therefore deemed to have been constructively dismissed.

FACTS:

On March 14, 1998, JLFP, a business engaged as a security agency, hired Tatel as one of its
security guards. On October 14, 2009, Tatel filed a complaint before the NLRC against JLFP and
its officer, Jose Luis F. Pamintuan, as well as SKI Group of Companies and its officer, Joselito
Dueñ as, for underpayment of salaries and wages, non-payment of other benefits, 13th month
pay, and attorney's fees. 10 days after filing the complaint, Tatel was placed on "floating status";
after the lapse of six (6) months therefrom, without having been given any assignments, he filed
another complaint against JLFP and its officers, respondent Paolo C. Turno and Jose Luis Fabella
for illegal dismissal, reinstatement, backwages, refund of cash bond deposit, attorney's fees, and
other money claims.

In their defense, respondents JLFP, Pamintuan, and Turno denied that Tatel was dismissed and
averred that they removed the latter from his post on August 24, 2009 because of several
infractions he committed while on duty. Thereafter, he was reassigned. Notwithstanding,
respondents sent a Memorandum directing Tatel to report back to work. However, despite
receipt of the said memorandum, respondents averred that Tatel ignored the same and failed to
appear; hence, he was deemed to have abandoned his work.

In his reply, Tatel admitted having received a Memorandum directing him to report back to
work for reassignment. However, when he went to the JLFP office, he was merely advised to
"wait for possible posting." He repeatedly went back to the office for reassignment, but to no
avail. He likewise refuted respondents' claim that he abandoned his work, insisting that after
working for JLFP for more than 11 years, it was illogical for him to refuse any assignments, more
so, to abandon his work and security of tenure without justifiable reasons.

The LA dismissed Tatel's illegal dismissal complaint for lack of merit. Aggrieved, Tatel appealed
to the NLRC. The NLRC reversed and set aside the LA's Decision and found Tatel to have been
illegally dismissed. Respondents' motion for reconsideration was also denied.

The CA reversed and set aside the NLRC's Decision and reinstated the LA's Decision dismissing
the illegal dismissal complaint filed by Tatel. Finding grave abuse of discretion on the part of the
NLRC in rendering its assailed Decision, the CA instead concurred with the stance of the LA.
Tatel moved for reconsideration, which was denied; hence, this petition.

ISSUE: Whether or not the CA erred in ruling that the NLRC gravely abused its discretion in
finding Tatel to have been illegally dismissed. (NO)

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RULING:

The petition is meritorious.

Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on

the part of the employer has become so unbearable as to leave an employee with no choice but
to forego continued employment, or when 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 Salvaloza v. NLRC, the Court further explained the nature of the "floating status," to wit:
Temporary "off-detail" or "floating status" is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post
until they are transferred to a new one. It takes place when the security agency's clients decide
not to renew their contracts with the agency, resulting in a situation where the available posts
under its existing contracts are less than the number of guards in its roster. It also happens in
instances where contracts for security services stipulate that the client may request the agency
for the replacement of the guards assigned to it even for want of cause, such that the replaced
security guard may be placed on temporary "off-detail" if there are no available posts under the
agency's existing contracts. During such time, the security guard does not receive any salary or
any financial assistance provided by law. It does not constitute a dismissal, as the assignments
primarily depend on the contracts entered into by the security agencies with third parties, so
long as such status does not continue beyond a reasonable time. When such a "floating status"
lasts for more than six (6) months, the employee may be considered to have been constructively
dismissed.

In this case, respondents themselves claimed that after having removed Tatel from his post due to
several infractions committed thereat, they subsequently reassigned him. Thereafter, and until Tatel
filed the instant complaint for illegal dismissal 6 months later, he was not given any other postings or
assignments. While it may be true that respondents summoned him back to work through the
Memorandum, which Tatel acknowledged to have, records are bereft of evidence to show that he
was given another detail or assignment. As the "off-detail" period had already lasted for more than
six 6 months, Tatel is therefore deemed to have been constructively dismissed.

In this regard, the Court concurs with the finding of the NLRC that respondents failed to
establish that Tatel abandoned his work. To constitute abandonment, two elements must
concur: (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, with the second element as the
more determinative factor and being manifested by some overt acts. Mere absence is not
sufficient. 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. Abandonment is
incompatible with constructive dismissal.

For all the foregoing reasons, the CA therefore erred in ascribing grave abuse of discretion on
the part of the NLRC which, in fact, correctly found Tatel to have been illegally dismissed. In
consequence of the foregoing, Tatel is entitled to reinstatement and back wages. However, as
reinstatement is no longer feasible in this case because of the strained relations between the

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parties and the fact that Tatel had since been employed with another company, separation pay
is awarded in lieu of reinstatement.

CENTRAL AZUCARERA DE BAIS, INC. AND ANTONIO STEVEN L. CHAN v.

JANET T. SIASON
G.R. No. 215555, FIRST DIVISION, 29 July 2015, PERLAS-BERNABE, J.

Constructive dismissal exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay and other benefits xxx constructive dismissal may, likewise, exist if an act of
clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of
the employee that it could foreclose any choice by him except to forego his continued employment.

In this case, Siason chose to tender her resignation to save herself from the trouble of besmirching
her employment record. The foregoing facts belie Siason's argument that petitioners
constructively dismissed her.

FACTS:

Siason was hired as a Purchasing Assistant and eventually promoted to Purchasing Officer. On a
letter dated 03 October 2011, Chan confronted her regarding the propriety of a deliver of
certain machines and thereafter informed her that she had been committing various policy
violations and that she should tender her immediate resignation “rather than to force his hand”.
Consequently, Siason filed her letter of resignation citing that she was resigning because Chan
told her so. However, herein petitioners refused to accept the letter hence, Siason was
constrained to make a letter of resignation acceptable to them.

Later on, Siason filed a complaint against petitioners for constructive dismissal. Petitioners
argued that there was no constructive dismissal but in fact a voluntary resignation.

The Labor Arbiter (the “LA”) ruled in favor of petitioners, ruling that there was no constructive
dismissal but awarded Siason of separation pay. Siason then appealed to the NLRC where it
overruled the LA and held that there was constructive dismissal by virtue of the letter dated 03
October 2011 sent by Chan to Siason. Thereafter, the Court of Appeals (the “CA”) upheld the
ruling of NLRC that there was constructive dismissal.

ISSUE: Whether or not there was constructive dismissal. (NO)

RULING:

Constructive dismissal exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay and other benefits. Aptly called a dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of
clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the

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part of the employee that it could foreclose any choice by him except to forego his continued
employment.
A judicious review of the records reveals that CABI's accounting department indeed made an
audit of the purchases made by the company through its Purchasing Officer, Siason. This
resulted in the discovery of a number of questionable discrepancies in several purchasing
transactions undertaken by Siason, consisting in different price quotations for identical items
contained in various purchase documents prepared by Siason herself.

Taking into consideration Siason's long tenure at CABI, as well as her close relationship with
Chan, the latter sent her the October 3, 2011 letter asking her to resign which should be
construed as Chan telling Siason to resign or be faced with an administrative complaint. Siason
received another letter, essentially confirming if the latter was going to resign or if she is
subjecting herself to an administrative investigation. Ultimately, Siason chose to tender her
resignation to save herself from the trouble of besmirching her employment record. The
foregoing facts belie Siason's argument that petitioners constructively dismissed her. These
circumstances show that she was given the option to voluntarily resign from CABI, instead of
dealing with an investigation which might result in her dismissal. Verily, Chan's decision to give
Siason a graceful exit rather than to file an action for redress is perfectly within the discretion of
the former; as it is not uncommon that an employee is permitted to resign to avoid the
humiliation and embarrassment of being terminated for just cause.

JOLO'S KIDDIE CARTS, Petitioner, - versus - EVELYN A. CABALLA,

Respondent. GR No. 230682, SECOND DIVISION, Nov 29, 2017
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 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.
Petitioners failed to prove that respondents committed unequivocal acts that 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.
FACTS:
Respondents Caballa and Bautista alleged that petitioners Jolo's Kiddie Carts 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.
They claimed that when petitioners found out that respondents inquired from the DOLE about
the prevailing minimum wage rates, they were prohibited from reporting to their work

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assignment without any justification. Petitioners denied such and maintained that they were the
ones who abandoned their work.
The LA ruled in favor of respondents. The NLRC modified the ruling, finding no illegal dismissal
nor abandonment of work and ordered the reinstatement of respondents to their former
positions and awarded increased monetary benefits. Anent the procedural matters raised by
petitioners, it ruled that petitioners waived the issue of improper venue when they failed to
raise the same before the filing of position papers.
Petitioners directly filed a petition for certiorari before the CA. The CA denied the petition due to
petitioners' failure to file a motion for reconsideration before the NLRC.
ISSUE:
1. Whether or not the CA was correct in dismissing the petition for certiorari due to
petitioners' non-filing of a prior motion for reconsideration before the NLRC. (NO)
2. Whether or not the LA of Manila had jurisdiction of the case due to improper venue. (YES)
3. Whether or not respondents abandoned their work. (NO)

RULING:
1. NO. As a rule, the filing of a motion for reconsideration is a condition sine qua non to the
filing of a petition for certiorari. However, there are several recognized exceptions to the
rule, one of which is when the order is a patent nullity.

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. 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 labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings
and conclusions are not supported by substantial evidence.
In this case, the NLRC did not gravely abuse its discretion in ruling that: (a) petitioners
are barred from raising improper venue; and (b) respondents were neither dismissed by
petitioners nor considered to have abandoned their jobs. However, 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.

2. YES. 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 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

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 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 same.
Article 224 of the Labor Code, as amended, clearly provides that the LAs shall
have exclusive and original jurisdiction to hear and decide, inter alia, termination
disputes and money claims arising from employer-employee relations. As such, the LA
clearly had jurisdiction to resolve respondents' complaint.

3.NO. 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 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.
Petitioners failed to prove that respondents committed unequivocal acts that
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.

JOHN L. BORJA and AUBREY L. BORJA/DONG JUAN, Petitioners, – versus - RANDY MIÑOZA
and ALAINE S. BANDALAN, Respondents.
G.R. No. 218384, FIRST DIVISION, July 3, 2017

Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain on the
part of the employer has become so unbearable as to leave an employee with no choice but to
forego continued employment, or when 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.

Miñoza and Bandalan failed to prove through substantial evidence that they were discriminated
against, or that working at the restaurant had become so unbearable that they were left without
any choice but to relinquish their employment. Neither were they able to prove that there was a
demotion in rank or a diminution in pay such that they were forced to give up their work.

FACTS:
Miñ oza and Bandalan were employed as cooks of Dong Juan, a restaurant owned and operated by
John Borja and Aubrey Borja. The company implements a “double-absent” policy, which considers

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an employee absent for 2 days without pay if he incurs an absence on a Friday, Saturday, or
Sunday. Miñ oza and Bandalan, respectively incurred absences on a Friday. Miñ oza, because of
the double-absent policy, opted not to work the next day. While Bandalan, reported for work but
was later advised by John to go home a take a rest.

According to Miñ oza and Bandalan, they were summoned by John and Aubrey the
following day and John accused them of planning to extort money from the company and were
told that they should resign. The day after, Miñ oza and Bandalan alleged that they reported for
work but were barred from entering the restaurant. Instead, John and Aubrey brought them to
another restaurant where they were forced to receive separate memoranda asking them to
justify their unexplained absences and was intimidated by a certain “Mark” during the meeting.
When Miñ oza and Bandalan reported for work the next day, they were purportedly refused
entry once more. Only during the closing hour for that day that they were invited to go inside
the restaurant but were subjected to an on-the-spot drug test, the results of which yielded
negative. On their way home, they heard people presumably “Mark” and his hired goons
shouting and threatening them. Out of fear, they no longer reported for work the following day
and instead filed a complaint for illegal dismissal.

In defense, John and Aubrey explained that the “double-absent” policy was actually proposed by the
employees and all were amenable thereto. They alleged that when they summoned Miñ oza and
Bandalan for a meeting, the two expressed their intention to resign. But the following day, they
arrived at the restaurant and insisted that they wanted to work. To maintain order in the restaurant
and to keep the other employees from being harassed, they called on a certain Mark Opura to stay in
the restaurant and keep watch. Aubrey further alleged that Miñ oza and Bandalan were sent separate
memoranda requiring them to explain their absence without official leave, which they both failed to
do. Subsequently, they were dismissed from employment.

ISSUE:
1. Whether or not Miñ oza and Bandalan have been constructively dismissed. (NO)

RULING:
No. Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain
on the part of the employer has become so unbearable as to leave an employee with no choice but to
forego continued employment or when 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. The test of constructive dismissal is whether a reasonable person in the
employee's position would have felt compelled to give up his job under the circumstances.

Despite their allegations, Miñ oza and Bandalan failed to prove through substantial evidence that
they were discriminated against, or that working at the restaurant had become so unbearable
that they were left without any choice but to relinquish their employment. Neither were they
able to prove that there was a demotion in rank or a diminution in pay such that they were
forced to give up their work.

D. Preventive Suspension
E. Reliefs from illegal dismissal

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 THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-BOTE, vs.
FRANCISCO N. DAKILA
(G.R. No. 199547, SECOND DIVISION, September 24, 2012, PERLAS-BERNABE, J.)

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his compulsory
retirement on May 2, 2007, his reinstatement is no longer feasible.

Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits
pursuant to the CBA. On the other hand, his backwages should be computed only for days prior to
his compulsory retirement which in this case is only a day. Consequently, the award of
reinstatement wages pending appeal must be deleted for lack of basis.

FACTS:
Dakila was employed by New Philippine Skylanders and was terminated for cause when the
corporation was sold. Subsequently, he was rehired as consultant by the petitioners under a
Contract for Consultancy Services.

Thereafter, in a letter, Dakila informed petitioners of his compulsory retirement and sought for
the payment of his retirement benefits pursuant to the CBA. His request, however, was not
acted upon. Instead, he was terminated from service.

Consequently, Dakila filed a complaint for constructive illegal dismissal, non-payment of

retirement benefits, under/non-payment of wages and other benefits of a regular employee, and
damages against petitioners before the NLRC. He averred, among others, that the consultancy
contract was a scheme to deprive him of the benefits of regularization, claiming to have
assumed tasks necessary and desirable in the trade or business of petitioners and under their
direct control and supervision.

On the other hand, petitioners, in their position paper, asserted that respondent Dakilawas a
consultant and not their regular employee. Moreover, respondentDakila terminated his contract
in a letter, thus, negating his dismissal.

Labor Arbiter rendered a Decisionfinding Dakila to have been illegally dismissed and ordered
his reinstatement with full backwages computed from the time of his dismissal until his actual
reinstatement as well as the payment of his unpaid benefits under the CBA.

On appeal, the NLRC sustained the LA’s finding that Dakila was a regular employee and that his
dismissal was illegal. However, it noted that since he was already beyond the retirement age, his
reinstatement was no longer feasible. As such, it ordered the payment of his retirement pay to
be computed from 1997 until the date of the decision.

The petitioners' motion for reconsideration having been denied in the Resolution, they filed a
petition for certiorari before the CA. CA dismissed the petition for failure to show that the NLRC
committed grave abuse of discretion in affirming the LA's Decision. It found the factual findings

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of the LA and the NLRC to be supported by substantial evidence and thus, should be accorded
respect and finality. Petitioners' motion for reconsideration therefrom was likewise denied.
Hence, the instant petition.

ISSUE:
Whether or not Dakila was illegally dismissed and whether or not he can be reinstated to work?
(YES)

RULING:
Records reveal that both the LA and the NLRC, as affirmed by the CA, have found substantial
evidence to show that Dakila was a regular employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his compulsory
retirement on May 2, 2007, his reinstatement is no longer feasible.

Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits
pursuant to the CBA. On the other hand, his backwages should be computed only for days prior
to his compulsory retirement which in this case is only a day. Consequently, the award of
reinstatement wages pending appeal must be deleted for lack of basis.

Similarly, the Court finds no basis to hold Jennifer M. Eñ ano-Bote, President and General
Manager of The New Philippine Skylanders, Inc., jointly and severally liable with the corporation
for the payment of the monetary awards. The mere lack of authorized or just cause to terminate
one's employment and the failure to observe due process do not ipso facto mean that the
corporate officer acted with malice or bad faith. There must be independent proof of malice or
bad faith which was not established in this case. Perforce, petitioner Jennifer M. Eñ ano-Bote
cannot be made personally liable for the liabilities of the corporation which, by legal fiction, has
a personality separate and distinct from its officers, stockholders and members.

Moreover, for lack of factual and legal bases, the awards of moral and exemplary damages
cannot also be sustained. Thus:
(1) petitioner Jennifer M. Eñ ano-Bote is ABSOLVED from liability for payment of respondent
Francisco N. Dakila's monetary awards;
(2) the awards of reinstatement wages pending appeal as well as the moral and exemplary
damages are ordered DELETED; and
(3) the computation of backwages should be limited only for a day prior to his compulsory
retirement.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION, Petitioner, -versus- ELMER ABLAY,

et. al., Respondents.
G.R. No. 218172, FIRST DIVISION, March 16, 2016, PERLAS-BERNABE, J.

As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation

pay, if reinstatement is not viable) and payment of full backwages. In certain cases, however, the

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Court has carved out an exception to the foregoing rule and thereby ordered the reinstatement of
the employee without backwages on account of the following: (a) the fact that the dismissal of the
employee would be too harsh a penalty; and (b) that the employer was in good faith in terminating
the employee.
In this case, Ablay's conviction as an accomplice to the murder of petitioner's former
assistant manager had strained the relationship between Ablay and petitioner. Hence, Ablay
should not be reinstated in the company and, instead, be paid separation pay, as reinstatement
would only create an atmosphere of antipathy and antagonism would be generated as to adversely
affect his efficiency and productivity. In this relation, it should be clarified that said strained
relation should not affect the grant of benefits in his favor prior to his conviction, as the latter
pertains to an offense entirely separate and distinct from the acts constituting petitioner's charges
against him in the case at bar, i.e., taking of the company equipment without authority.
Petitioner's payment of separation pay to Ablay in lieu of his reinstatement is therefore warranted.

FACTS:
The instant case arose from a complaint for illegal dismissal, unfair labor practice, and
recovery of damages filed by respondents, members of the Nagkahiusang Mamumuo sa Ursumco-
National Federation of Labor (the Union), against petitioner before the Sub-Regional Arbitration
Branch of the NLRC. Respondents alleged that the Union filed a complaint against petitioner for non-
compliance with Wage Order No. 3 issued by the Regional Tripartite Wages and Productivity Board
before the DOLE. After due proceedings, the DOLE found petitioner liable to the members of the
Union and, consequently, issued a Writ of Execution to enforce the said ruling.

DOLE Sheriff Ignacio Calinawan (Sheriff Calinawan) went to petitioner's premises to

serve the writ to petitioner's Personnel Manager, Jocelyn Teo (Teo), but the latter refused to
comply by reason of petitioner's pending appeal before the Secretary of Labor. Two (2) months
later, Sheriff Calinawan went back to petitioner's premises in another attempt to serve the writ
of execution, this time, seeking the help of the Union Officers, including respondents, in its
enforcement. Despite Teo's refusal to receive the writ, Sheriff Calinawan and respondents still
effected a levy on one of petitioner's forklifts, took it outside the company premises, and
deposited it at the municipal hall for safekeeping.

Due to the foregoing incidents, petitioner issued a Notice of Offense to each of the
respondents, requiring them to explain in writing why no disciplinary action should be taken
against them. Thereafter, petitioner issued a Notice of Administrative Investigation to each of
the respondents, charging them of stealing company property, fraudulent acquisition or release
to other persons of company property, unauthorized possession/use of company property,
unauthorized operation of company equipment, and serious misconduct during official working
hours or within company premises. After due investigation, petitioner furnished respondents
with a Notice of Dismissal for being found guilty as charged. This prompted the filing of the
instant complaint.

The LA dismissed respondents' complaint for illegal dismissal for lack of merit. The LA
found that respondents' participation in the execution of the writ by Sheriff Calinawan, while
legal, was tainted with arrogance and lawlessness, considering that the same was effected with
the use of force and intimidation.Aggrieved, both parties appealed to the NLRC.

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 The NLRC affirmed the LA ruling with modification, reducing the monetary awards in
favor of respondents.

The NLRC agreed with the LA that the manner in which respondents assisted in the
execution of the writ was arrogant and unlawful and, thus, deemed the legality of their
termination as valid. Dissatisfied, both parties moved for reconsideration, but the same were
denied.. Undaunted, respondents filed a petition for certiorari before the CA.

The CA reversed and set aside the NLRC ruling by declaring respondents to have been
illegally dismissed by petitioner. While the CA agrees with the finding that respondents violated
company rules in the manner by which they assisted Sheriff Calinawan in enforcing the writ of
execution, it ruled that dismissal is too severe a penalty for the infraction.

Dissatisfied, petitioner moved for reconsideration, insisting that respondents' act of

wresting possession of company property constitutes a serious infraction which warrants their
dismissal. Moreover, petitioner brought to the CA's attention Ablay's conviction as an
accomplice in the murder of one of its former assistant managers. In view of this, petitioner
contended that the relationship between it and Ablay has already been strained and, as such, he
should neither be reinstated nor granted separation pay and backwages.

The CA partially granted petitioner's motion by modifying its earlier ruling, but only
insofar as the reinstatement of Ablay is concerned. The CA agreed that Ablay's conviction as an
accomplice to the murder of one of its former assistant managers strained the relationship
between him and petitioner, and, as such, he should no longer be reinstated to his former
position. Nevertheless, the CA pointed out that since Ablay's conviction stemmed from a cause
entirely different from his participation in the enforcement of the writ of execution, he should
still receive the benefits accorded to him by law prior to such conviction.

Hence, this petition.

ISSUE: Whether or not the CA correctly ruled that:

1. Respondents were illegally dismissed as the penalty of suspension would have sufficed;
(YES) and

2. Ablay is entitled to his benefits prior to his conviction, i.e., separation pay, backwages,
and other benefits. (YES)

RULING:

1. Respondents were illegally dismissed as the penalty of suspension would have sufficed.

Article 297 (formerly Article 282) of the Labor Code, which includes the ground of
serious misconduct, provides for the just causes where the employee may be validly terminated
from employment.

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,

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and implies wrongful intent and not mere error in judgment. To constitute a valid cause for the
dismissal within the text and meaning of Article 282 of the Labor Code, the employee's
misconduct must be serious, i.e., of such grave and aggravated character, and not merely trivial
or unimportant. Additionally, the misconduct must be related to the performance of the
employee's duties showing him to be unfit to continue working for the employer. Further, and
equally important and required, the act or conduct must have been performed with wrongful
intent. In other words, for serious misconduct to be a just cause for dismissal, the concurrence
of the following elements is required: (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.

In this case, clearly, respondents committed some form of misconduct when they
assisted Sheriff Calinawan in effecting the levy on the forklift and depositing the same to the
municipal hall for safekeeping as they operated the forklift and took it out of company premises,
all without the authority and consent from petitioner or any of its officers. However,
respondents did not perform the said acts with intent to gain or with wrongful intent. Rather,
they were impelled by their belief - albeit misplaced - that they were merely facilitating the
enforcement of a favorable decision in a labor standards case in order to finally collect what is
due them as a matter of right, which is the balance of their unpaid benefits. In light of the
foregoing, the Court upholds the right of petitioner to take the appropriate disciplinary action
against respondents, but nevertheless, holds that respondents should not have been dismissed
from service as a less punitive sanction, i.e., suspension, would have sufficed.

The Court stressed that while it is the prerogative of the management to discipline its
employees, it should not be indiscriminate in imposing the ultimate penalty of dismissal as it not
only affect the employee concerned, but also those who depend on his livelihood.

Further, considering the fact that respondents were mere equipment operators, technicians,
and electricians, and thus, not occupying managerial nor confidential positions, and that the incident
concerning the forklift was only their first offense in their 14-15 years of service, the Court agrees
with the CA that they should have only been meted a penalty that is less severe than dismissal, i.e.,
suspension. Hence, respondents could not be validly dismissed by petitioner.

2. However, Ablay is entitled only to separation pay.

As a general rule, an illegally dismissed employee is entitled to reinstatement (or

separation pay, if reinstatement is not viable) and payment of full backwages. In certain cases,
however, the Court has carved out an exception to the foregoing rule and thereby ordered the
reinstatement of the employee without backwages on account of the following: (a) the fact that
the dismissal of the employee would be too harsh a penalty; and (b) that the employer was in
good faith in terminating the employee.

To reiterate, respondents were indeed guilty of some form of misconduct and, as such,
petitioner was justified in exercising disciplinary action against them. Absent any evidence to the
contrary, petitioner's resort to disciplinary proceedings should be presumed to have been done in
good faith. Thus, perceiving that petitioner had ample ground to proceed with its disciplinary action
against respondents, and that the disciplinary proceedings appear to have been conducted

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in good faith, the Court finds it proper to apply the exception to the rule on backwages, and
consequently, direct the deletion of backwages in favor of respondents.

Finally, the CA correctly observed that Ablay's conviction as an accomplice to the

murder of petitioner's former assistant manager had strained the relationship between Ablay
and petitioner. Hence, Ablay should not be reinstated in the company and, instead, be paid
separation pay, as reinstatement would only create an atmosphere of antipathy and antagonism
would be generated as to adversely affect his efficiency and productivity. In this relation, it
should be clarified that said strained relation should not affect the grant of benefits in his favor
prior to his conviction, as the latter pertains to an offense entirely separate and distinct from the
acts constituting petitioner's charges against him in the case at bar, i.e., taking of the company
equipment without authority. Petitioner's payment of separation pay to Ablay in lieu of his
reinstatement is therefore warranted.

F. Money claims arising from employer-employee relationship

ARIEL HORLADOR, Petitioner, - versus - PHILIPPINE TRANSMARINE CARRIERS INC.,

Respondent.
GR No. 236576, SECOND DIVISION, September 05, 2018

In labor cases involving employees' wages and other benefits, the Court has consistently held that
when the concerned employee is entitled to the wages/benefits prayed for, he/she is also entitled
to attorney's fees amounting to ten percent (10%) of the total monetary award due him/her.

In this case, suffice it to say that attorney's fees are proper considering that petitioner was found
to be entitled to permanent and total disability benefits and was forced to litigate to protect his
valid claim.

FACTS:
Philippine Transmarine Carriers (PCTI) on behalf of its foreign principal Marine
Shipmanagement hired Ariel Horlador as a Chief Cook on board the vessel PRAIA for a period of
eight months starting from his deployment on June 19, 2012. While on board the vessel, while
carrying provisions, Horlador suddenly felt a severe pain on his waist, abdomen, and down to
his left scrotum. As the pain persisted for a number of days, he was airlifted to a hospital in
Belgium where he was diagnosed with "infection with the need to rule out Epididymitis and
Prostatitis" and advised to undergo repatriation.

Upon arriving on the Philippines, Horlador asked for referral for further treatment from PCTI
but was ignored. Horlador then used his own health card in order to seek treatment at the
Molino Doctors Hospital where he was diagnosed with hernia.

Horlador then filed a claim of permanent and total disability benefits against PTCI

The LA dismissed the petition for lack of merit. The NLRC however reversed the LA and ordered
PCTI to pay Horlador the disability benefits and attorney’s fees. The CA affirmed the NLRC but
deleted the attorney’s fees for failure to present factual bases

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ISSUE:
1. Whether or not the deletion of attorney’s fee is correct. (NO)

RULING:
1. No. There are two (2) commonly accepted concepts of attorney's fees the ordinary and
extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation
paid to a lawyer by his client for the legal services the former renders; compensation is
paid for the cost and/or results of legal services per agreement or as may be assessed. In
its extraordinary concept, attorney's fees are deemed indemnity for damages ordered by
the court to be paid by the losing party to the winning party. The instances when these
may be awarded are enumerated in Article 2208 of the Civil Code and is payable not to
the lawyer but to the client, unless the client and his lawyer have agreed that the award
shall accrue to the lawyer as additional or part of compensation. Particularly, Article
2208 of the Civil Code reads:

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:

(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;

(8) In actions for indemnity under workmen's compensation and employer's liability
laws;

In labor cases involving employees' wages and other benefits, the Court has consistently
held that when the concerned employee is entitled to the wages/benefits prayed for,
he/she is also entitled to attorney's fees amounting to ten percent (10%) of the total
monetary award due him/her.

In this case, suffice it to say that attorney's fees are proper considering that petitioner
was found to be entitled to permanent and total disability benefits and was forced to
litigate to protect his valid claim.

G. Retirement

ELEAZAR S. PADILLO, vs.

RURAL BANK OF NABUNTURAN, INC. and MARK S. OROPEZA
(G.R. No. 199338, SECOND DIVISION, January 21, 2013, PERLAS-BERNABE, J.)

What remains applicable, however, is the Article 300 of the Labor Code as amended by Republic
Act Nos. 7641 and 8558. Simply stated, the provision states that in the absence of any applicable
agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2)
month salary for every year of service, with a fraction of at least six (6) months being considered as

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one whole year. Notably, these age and tenure requirements are cumulative and non-compliance
with one negates the employee’s entitlement to the retirement benefits under Article 300 of the
Labor Code altogether.

Thus, Padillo should have met the age and tenure requirements set forth under Article 300 of the
Labor Code to be entitled to the retirement benefits provided therein. Unfortunately, while Padillo
was able to comply with the five (5) year tenure requirement – as he served for twenty-nine (29)
years – he, however, fell short with respect to the sixty (60) year age requirement given that he
was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due
under the Philam Life Plan, petitioners’ claim for retirement benefits must be denied.

FACTS:
The late Eleazar Padillo, was employed by Rural Bank of Nabunturan, Inc. as its SA Bookkeeper.
During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which
consequently impaired his ability to effectively pursue his work. Subsequently, he wrote a letter
addressed to respondent Oropeza expressing his intention to avail of an early retirement
package. Despite several follow-ups, his request remained unheeded.

Padillo was then separated from employment due to his poor and failing health as reflected in a
Certification issued by the Bank. Padillo then filed with the NLRC Regional Arbitration Branch a
complaint for the recovery of unpaid retirement benefits. He asserted, among others, that the
Bank had adopted a policy of granting its aging employees early retirement packages. The Bank
and Oropeza (respondents) countered that the claim of Padillo for retirement benefits was not
favorably acted upon for lack of any basis to grant the same.

LA issued a Decision dismissing Padillo’s complaint but directed the Bank to pay financial assistance,
finding Padillo disqualified to receive any benefits under Article 300 (formerly, Article
287) of the Labor Code of the Philippines (Labor Code) as he was only fifty-five (55) years old
when he resigned, while the law specifically provides for an optional retirement age of sixty
(60) and compulsory retirement age of sixty-five (65). Dissatisfied with the LA’s ruling, Padillo
elevated the matter to the NLRC.

NLRC’s Fifth Division reversed and set aside the LA’s ruling and ordered respondents to pay Padillo
separation pay, on top of the Philam Life Plan benefit, applying the Labor Code provision on
termination on the ground of disease – particularly, Article 297 thereof (formerly, Article 323)
– holding that while Padillo did resign, he did so only because of his poor health condition.

Aggrieved, respondents filed a petition for certiorari with the CA which granted respondents’
petition for certiorari and rendered a decision setting aside the NLRC’s Resolutions. The CA held
that Padillo could not, absent any agreement with the Bank, receive any retirement benefits
pursuant to Article 300 of the Labor Code considering that he was only fifty-five (55) years old
when he retired. Finally, it pronounced that separation pay on the ground of disease under
Article 297 of the Labor Code should not be given to Padillo because he was the one who
initiated the severance of his employment. Nonetheless, Padillo was still awarded the amount of
₱50,000.00 as financial assistance, in addition to the benefits accruing under the Philam Life
Plan. Displeased with the CA’s ruling, Padillo (now substituted by his legal heirs due to his
death) filed the instant petition.

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ISSUE:
Whether or not Article 300 of the Labor Code on retirement benefits or Article 297 of the Labor
Code on termination on the ground of diseases should be applied in this case? (Art. 300 of the
Labor Code)

RULING:
The Labor Code provision on termination on the ground of disease under Article 297 does not
apply in this case, considering that it was Padillo and not the Bank who severed the employment
relations. Article 297 does not contemplate a situation where it is the employee who severs his
or her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the
Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the
services of the employee unless there is a certification by a competent public health authority
that the disease is of such nature or at such a stage that it cannot be cured within a period of six
(6) months even with proper medical treatment. Thus, given the inapplicability of Article 297 of
the Labor Code to the case at bar, it necessarily follows that petitioners’ claim for separation pay
anchored on such provision must be denied.

What remains applicable, however, is the Article 300 of the Labor Code as amended by Republic
Act Nos. 7641 and 8558. Simply stated, the provision states that in the absence of any applicable
agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve
at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half
(1/2) month salary for every year of service, with a fraction of at least six (6) months being
considered as one whole year. Notably, these age and tenure requirements are cumulative and
non-compliance with one negates the employee’s entitlement to the retirement benefits under
Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the terms and
condition for the retirement of employees, with the sole exception of the Philam Life Plan which
premiums had already been paid by the Bank. Neither was it proven that there exists an
established company policy of giving early retirement packages to the Bank’s aging employees.

Thus, Padillo should have met the age and tenure requirements set forth under Article 300 of
the Labor Code to be entitled to the retirement benefits provided therein. Unfortunately, while
Padillo was able to comply with the five (5) year tenure requirement – as he served for twenty-
nine (29) years – he, however, fell short with respect to the sixty (60) year age requirement
given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to
the proceeds due under the Philam Life Plan, petitioners’ claim for retirement benefits must be
denied.

CONCEPCION A. VILLENA v. BATANGAS II ELECTRIC COOPERATIVE, INC. AND GEORGE A.

DIN
G.R. No. 205735, FIRST DIVISION, February 04, 2015, PERLAS-BERNABE, J.

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Verily, the Court is not unaware of its rulings wherein it pronounced that retirement pay and
separation pay are not mutually exclusive (unless there is a specific prohibition in the collective
bargaining agreement or retirement plan against the payment of both benefits); however, with
Villena's entitlement to retirement pay not included as an issue in an illegal dismissal case
which had already been finally decided, it is quite absurd for Villena to submit a
"contemporaneous" claim for retirement pay on the execution phase of these proceedings. In fine,
the plea to include retirement pay under the phrase "other benefits," cannot be granted.

FACTS:

Villena was hired by BATELEC II as bookkeeper in 1978. She rose from the ranks and was promoted
as Finance Manager in 1985. In 1994, she was demoted to the position of Auditor, which caused her
to file a complaint for constructive dismissal before the Labor Arbiter. The LA dismissed Villena's
complaint, prompting her to seek recourse before the NLRC. The ruling of the LA was reversed,
whereby the NLRC declared Villena to have been illegally dismissed, and thus, ordered BATELEC II to
reinstate her to her former position as Finance Manager, or its equivalent, and to pay her salary
differentials. However, the NLRC's judgment was silent on the payment of allowances, benefits, and
attorney's fees. Hence, Villena moved for reconsideration, but was denied. At odds with the verdict,
she elevated the matter to the CA via petition for certiorari.

The CA modified the NLRC Resolution and declared Villena to be "entitled to the difference
between the salary of the Finance Manager and that of the auditor, plus allowances and any
other benefits pertaining to the position of Finance Manager at the time she was removed
therefrom up to the date of her actual reinstatement." It also granted her attorney's fees in the
amount of 10% of the total monetary award. The case was then remanded to the NLRC for the
computation of the total amount due to Villena. In the course thereof, the LA declared that
Villena was entitled only to "salary differentials, 13 th month pay, unused sick leave, leave of
absence" amounting to P1,078,890.14, excluding from the computation claims for bonus,
representation allowance, transportation benefits, and attorney's fees. Moreover, her claim for
separation pay in lieu of reinstatement was denied.

She appealed to the NLRC the exclusion of her other benefits as well as her claim for separation
pay. The NLRC granted the appeal of Villena, holding that since reinstatement was no longer
possible, separation pay in lieu of reinstatement was justified. BATELEC II moved for
reconsideration, but the same was denied.With no further action having been taken by
BATELEC II, the NLRC Resolution attained finality. Thus, Villena moved for its execution.

Acting on the motion for execution, the Executive Labor Arbiter issued an Order, finding Villena
to be entitled to the following benefits: (a) salary differentials; (b) 13th month pay; (c) 14th
month pay; (d) bonus cash gift; (e) unused sick leave; (f) leave of absence; (g) uniform
allowance; (h) separation pay; (i) representation allowance; (j) transportation allowance; (k)
cellular phone allowance; (l) retirement pay; and (m) attorney's fees.

Insisting that Villena was not entitled to salary differentials, allowances and benefits of a Finance
Manager, separation pay, and allowances for representation, transportation, and cellular phone
usage, BATELEC II appealedto the NLRC. The NLRC partly granted the appeal and excluded from the
computation of monetary awards the sums for representation, transportation, and cellular

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phone usage allowances, as well as retirement pay. It found that Villena was not able to prove
that she was qualified to receive representation allowance or that she was authorized to travel.
The NLRC likewise found no basis for the award of cellular phone allowance to Villena.

With the substantial modification, Villena moved for partial reconsideration, which the NLRC
partly granted, deleting the award for separation pay and in lieu thereof, ordering the payment
of retirement pay in the interest of justice and fairness and in order to be consistent with the
spirit of the law on retirement to grant the more beneficial retirement gratuity to the worker,
including 15th month pay.

Dissatisfied, Villena filed a petition for certiorari before the CA. The CA reversed and set aside
the ruling of the NLRC, pointing out that the earlier August 31, 2001 CA Decision finding Villena
to have been illegally dismissed and the March 22, 2007 NLRC Resolution ordering the payment
of separation pay in lieu of reinstatement had both become final and executory and, thus,
immutable and unalterable. As the NLRC, awarded retirement pay instead of separation pay,
the CA found that the NLRC acted beyond its authority in modifying the aforesaid final and
executory judgments. The CA, however, affirmed disallowing the inclusion of allowances for
representation, transportation, and cellular phone usage as Villena did not perform her duties
as Finance Manager not being a certified public accountant which is a required qualification for
such position.

Contesting the exclusions, Villena filed the present petition.

ISSUE: Whether or not retirement pay, and representation, transportation, and cellular phone
usage allowances should be awarded in favor of Villena. (IT DEPENDS)

RULING:

The petition is partly meritorious.

A. On Retirement Pay.

As the Court sees it, the "other benefits" mentioned in these rulings cannot be construed to
include retirement pay for the primary reason that they adjudged awards relative to Villena's
illegal dismissal complaint, which remains barren of a specific cause of action for retirement
pay. In order for her retirement pay claim to be considered, Villena's complaint should have
contained substantial allegations which would show that she (a) had applied for the same, and
(b) her application squares with the requirements of entitlement under the terms of the
company's retirement plan, i.e., Policy No. 03-003, which, in fact, was issued on September 20,
2003, or after the August 31, 2001 CA Decision had already attained finality. However, based on
the records, what she sought for in her illegal dismissal complaint were the reliefs of
reinstatement, payment of salary differentials, all benefits and allowances that she may have
received as Finance Manager, attorney's fees, and damages. Thus, as the matter left for
determination is whether or not the aforesaid rulings, when executed, should include
retirement pay and representation, transportation, and cellular phone usage allowances, the
Court will harken back only to the context of the illegal dismissal complaint from which such
awards of "other benefits" stemmed from.

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Verily, the Court is not unaware of its rulings wherein it pronounced that retirement pay and
separation pay are not mutually exclusive, however, with Villena's entitlement to retirement
pay not included as an issue in an illegal dismissal case which had already been finally
decided, it is quite absurd for Villena to submit a "contemporaneous" claim for retirement pay
on the execution phase of these proceedings. In fine, the plea to include retirement pay, under
the phrase "other benefits," cannot be granted.
B. On Transportation, Representation, and Cellular Phone Usage Allowances.

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

With the award of the "other benefits pertaining to the position of Finance Manager" made by the CA
in its August 31, 2001 Decision lapsing into finality, the same had already become immutable and
unalterable; this means that they may no longer be modified in any respect, even if the modification
is meant to correct what is perceived to be an erroneous conclusion of fact or law.

EDWIN BARROGA, Petitioner, - versus - QUEZON COLLEGES OF THE NORTH, Respondent.

GR No. 235572, SECOND DIVISION, December 5, 2018

The line between " voluntary" and " involuntary" retirement is thin but it is one which case law had
already drawn. On the one hand, voluntary retirement cuts the employment ties leaving no
residual employer liability; on the other, involuntary retirement amounts to a discharge, rendering
the employer liable for termination without cause. The employee's intent is decisive.

In the case at hand, an examination Barroga’s SENA Form readily shows that his claim against
QCN was just for " non-payment of retirement benefits," which they ultimately agreed to settle.
Clearly, this agreement to settle cements Barroga’s intent

FACTS:
Edwin Barroga is a full-time teacher at Quezon Colleges of the North (QCN)’s high school
department continuously from June 1985 to March 2014. However, at the beginning of S.Y.
2014-15, Barroga was told that he would not be given any teaching load. Barroga found the
timing thereaf suspicious as he was already due for optional retirement for continuously serving
for almost 30 years. Weeks after the beginning of the school year, Barroga submitted a
retirement letter wherein he expressed his intent to optionally retire. Barroga filed a case
through Single-Entry Approach (SENA) wherein he asked to be paid his retirement benefits.
Barroga and QCN then agreed on a settlement whereby QCN undertook to pay Barroga his
money claims. However, QCN failed to honor the settlement agreement, prompting Barroga to
file a complaint for illegal dismissal.

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ISSUE:
1. Whether or not Barroga was illegaly dismissed. (NO)

RULING
1. No, however, Barroga is entitled to his retirement benefits

While retirement from service is similar to termination of employment insofar as they are
common modes of ending employment, they are mutually exclusive, with varying juridical bases
and resulting benefits. Retirement from service is contractual, while termination of employment
is statutory. Verily, the main feature of retirement is that it is the result of a bilateral act of both
the employer and the employee based on their voluntary agreement that upon reaching a
certain age, the employee agrees to sever his employment. Since the core premise of retirement
is that it is a voluntary agreement, it necessarily follows that if the intent to retire is not clearly
established or if the retirement is involuntary, it is to be treated as a discharge

The line between " voluntary" and " involuntary" retirement is thin but It is one which case law
had already drawn. On the one hand, voluntary retirement cuts the employment ties leaving no
residual employer liability; on the other, involuntary retirement amounts to a discharge,
rendering the employer liable for termination without cause. The employee's intent is decisive.
In determining such intent, the relevant parameters to consider are the fairness of the process
governing the retirement decision, the payment of stipulated benefits, and the absence of
badges of intimidation or coercion

In the case at hand, an examination Barroga’s SENA Form readily shows that his claim against
QCN was just for " non-payment of retirement benefits," which they ultimately agreed to settle.
Clearly, this agreement to settle cements Barroga’s intent and decision to opt for voluntary
retirement which, as mentioned, is separate and distinct from the concept of dismissal as a
mode of terminating employment

VII. MANAGEMENT PREROGATIVE

A. Discipline
B. Transfer of employees

SUMIFRU (PHILIPPINES) CORPORATION (surviving entity in a merger with DAVAO

FRUITS CORPORATION and other Companies), Petitioner, v. BERNABE BAYA, Respondent.
G.R. No. 188269, FIRST DIVISION, April 17, 2017

The burden is on the employer to prove that the transfer or demotion of an employee was a valid
exercise of management prerogative and was not a mere subterfuge to get rid of an employee;
failing in which, the employer will be found liable for constructive dismissal.

In this case, both AMSFC and DF Cwere well-aware of the lack of supervisory positions in AMSFC.
This notwithstanding, they still proceeded to order Baya's return therein, thus, forcing him to
accept rank-and-file positions.

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FACTS:
Bernabe Baya was employed by AMS Farming Corporation (AMSFC) since 1985, and since from then
on, worked his was to a supervisory rank in 1997. As a supervisor, he joined the union of
supervisors, and eventually, formed AMS Kapalong Agrarian Reform Beneficiaries Multipurpose
Cooperative (AMSKARBEMCO). In 1999, Baya was reassigned to a series of supervisory positions in
AMSFC’s sister company, Davao Fruits Corporation (DFC).Upon petition of AMSKARBEMCO before
the DAR, some 220 hectares of AMSFC’s 513-hectare banana plantation were covered by the
Comprehensive Agrarian Reform Law. Eventually, said portion was transferred to AMSFC’s regular
employees as Agrarian Reform Beneficiaries (ARBs), including Baya.

When AMSFC learned that AMSKARBEMCO entered into an export agreement with another
company, it summoned AMSKARBEMCO officers, including Baya, to lash out at them and even
threatened them that the ARBs’ takeover of the lands would not push through. Thereafter, a DFC
manager tried to persuade Bayato shift his loyalty to SAFFP AI, an association of pro-company
beneficiaries, to avoid putting himself in a “difficult situation” butBaya politely refused.

A few days later, Baya received a letter stating that his secondment with DFC had ended, thus,
ordering his return to AMSFC.However, upon Baya’s return to AMSFC on August 30, 2002, he
was informed that there was no supervisory positions available, thus, he was assigned to
different rank-and-file positions instead. On September 20, 2002, Baya’s written request to be
restored to a supervisory position was denied, prompting him to file a complaint for
illegal/constructive dismissal against AMSFC and DFC before the NLRC. In their defense, AMSFC
and DFC maintained that Baya was not illegally/constructively dismissed but his termination
was the direct result of the ARBs’ takeover of AMSFC’s banana plantation through the
government’s agrarian reform program.

ISSUE:
1. Whether or not Baya was constructively dismissed. (YES)

RULING:
Yes. In case of a constructive dismissal, the employer has the burden of proving that the
transfer and demotion of an employee are for valid and legitimate grounds such as genuine
business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the
employer must be able to show that such transfer is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Failure of the employer to overcome this burden of proof,
the employee's demotion shall no doubt be tantamount to unlawful constructive dismissal.

In this case, both AMSFC and DF Cwere well-aware of the lack of supervisory positions in
AMSFC. This notwithstanding, they still proceeded to order Baya's return therein, thus, forcing
him to accept rank-and-file positions. Moreover, credence cannot be given to the contentionthat
Baya's termination was due to the ARBs' takeover of the banana plantation, because the said
takeover only occurred on September 20, 2002, while the acts constitutive of constructive
dismissal were performed as early as August 30, 2002, when Baya returned to AMSFC. Thus,
AMSFC and DFC are guilty of constructively dismissing Baya.

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 C. Productivity standard
D. Bonus
E. Change of working hours
F. Bona Fide Occupational Qualifications
G. Post-employment restrictions

VIII. JURISDICTION AND RELIEFS

A. Labor Arbiter
B. National Labor Relations Commission

KAPISANANG PANGKAUNLARAN NG KABABAIHANG POTRERO, INC. vs. REMEDIOS

BARRENO, et al.
(G.R. No. 175900, SECOND DIVISION, June 10, 2013, PERLAS-BERNABE, J.)

Clearly, there is no identity of causes of action between the cases pending with the DOLE and the NLRC.
The DOLE CASE involved violations of labor standard provisions where an employer-employee
relationship exists. On the other hand, the NLRC CASE questioned the propriety of respondents'
dismissal. No less than the Labor Code provides for these two (2) separate remedies for distinct causes
of action. More importantly, at the time the DOLE CASE was initiated, respondents' only, cause of action
was petitioners' violation of labor standard laws which falls within the jurisdiction of the DOLE. It was
only after the same was filed that respondents were dismissed from employment, prompting the filing
of the NLRC CASE, which is within the mantle of the NLRC's jurisdiction. Under the foregoing
circumstances, respondents had no choice but to avail of different fora.

FACTS:
Petitioner Kapisanang Pangkaunlaran ng Kababaihang Potrero, Inc. (KPKPI) is a non-stock, non-
profit, social service oriented corporation. Sometime in November 1997, the Technology and
Livelihood Resource Center (TLRC) tapped KPKPI to participate in its microlending program
and was granted a loan for microfinance or re-lending for the poor. As such, KPKPI hired
respondents for its KPKPI Mile Program.

On September 20, 2001, respondents filed a Complaint before the Department of Labor and
Employment-National Capital Region (DOLE NCR) for underpayment of wages, non-payment of labor
standard benefits, namely, legal/special holiday pay, 13th month pay and service incentive leave pay,
and non-coverage with the Social Security System and Home Development Mutual Fund against
KPKPI and its Program Manager, petitioner Milagros H. Reyes (Reyes), docketed as LSED-0109-IS-
029 (DOLE CASE). During its pendency, however, respondent Barreno was served a memo signed by
petitioner Reyes terminating her from employment effective October 1, 2001.

On even date, respondent Barreno filed another Complaint against petitioners, this time for illegal
dismissal with prayer for reinstatement and payment of their money claims before the NLRC.

In petitioners’ Position Paper dated November 29, 2001, they claimed that respondents were
not employees but mere volunteers who received allowances and reimbursements for their
expenses. Hence, they are not entitled to recover their money claims.

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In respondents’ Reply dated December 19, 2001, they insisted that they were employees under
the control of KPKPI, submitting in support thereof a copy of an office memorandum issued by
petitioner Reyes respecting the rules on absences of all its employees. Respondents likewise
denied having committed forum shopping, explaining that the DOLE CASE referred only to
money claims and that it had already been withdrawn while the NLRC CASE involves the
complaint for illegal dismissal with money claims.

ISSUE:
Whether respondents committed forum shopping in filing the same complaint against
petitioners in two (2) fora, namely the DOLE and the NLRC? (NO)

RULING:
Respondents did not commit forum shopping.
Forum shopping exists "when one party repetitively avails of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the
same essential facts and circumstances, and all raising substantially the same issues either pending
in, or already resolved adversely, by some other court." What is truly important to consider in
determining whether it exists or not is the vexation caused the courts and parties-litigants by a party
who asks different courts and/or administrative agencies to rule on the same or related causes
and/or grant the same or substantially the same reliefs, in the process creating the possibility of
conflicting decisions being rendered by different fora upon the same issues.

Clearly, there is no identity of causes of action between the cases pending with the DOLE and the
NLRC. The DOLE CASE involved violations of labor standard provisions where an employer-
employee relationship exists. On the other hand, the NLRC CASE questioned the propriety of
respondents' dismissal. No less than the Labor Code provides for these two (2) separate
remedies for distinct causes of action. More importantly, at the time the DOLE CASE was
initiated, respondents' only, cause of action was petitioners' violation of labor standard laws
which falls within the jurisdiction of the DOLE. It was only after the same was filed that
respondents were dismissed from employment, prompting the filing of the NLRC CASE, which is
within the mantle of the NLRC's jurisdiction. Under the foregoing circumstances, respondents
had no choice but to avail of different fora.

PHILIPPINE TOURISTERS, INC. and/or ALEJANDRO R. YAGUE, JR., vs. MAS TRANSIT
WORKERS UNION-ANGLO-KMU* and its members, represented by ABRAHAM TUMALA, JR.
G.R. No. 201237, FIRST DIVISION, September 3, 2014, PERLAS-BERNABE, J

While it has been settled that the posting of a cash or surety bond is indispensable to the perfection
of an appeal in cases involving monetary awards from the decision of the LA, the Rules of
Procedure of the NLRC (the Rules), particularly Section 6, Rule VI thereof, nonetheless allows the
reduction of the bond upon a showing of (a) the existence of a meritorious ground for reduction,
and (b) the posting of a bond in a reasonable amount in relation to the monetary award.

In this regard, it bears stressing that the reduction of the bond provided thereunder is not a matter of
right on the part of the movant and its grant still lies within the sound discretion of the NLRC upon

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a showing of meritorious grounds and the reasonableness of the bond tendered under the
circumstances.

FACTS:

MAS Transit Inc. (MTI) decided to sell its passenger buses together with its Certificate of Public
Convenience (CPC) issued by the Land Transportation Franchising and Regulatory Board
(LTFRB) to Philippine Touristers INc. (PTI). Records disclose that the sale of 50 passenger buses
together with MTI’s CPC was approved by the LTFRB. As such, PTI was issued a new CPC
authorizing it to operate the service on the Baclaran-Malabon via EDSA route using the
passenger buses that were sold.

In light of the foregoing, MTI issued a "Patalastas" apprising all of its employees of the sale and
transfer of its operations to PTI, and the former’s intention to pay them separation benefits in
accordance with law and based on the resources available. The employees were also advised to
apply anew with PTI should they be interested to transfer. Thereafter, MTI sent each of the
individual respondents a Memorandum informing them of their termination from work,
effective on said date, in line with the cessation of its business operations caused by the sale of
the passenger buses to the new owners.

Claiming that the sale was intended to frustrate their right to self-organization and that there
was no actual transfer of ownership of the passenger buses as the stockholders of MTI and PTI
are one and the same, the Union, on behalf of its 98 members (respondents), filed a complaint
for illegal dismissal, unfair labor practice, i.e., illegal lock out, and damages against MTI and/or
Tomas Alvarez (Alvarez), and PTI and Yague (petitioners), before the NLRC.
In a Decision, the LA ruled in favor of the respondents, finding MTI and petitioners guilty of
unfair labor practice, i.e., illegal lock out. Dissatisfied, petitioners appealed before the NLRC by
filing their Notice of Appeal and Appeal Memorandum, accompanied by a Manifestation with
Motion for Reduction of Bond, praying that the required bond covering the monetary judgment
of ₱12,833,210.00 (full judgment award) be reduced in view of PTI’s liquidity problems.
Meanwhile, respondents opposed petitioners’ motion to reduce bond and moved for the
dismissal of their appeal for failure to perfect the same as the bond posted was not in an amount
equivalent to the full judgment award as mandated by law.

The NLRC dismissed the appeal for petitioners’ failure to post the required bond equal to the full
judgment award within the ten (10)-day reglementary period prescribed under the NLRC Rules
of Procedure. Undeterred, petitioners moved for reconsideration, insisting that the NLRC should
adopt a liberal interpretation of the rules on perfection of appeal considering that they had
substantially complied with the same and had in fact completely posted the required bond prior
to the resolution of their motion to reduce bond. The NLRC ultimately rendered its decision
dismissing the case against petitioner.

The case was then elevated to the CA which annulled and set aside the modified ruling of the
NLRC finding the latter to have acted with grave abuse of discretion in applying a liberal
interpretation of the rules on perfection of appeal. Hence, the present petition.

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ISSUE: Whether or not the CA erred in ascribing grave abuse of discretion on the part of the
NLRC when the latter gave due course to petitioners’ appeal and consequently absolved
petitioners from liability. (YES)

HELD:

For an appeal from the LA’s ruling to the NLRC to be perfected, Article 223 (now Article 229) of
the Labor Code requires the posting of a cash or surety bond in an amount equivalent to the
monetary award in the judgment appealed from.
While it has been settled that the posting of a cash or surety bond is indispensable to the perfection
of an appeal in cases involving monetary awards from the decision of the LA, the Rules of Procedure
of the NLRC (the Rules), particularly Section 6, Rule VI thereof, nonetheless allows the reduction of
the bond upon a showing of (a) the existence of a meritorious ground for reduction, and (b) the
posting of a bond in a reasonable amount in relation to the monetary award.

In this regard, it bears stressing that the reduction of the bond provided thereunder is not a
matter of right on the part of the movant and its grant still lies within the sound discretion of the
NLRC upon a showing of meritorious grounds and the reasonableness of the bond tendered
under the circumstances.

In Nicol v. Footjoy Industrial Corp., the Court held that "meritorious cases" for said purpose
would include "instances in which (1) there was substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a
liberal interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits, or (4) the appellants, at the very least exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period."
Notably, in determining whether the arguments raised by the petitioners in their motion to
reduce bond is a "meritorious ground," the NLRC is not precluded from conducting a
preliminary determination of the merits of the appellant’s contentions. And since the intention
is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the
purpose would necessarily be less than the evidence required for a ruling on the merits.

MICHELIN ASIA APPLICATION SUPPORT CENTER, INC., v. MARIO J. ORTIZ

G.R. No. 189861, FIRST DIVISION, November 19, 2014, PERLAS-BERNABE, J.:

Time and again, this Court has been emphatic in ruling that the seasonable filing of a motion for
reconsideration within the 10-day reglementary period following the receipt by a party of any order,
resolution or decision of the NLRC, is a mandatory requirement to forestall the finality of such order,
resolution or decision. The statutory base for this is found in Article 223 of the Labor Code and Section
14, Rule VII of the New Rules of Procedure of the National Labor Relations Commission.

"A definitive final judgment [- such as the NLRC's March 24, 2008 Resolution -] however erroneous, is
no longer subject to change or revision. "Settled is the rule that "[a] decision that has acquired finality
becomes immutable and unalterable. This quality of immutability precludes the modification

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of a final judgment, even if the modification is meant to correct erroneous conclusions of fact and
law." Hence, by the foregoing consideration alone, the CA should have dismissed Ortiz's certiorari
petition.

FACTS:

Ortiz was employed by petitioner Michelin Asia Pacific Application Support Center, Inc. as
Personnel Manager. In line with the Michelin Group's "Tonus" initiative, which is a program for
improving working methods, increasing efficiency, and reducing fixed costs across all of its
affiliates, functions, and departments globally, a formal review of the Service Personnel
processes at Michelin ASC was conducted and results therefrom determined that the functions
of the Personnel Manager could be absorbed by the Service Center/Site Manager and/or
Assistant Personnel Manager.

Thus, on November 30, 2006, Michelin ASC sent Ortiz a letter informing him of the termination
of his employment on the ground of redundancy. It also notified the Department of Labor and
Employment - Regional Office about Ortiz's intended termination and submitted an
Establishment Termination Report.

Ortiz accepted a separation package in the amount of P2,225,561.66and executed a Release,

Waiver and Quitclaim in favor of Michelin ASC. Respondent also signed a Final Pay Computation
evidencing payment of the said amount. This notwithstanding, Ortiz filed a complaint for illegal
dismissal against Michelin ASC.

The Labor Arbiter dismissed the illegal dismissal complaint. In a Resolution, the NLRC dismissed
Ortiz's appeal for not having been duly perfected, observing that his Memorandum of Appeal was
not accompanied by a certificate of non-forum shopping in violation of the NLRC Rules. Ortiz moved
for reconsideration but was denied by the NLRC considering that his motion was filed out of time.
However, the CA annulled the NLRC’s Resolutions, hence, the instant petition.

ISSUE: Whether or not the CA could still take cognizance of the case despite the MR being filed
out of time. (NO)

RULING:

To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily
show that the court or quasi-judicial authority gravely abused the discretion conferred upon
them. Grave abuse of discretion connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction. To be considered "grave," the discretionary
authority 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.

After evaluating the relevant antecedents of this case, the Court comes to the conclusion that no
grave abuse of discretion, in the sense above-described, was committed by the NLRC in
dismissing Ortiz's appeal.

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Of significant consideration is Ortiz's violation of the mandatory requirement on the timely
filing of a motion for reconsideration, which thus rendered the NLRC's initial Resolution final
and executory. Silva v. NLRC instructs:

Time and again, this Court has been emphatic in ruling that the seasonable filing of a motion for
reconsideration within the 10-day reglementary period following the receipt by a party of any
order, resolution or decision of the NLRC, is a mandatory requirement to forestall the finality of
such order, resolution or decision. The statutory base for this is found in Article 223 of the
Labor Code and Section 14, Rule VII of the New Rules of Procedure of the National Labor
Relations Commission. "A definitive final judgment [- such as the NLRC's March 24, 2008
Resolution -] however erroneous, is no longer subject to change or revision. "Settled is the rule
that "[a] decision that has acquired finality becomes immutable and unalterable. This quality of
immutability precludes the modification of a final judgment, even if the modification is meant to
correct erroneous conclusions of fact and law."

Hence, by the foregoing consideration alone, the CA should have dismissed Ortiz's certiorari
petition. But this is not all.

To compound his mistakes, Ortiz even filed a second motion for reconsideration, which is a
prohibited pleading under the NLRC Rules. As a prohibited pleading, the filing of said motion
could not have tolled the running of the 60-day reglementary period for the filing of a petition
for certiorari under Rule 65 of the Rules of Court before the CA. Thus, since the NLRC's June 24,
2008 Resolution assailed by Ortiz's second motion for reconsideration was received by him on
July 8, 2008,while his petition for certiorari before the CA was filed more than 60 days
thereafter, or on December 12, 2008, his certiorari petition should have been dismissed outright
for having been filed out of time.

QUANTUM FOODS, INC., Petitioner, v. MARCELINO ESLOYO and

GLEN MAGSILA,
G.R. NO. 213696 Respondents Perlas-Bernabe, J.
December 9, 2015

The Revised Rules of Procedure of the NLRC — specifically Section 6, Rule VI — thereof, allows the
reduction of the appeal bond upon a showing of: (a) the existence of a meritorious ground for
reduction, and (b) the posting of a bond in a reasonable amount in relation to the monetary
award.

FACTS:

Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the distribution and selling of
food products nationwide, which employed Marcelino Esloyo as Major Accounts Representative
in 2004, who was later promoted as the Regional Sales Manager for Visayas and Mindanao, and
Glen Magsila as Key Accounts Representative for the Panay Area in 2005.

In 2006, Magsila’s employment was terminated by reason of retrenchment following the decision of
the QFI to reorganize its sales force nationwide following a drastic drop in net income in the
previous year. However, Magsila’s final pay and other benefits were not released due to alleged

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discovery of unauthorized/undocumented deductions, which he purportedly failed to explain.
On the same year, Esloyo was terminated from his employment on the ground of loss of trust
and confidence due to his numerous violations of the company rules and regulations.

Aggrieved, Esloyo and Magsila filed separate complaints for illegal dismissal with money claims
against QFI, its President/General Manager, RobertN. Suarez, and its HR Manager, De la Cruz,
before the NLRC, docketed as SRAB VI, Case Nos. 04-50116-2006 and 07-50239-2006,
respectively, which were subsequently consolidated. For its part, QFI maintained that
respondents' dismissals were valid, hence, it is not liable for their money claims.

The Labor Arbiter (LA) found Esloyo and Magsila to have been illegally dismissed, and ordered
QFI to pay them, among others, their respective backwages.

Dissatified, QFI filed its Notice of Appeal and Memorandum of Appeal before the National Labor
Relations Commission (NLRC) on February 8, 2008, accompanied by: ( a) a Motion to Reduce
Bond averring that it was encountering difficulty raising the amount of the bond and finding an
insurance company that can cover said amount during the short period of time allotted for an
appeal; and (b) a cash bond in the amount of P400,000.00 (partial bond).

Esloyo and Magsila filed a motion to dismiss the appeal for QFI's failure: (a) to attach a
Verification and Certification of Non-Forum Shopping as required by the New Rules and
Procedure of the NLRC; and (b) to post a bond in an amount equivalent to the monetary
judgment as mandated by law. To this, QFI explained that the failure to attach said documents
was due to the inadvertence of its counsel who was just recovering from the open
cholecystectomy performed on him, and that the appeal was based on meritorious grounds.

On appeal, the NLRC held that Esloyo and Magsila were not illegally dismissed, and denied the
latter’s motion to dismiss and gave due course to QFI's appeal. Esloyo and Magsila filed a motion
for reconsideration but the same was denied.

Before the Court of Appeals (CA), the CA reversed and set aside the NLRC's ruling and reinstated
the LA's decision. It ruled that QFI's failure to post the required bond in an amount equivalent to
the monetary judgment impeded the perfection of its appeal, and rendered the LA's decision
final and executory. Thus, the NLRC was bereft of jurisdiction and abused its discretion in
entertaining the appeal. QFI filed filed a motion for reconsideration but the same was denied.
Hence, this petition.

ISSUE

Whether or not the CA erred in ascribing grave abuse of discretion on the part of the NLRC in
giving due course to QFI's appeal.

RULING

NO. Pertinent herein is the bond requirement before the NLRC. Jurisprudence dictates that while it
has been settled that the posting of a cash or surety bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the LA, in several cases, the

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Supreme Court has relaxed this stringent requirement whenever justified. Thus, the Revised
Rules of Procedure of the NLRC — specifically Section 6, Rule VI — thereof, allows the reduction
of the appeal bond upon a showing of: (a) the existence of a meritorious ground for reduction,
and (b) the posting of a bond in a reasonable amount in relation to the monetary award.

In this case, the Supreme Court held that the CA did not err in ascribing grave abuse of discretion
on the part of the NLRC in giving due course to QFI's appeal because the NLRC held that a liberal
application of the requirement on the timely filing of the appeal bond is justified, finding that (a)
the posting of a P400,000.00 cash bond within the reglementary period to appeal and the
subsequent posting of a surety bond constitute substantial compliance of the bond requirement;
and (b) there is
merit in QFI's appeal.

Accordingly, it was held in the case of McBurnie v. Ganzon that "a reasonable amount of bond" is
the cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal.
Herein this case, the posting of a P400,000.00 cash bond equivalent to more than 20% of the
monetary judgment, together with the Motion to Reduce Bond within the reglementary period
was sufficient to suspend the period to perfect the appeal.

C. Judicial review of labor rulings

LEI SHERYLL FERNANDEZ vs. BOTICA CLAUDIO represented by GUADALUPE JOSE (G.R. No.
205870, SECOND DIVISION, AUGUST 13, 2014, PERLAS-BERNABE, J.)

Mere failure to serve the same upon the opposing party does not bar the NLRC from giving due
course to an appeal. Instead, the NLRC should require the appellant to provide the opposing party
copies of the notice of appeal and memorandum of appeal. In this case, however, the NLRC could
not be expected to require compliance from Fernandez, the appellant, since it was not aware that
the opposing party, Jose, was not notified of her appeal.

FACTS:
Fernandez was hired as a trainee at Botica Claudio which is owned and operated by Jose. Later
on, she was promoted as sales clerk/pharmacy aide, which position she held until the
termination of her services. Due to her termination, Fernandez filed a complaint for illegal
dismissal with prayer for the payment of her statutory benefits against Jose before the NLRC.

The LA held that while just cause attended Fernandez’s dismissal from work based on the
finding that she went on AWOL, the same was nonetheless effected without procedural due
process. Thus, the LA ordered Jose to pay Fernandez separation pay. Dissatisfied with the LA’s
ruling, Fernandez appealed to the NLRC.

The NLRC reversed the ruling of the LA. It found Fernandez to have been illegally dismissed by
her employer, Jose, without a valid cause and observance of procedural due process. Despite the
fact that the NLRC had yet to act on the aforesaid motion for reconsideration, Jose filed a second
motion for reconsideration before the same tribunal.

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Notwithstanding the pendency of the aforesaid motions for reconsideration, Jose filed a petition
for certiorari before the CA, claiming to have secured a copy of the NLRC Resolution and LA
Order only upon personal verification and filed a motion for reconsideration therefrom
referring to her second motion for reconsideration

The CA granted Jose’s petition for certiorari, holding that the NLRC gravely abused its discretion
in taking cognizance of Fernandez’s appeal despite the latter’s failure to furnish Jose copies of
her notice of appeal and appeal memorandum in violation of Article 223 of the Labor Code and
the NLRC Rules of Procedure.

ISSUE:
Whether or not the CA erred in holding that the NLRC gravely abused its discretion in giving due
course to Fernandez’s appeal? (YES)

RULING:
While Article 223 of the Labor Code and Section 3(a), Rule VI of the then New Rules of
Procedure of the NLRC require the party intending to appeal from the LA’s ruling to furnish the
other party a copy of his memorandum of appeal, the Court has held that the mere failure to
serve the same upon the opposing party does not bar the NLRC from giving due course to an
appeal. Instead, the NLRC should require the appellant to provide the opposing party copies of
the notice of appeal and memorandum of appeal. In this case, however, the NLRC could not be
expected to require compliance from Fernandez, the appellant, since it was not aware that the
opposing party, Jose, was not notified of her appeal.

QUANTUM FOODS, INC., Petitioner, -versus- MARCELINO ESLOYO and GLEN MAGSILA,
Respondents.
G.R. No. 213696, FIRST DIVISION, December 9, 2015, PERLAS-BERNABE, J.

Case law has held that for purposes of justifying the reduction of the appeal bond, the
merit referred to may pertain to (a) an appellant's lack of financial capability to pay the
full amount of the bond, or (b) the merits of the main appeal such as when there is a valid
claim that there was no illegal dismissal to justify the award, the absence of an employer-employee
relationship, prescription of claims, and other similarly valid issues that are raised in the appeal.

As to what constitutes "a reasonable amount of bond" that must accompany the motion to
reduce bond in order to suspend the period to perfect an appeal, the Court held that to ensure that
the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance to
seek a reduction of the appeal bond are effectively carried out, without however defeating the
benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that
are to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond
equivalent to 10% of the monetary award that is subject of the appeal, which shall
provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant's motion is pending resolution by the Commission. In conformity with the NLRC
Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall exclude

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damages and attorney's fees. Only after the posting of a bond in the required percentage shall an
appellant's period to perfect an appeal under the NLRC Rules be deemed suspended.

In this case, the posting of a P400,000.00 cash bond equivalent to more than 20% of the
monetary judgment, together with the Motion to Reduce Bond within the reglementary period was
sufficient to suspend the period to perfect the appeal. The posting of the said partial bond coupled
with the subsequent posting of a surety bond in an amount equivalent to the monetary judgment
also signified QFI's good faith and willingness to recognize the final outcome of its appeal.

FACTS:
Petitioner Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the
distribution and selling of food products nationwide. It hired Esloyo as Major Accounts
Representative, whose consistent good performance led to successive promotions, until his
promotion to the position of Regional Sales Manager for Visayas and Mindanao. On the other
hand, it hired Magsila as Key Accounts Representative for the Panay Area on a probationary
status and gave him a "permanent" status sometime later. In the course of their employment,
Esloyo and Magsila were each required to post a cash bond in the amount of P10,000.00 and
P7,000.00, respectively.

In 2006, QFI decided to reorganize its sales force nationwide following a drastic drop in
net income in 2005, and Magsila was among those retrenched. In a letter,Magsila was informed
of his termination, given the option not to report for work, and advised to turn over his
responsibilities and clear his accountabilities to facilitate the release of his final pay. However,
Magsila's final pay and other benefits were not released due to alleged discovery of
unauthorized/undocumented deductions, which he purportedly failed to explain.

Meanwhile, in response to several anonymous complaints against Esloyo for alleged

misbehavior and violations of various company rules and regulations, such as sexual
harassment, misappropriation of company funds/ property, falsification/padding of reports and
serious misconduct, QFI conducted an audit/investigation. A Show Cause Memorandum was
thereafter issued, directing Esloyo to explain.

Esloyo submitted his written explanation denying the charges, which QFI found to be
unsatisfactory. Consequently, Esloyo was informed of his termination from work on the ground
of loss of trust and confidence due to his numerous violations of the company rules and
regulations.

Aggrieved, Esloyo and Magsila (respondents) filed separate complaints for illegal
dismissal with money claims against QFI before the NLRC, which were subsequently
consolidated.

In a Decision, the LA found respondents to have been illegally dismissed.

Dissatisfied, QFI filed its Notice of Appeal and Memorandum of Appeal before the NLRC
accompanied by:

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 (a) a Motion to Reduce Bond averring that it was encountering difficulty raising the
amount of the bond and finding an insurance company that can cover said amount
during the short period of time allotted for an appeal; and
(b) a cash bond in the amount of P400,000.00 (partial bond).

Respondents filed a motion to dismiss the appeal for QFI's failure to post a bond in an
amount equivalent to the monetary judgment as mandated by law.

Subsequently, but before the NLRC could act on the Motion to Reduce Bond, it posted a
surety bond from an accredited insurance company fully covering the monetary judgment,
which respondents vehemently opposed.

The NLRC denied respondents' motion to dismiss and gave due course to QFI's appeal,
holding that there was substantial compliance with the bond requirement, and merit in QFI's
appeal that would justify a liberal application of the requirement on the timely filing of the
appeal bond.

Respondents filed a motion for reconsideration, which was denied, prompting them to
elevate the matter on certiorari before the CA.

The CA reversed the NLRC's ruling and ruled that QFI's failure to post the required bond
in an amount equivalent to the monetary judgment impeded the perfection of its appeal, and
rendered the LA's Decision final and executory. Thus, the NLRC was bereft of jurisdiction and
abused its discretion in entertaining the appeal. It also held that the posting of the partial bond
together with the Motion to Reduce Bond did not stop the running of the period to perfect the
appeal, considering that: (a) the grounds relied upon by QFI are not meritorious; and (b) the
partial bond posted was not reasonable in relation to the monetary judgment.

ISSUE:

Whether or not the CA erred in ascribing grave abuse of discretion on the part of the NLRC in
giving due course to QFI's appeal. (YES)

RULING:
The CA erred in ascribing grave abuse of discretion on the part of the NLRC in giving due
course to QFI’s appeal.

While QFI timely filed its Notice of Appeal and Memorandum of Appeal, it was only
accompanied by a partial bond with a Motion to Reduce Bond, and not a bond in an amount
equivalent to the monetary judgment.

While it has been settled that the posting of a cash or surety bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the decision of the LA, in several
cases, the Court has relaxed this stringent requirement whenever justified. Thus, the Rules -
specifically Section 6, Rule VI - thereof, allow the reduction of the appeal bond upon a showing of:
(a) the existence of a meritorious ground for reduction, and (b) the posting of a bond in a
reasonable amount in relation to the monetary award. The mere filing of a motion to reduce

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bond without complying with the requisites shall not stop the running of the period to perfect
an appeal.

In this regard, it bears stressing that the reduction of the bond provided thereunder is
not a matter of right on the part of the movant and its grant still lies within the sound discretion
of the NLRC upon a showing of meritorious grounds and the reasonableness of the bond
tendered under the circumstances.The requirement on the existence of a "meritorious ground"
delves on the worth of the parties' arguments, taking into account their respective rights and the
circumstances that attend the case.

The Court summarized the guidelines under which the NLRC must exercise its discretion
in considering an appellant's motion for reduction of bond. The bond requirement on appeals
involving monetary awards has been and may be relaxed in meritorious cases. These cases
include instances in which (1) there was substantial compliance with the Rules, (2) surrounding
facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond would serve the desired objective of
resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.

Case law has held that for purposes of justifying the reduction of the appeal bond, the merit
referred to may pertain to (a) an appellant's lack of financial capability to pay the full amount
of the bond, or (b) the merits of the main appeal such as when there is a valid claim that there was
no illegal dismissal to justify the award, the absence of an employer-employee relationship,
prescription of claims, and other similarly valid issues that are raised in the appeal.

In this case, the NLRC held that a liberal application of the requirement on the timely filing of
the appeal bond is justified, finding that (a) the posting of a P400,000.00 cash bond within the
reglementary period to appeal and the subsequent posting of a surety bond constitute substantial
compliance of the bond requirement; and (b) there is merit in QFI's appeal.

As to what constitutes "a reasonable amount of bond" that must accompany the motion to
reduce bond in order to suspend the period to perfect an appeal, the Court held that to ensure that
the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance to
seek a reduction of the appeal bond are effectively carried out, without however defeating the
benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond
equivalent to 10% of the monetary award that is subject of the appeal, which shall
provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant's motion is pending resolution by the Commission. In conformity with the NLRC Rules,
the monetary award, for the purpose of computing the necessary appeal bond, shall exclude damages
and attorney's fees. Only after the posting of a bond in the required percentage shall an appellant's
period to perfect an appeal under the NLRC Rules be deemed suspended.

Hence, the posting of a P400,000.00 cash bond equivalent to more than 20% of the
monetary judgment, together with the Motion to Reduce Bond within the reglementary period
was sufficient to suspend the period to perfect the appeal. The posting of the said partial bond
coupled with the subsequent posting of a surety bond in an amount equivalent to the monetary

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judgment also signified QFI's good faith and willingness to recognize the final outcome of its
appeal.

Far from having gravely abused its discretion, the NLRC correctly preferred substantial
justice over the rigid and stringent application of procedural rules.

GENPACT SERVICES, INC. AND DANILO SEBASTIAN REYES, Petitioners, – versus - MARIA
KATRINA SANTOS-FALCESO, JANICE ANN M. MENDOZA, and JEFFREY S. MARIANO,
Respondents.
G.R. No. 227695, FIRST DIVISION, July 31, 2017

The general rulethat a motion for reconsideration must first be filed with the lower court prior to
resorting to the extraordinary remedy of certiorari admits of well-defined exceptions such as: “(d)
where, under the circumstances, a motion for reconsideration would be useless; and (e) where
petitioner was deprived of due process and there is extreme urgency of relief.”

The dispositive portion of the NLRC Resolution explicitly stated that “No further motion of similar
import shall be entertained.” Irrefragably, this circumstance gave Genpact the impression that
moving for reconsideration before the NLRC would only be an exercise in futility in light of the
tribunal’s aforesaid warning.

FACTS:
On different dates, Genpact hired Santos-Falceso, et al. to various positions to service its Allstate
Insurance Company account. However, Allstate ended its account with Genpact resulting in Santos-
Falceso, et al. being placed on floating status, and eventually, terminated from service. This
prompted the latter to file a complaint before the NLRC for illegal dismissal against Genpact.

Santos-Falceso et al. argued that the termination of Genpact and Allstate’s agreement
neither amounted to a closure of business nor justified their retrenchment and that Genpact
failed to observe the requirements of procedural due process before they were terminated. In
their defense, Genpact justified respondents’ termination of employment on the ground of
closure or cessation of Allstate’s account with Genpact. Moreover, Genpact claimed that they
reported to the DOLE the fact of respondents’ separation due to redundancy and that said resort
was in the exercise of management prerogative with utmost good faith.

The LA dismissed the complaint for lack of merit and concluded that there was an
authorized cause in terminating the respondents’ services, and that Genpact complied with
DOLE’s reportorial requirement in doing so. This was affirmed by the NLRC. However, upon
motion for reconsideration of Santos-Falceso et al., the NLRC partially granted their claim for
separation pay while notably explicitly stating in their Resolution that “no further motion of
similar import shall be entertained.” Thus, Genpact elevated the case to CA, which, in turn,
dismissed outright their petition for certiorari purely on procedural grounds for their failure to
file a motion for reconsideration before the NLRC prior to elevating the case to the CA.

ISSUE:

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 1. Whether or not the CA correctly dismissed outright the certiorari petition by reason of
petitioner’s failure to file a motion for reconsideration. (NO)

RULING:
No. Given the special and extraordinary nature of a Rule 65 petition, the general rule is
that a motion for reconsideration must first be filed with the lower court prior to resorting to
the extraordinary remedy of certiorari. This notwithstanding, the foregoing rule admits of well-
defined exceptions, such as: “(d) where, under the circumstances, a motion for reconsideration
would be useless; and (e) where petitioner was deprived of due process and there is extreme
urgency of relief.”

The dispositive portion of the NLRC Resolution explicitly stated that “No further motion
of similar import shall be entertained.” Irrefragably, this circumstance gave Genpact the
impression that moving for reconsideration before the NLRC would only be an exercise in
futility in light of the tribunal’s aforesaid warning. Moreover, Sec. 15, Rule VII of the 2011 NLRC
Rules of Procedure, as amended, provides, among others, that the remedy of filing a motion for
reconsideration may be availed of once by each party. In this case, only Santos-Falceso et al. had
filed a motion for reconsideration for the NLRC. Applying the foregoing provision, Genpact also
had an opportunity to file such motion in this case, should they wish to do so. However, the
tenor of such warning effectively deprived petitioners of such opportunity, thus, constituting a
violation of their right to due process.

D. Bureau of Labor Relations

E. National Conciliation and Mediation Board
F. DOLE Regional Directors
G. DOLE Secretary
H. Grievance machinery
I. Voluntary arbitration

AUGUSTIN INTERNATIONAL CENTER INC, Petitioner, – versus - ELFRENITO BARTOLOME

AND RUMBY YAMAT, Respondents.
GR No. 226578, SECOND DIVISION, January 28, 2019

The Voluntary Arbitrator under the Labor Code is one agreed upon by the parties to resolve
certain disputes and is tasked to render an award or decision.

The stipulation in the contract is not equivalent to a voluntary arbitration under the Labor Code.
The text of the contractual provision shows that the designated person is tasked merely to
participate in the amicable settlement and not to decide the dispute.

FACTS:
Bartolome and Yamat were hired by AICI, an employment agency providing manpower
to foreign corporations. They were eventually engaged by Golden Arrow Company, Ltd. (Golden
Arrow), which had its office in Khartoum, Republic of Sudan. They signed employment contracts
for a period not less than twenty-four months. There is a provision in the contract which in part
reads:

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 “In case the Employee contests the decision of the employer, the matter shall be settled
amicably with [the) participation of the Labour Attache or any authorised representative of the
Philippines Embassy nearest the site of employment”

Upon arrival in Sudan, Golden Arrow transferred their employment to Al Mamoun. A

year later they were served notice of termination causing them to return to the Philippines. This
prompted them to file a case for illegal dismissal, breach of contract, and payment of the
unexpired portion of the contract.

The LA, NLRC and CA found Bartolome and Yamat illegally dismissed for failing to
overcome the burden to prove the dismissal was for a just or authorized. When AICI filed a
moved for reconsideration, they allege that the LA erred in taking cognizance of the case since
the proper forum is before the "[Labor] Attache or any [authorized] representative of the
Philippine Embassy nearest the site of employment," as stipulated in the employment contracts,
before filing the complaint before the LA

ISSUE:
1. Whether or not the LA correctly took cognizance of the case. (YES)

RULING
Yes, Section 10 of Republic Act No. (RA) 8042, 31 as amended by RA 10022, explicitly
provides that LAs have original and exclusive jurisdiction over claims arising out of employer-
employee relations or by virtue of any law or contract involving Filipino workers for overseas
deployment, as in this case.

The stipulation in the contract is not equivalent to a voluntary arbitration under the
Labor Code. The Voluntary Arbitrator under the Labor Code is one agreed upon by the parties to
resolve certain disputes and is tasked to render an award or decision. The mechanism
contemplated herein is an amicable settlement whereby the parties can negotiate with each
other; it is not a voluntary arbitration under the Labor Code wherein a third party renders a
decision to resolve the dispute. The text of the contractual provision shows that the designated
person is tasked merely to participate in the amicable settlement and not to decide the dispute.

J. Prescription of actions
1. Money claims
2. Illegal dismissal
3. Unfair labor practice
4. Offenses under the Labor Code
5. Illegal recruitment

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