4Q Labor Case Digests

4TH QUARTER, 2012: LABOR CASE DIGESTS

In Partial Fulfillment Of the Requirements for Labor 1

By Karen S. Pascual 14 October 2013

TABLE OF CONTENTS 01. Johansen World Group Corporation vs. Gonzales III (G.R. No. 198733, 10 Oct 2012) ................................................... 1 02. Ace Navigation Co., Inc. vs. Fernandez (G.R. No. 197309, 10 Oct 2012) ................................................................................ 3 03. Digital Telecommunications Phil., Inc. vs. Digitel Employees Union (G.R. Nos. 184903, 10Oct 2012).................. 5 04. Portillo vs. Rudolf Lietz, Inc. (G.R. No. 196539, 10 Oct 2012) ..................................................................................................... 7 05. Superior Packaging corporation vs. Arnel Balagsay, et al. (G.R. No. 178909, 10 Oct 2012) ........................................ 9 06. Norkis Trading Corporation Vs. Joaquin Buenavista, et al. (G.R. No. 182018, 10 Oct 2012) ................................... 11 07. Crewlink, Inc. and/or Gulf Marine Services Vs. Editha Teringtering, for her behalf and in behalf of minor Eimareach Rose De Garcia Teringtering (G.R. No. 166803, 11 Oct 2012) ................................................................................. 13 08. Cecilia T. Manese, Julietes E. Cruz, and Eufemio Peñano II Vs. Jollibee Foods Corporation, Tony Tan Caktiong, Elizabeth Dela Cruz, Divina Evangelista and Sylvia M. Mariano (G.R. No. 170454, 11 Oct 2012) ................................. 15 09. Gonzales Vs. Solid Cement Corporation and Allen Querubin (G.R. No. 198423, 23 Oct 2012) ............................... 17 10. Andrada Vs. Agemar Manning Agency, Inc. and/or Sonnet Shipping Ltd./Malta (G.R. No. 194758, 24 Oct 2012) ........................................................................................................................................................................................................................................... 19 11. Martos, Eclana, Pilones, et al. Vs. New San Jose Builders, Inc. (G.R. No. 192650 24 Oct 2012) .............................. 21 12. Millan v Wallem Maritime Services, Inc. (G.R. No. 195168, 12 Nov 2012) ........................................................................ 23 13. Hon. Patricia Sto. Tomas v Salac, et al. (G.R. No. 152642, 13 Nov 2012) ............................................................................ 25 14. Tuason v Bank of Commerce (G.R. No. 192076, 21Nov 2012) ............................................................................................... 27 15. Auza v. MOL Philippines, Inc. (G.R. No. 175481, 21 Nov 2012) ............................................................................................... 29 16. Morales v Metrobank (G.R. No. 182475, 21 Nov 2012) ............................................................................................................... 31 17. Sameer Overseas Placement Agency v Bajaro (G.R. No. 170029, 21 Nov 2012) ............................................................ 33 18. Mirant v. Sario (G.R. No. 197598, 21 Nov 2012) ............................................................................................................................. 34 19. Barba v Liceo de Cagayan University (G.R. No. 193857.

28 Nov 2012) .......................................................................... 36

20. Career Philippines Shipmanagement v Serna (G.R. No. 172086, 03 Dec 2012) ............................................................. 38 21. Fetalino v COMELEC (G.R. No. 191890, 04 Dec 2012) ................................................................................................................. 40 22. Building Care Corp v Macaraeg (G.R. No. 198357, 10 Dec 2012) ........................................................................................... 42 23. Loadstart Shipping v Heirs of Calawigan (G.R. No. 187337, 05 Dec 2012) ....................................................................... 43 24. Mindanao Terminal and Brokerage Service v Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor (G.R. No. 174300, 05 Dec 2012)........................................................................................................................... 45 25. Best Wear Garments v De Lemos (G.R. No. 191281, 05 Dec 2012) ....................................................................................... 47 26. Crew and Ship Management International v Soria (G.R. No. 175491, 10 Dec 2012) ................................................... 49

01. JOHANSEN WORLD GROUP CORPORATION VS. GONZ ALES III (G.R. NO. 198733, 10 OCT 2012) Hans is JWGC’s President and CEO while his wife Liza is its EVP for Finance. Hans hired Rene Gonzales (Gonzales) as JWGC’s General Manager. Gonzales alleged that during his tenure as JWGC’s General Manager, he was able to put the company’s operational and legal issues and problems, particularly its liquidity and administrative problems, in order. Gonzales claimed that under his term as General Manager, JWGC, a bankrupt business enterprise when he joined the company, began to flourish. On 25 July 2009, Margie (Gonzales’ wife), Liza, Hans and JWGC’s former counsel, one Atty. Caedo, went out. Hans vented his ire on Gonzales and told Margie that he was not satisfied with her husband’s work. When Gonzales heard about the conversation, he refused to talk to Hans. On 12 August 2009, Gonzales left the office at around 3:00 p.m. and sent a text message to Liza that he could not face Hans yet. Liza responded that his work should not be affected by his feelings towards Hans. Gonzales responded with harsh words and called the spouses Hernandez "gago." On 24 August 2009, Liza met with Gonzales. During their meeting, Liza told him that he had to resign by the end of the month because she needed a manager who would be in the office early, something which he could not do. Liza told Gonzales to stop reporting for work but promised that she would give what was due him. Gonzales then realized that Liza was actually firing him. On 26 August 2009, Gonzales sent Liza his proposed severance package of P783,489.17 plus commission of US$5,075.96. They had an argument about the proposal. Nevertheless, he continued to communicate with Liza regarding work-related matters. Liza had another version of the incidents. As regards the 24 August 2009 meeting, Liza allegedly informed Gonzales of his new work schedule from 9:00 a.m. to 5:00 p.m. but Gonzalez reacted violently to the new schedule and told Liza that if the company would insist on the new work schedule, it would have to terminate his services. Liza asked Gonzales if he wanted to resign but Gonzales insisted on being terminated from work. He told her that he would e-mail to her his severance package proposal. Liza sent Gonzales two letters, both dated 27 August 2009, regarding the new work schedule. JWGC and Liza (petitioners) then sent Gonzales a show-cause notice ordering him to explain his alleged misconduct, particularly: (1) his text message to Liza on 12 August 2009 where he called the spouses Hernandez "gago;" (2) his non-compliance with the directive to report for work from 9:00 a.m. to 5:00 p.m.; (3) his failure to report for work starting 25 August 2009 which resulted in his failure to perform his duties as General Manager; and (4) his lackluster performance as General Manager. An administrative hearing was scheduled on 21 September 2009 but it was later moved to 23 September 2009. In a letter dated 25 September 2009, petitioners sent a Notice of Termination to Gonzales informing him of their decision to terminate his services for serious misconduct or willful disobedience of the company’s lawful orders or policies, gross and habitual neglect of duty, and breach of trust and confidence. Earlier however, or on 17 September 2009 and three days after receiving the show-cause notice, Gonzales filed a complaint for illegal dismissal against petitioners. The Labor Arbiter dismissed the complaint for illegal dismissal. However, the Labor Arbiter found that Gonzales was not paid, and should be entitled to, his proportionate 13th month pay for 2009. Gonzales filed an appeal before the NLRC. NLRC reversed the Labor Arbiter’s decision. It ruled that Gonzales was illegally dismissed from employment. The NLRC ruled that Liza made it clear during the 24 August 2009 meeting with Gonzales that she wanted him out of the company. The NLRC found that Hans sent Gonzales the change in work schedule on 27 August 2009, three days after the meeting with Liza, only as an afterthought. The NLRC ruled that the show-cause notice was done only because petitioners realized that they had to comply with due process in terminating Gonzales from work but it was done after his dismissal from employment was effected. The motion for reconsideration filed by petitioners before the NLRC was denied. Petitioners then filed a petition for certiorari before the Court of Appeals but this was also denied and the decision of the NLRC was affirmed. ISSUE: Whether Gonzales was illegally dismissed from employment? RULING: SC found that there was nothing in the records that would show that petitioners had issues against Gonzales before the 24 August 2009 meeting with Liza. The NLRC found credence in Gonzales’ narration of what transpired during the 24 August 2009 meeting which showed that Liza already decided to terminate Gonzales from employment. At the outset, Liza already informed Gonzales that their employment relationship was not working and she made it clear that they wanted him out of the company. She even told him that he could stop reporting for work. Liza told Gonzales that they would give him what is due him and Gonzales, in an e-mail dated 26 August 2009, sent Liza his proposed severance package. Additionally, the petitioners were also unable to prove the alleged lackluster performance of respondent. Hans even indirectly admitted that the company is on to road to success. He even praised respondent’s effectiveness in creating a more professional atmosphere in the work place and his adeptness in negotiation – negotiations that brought thousands of dollars to the company coffer.

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By Karen S. Pascual. ALS 2015

For misconduct to be a ground for dismissal of an employee, it must be serious in nature and in connection with the employee’s work. In order for serious misconduct to justify dismissal from employment under the law: (a) it must be serious; (b) it must relate to the performance of the employee’s duties; and (c) it must show that the employee has become unfit to continue working for the employer. For misconduct to be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial and unimportant. The alleged misconduct of Gonzales, which was his failure to report for work on the new time schedule specified by petitioners, could not be considered a ground for his termination from employment. As discussed earlier, Liza already dismissed Gonzales from employment in their 24 August 2009 meeting. The letter of Hans, dated 27 August 2009, and the show-cause notice, dated 14 September 2009, were belated attempts to comply with due process in effecting the dismissal of Gonzales from employment. Petitioners further assert that Gonzales was a managerial employee and that mere loss of trust and confidence justified his dismissal from employment. SC has held that as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. However, loss of trust and confidence as a ground of dismissal has never been intended to afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which are illegal, improper, and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith. Stated differently, the loss of trust and confidence must be based not on ordinary breach by the employee of the trust reposed in him by the employer, but, in the language of Article 282 (c) of the Labor Code, on willful breach. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be genuine and not simulated; nor should it appear as a mere afterthought to justify earlier action taken in bad faith or a subterfuge for causes which are improper, illegal or unjustified. There must, therefore, be an actual breach of duty committed by the employee which must be established by substantial evidence. In this case, the allegation of loss of trust and confidence was not supported by substantial evidence. Hence, we find no valid ground that will justify petitioners in terminating the services of Gonzales.

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02. ACE NAVIGATION CO., INC. VS. FERNANDEZ (G.R. NO. 197309, 10 OCT 2012) On October 9, 2008, seaman Teodorico Fernandez (Fernandez), assisted by his wife, Glenita Fernandez, filed with the NLRC a complaint for disability benefits, with prayer for moral and exemplary damages, plus attorney’s fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan (petitioners). The petitioners moved to dismiss the complaint,4 contending that the labor arbiter had no jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA Standard Employment Contract (POEA-SEC), since the parties are covered by the AMOSUPTCC or AMOSUP-VELA (as later cited by the petitioners) collective bargaining agreement (CBA). Under Section 14 of the CBA, a dispute between a seafarer and the company shall be settled through the grievance machinery and mandatory voluntary arbitration. Fernandez opposed the motion.5 He argued that inasmuch as his complaint involves a money claim, original and exclusive jurisdiction over the case is vested with the labor arbiter. On December 9, 2008, Labor Arbiter Rioflorido denied the motion to dismiss, holding that under Section 10 of RA No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, the labor arbiter has original and exclusive jurisdiction over money claims arising out of an employer-employee relationship or by virtue of any law or contract, notwithstanding any provision of law to the contrary.6 The petitioners appealed to the NLRC, but the labor agency denied the appeal. Accordingly, it remanded the case to the labor arbiter for further proceedings. The petitioners moved for reconsideration, but the NLRC denied the motion, prompting the petitioners to elevate the case to the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA Decision Through its decision of September 22, 2010,7 the CA denied the petition on procedural and substantive grounds. On the merits of the case, the CA believed that the petition cannot prosper. The CA clarified that while the law 9 allows parties to submit to voluntary arbitration other labor disputes, including matters falling within the original and exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code as this Court recognized in Vivero v. Court of Appeals10, the parties’ submission agreement must be expressed in unequivocal language. It found no such unequivocal language in the AMOSUP/TCC CBA that the parties agreed to submit money claims or, more specifically, claims for disability benefits to voluntary arbitration. Taking note of Section 29 of the POEA-SEC11, the CA explained that the relevant POEA-SEC provisions should likewise be qualified by the ruling in the Vivero case, the Labor Code, and other applicable laws and jurisprudence. In sum, the CA stressed that the jurisdiction of voluntary arbitrators is limited to the seafarers’ claims which do not fall within the labor arbiter’s original and exclusive jurisdiction or even in cases where the labor arbiter has jurisdiction, the parties have agreed in unmistakable terms (through their CBA) to submit the case to voluntary arbitration. The petitioners moved for reconsideration of the CA decision, but the appellate court denied the motion. ISSUE: Who has the original and exclusive jurisdiction over Fernandez’s disability claim — the labor arbiter under Section 10 of R.A. No. 8042, as amended, or the voluntary arbitration mechanism as prescribed in the parties’ CBA and the POEA-SEC? RULING: We find merit in the petition. The State’s labor relations policy laid down in the Constitution and fleshed out in the enabling statute, the Labor Code (Art. 260, 261 and 262) and the POEA-SEC1 provide that the voluntary arbitrator or panel of The answer lies in the State’s labor relations policy laid down in the Constitution and fleshed out in the enabling statute, the Labor Code. Section 3, Article XIII (on Social Justice and Human Rights) of the Constitution declares: xxxx The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. (emphasis supplied.) 1

Article 260 of the Labor Code (Grievance machinery and voluntary arbitration) states: The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. Article 261 of the Labor Code (Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators), on the other hand, reads in part: The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies[.] Article 262 of the Labor Code (Jurisdiction over other labor disputes) declares: The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. Further, the POEA-SEC, which governs the employment of Filipino seafarers, provides in its Section 29 on Dispute Settlement Procedures: In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at

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voluntary arbitrators has original and exclusive jurisdiction over Fernandez’s disability claim. There is no dispute that the claim arose out of Fernandez’s employment with the petitioners and that their relationship is covered by a CBA — the AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a grievance procedure for the resolution of grievances or disputes which occur during the employment relationship and, like the grievance machinery created under Article 261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as the last step. Contrary to the CA’s reading of the CBA’s Article 14, there is unequivocal or unmistakable language in the agreement which mandatorily requires the parties to submit to the grievance procedure any dispute or cause of action they may have against each other. What might have caused the CA to miss the clear intent of the parties in prescribing a grievance procedure in their CBA is, as the petitioners’ have intimated, the use of the auxiliary verb "may" in Article 14.7(a) of the CBA which provides that "if by reason of the nature of the Dispute, the parties are unable to amicably settle the dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE."28 While the CA did not qualify its reading of the subject provision of the CBA, it is reasonable to conclude that it viewed as optional the referral of a dispute to the mandatory arbitration committee when the parties are unable to amicably settle the dispute. We find this a strained interpretation of the CBA provision. The CA read the provision separately, or in isolation of the other sections of Article 14, especially 14.7(h), which, in clear, explicit language, states that the "referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be unwaivable prerequisite or condition precedent for bringing any action, claim, or cause of action, legal or otherwise, before any court, tribunal, or panel in any jurisdiction"29 and that the failure by a party or seaman to so refer the dispute to the prescribed dispute resolution mechanism shall bar any legal or other action. Read in its entirety, the CBA’s Article 14 (Grievance Procedure) unmistakably reflects the parties’ agreement to submit any unresolved dispute at the grievance resolution stage to mandatory voluntary arbitration under Article 14.7(h) of the CBA. And, it should be added that, in compliance with Section 29 of the POEA-SEC which requires that in cases of claims and disputes arising from a seafarer’s employment, the parties covered by a CBA shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. Since the parties used unequivocal language in their CBA for the submission of their disputes to voluntary arbitration, we find that the CA committed a reversible error in its ruling. It bears stressing at this point that we are upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over the present dispute, not only because of the clear language of the parties’ CBA on the matter; more importantly, we so uphold the voluntary arbitrator’s jurisdiction, in recognition of the State’s express preference for voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as expressed in the Constitution, the law and the rules. It is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed.31

their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment. [emphasis ours]

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03. DIGITAL TELECOMMUNIC ATIONS PHIL., INC. VS. DIGITEL EMPLOYEES UNION (G.R. NOS. 184903, 10OCT 2012) By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent of all rank and file employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining negotiations which resulted in a bargaining deadlock. The Union threatened to go on strike, but then the Labor Secretary assumed jurisdiction over the dispute and eventually directed the parties to execute a CBA. 2 However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment with Digitel. The Union later became dormant. Ten (10) years thereafter or on 28 September 2004, Digitel received from Esplana, who was President of the Union, a letter containing the list of officers, CBA proposals and ground rules. 3 Digitel was reluctant to negotiate with the Union and demanded that the latter Union show compliance with the provisions of the Union’s Constitution and By-laws on union membership and election of officers. On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation and Mediation Board based on Digitel’s violation of the duty to bargain. On 25 November 2004, Esplana filed a notice of strike. On 10 March 2005, the then Labor Secretary issued an Order4 assuming jurisdiction over the labor dispute. During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, filed with the DOLE an Establishment Termination Report stating that it will cease its business operation. The closure affected at least 100 employees, 42 of whom are members of the herein respondent Union. Alleging that the affected employees are its members and in reaction to Digiserv’s action, Esplana and his group filed another Notice of Strike for union busting, illegal lock-out, and violation of the assumption order. On 23 May 2005, the Labor Secretary ordered the second notice of strike subsumed by the previous Assumption Order.5 Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations (BLR) seeking cancellation of the Union’s registration. In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the petition for cancellation of union registration for lack of merit. The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a Resolution dated 9 March 2007. In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence the CBA negotiation with the Union and certified for compulsory arbitration before the NLRC the issue of unfair labor practice. In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was certified for compulsory arbitration before the NLRC. On 31 January 2006, NLRC rendered a Decision dismissing the unfair labor practice charge against Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and ordering their reinstatement. 10 The Union manifested that out of 42 employees, only 13 remained, as most had already accepted separation pay. In view of this unfavorable decision, Digitel filed a petition on 9 June 2006 before the Court of Appeals, challenging the above NLRC Decision and Resolution and arguing mainly that Digiserv employees are not employees of Digitel. On 18 June 2008, CA partially granted the case for ULP, thus modifying the assailed NLRC dispositions. The CA likewise sustained the finding that Digiserv is engaged in labor-only contracting and that its employees are actually employees of Digitel. Digitel filed a motion for reconsideration but was denied in a Resolution dated 9 October 2008. Hence, this petition for review on certiorari. ISSUES: 1) Whether Digiserv is a legitimate contractor; and 2) Whether there was a valid dismissal. RULING: Digiserv is a labor-only contractor. Labor-only contracting is expressly prohibited by our labor laws. After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the form of capital, equipment or tools. The NLRC, as echoed by the CA, did not find substantial Digiserv’s authorized capital stock of P 1,000,000.00. It pointed out that only P 250,000.00 of the authorized capital stock had been subscribed and only P 62,500.00 had been paid up. There was no increase in capitalization for the last 10 years.19 Moreover, in the Amended Articles of Incorporation, as well as in the General Information Sheets for the years 1994, 2001 and 2005, the primary purpose of Digiserv is to provide manpower services. In PCI Automation Center, Inc. v. National Labor Relations Commission,20 the Court made the following distinction: "the legitimate job contractor provides services while the labor-only contractor provides only manpower. The legitimate job contractor undertakes to perform a specific job for the principal employer while the labor-only contractor merely provides the personnel to work for the principal employer." The services provided by employees of Digiserv are directly related to the business of Digitel. It is undisputed that as early as March 1994, the affected employees, except for two, were already performing their job as Traffic Operator which was later renamed as Customer Service Representative (CSR). It is equally undisputed that all throughout their employment, their

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function as CSR remains the same until they were terminated effective May 30, 2005. Their long period of employment as such is an indication that their job is directly related to the main business of DIGITEL which is telecommunications. Furthermore, Digiserv does not exercise control over the affected employees. Digiserv shared the same Human Resources, Accounting, Audit and Legal Departments with Digitel which manifested that it was Digitel who exercised control over the performance of the affected employees. The NLRC also relied on the letters of commendation, plaques of appreciation and certification issued by Digitel to the Customer Service Representatives as evidence of control. Considering that Digiserv has been found to be engaged in labor-only contracting, the dismissed employees are deemed employees of Digitel. The affected employees were illegally dismissed. In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees are in fact employees of Digitel. The NLRC enumerated these pieces of evidence, thus:  The remaining affected employees, except for two (2), were already hired by DIGITEL even before the existence of DIGISERV. Likewise, the remaining affected employees continuously held the position of Customer Service Representative, which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994 until they were terminated on May 30, 2005.  Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL, Take for example the "Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees. The "Service Award" was signed by the officers of DIGITEL – the VP-Customer Services Division, the VPHuman Resources Division and the Group Head-Human Resources Division. It cannot be gainsaid that it is only the employer that issues service award to its employees.22 As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of closure of Digiserv, a department within Digitel. In the recent case of Waterfront Cebu City Hotel v. Jimenez,23 we referred to the closure of a department or division of a company as retrenchment. For a valid retrenchment, the following elements must be present: (1) 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; (2) 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; (3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least ½ month pay for every year of service, whichever is higher; (4) 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; and (5) 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.24 Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to close a department of the company. Digitel’s decision to outsource the call center operation of the company is a valid reason to close down the operations of a department under which the affected employees were employed. The fifth element regarding the criteria to be observed by Digitel clearly does not apply because all employees under Digiserv were dismissed. The instant case is all about the fourth element, that is, whether or not the affected employees were dismissed in good faith. We find that there was no good faith in the retrenchment. Prior to the cessation of Digiserv’s operations, the Secretary of Labor had issued the first and second assumption order. The effects of the assumption order issued by the Secretary of Labor are two-fold. It enjoins an impending strike on the part of the employees and orders the employer to maintain the status quo. There is no doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a department is not illegal per se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John Colleges, Inc. v. St. John Academy Faculty and Employees Union,26 bad faith was evidenced by the timing of and reasons for the closure and the timing of and reasons for the subsequent opening.

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04. PORTILLO VS. RUDOLF LIETZ, INC. (G.R. NO. 196539, 10 OCT 2012) In a letter agreement, signed by individual respondent Rudolf Lietz and conformed to by Portillo, the latter (Portillo) was hired by the former under the conditions that Portillo “will not engage in any other gainful employment by [her]self or with any other company either directly or indirectly without written consent of [Lietz Inc.]” and “a breach of which will render [Portillo] liable to [Lietz Inc.] for liquidated damages.” On her tenth (10th) year of service with Lietz Inc., Portillo was promoted to Sales Representative. In this regard, Portillo signed another letter agreement containing a "Goodwill Clause:" It remains understood and you agreed that, on the termination of your employment by act of either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a similar or competitive business or the same character of work which you were employed by [Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation over the last 12 months, it being agreed that this sum is reasonable and just. 5

Three (3) years thereafter Portillo resigned from Lietz Inc. During her exit interview, Portillo declared that she intended to engage in business—a rice dealership, selling rice in wholesale. On 15 June 2005, Lietz Inc. accepted Portillo’s resignation and reminded her of the "Goodwill Clause" in the last letter agreement she had signed. Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc. Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining salaries and commissions went unheeded. On 14 September 2005, Portillo filed a complaint with the NLRC for non-payment of 1½ months’ salary, two (2) months’ commission, 13th month pay, plus moral, exemplary and actual damages and attorney’s fees. In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the total amount of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillo’s money claims should be offset against her liability to Lietz Inc. for liquidated damages in the amount of ₱869,633.097 for Portillo’s alleged breach of the "Goodwill Clause" in the employment contract when she became employed with Ed Keller Philippines, Limited. On 25 May 2007, the Labor Arbiter granted Portillo’s complaint, ordering Lietz, Inc. to pay Portillo the amount of Php110,662.16, representing her salary and commissions, including 13th month pay.8 On appeal by respondents Lietz Inc., the NLRC affirmed the ruling of the Labor Arbiter. The motion for reconsideration was denied by NLRC. Lietz Inc. filed a petition for certiorari before the Court of Appeals, alleging grave abuse of discretion in the labor tribunals’ rulings. The CA initially affirmed the labor tribunals, but on motion for reconsideration, modified its previous decision. While upholding the monetary award in favor of Portillo in the aggregate sum of ₱110,662.16, the CA allowed legal compensation or set-off of such award of monetary claims by her liability to Lietz Inc. for liquidated damages arising from her violation of the "Goodwill Clause" in her employment contract with them. 10 Portillo’s motion for reconsideration was denied. Hence, this petition for certiorari before the SC. ISSUE: Whether Portillo’s money claims for unpaid salaries may be offset against Lietz Inc.’s claim for liquidated damages. RULING: Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the CA on the "causal connection between Portillo’s monetary claims against respondents and the latter’s claim from liquidated damages against the former." Art. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise provided under this code, the Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following case involving all workers, whether agricultural or nonagricultural: xxxx 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; (Underscoring supplied)

Evidently, the CA is convinced that the claim for liquidated damages emanates from the "Goodwill Clause of the employment contract and, therefore, is a claim for damages arising from the employer-employee relations." As early as Singapore Airlines Limited v. Paño,18 we established that not all disputes between an employer and his employee(s) fall within the jurisdiction of the labor tribunals. We differentiated between abandonment per se and the manner and consequent effects of such abandonment and ruled that the first, is a labor case, while the second, is a civil law case.

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Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.19 (Emphasis supplied) Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable causal connection rule was discussed. Thus, in San Miguel Corporation v. National Labor Relations Commission,20 we held: xxx The Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal connection with the employeremployee relationship.21 (Emphasis supplied)

We thereafter ruled that the "reasonable causal connection with the employer-employee relationship" is a requirement not only in employees’ money claims against the employer but is, likewise, a condition when the claimant is the employer. In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,22 which reiterated the San Miguel ruling and allied jurisprudence, we pronounced that a non-compete clause, as in the "Goodwill Clause" referred to in the present case, with a stipulation that a violation thereof makes the employee liable to his former employer for liquidated damages, refers to postemployment relations of the parties. We iterated that Article 217, paragraph 4 does not automatically cover all disputes between an employer and its employee(s). We noted that the cause of action was within the realm of Civil Law, thus, jurisdiction over the controversy belongs to the regular courts. At bottom, we considered that the stipulation referred to postemployment relations of the parties. That the "Goodwill Clause" in this case is likewise a postemployment issue should brook no argument. There is no dispute as to the cessation of Portillo’s employment with Lietz Inc.23 She simply claims her unpaid salaries and commissions, which Lietz Inc. does not contest. At that juncture, Portillo was no longer an employee of Lietz Inc.24 The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after the cessation of the employment relationship between the parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case. It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim that arises out of or in connection with an employer-employee relationship, Lietz Inc.’s claim against Portillo for violation of the goodwill clause is a money claim based on an act done after the cessation of the employment relationship. And, while the jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s claim rests on the regular courts. In the case at bar, the difference in the nature of the credits that one has against the other, conversely, the nature of the debt one owes another, which difference in turn results in the difference of the forum where the different credits can be enforced, prevents the application of compensation. Simply, the labor tribunal in an employee’s claim for unpaid wages is without authority to allow the compensation of such claims against the post employment claim of the former employer for breach of a post employment condition. The labor tribunal does not have jurisdiction over the civil case of breach of contract. Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits wage deductions except in three circumstances: ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

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05. SUPERIOR PACKAGING C ORPORATION VS. ARNEL BALAGSAY, ET AL. (G.R. NO. 178909, 10 OCT 2012) The petitioner Superior Packaging Corporation (principal) engaged the services of Lancer (agent) to provide reliever services to its business, which involves the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the respondents were engaged for four (4) months – from February to June 1998 – and their tasks included loading, unloading and segregation of corrugated boxes. Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz), for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary, the DOLE conducted an inspection of the petitioner’s premises and found several violations, to wit: (1) non-presentation of payrolls and daily time records; (2) non-submission of annual report of safety organization; (3) medical and accident/illness reports; (4) non-registration of establishment under Rule 1020 of Occupational and Health Standards; and (5) no trained first aide1 Due to the petitioner’s failure to appear in the summary investigations conducted by the DOLE, an Order 2 was issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay respondents their total claims in the amount of P 840,463.38.3 Petitioner and Luz filed a motion for reconsideration on the ground that respondents are not its employees but of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its motion in its Resolution4 dated February 16, 2004, ruling that the petitioner failed to support its claim that the respondents are not its employees, and even assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual employees to the extent of the work performed when the contractor fails to pay its employees’ wages. Their appeal to the Secretary of DOLE was dismissed per Order5 dated July 30, 2004 and the Order dated June 18, 2003 and Resolution dated February 16, 2004 were affirmed. 6 Their motion for reconsideration likewise having been dismissed by the Secretary of DOLE in an Order dated January 21, 2005,7 petitioner and Luz filed a petition for certiorari with the Court of Appeals (CA). On November 17, 2006, the CA affirmed the Secretary of DOLE’s orders, with the modification in that Luz was absolved of any personal liability under the award. 8 The petitioner filed a partial motion for reconsideration insofar as the finding of solidary liability with Lancer is concerned but it was denied by the CA in a Resolution9 dated July 10, 2007. The petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court. ISSUE: (1) Whether the DOLE has authority to make a finding of an employer-employee relationship concomitant to its visitorial and enforcement power. (2) Whether Superior Packaging Corporation (petitioner) may be held solidarily liable with Lancer Staffing & Services Network, Inc. (Lancer) for respondents’ unpaid money claims. RULING: The DOLE has authority to make a finding of an employer-employee relationship concomitant to its visitorial and enforcement power. The DOLE clearly acted within its authority when it determined the existence of an employer-employee relationship between the petitioner and respondents as it falls within the purview of its visitorial and enforcement power under Article 128(b) of the Labor Code. In People’s Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment,20 the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such determination, however, is merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. Also, the existence of an employer-employee relationship is ultimately a question of fact. 23 The determination made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the ambit of a petition for review on certiorari. 24 Lancer was engaged in labor-only contracting. It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of respondents and liable to the latter for their unpaid money claims. At the time of the respondents’ employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of 1997.25 Under said Department Order, labor-only contracting was defined as follows: Sec. 9. Labor-only contracting. – (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.

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Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.26 According to the CA, the totality of the facts and surrounding circumstances of this case point to such conclusion. The Court agrees. The ratio of Lancer’s authorized capital stock of P 400,000.00 as against its subscribed and paid-up capital stock of P 25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day operations. And while the Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, it measures the same against the type of work which the contractor is obligated to perform for the principal. 27 Moreover, the nature of respondents’ work was directly related to the petitioner’s business. The marked disparity between the petitioner’s actual capitalization (P 25,000.00) and the resources needed to maintain its business, i.e., "to establish, operate and manage a personnel service company which will conduct and undertake services for the use of offices, stores, commercial and industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed to produce any written service contract that might serve as proof of its alleged agreement with Lancer.28 Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employeremployee relationship between the principal and the employees of the supposed contractor, and the "labor only" contractor is considered as a mere agent of the principal, the real employer. 29 The former becomes solidarily liable for all the rightful claims of the employees.30 The petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents’ unpaid money claims.

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06. NORKIS TRADING CORPORATION VS. JOAQUIN B UENAVISTA, ET AL. (G.R. NO. 182018, 10 OCT 2012) The respondents were hired by Norkis Trading, a domestic corporation engaged in the business of manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate dates and for various positions as welders and operators. Although they worked for Norkis Trading as skilled workers assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its business, they were not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of Panaghiusa sa Kauswagan Multi-Purpose Cooperative (PASAKA) and deemed an independent contractor that merely deployed the respondents to render services for Norkis Trading.4 The respondents nonetheless believed that they were regular employees of Norkis Trading citing various circumstances in their position paper. Hence, the respondents filed with the DOLE a complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and overtime pay. The filing of the complaint for labor-only contracting allegedly led to the suspension of the respondents’ membership with PASAKA. The suspension prompted the respondents to file with the NLRC the complaint for illegal suspension against Norkis Trading and PASAKA. On October 13, 1999, the respondents were to report back to work but during the hearing in their NLRC case, they were informed by PASAKA that they would be transferred to Norkis Tradings’ sister company, Porta Coeli Industrial Corporation (Porta Coeli), as washers of Multicab vehicles. The respondents opposed the transfer as it would allegedly result in a change of employers and that the transfer would result in a demotion since from being skilled workers in Norkis Trading; they would be reduced to being utility workers. Labor Arbiter (LA) Gutierrez dismissed the complaint for lack of merit. LA directed complainants to report back to PASAKA for work assignment. Likewise, respondent PASAKA is directed to accept the complainants back for work. In the meantime (in a separate case) DOLE Regional Director Balanag issued on August 22, 2000 his Order20 in LSED Case No. RO700-9906-CI-CS-168. Regional Director Balanag ruled that PASAKA was engaged in labor-only contracting.21 It was found that: (1) PASAKA had failed to prove that it had substantial capital; 22 (2) the machineries, equipment and supplies used by the respondents in the performance of their duties were all owned by Norkis Trading and not by PASAKA; 23 (3) the respondents’ membership with PASAKA as a cooperative was inconsequential to their employment with Norkis Trading; 24 (4) Norkis Trading and PASAKA failed to prove that their sub-contracting arrangements were covered by any of the conditions set forth in Section 6 of Department Order No. 10, Series of 1997;25 (5) Norkis Trading and PASAKA failed to dispute the respondents’ claim that their work was supervised by leadmen and production supervisors of Norkis Trading;26 and (6) Norkis Trading and PASAKA failed to dispute the respondents’ allegation that their salaries were paid by employees of Norkis Trading.27 Norkis Trading and PASAKA were then declared solidarily liable for the monetary claims of therein complainants. Regional Director Balanag’s Order was later affirmed by then DOLE Secretary Sto. Tomas. When the rulings of the DOLE Secretary were appealed before the CA via the petitions for certiorari, the CA affirmed the Orders of the DOLE Secretary.31 A motion for reconsideration of the CA decision was denied in a Resolution 32. The two petitions docketed as G.R. Nos. 180078-79, which were brought before the SC to question the CA’s rulings, were later denied with finality by the SC. The respondents informed the NLRC of Regional Director Balanag’s Order by filing a Manifestation. However, the NLRC rendered its Decision35 affirming with modification the decision of LA Gutierrez. It held that the respondents were not illegally suspended from work. The NLRC declared that the LA had no jurisdiction over the dispute because the respondents were not employees, but members of PASAKA. The respondents’ motion for reconsideration was denied by the NLRC. Undaunted, the respondents questioned the NLRC’s rulings before the CA via a petition for certiorari. Finding merit in the petition for certiorari, the CA rendered its decision reversing and setting aside the decision and resolution of the NLRC. The CA considered Regional Director Balanag’s finding in LSED Case No. RO700-9906-CI-CS-168 that PASAKA was engaged in labor-only contracting. In ruling that the respondents were illegally dismissed, the CA held that Norkis Trading’s refusal to accept the respondents back to their former positions, offering them instead to accept a new assignment as washers of vehicles in its sister company, was a demotion that amounted to a constructive dismissal. Norkis Trading’s motion for reconsideration was denied by the CA. Hence, this petition. ISSUES: (1) Whether the CA erred in revering of LA Gutierrez’s and the NLRC’s rulings. (2) Whether PASAKA is a labor-only contractor. (3) Whether the respondents were illegally dismissed by Norkis Trading RULING: Factual findings of labor officials may be examined by the courts when there is a showing that they were arrived at arbitrarily or in disregard of evidence on record. Nonetheless, these findings are not infallible. When there is a showing that

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they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can then grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, has made a factual finding that is not supported by substantial evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the NLRC.47 This case falls within the exception to the general rule that findings of fact of labor officials are to be accorded respect and finality on appeal. Norkis Trading is the principal employer of the respondents, considering that PASAKA is a mere labor-only contractor. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the employees recruited, supplied or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. These differentiate it from permissible or legitimate job contracting or subcontracting, which refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) the contractor carries on a distinct and independent business and partakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and the contractor or subcontractor assures the contractual employees’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. 49 SC emphasized that the petitioner’s arguments against the respondents’ claim that PASAKA is a labor-only contractor, which is thus to be regarded as a mere agent of Norkis Trading for which the respondents rendered service, are already mooted by the finality of this SC’s Resolutions in G.R. Nos. 180078-79, which stems from the CA’s and the DOLE Secretary’s review of the DOLE Regional Director’s Order dated August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168. Applying the doctrine of res judicata, all matters that have been fully resolved with finality by this Court’s dismissal of the appeal that stemmed from Regional Director Balanag’s Order in LSED Case No. RO700-9906-CI-CS-168 are already conclusive between the parties. The rule on conclusiveness of judgment then now precludes this Court from re-opening the issues that were already settled with finality in G.R. Nos. 180078-79, which effectively affirmed the CA’s findings that PASAKA was engaged in labor-only contracting, and that Norkis Trading shall be treated as the employer of the respondents. Termination of an employment for no just or authorized cause amounts to an illegal dismissal. Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process. 66 Termination of employment without just or authorized cause and without observing procedural due process is illegal. In claiming that they were illegally dismissed from their employment, the respondents alleged having been informed by PASAKA that they would be transferred, upon the behest of Norkis Trading, as Multicab washers or utility workers to Porta Coeli, a sister company of Norkis Trading. Norkis. Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. 67

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07. CREWLINK, INC. AND/OR GULF MARINE SERVIC ES VS. EDITHA TERING TERING, FOR HER BEHALF AND IN BEHALF OF MINOR EIMAREACH ROSE DE GARCIA TERINGTERING (G.R. NO. 166803, 11 OCT 2012) Respondent Editha Teringtering (Teringtering), spouse of deceased Jacinto Teringtering (Jacinto), and in behalf of her minor child, filed a complaint against petitioner Crewlink, Inc. (Crewlink), and its foreign principal Gulf Marine Services for the payment of death benefits, benefit for minor child, burial assistance, damages and attorney's fees. Respondent alleged that her husband Jacinto entered into an overseas employment contract with Crewlink, Inc. for and in behalf of its foreign principal Gulf Marine Services.2 Before her husband was employed, he was subjected to a preemployment medical examination wherein he was pronounced as "fit to work." Thus, her husband joined his vessel of assignment and performed his duties as Oiler. On or about April 18, 2001, a death certificate was issued by the Ministry of Health of the United Arab Emirates wherein it was stated that Jacinto died on April 9, 2001 due to asphyxia of drowning. After learning of the death of Jacinto, respondent claimed from petitioners the payment of death compensation in the amount of US$50,000.00 and burial expenses in the amount of US$1,000.00, as well as additional death compensation in the amount of US$7,000.00, for the minor but was refused without any valid cause. Hence, a complaint was filed against the petitioners. Respondent claimed that in order for her husband's death to be compensable it is enough that he died during the term of his contract and while still on board. Respondent asserted that Jacinto was suffering from a psychotic disorder, or Mood Disorder Bipolar Type, which resulted to his jumping into the sea and his eventual death. Respondent further asserted that her husband’s death was not deliberate and not of his own will, but was a result of a mental disorder, thus, compensable. For its part, petitioner Crewlink alleged that sometime on April 9, 2001, around 8:20 p.m. while at Nasr Oilfield, the late Jacinto Teringtering suddenly jumped into the sea, but the second engineer was able to recover him. Because of said incident, one personnel was directed to watch Jacinto. However, around 10:30 p.m., while the boat dropped anchor south of Nasr Oilfield and went on standby, Jacinto jumped off the boat again. Around 11:00 p.m., the A/B watchman reported that Jacinto was recovered but despite efforts to revive him, he was already dead from drowning. Petitioner asserted that Teringtering was not entitled to the benefits being claimed, because Jacinto committed suicide. Despite the non-entitlement, however, Teringtering was even given burial assistance in the amount of P35,800.00 and P13,273.00 on May 21, 2001. She likewise received the amount of US$792.51 representing donations from the GMS staff and crew. Petitioner likewise argued that Teringtering is not entitled to moral and exemplary damages, because petitioner had nothing to do with her late husband's untimely demise as the same was due to his own doing. In a Decision dated February 12, 2002, the Labor Arbiter, after hearing, dismissed the case for lack of merit. The Labor Arbiter held that, while it is true that Jacinto Teringtering died during the effectivity of his contract of employment and that he died of asphyxiation, nevertheless, his death was the result of his deliberate or intentional jumping into the sea. Thus, his death was directly attributable to him. Teringtering then appealed before the NLRC which affirmed in toto the ruling of the Labor Arbiter. Unsatisfied, Teringtering filed a petition for certiorari under Rule 65 before the Court of Appeals (CA) and sought the nullification of the NLRC Resolution, dated February 20, 2003, which affirmed the Labor Arbiter’s Decision dated February 12, 2002. On July 8, 2004, the CA reversed and set aside the assailed Resolution of the NLRC, thus ordering Crewlink, Inc. and Gulf Marine Services jointly and severally pay deceased Jacinto Teringtering's beneficiaries, namely respondent and her daughter. Thus, before this Court, Crewlink, Inc. and/or Gulf Marine Services, filed a Petition for Review on Certiorari under Rule 45. ISSUE: Whether the death of Jacinto as a result of his own deliberate act renders his death compensable? RULING: As found by the Labor Arbiter, Jacinto's jumping into the sea was not an accident but was deliberately done. Indeed, Jacinto jumped off twice into the sea and it was on his second attempt that caused his death. The accident report of Captain Oscar Morado narrated in detail the circumstances that led to Jacinto's death. The circumstances of Jacinto's actions before and at the time of his death were likewise entered in the Chief Officer's Log Book and were attested to by Captain Morado before the Philippine Embassy. Even the A/B personnel, Ronald Arroga, who was tasked to watch over Jacinto after his first attempt of committing suicide, testified that despite his efforts to prevent Jacinto from jumping again overboard, Jacinto was

Duration of Contract: 12 Months Position: Basic Monthly Salary: US $385.00 Hours of Work: Overtime: Vacation Leave with pay: Point of Hire: 2

Oiler 48 hrs/wk US $115.50 1 mo. leave after 12 months Manila, Philippines

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determined and even shoved him and jumped anew which eventually caused his death. Considering the foregoing, we do not find any reason to discredit the evidence presented as well as the findings of the Labor Arbiter. Likewise, the provisions of the Code of Commerce are certainly inapplicable in this case. For precisely, the issue for resolution here is the obligation of the employer to its employee should the latter die during the term of his employment. The relationship between the petitioner and Jacinto is one based on contract of employment and not one of contract of carriage. Under No. 6, Section C, Part II of the POEA "Standard Employment Contract Governing the Employment of All Filipino Seamen On-Board Ocean-Going Vessels" (POEA-SEC), it is provided that: xxxx 6. No compensation shall be payable in respect of any injury, incapacity, disability or death resulting from a willful act on his own life by the seaman, provided, however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to him. (Emphasis ours)

Indeed, in order to avail of death benefits, the death of the employee should occur during the effectivity of the employment contract. The death of a seaman during the term of employment makes the employer liable to his heirs for death compensation benefits. This rule, however, is not absolute. The employer may be exempt from liability if it can successfully prove that the seaman's death was caused by an injury directly attributable to his deliberate or willful act. In the instant case, petitioner was able to substantially prove that Jacinto's death was attributable to his deliberate act of killing himself by jumping into the sea. Meanwhile, respondent, other than her bare allegation that her husband was suffering from a mental disorder, no evidence, witness, or any medical report was given to support her claim of Jacinto's insanity. Establishing the insanity of an accused requires opinion testimony which may be given by a witness who is intimately acquainted with the person claimed to be insane, or who has rational basis to conclude that a person was insane based on the witness’ own perception of the person, or who is qualified as an expert, such as a psychiatrist. 8 No such evidence was presented to support respondent's claim.

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08. CECILIA T. MANESE, JULIETES E. CRUZ, AND EUF EMIO PEÑANO II VS. JOLLIBEE FOODS CORPORATION, TONY TAN CAKTIONG, ELIZABETH DELA CRUZ, DIVINA EVANGELISTA AND SYLVIA M. MARIANO (G.R. NO. 170454, 11 OCT 2012) Petitioners were employees of respondent Jollibee Foods Corporation (Jollibee). At the time of their termination, petitioner Manese, Cruz and Peñano were managerial employees. Petitioners were part of the team tasked to open a new Jollibee branch at Festival Mall, Level 4, in Alabang, Muntinlupa City on December 12, 2000. However, the opening of the store was postponed thrice. In preparation for the opening of the new branch, petitioner Cruz requested the commissary for the delivery of the product called “Chickenjoy”. When the opening was rescheduled to December 24, 2000, petitioner Cruz made another requisition for the delivery of the food on December 23, 2000, but the opening date was again postponed to December 28, 2000. Petitioner Cruz did not cancel the request for delivery of the products. On December 23, 2000, 450 packs of Chickenjoy were delivered and petitioners placed them in the freezer. On December 26, 2000, petitioner Cruz thawed the 450 packs of Chickenjoy (ten pieces in each pack), or 4,500 pieces of Chickenjoy, in time for the branch opening on December 28, 2000. The shelf life of the Chickenjoy is 25 days from the time it is marinated; and, once thawed, it should be served on the third day. Its shelf life cannot go beyond three days from thawing. After that, the remaining Chickenjoy products are no longer served. Within the period provided for in the company policy, valid Chickenjoy rejects are usually returned to the commissary, while rejects which are unreturnable are wasted and disposed of properly. The sales targets of for the first and second day were not reached. Sometime in January 2001, petitioner Cruz attempted to return 150 pieces of Chickenjoy rejects to the commissary, but the driver of the commissary refused to accept them due to its discoloration and deteriorated condition, and for fear that the rejects may be charged against him. Thus, the Chickenjoy rejects were returned to the freezer. During the first week of March 2001, the team of petitioners had a meeting on what to do with the stored Chickenjoy rejects. They decided to soak and clean the Chickenjoy rejects in soda water and segregate the valid rejects from the wastes. On April 2, 2001, petitioner Cruz was transferred to Jollibee Shell South Luzon Tollway branch in Alabang, Muntinlupa. She failed to make the proper indorsement as the area manager directed her to report immediately to her new assignment. On May 3, 2001, the area manager, Evangelista visited the subject Jollibee branch at Festival Mall. Evangelista told petitioner Manese to dispose of the Chickenjoy rejects, but Manese replied that they be allowed to find a way to return them to the Commissary.5 On May 8, 2001, Evangelista required petitioners Cruz and Manese to submit an incident report on the Chickenjoy rejects. On May 10, 2001, a corporate audit was conducted to spot check the waste products. According to the audit, 2,130 pieces of Chickenjoy rejects were declared wastage. On May 15, 2001, Evangelista issued a memorandum with a charge sheet,6 requiring petitioners to explain in writing within 48 hours from receipt why they should not be meted the appropriate penalty under the respondent company's Code of Discipline for extremely serious misconduct, gross negligence, product tampering, fraud or falsification of company records and insubordination in connection with their findings that 2,130 pieces of Chickenjoy rejects were kept inside the walk-in freezer, which could cause product contamination and threat to food safety. The petitioners and other store managers submitted their respective letters of explanation. Thereafter, respondent’s Investigating Committee conducted an administrative hearing on the incident. Subsequently, the Investigating Committee sent petitioners Cruz, Manese and Peñano each received a Memorandum10 on its administrative findings and decision, notifying each of their termination from employment due to loss of trust and confidence. Thereafter, petitioners Manese, Cruz and Peñano filed a Complaint12 against respondents for illegal dismissal. On July 31, 2003, the Labor Arbiter (LA) rendered a Decision15 dismissing the complaints for illegal dismissal of complainants Manese and Peñano for want of merit. However, the complaint for illegal dismissal filed by Cruz is resolved in her favor, against Jollibee. Jollibee was held liable for separation pay instead of reinstatement. The LA stated that at the time the incident was discovered on May 3, 2001, Cruz was no longer working at Jollibee Festival Mall, Level 4, as she was already transferred to a different Jollibee branch on April 2, 2001. Thus, the LA held that Cruz could not be held liable therefor; hence, her dismissal was illegal. Further, the LA held that petitioner Manese was not entitled to her money claims, particularly unpaid salary, sick leave for the period from May 16-31, 2001, cooperative savings, maternity benefit, mid-year bonus and retirement pay. The LA took note of respondents' argument alleging that such benefits due her were not given because of a car loan given by the company which still has an outstanding balance. Even after computing the amount due her vis-a-vis the car loan balance, she would still owe a balance of P14,262.76. Petitioners appealed the Decision of the LA to the NLRC. Respondents filed an Opposition to Appeal18 on October 10, 2003. NLRC issued a Resolution19 dismissing the appeal and affirming the LA’s Decision in toto.20 However, the NLRC held that the Labor Arbiter erred in ruling that petitioner Cruz was illegally dismissed as it found that she committed the offenses

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enumerated in paragraphs 1.1 to 1.5 and paragraph 2 of the Memorandum 21 sent to her. Nevertheless, since respondents failed to interpose a timely appeal, the NLRC stated that it was constrained to affirm the findings and award of separation pay granted to petitioner Cruz by the Labor Arbiter. Petitioners' motion for reconsideration was denied by the NLRC. Petitioners appealed the Resolutions of the NLRC to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. The CA rendered a Decision affirming the Resolutions of the NLRC with modification. The CA found that (1) petitioner Cruz was legally dismissed in accordance with Article 282, par. (c) of the Labor Code; and (2) Jollibee is liable for the payment of petitioner Manese's unpaid salary for the period of June 1-15, 2001, sick leave for the period of May 16-31, 2001, and cooperative savings. Petitioners' motion for reconsideration was denied by the CA. Hence, petitioners filed the present petition. ISSUE: (1) Whether the CA exceeded its jurisdiction in dismissing petitioner Cruz. (2) Whether the CA erred in its appreciation of facts when it affirmed their dismissal on the ground of loss of trust and confidence when the records show that they were dismissed based on the allegation of causing product contamination and gross negligence. RULING: Failure to file a timely appeal by respondents caused the LA’s ruling to become final and executory. In this case, respondents did not appeal from the decision of the LA who ruled that the dismissal of petitioner Cruz was illegal. Respondents only filed an Opposition to Appeal, which prayed for the reversal of the Labor Arbiter’s orders declaring as illegal the dismissal of Cruz and directing payment of her separation pay. The NLRC stated that respondents' opposition could have been treated as an appeal, but it was filed only in October, way beyond the ten-day reglementary period within which an appeal may be filed. Although the NLRC found that Cruz was legally dismissed, it stated that it was constrained to affirm the findings and award of separation pay granted to Cruz by the Labor Arbiter, since respondents failed to interpose a timely appeal. Hence, the NLRC affirmed the decision of the Labor Arbiter in toto. In view of the foregoing, the Court holds that the Court of Appeals exceeded its jurisdiction when it adjudged that petitioner Cruz was legally dismissed. Mere existence of a basis for the loss of trust and confidence justifies the dismissal of a managerial employee. The mere existence of a basis for the loss of trust and confidence justifies the dismissal of the managerial employee because when an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, such employee gives up some of the rigid guaranties available to ordinary workers. 29 Infractions, which if committed by others would be overlooked or condoned or penalties mitigated, may be visited with more severe disciplinary action. 30 Proof beyond reasonable doubt is not required provided there is a valid reason for the loss of trust and confidence, such as when the employer has a reasonable ground to believe that the managerial employee concerned is responsible for the purported misconduct and the nature of his participation renders him unworthy of the trust and confidence demanded by his position.31 However, the right of the management to dismiss must be balanced against the managerial employee’s right to security of tenure which is not one of the guaranties he gives up.32 This Court has consistently ruled that managerial employees enjoy security of tenure and, although the standards for their dismissal are less stringent, the loss of trust and confidence must be substantial and founded on clearly established facts sufficient to warrant the managerial employee’s separation from the company.33 As regards the monetary claims of petitioner Manese, the CA found that petitioner Manese had already earned the same, except for the maternity leave. Manese's unpaid balance on her car loan cannot be set off against the monetary benefits due her. The Court has held in Nestlé Philippines, Inc. v. NLRC38 that the employer's demand for payment of the employees' amortization on their car loans, or, in the alternative, the return of the cars to the employer, is not a labor, but a civil, dispute. It involves debtor-creditor relations, rather than employee-employer relations.39

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09. GONZALES VS. SOLID C EMENT CORPORATION AN D ALLEN QUERUBIN (G.R. NO. 198423, 23 OCT 2012) The current petition arose from the execution of the final and executory judgment in the parties’ illegal dismissal dispute (referred to as "original case," docketed in this Court as G.R. No. 165330 and entitled Solid Cement Corporation, et al. v. Leo Gonzales). The Labor Arbiter (LA) resolved the case at his level on December 12, 2000. Since the LA found that an illegal dismissal took place, the company reinstated petitioner Gonzales in the payroll on January 22, 2001. 2 In the meanwhile, the parties continued to pursue the original case on the merits. The case was appealed to the National Labor Relations Commission (NLRC) and from there to the Court of Appeals (CA) on a petition for certiorari under Rule 65 of the Rules of Court. The LA’s ruling of illegal dismissal was largely left undisturbed in these subsequent recourses. The original case eventually came to this Court. In our Resolutions of March 9, 20053 and June 8, 2005,4 we denied the petition of respondent Solid Cement Corporation (Solid Cement) for lack of merit. Our ruling became final and entry of judgment took place on July 12, 2005. Soon after its finality, the original case was remanded to the LA for execution. The LA decision dated December 12, 2000 declared the respondents guilty of illegal dismissal and ordered the reinstatement of Gonzales to his former position "with full backwages and without loss of seniority rights and other benefits." 5 Under this ruling, as modified by the NLRC ruling on appeal, Gonzales was awarded the following: (1) Backwages in the amount of P636,633.33; (2) Food and Transportation Allowance in the amount of P18,080.00; (3) Moral damages in the amount of P100,000.00; (4) Exemplary damages in the amount of P 50,000.00; and (5) Ten percent (10%) of all sums owing to the petitioner as attorney’s fees. Actual reinstatement and return to work for Gonzales (who had been on payroll reinstatement since January 22, 2001) came on July 15, 2008.6 When Gonzales moved for the issuance of an alias writ of execution on August 4, 2008, he included several items as components in computing the amount of his backwages. Acting on the motion, the LA added P57,900.00 as rice allowance and P14,675.00 as medical reimbursement (with the company’s apparent conformity). Under the LA’s execution order dated August 18, 2009, Gonzales was entitled to a total of P965,014.15.7 The NLRC, in its decision8 dated February 19, 2010 and resolution dated May 18, 2010, modified the LA’s execution order. The NLRC differed from the LA on the actual details of implementation and modified the latter’s ruling by including: Additional backwages from Dec. 13, 2000 to Jan. 21, 2001 P 50, 800.009 Salary differentials from year 2000 until August 2008 617,517.48 13th month pay differential 51,459.79 13th month pay for years 2000 and 2001 80,000.00 12% interest from July 12, 2005 878,183.42 This ruling increased Gonzales’ entitlement to P2,805,698.04 (from P965,014.15). On a petition for certiorari under Rule 65 of the Rules of Court, the CA set aside the NLRC’s decision and reinstated the LA’s order, prompting Gonzales to come to the Court via a petition for review on certiorari (docketed as G.R. No. 198423) under Rule 45 of the Rules of Court. In our Minute Resolutions, we denied Gonzales’ Rule 45 petition. At this point came the two motions now under consideration. ISSUE: Whether the CA correctly determined the absence or presence of grave abuse of discretion by the NLRC. Re-computation of awards during execution of an illegal dismissal decision. On the execution aspect of an illegal dismissal decision, the case of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division),16 despite its lack of a complete factual congruence with the present case, serves as a good guide on how to approach the execution of an illegal dismissal decision that contains a monetary award. There the SC held the CA was not in error in confirming that a recomputation is necessary as it essentially considered the labor arbiter’s original decision in accordance with its basic component. The SC further ratiocinated that: xxx under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal

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upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments. xxx The re-computation of the amounts still due took off from the LA’s decision that contained the itemized and computed dispositive portion as of the time the LA rendered his judgment. It was necessary because time transpired between the LA’s decision and the final termination of the case on appeal, during which time the illegally dismissed employee should have been paid his salary and benefit entitlements.

The current petition only generally involves a determination of the scope of the awards that include the backwages. The components of the backwages: a. Salary and 13th month differential due after dismissal In the case of BPI Employees Union – Metro Manila and Zenaida Uy v. Bank of the Philippine Islands and Bank of the Philippine Islands v. BPI Employees Union – Metro Manila and Zenaida Uy,21 the Court ruled that in computing backwages, salary increases from the time of dismissal until actual reinstatement, and benefits not yet granted at the time of dismissal are excluded. Hence, we cannot fault the CA for finding that the NLRC committed grave abuse of discretion in awarding the salary differential amounting to P617,517.48 and the 13th month pay differentials amounting to P51,459.48 that accrued subsequent to Gonzales’ dismissal. b. Legal interest of 12% on total judgment However, based on the same BPI case, Gonzales is entitled to 12% interest on the total unpaid judgment amount, from the time the Court’s decision (on the merits in the original case) became final. When the CA reversed the NLRC and reinstated the LA’s ruling (which did not order payment of interest), the CA overstepped the due bounds of its jurisdiction under a certiorari petition as it acted on the basis of wrong considerations and outside the contemplation of the law on the legal interests that final orders and rulings on forbearance of money should bear. c. Additional backwages and 13th month pay We reach the same conclusion on the other deletions the CA made, particularly on the deletion of the 13th month pay for 2000-2001, amounting to P80,000.00, and the additional backwages for the period of December 13, 2000 to January 21, 2001, amounting to P50,800.00. We note in this regard that the execution proceedings were conducted before the LA issued an Order requiring the payment of P965,014.15 in Gonzales’ favor. An appeal of this computation to the NLRC to question the LA’s determination of the amount due throws the LA’s determination wide open for the NLRC’s review. In granting these monetary reliefs, the NLRC reasoned that – Since there is no showing that complainant was paid his salaries from the time when he should have been immediately reinstated until his payroll reinstatement, he is entitled thereto. 25 (emphasis ours)

SC found no reason to disturb the findings of respondent NLRC that the entire amount of commissions was not paid, this by reason of the evident failure of herein petitioners to present evidence that full payment thereof has been made. It is a basic rule in evidence that each party must prove his affirmative allegations. These amounts are not excluded from the concept of backwages as the salaries fell due after Gonzales should have been reinstated, while the 13th month pay fell due for the same period by legal mandate. These are entitlements that cannot now be glossed over if the final decision on the merits in this case were to be respected.

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10. ANDRADA VS. AGEMAR MANNING AGENCY, INC. AND/OR SONNET SHIPPIN G LTD./MALTA (G.R. NO. 194758, 24 OCT 2012) Petitioner Ruben D. Andrada (Andrada) was employed by respondent Agemar Manning Agency, Inc. (Agemar Manning), for and in behalf of its foreign principal, respondent Sonnet Shipping Ltd./Malta (Sonnet Shipping), as chief cook steward on board M/T Superlady. Andrada finished five (5) contracts of employment with the respondents from December 1994 to April 2003 on board their other vessels. Prior to his last embarkation, Andrada underwent a pre-employment medical examination (PEME) and was found fit for sea service. Sometime in April 2004, while the vessel was navigating in high seas, Andrada experienced severe abdominal pain while carrying heavy food provisions which was part of his job. Thinking that it would not lead to any serious consequences, he just let it pass. The abdominal pain, however, recurred during the latter part of his extended contract. On October 10, 2004, he was referred to the Island Healthy Center in Texas, U.S.A., where he was diagnosed with umbilical hernia. Andrada requested for a medical sign-off and was repatriated to the Philippines on December 8, 2004 so he could continue his treatment and medication as per advice of a doctor in Texas, U.S.A. On the day following his arrival, Andrada immediately reported to the Agemar Manning, which referred him to YGEIA Medical Clinic for a general check-up. Dr. De Leon recommended that Andrada should undergo surgical operation of his umbilical hernia and multiple gallbladder stones. On January 25, 2005, the medical procedures were performed on him at the Philippine General Hospital where he was confined for five (5) days Dr. Faylona. On February 8, 2005, as he could still feel the symptoms of his illness, Andrada consulted Dr. Vicaldo of the Philippine Heart Center. In his medical certificate, Dr. Vicaldo he concluded that Andrada was unfit to resume work as a seaman in any capacity and could not be expected to land a gainful employment due to his medical condition.3 On the other hand, the record shows that Dr. Faylona, through a letter, dated March 14, 2005, certified that Andrada was "fully recovered from the surgery and is now fit to work." 4 Almost two months after his surgery, Andrada submitted himself to a medical check-up at the YGEIA Medical Clinic wherein Dr. Ramos, the medical director of YGEIA Medical Clinic, declared Andrada as fit to work effective March 22, 2005.5 On April 21, 2005, Andrada signed the Deed of Release, Waiver and Quitclaim wherein he acknowledged receipt of the amount of $3,501.53 or its peso equivalent of P192,357.41. 6 The said deed stated that Andrada was thereby releasing and discharging the respondents from all actions, complaints and demands on account or arising out of his employment as a seaman on board M/T Superlady.7 Notwithstanding, Andrada demanded payment of disability and illness allowance/benefits from the respondents pursuant to the POEA-SEC on the basis of the findings/recommendations of Dr. Vicaldo. His claims were refused. On May 26, 2005, Andrada filed a complaint8 for the recovery of disability benefits, sickness allowance, reimbursement of medical expenses, damages, and attorney's fees against the respondents. On January 9, 2007, the Labor Arbiter rendered judgment and ruled that Andrada was entitled to disability benefits. He gave scant consideration on the two certifications separately issued by Dr. Faylona and Dr. Ramos which he considered self-serving and biased in favor of the respondents and certainly could not be considered independent. The LA said that his umbilical hernia was contracted during his employment for the last 10 years because his job entailed the lifting of heavy food provisions. He added that Andrada’s non redeployment put in doubt the respondents' claim that he was indeed fit to work. On appeal, the NLRC reversed the judgment of the LA ratiocinating that Andrada’s claim for disability benefit was bereft of legal and factual basis in the face of the certificate of fitness to work issued by the company-designated physician. The NLRC said that the findings and assessment of the company-designated physician, who also supervised and monitored Andrada's treatment, should be upheld as the truthful declaration of the latter's medical status at the time of the issuance of the certificate. It was likewise ruled that the execution by Andrada of the Deed of Release, Waiver and Quitclaim effectively negated his claim for disability benefits. Aggrieved, Andrada assailed the NLRC decision via a petition for certiorari before the CA ascribing grave abuse of discretion on the part of the NLRC. On May 28, 2010, the CA rendered its judgment finding that the challenged decision of the NLRC was in accordance with law and prevailing jurisprudence and that no grave abuse of discretion amounting to lack or excess of jurisdiction could be imputed against it. Andrada's motion for reconsideration was denied by the CA. Hence, he filed this petition. ISSUES: Whether Andrada is entitled to disability benefits on account of his medical condition. RULING: The SC rules in the negative. The issue of whether the petitioner can legally demand and claim disability benefits from the respondents for an illness suffered is best addressed by the provisions of the POEA-SEC which incorporated the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, specifically Section 203 thereof. 3Section

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

2. xxx

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Jurisprudence is replete with pronouncements that it is the company-designated physician who is entrusted with the task of assessing the seaman's disability, whether total or partial, due to either injury or illness, during the term of the latter's employment.18 It is his findings and evaluations which should form the basis of the seafarer's disability claim. His assessment, however, is not automatically final, binding or conclusive on the claimant, the labor tribunal or the courts, 19 as its inherent merits would still have to be weighed and duly considered. The seafarer may dispute such assessment by seasonably exercising his prerogative to seek a second opinion and consult a doctor of his choice.20 In case of disagreement between the findings of the company-designated physician and the seafarer's doctor of choice, the employer and the seaman may agree jointly to refer the latter to a third doctor whose decision shall be final and binding on them. The Court notes that the dispute regarding Andrada's medical condition could have been easily clarified and resolved had the parties observed and stayed true to the procedure laid down in Section 20 (B), par. 3 of the POEA-SEC. Considering that the parties did not jointly resort to seek the opinion of a third physician in the determination and assessment of Andrada's disability or the absence of it, the credibility of the findings of their respective doctors was properly evaluated by the NLRC 21 on the basis of their inherent merits. Andrada based his claim for disability benefits on the medical certificate, dated February 8, 2005, issued by Dr. Vicaldo who assessed his alleged disability as impediment grade VIII (33.59%). Record, however, shows that said medical certification was not supported by such diagnostic tests and/or procedures as would adequately refute the normal results of those administered to Andrada by the physicians at the YGEIA Medical Clinic and by Dr. Faylona at the Philippine General Hospital. Dr. Vicaldo's justification for his assessment was merely anchored on general impressions. The Court sustains the NLRC in ruling that the separate assessments of the company-designated physician and Dr. Faylona as to the medical condition of Andrada deserved greater evidentiary weight than that of Dr. Vicaldo. Records show that it was Dr. Ramos who referred his health problems to the proper medical specialist so that the appropriate and necessary surgeries could be performed on him and, whose medical results were not essentially disputed; who kept track of his medical case during its progress; and who issued the certification of his fitness to work, dated March 22, 2005, on the basis of the available medical records. The certification issued by Dr. Faylona likewise deserves credence. Dr. Faylona was the one who performed the surgical procedures on Andrada. Dr. Faylona also monitored and attended to Andrada's treatment and recuperation from January 25 to 29, 2005 at the Philippine General Hospital. Certainly, this enabled Dr. Faylona to acquire detailed knowledge of Andrada's medical condition and, thus, was in a better position to reach an accurate evaluation of his health condition and his fitness for work resumption. On the other hand, it is undisputed that the recommendation of Dr. Vicaldo was based on a single medical report after Dr. Vicaldo examined him only once. It is pristine clear that the examination and treatment of Andrada by Dr. Faylona had been more extensive than the examination conducted by Dr. Vicaldo. Additionally, Andrada executed the Deed of Release, Waiver and Quitclaim in favor of the respondents on April 21, 2005. By doing so, Andrada impliedly admitted the correctness of the medical assessments, and acknowledged to have "completely released and forever discharged" the respondents "from all actions, claims, complaints and demand whatsoever xxx on account of or arising out of my employment as seaman on board MT Superlady." 25

However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time as he is declared fit or the degree of his disability has been established by the company-designated physician. 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of his permanent disability has been assessed by the company-designated physician, but in no case shall this period exceed one hundred twenty (120) days. For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

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11. MARTOS, ECLANA, PILONES, ET AL. VS. NEW SAN JOSE BUILDERS, I NC. (G.R. NO. 192650 24 OCT 2012) Respondent New San Jose Builders, Inc. (NSJB) is a domestic corporation duly organized and existing under the laws of the Philippines and is engaged in the construction of road, bridges, buildings, and low cost houses primarily for the government. One of the projects of NSJB is the San Jose Plains Project (hereafter SJPP), located in Montalban, Rizal. SJPP, which is also known as the "Erap City" calls for the construction of low cost housing, which are being turned over to the National Housing Authority to be awarded to deserving poor families. Petitioners (Martos, et al.) alleged that, on various dates, NSJB hired them on different positions. Sometime in 2000, NSJB was constrained to slow down and suspend most of the works on the SJPP project due to lack of funds of the National Housing Authority. Felix Martos, among others, is one of those who were retained and issued new appointment papers, indicating their status as project employees. However, they refused to sign the appointment papers as project employees and subsequently refused to continue to work. On different dates, three (3) Complaints for Illegal Dismissal and for money claims were filed before the NLRC against NSJB and Jose Acuzar, by Martos, et al. who claimed to be the former employees of NSJB. NSJB denies that petitioners were illegally dismissed, and alleged that they were project employees, whose employments were automatically terminated upon completion of the project for which they were hired. On the other hand, Martos, et al. claim that NSJB hired them as regular employees, continuously and without interruption, until their dismissal on February 28, 2002. Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter (LA) Facundo Leda.7 The LA handed down a decision declaring, among others, that petitioner Martos was illegally dismissed and entitled to separation pay, backwages and other monetary benefits; and dismissing, without prejudice, the complaints of the other complainants (petitioners). Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which dismissed all the complaints, without prejudice, except that of Martos. On the other hand, NSJB appealed that part which held that Martos was its regular employee and that he was illegally dismissed. On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by respondent NSJB and partially granting that of the other petitioners. NLRC ordered respondents to reinstate all the complainants to their former positions, without loss of seniority rights and with full backwages, counted from the time their compensation was withheld from them until actual reinstatement. Respondents are likewise ordered to pay complainants their salary differentials, service incentive leave pay, and 13th month pay, using, as basis, the computation made on the claims of complainant Felix Martos. After the denial of its motion for reconsideration, NSJB filed before the CA a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. On July 31, 2009, the CA rendered a decision reversing and setting aside the July 30, 2008 Decision and the October 28, 2008 Resolution of the NLRC and reinstating the May 23, 2003 Decision of the LA. The CA explained that the NLRC committed grave abuse of discretion in reviving the complaints of petitioners despite their failure to verify the same. Out of the 102 complainants, only Martos verified the position paper and his counsel never offered any explanation for his failure to secure the verification of the others. The CA also held that the NLRC gravely abused its discretion when it took cognizance of petitioners’ appeal because Rule 41, Section 1(h) of the 1997 Rules of Civil Procedure, as amended, which is suppletory, provides that no appeal may be taken from an order dismissing an action without prejudice. With respect to Martos, the CA ruled that he was a regular employee of respondent and his termination was illegal. It explained that Martos should have been considered a regular employee because there was no indication that he was merely a project employee when he was hired. To show otherwise, respondent should have presented his employment contract for the alleged specific project and the successive employment contracts for the different projects or phases for which he was hired. In the absence of such document, he could not be considered such an employee because his work was necessary and desirable to the respondent’s usual business and that he was not required to sign any employment contract fixing a definite period or duration of his engagement. Thus, Martos already attained the status of a regular employee. Being a regular employee, the CA concluded that he was constructively dismissed when he was asked to sign a new appointment paper indicating therein that he was a project employee and that his appointment would be co-terminus with the project. ISSUES: (1) Whether the CA was correct in dismissing the complaints filed by those petitioners who failed to verify their position papers; and (2) Whether or not Martos should be reinstated. RULING: Absence of a proper verification is cause to treat the pleading as unsigned and dismissible. As to the first issue, the verification requirement is significant, as it is intended to secure an assurance that the allegations in the pleading are true and

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correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. Verification is deemed substantially complied with when, as in this case, one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct. Doctrine of strained relations. As to Martos, the Court agrees that the reinstatement being sought by him was no longer practicable because of strained relation between the parties. Indeed, he can no longer question this fact. This issue was never raised or taken up on appeal before the NLRC. It was only after he lost the appeal in the CA that he raised it. Thus, the Court deems it fair to award separation pay in lieu of reinstatement. In addition to his separation pay. Martos is also entitled to payment of full backwages, 13th month pay, service incentive leave pay, and attorney’s fees. The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. Under the doctrine of stained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter opinion is no longer desirable or viable. On one hand, such payment liberates the employee from what could be highly oppressive work environment. On the other hand, it release the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 24

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12. MILLAN V WALLEM MARITIME SERVIC ES, INC. (G.R. NO. 195168, 12 NOV 2012) Petitioner Benjamin C. Millan was deployed by the Wallem Maritime Services, Inc. as a seafarer for its foreign principal, Wallem Shipmanagement, Ltd., as a messman on board M/T "Front Vanadis." 5 On February 13, 2003, he slipped while carrying the ship’s provisions and injured his left arm. He was examined at St. Paul’s Surgical Clinic in Yosu City, South Korea where he was diagnosed to have suffered "fracture on left ulnar shaft." 6 Hence, he was medically repatriated on February 26, 2003.7 On February 28, 2003, he proceeded to the Manila Doctor’s Hospital where he consulted Dr. Estrada, the company-designated physician, and underwent an operation on March 3, 2003. 8 After his discharge, he went through a series of consultations and physical therapy sessions from May 6, 2003 until July 2, 2003.9 On July 5, 2003, Dr. Estrada reported that petitioner had completed his physical therapy program but will have to undergo a physical capacity test on August 28, 200310 to evaluate his fitness to work.11 Instead, on August 29, 2003, petitioner filed a complaint12 against respondents Wallem Maritime Services, Inc., its President/Manager Reginaldo A. Oben, and Wallem Shipmanagement, Ltd. for medical reimbursement, sickness allowance, permanent disability benefits, compensatory damages, exemplary damages and attorney’s fees. On September 1, 2003, petitioner consulted Dr. Saguin, an orthopedic surgeon, who diagnosed him as suffering from POEA Disability Grade 11 and elbow bursitis which rendered him "unfit to work at the moment."13 On September 10, 2003, petitioner sought the opinion of Dr. Escutin who assessed his condition as a partial permanent disability with POEA Disability Grade 10, 20.15%. Dr. Escutin also opined that petitioner was suffering from "loss of grasping power of small objects in one hand, and inability to turn forearm to pronation or supination. The period of healing remains undetermined. The patient is now unfit to go back to work at sea at whatever capacity."14 In the Decision16 dated September 27, 2006, the Labor Arbiter held that since the company-designated physician failed to make any pronouncement on petitioner’s fitness to resume sea service within 120 days as required by law, his disability is deemed permanent and total. Consequently, respondents were found jointly and severally liable to pay petitioner US$60,000.00 plus ten percent (10%) thereof as attorney’s fees. Petitioner’s claim for medical reimbursement and sickness allowance, however, were denied for lack of merit. 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 petitioner’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, Dr. Estrada. It pointed out that under the POEA-SEC, the post-employment medical examination and degree of disability must be performed and declared by the company-designated physician.17 Aggrieved, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. The CA set aside the NLRC’s conclusions and rendered a new judgment finding petitioner as suffering from partial permanent disability Grade 10. It held that while petitioner’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." 19 Thus, it ordered respondent manning agency and its principal liable to pay petitioner US$7,465.00 plus 10% thereof as attorney’s fees by way of partial disability benefits. Hence, the instant petition.20 ISSUE: Whether the CA committed reversible error in granting petitioner only partial permanent disability Grade 10 despite his inability to work for more than 120 days. 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 Vergara v. Hammonia Maritime Services, Inc.,22 the Court elucidated on the seeming conflict between Paragraph 3, Section 20(B)23 of the POEA-SEC (Department Order No. 004-00) and Article 192 (c)(1)24 of the Labor Code in relation to Section 2(a), Rule X25 of the Amended Rules on Employees Compensation, thus: As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition. (Italics in the original) Applying Vergara, the Court in the recent case of C.F. Sharp Crew Management, Inc. v. Taok 26 enumerated the following instances when a seafarer may be allowed to pursue an action for total and permanent disability benefits, to wit: (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;

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(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 workrelated 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 companydesignated physician and 181 days had passed on the day he last visited his physiatrist. 27 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 determined28 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, 29 thus, justifying the extension of the 120-day period. The company-designated physician therefore had a period of 240 days from the time that petitioner suffered his injury within which to make a finding on his fitness for further sea duties or degree of disability. 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.30 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.31 Besides, petitioner's own evidence shows that he is suffering only from partial permanent disability of either Grade 10 or 11.32 Accordingly, in the absence of proof to the contrary the Court concurs with the CA 's finding that petitioner suffers from a partial permanent disability grade of 10.

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13. HON. PATRICIA STO. TOMAS V SALAC, ET AL. (G.R. NO. 152642, 13 NOV 2012) On June 7, 1995 Congress enacted Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other purposes, sets the Government’s policies on overseas employment and establishes a higher standard of protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress. G.R. 152642 and G.R. 152710 (Constitutionality of Sections 29 and 30, R.A. 8042) Sections 29 and 30 of the Act1 commanded the Department of Labor and Employment (DOLE) to begin deregulating within one year of its passage the business of handling the recruitment and migration of overseas Filipino workers and phase out within five years the regulatory functions of the Philippine Overseas Employment Administration (POEA). Respondents Salac, et al. (in G.R. 152642) and respondents Arcophil, et al. (G.R. 152710) filed a petition for certiorari, prohibition and mandamus with application for TRO and preliminary injunction against petitioners, the DOLE Secretary, the POEA Administrator, and the TESDA Secretary-General before the RTC of Quezon City, Branch 96 and Brach 220, respectively.2 They sought to: 1) nullify DOLE Department Order 10 (DOLE DO 10) and POEA Memorandum Circular 15 (POEA MC 15); 2) prohibit the DOLE, POEA, and TESDA from implementing the same and from further issuing rules and regulations that would regulate the recruitment and placement of overseas Filipino workers (OFWs); and 3) also enjoin them to comply with the policy of deregulation mandated under Sections 29 and 30 of Republic Act 8042. The respective branches of Quezon City RTC granted the petitions of Salac, et al. and Acrophil, et al. Prompted by the RTC’s above actions, the government officials concerned filed the present petitions in G.R. 152642 and G.R. 152710 seeking to annul the RTC’s decision and have the same enjoined pending action on the petition. On December 4, 2008, however, the Republic informed7 the Court that on April 10, 2007 former President Gloria Macapagal-Arroyo signed into law R.A. 94228 which expressly repealed Sections 29 and 30 of R.A. 8042 and adopted the policy of close government regulation of the recruitment and deployment of OFWs. On August 20, 2009 respondents Salac, et al. told the Court in Case 1 that they agree9 with the Republic’s view that the repeal of Sections 29 and 30 of R.A. 8042 renders the issues they raised by their action moot and academic. The Court has no reason to disagree. Consequently, the two cases should be dismissed for being moot and academic. G.R. 167590 (Constitutionality of Sections 6, 7, and 9 of R.A. 8042) On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional. Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the same. Section 7 provides the penalties for prohibited acts. Meanwhile, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from "illegal recruitment" before the RTC of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense. The RTC of Manila declared Section 6 unconstitutional on the ground that its definition of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed recruiters11 and for that reason gives undue advantage to non-licensed recruiters in violation of the right to equal protection those licensed or authorized recruiters. It also declared Section 7 unconstitutional on the ground that its sweeping application of the penalties failed to make any distinction as to the seriousness of the act committed for the application of the penalty imposed on such violation. In the same way, Manila RTC also invalidated Section 9 of R.A. 80424 on the ground that allowing the offended parties to file the criminal case in their place of residence would negate the general rule on venue of criminal cases which is the place where the crime or any of its essential elements were committed. ISSUE: Whether Section 6, 7 and 9 are constitutional? RULING: Section 6. "Illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTC’s finding, actually makes a distinction between licensed and non-licensed recruiters. By its terms, persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers" without the appropriate government license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6. Section 9 provides: SEC. 9. Venue. – A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of the effectivity of this Act. 4

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Section 7. As to Section 7, in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the wisdom of this kind of choice. Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A. 1002212 which increased even more the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section 7. Section 9. As to Section 9, there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows exceptions provided by laws. G.R. 167590, G.R. 182978-79,16 and G.R. 184298-9917 (Constitutionality of Section 10, last sentence of 2nd paragraph) G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Cuaresma (the Cuaresmas) filed a claim for death and insurance benefits and damages against petitioners Becmen and White Falcon for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia. The Labor Arbiter (LA) dismissed the claim. On appeal, however, the NLRC found Becmen and White Falcon jointly and severally liable for Jasmin’s death and ordered them to pay the Cuaresmas actual damages. Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA). 18 On June 28, 2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi Arabian employer for actual damages. Becmen and White Falcon appealed the CA Decision to this Court. On April 7, 2009 the Court found Jasmin’s death not work-related or work-connected since her rape and death did not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted the award of actual damages but ruled that Becmen’s corporate directors and officers are solidarily liable with their company for its failure to investigate the true nature of her death. Consequently, the Court held the foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latter’s corporate directors and officers jointly and severally liable to the Cuaresmas for moral and exemplary damages, as well as attorney’s fees and costs of suit. On July 16, 2009, the corporate directors and officers of Becmen (Gumabay, et al.) filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily liable with their company for money claims filed by OFWs against their employers and the recruitment firms. The SC allowed the intervention and admitted Gumabay, et al.’s motion for reconsideration. ISSUE: Whether the 2nd paragraph of Section 10, R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional. RULING: The SC has already held that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities. 19 In the case of Becmen and White Falcon, 20 while there is evidence that these companies were at fault in not investigating the cause of Jasmin’s death, there is no mention of any evidence in the case against them that intervenors Gumabay, et al., Becmen’s corporate officers and directors, were personally involved in their company’s particular actions or omissions in Jasmin’s case. As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity.

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14. TUASON V BANK OF COMMERCE (G.R. NO. 192076, 21NOV 2012) Petitioner Michelle T. Tuason (Tuason) was hired by respondent Bank of Commerce (BOC) to head the Marketing Department of its Property Management Group (PMG) with the rank of Assistant Vice President. On May 2, 2002, she was designated the officer-in-charge of the whole PMG. On January 2, 2003, she was officially appointed as the head of PMG. Tuason’s duties included developing and proposing ways of disposing BOC’s real and acquired properties and assets (ROPOA), "in the soonest possible time with the least possible cost, and with the best possible price." 4 Tuason’s problems started when she was administratively charged with irregularities regarding the sale of ROPOA properties to a certain Ana Liza Cuizon. Through its committee on Fraud, Shortages, and Overages, BOC found Tuason to have violated its Code of Discipline on Work Performance, and imposed on her a 30-day suspension. Then, in 2006, BOC gave her a sixty-three (63%) percent overall performance rating.5 Tuason wrote a letter to her sector head, Padilla. In that letter, she referred to the latter’s previous phone call requesting her to resign and manifested that she had no intention of resigning. In the same letter, however, she made known her being stressed and uncomfortable about the situation and, hence, requested for a leave of absence from July 6-17, 2007, as paid vacation leave, and from July 18 to August 17, 2007, as leave without pay. 6 The head of BOC’s Human Resources, Uranza, informed Tuason that her request for leave of absence was disapproved. Instead, she advised Tuason to go back to work and report to BOC’s EVP Manuel. Another letter7 was sent to Tuason reiterating the directive to report for work on July 16, 2007. 8 On July 16, 2007, Tuason wrote Uranza, pointing out that she did go to the office on July 9, 2007 and that she even met with her (Uranza) and Manuel. The said meeting ended with talks on her supposed "graceful exit" from BOC’s PMG. She likewise pointed out that she received a BOC-wide flyer welcoming a new PMG Head effective also on July 16, 2007. Being contrary to the planned “graceful exit” and thus causing her anxiety, she reiterated her request to continue her leave.9 On July 18, 2007, Tuason sent another letter to Uranza inquiring about the status of her employment as she was effectively relieved of her position with the designation of another person to head PMG. On July 26, 2007, Uranza informed Tuason that her application for leave from July 6, 2007 to August 17, 2007 was finally approved but she was to report to Padilla on August 20, 2007 to discuss her "new assignment." When Tuason failed to report for work, on August 23, 2007, Uranza sent a letter informing the former to get in touch with Padilla otherwise she would be deemed to have lost interest in her employment.11 On August 24, 2007, Tuason informed Uranza that she was confused by the five letters sent by BOC. In any event, she had already filed a case for constructive dismissal against it. The Labor Arbiter (LA) dismissed Tuason’s complaint for lack of merit. 13 On appeal, the NLRC found that there was constructive dismissal and, thus, reversed and set aside the LA’s decision. 14 The NLRC found that Tuason was constructively dismissed. Accordingly, respondents were ordered to pay Tuason separation pay and full backwages. With the denial of its motion for reconsideration, BOC went to the CA via Rule 65. This time, the CA found that Tuason’s reassignment was a valid exercise of management prerogative on the part of BOC thereby reversing and setting aside the NLRC’s decision and further upholding that of the LA’s.16 ISSUE: Whether or not the pressure exerted upon Tuason to resign without reason, as well as the belated feigned transfer of petitioner to another assignment constitutes constructive dismissal. RULING: There was constructive dismissal. The Supreme Court reversed the ruling of the CA, and upheld the decision of the NLRC. BOC, acting through Padilla, was consistently exerting pressure on Tuason to resign as early as June 19, 2007. BOC opted to keep silent by not replying to her memorandum dated July 5, 2007, depicting the act of Padilla in requiring her to file her courtesy resignation. By requiring Tuason to resign from her position without Padilla offering any valid reason therefor only reveals and confirms the fact that his offer of Tuason’s reassignment to the Business Segment, which came after when she refused to resign, was a mere afterthought to cover up his disdainful treatment towards her. It was only in July 26, 2007 that Uranza enjoined Tuason to report to Padilla on August 20, 2007 to discuss her assignment. It was the first time that a new assignment in the Business Segment was mentioned. Significantly, a good ten days had lapsed from the day Estrada took over and replaced Tuason as head of PMG to the time that BOC mentioned about an assignment in the Business Segment. This could only mean that she had been replaced or booted out of her position before any transfer or even the suggestion of a transfer was made or offered to her. Furthermore, even though transfers or reassignments per se are indeed valid and fall within the ambit of management prerogatives, the exercise of these rights must remain within the boundaries of justice and fair play. The Court is fully aware of the right of management to transfer its employees as part of management prerogative. However, the same cannot be exercised with unbridled discretion. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic element of justice and fair play. In this case, there was no offer or even mention of a transfer or reassignment until July 26, 2007. By this time, it was too late. BOC had hired Estrada to head the PMG. Estrada had assumed the functions of the post and taken over her office on

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July 16, 2007. This all happened while Tuason was on leave, without a formal or official communication or advice if she was fired, transferred or reassigned. Worse, at the time that this was happening, Tuason went to the office upon Uranza’s several directives. At the office, she saw for herself the flyers boldly announcing the appointment and assumption of Estrada to the very same position that she was still occupying. Still, what was more embarrassing and painful for Tuason was when she saw Estrada already occupying her office and meeting with her subordinate officers and staff. This is clearly a case of constructive dismissal. Like Tuason, any reasonable person similarly situated would have felt compelled to give up her post as she was, in fact, stripped of it considering that someone else was already discharging her functions and occupying her office. In Dimagan v. Dacworks United, Inc., the Court held that “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.”

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15. AUZA V. MOL PHILIPPINES, INC. (G.R. NO. 175481, 21 NOV 2012) Respondent MOL is a common carrier engaged in transporting cargoes to and from the different parts of the world. It employed Auza, Jeanjaquet, and Otarra (Auza, et al.) as Cebu’s Branch Manager, Administrative Assistant, and Accounts Officer, respectively. On October 14, 2002, Auza, et al. submitted their resignation letters to take effect after 1 month. Petitioners were then given their separation pay and the monetary value of leave credits, 13th month pay, MOL cooperative shares and unused dental/optical benefits as shown in documents entitled "Remaining Entitlement Computation,"9 which documents were signed by each of them acknowledging receipt of such benefits. Afterwhich, they executed Release and Quitclaims 10 and then issued Separation Clearances.11 In February 2004 or almost 15 months after their severance from employment, petitioners filed separate Complaints12 for illegal dismissal before the Arbitration Branch of the NLRC against respondents and MOL’s Manager for Corporate Services, George Dolorfino. These complaints were later consolidated. Before Labor Arbiter (LA) Carreon petitioners averred that their consent to resign was not voluntarily given but was instead obtained through mistake and fraud. They claimed that they were led to believe that MOL’s Cebu branch would be downsized into a mere skeletal force due to alleged low productivity and profitability volume. Pressured into resigning prior to the branch’s closure as they might be denied separation pay, petitioners were constrained to resign. Subsequently, respondents filed a Motion to Expunge and/or Strike Out Position Paper for Complainants Dated Filed by Atty. Amorito V. Cañete.20 They pointed out the belated filing of petitioners’ Position Paper and the lack of authority of Atty. Cañete to file and sign the same, among others. Since petitioners were only able to file their Position Paper on August 11, 2004, way beyond the said 10-day period, said pleading must be stricken off the records. Consequently, the Labor Arbiter dismissed the Complaints without prejudice for failure to prosecute pursuant to Section 3, Rule 17 of the Rules of Court. Petitioners appealed to the NLRC22 claiming that the Labor Arbiter defied judicial pronouncements that the failure to submit a Position Paper on time is not a ground for dismissing a complaint. NLRC set aside the LA’s ruling that petitioners’ Position Paper was filed late. In deciding on the merits, NLRC noted that contrary to the representations made to petitioners, the Cebu branch was not actually closed but merely transferred to another location with a bigger office space and with new employees hired as petitioners’ replacements. Further, the NLRC noted that under MOL’s employment manual, an employee who voluntarily resigns shall only be entitled to benefits if he/she has rendered 10 years of continuous service. Hence, the grant of benefits to petitioners is questionable considering that each of them rendered only five years of service. It therefore opined that petitioners’ receipt of benefits is just part of respondents’ plan to secure their resignations. The NLRC concluded that petitioners were illegally dismissed and thus granted them the relief of reinstatement, full backwages. Both parties filed their respective Motions for Reconsideration. 26 The NLRC denied respondents’ motions by upholding its jurisdiction to entertain petitioners’ appeal. A Petition for Certiorari with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction29 was filed by respondents with the CA. CA rendered its Decision32 annulling and setting aside the Decision of the NLRC. The CA did not find any element of coercion and force in petitioners’ separation from employment but rather upheld the voluntary execution of their resignation letters as gleaned from the tenor thereof. A motion for reconsideration34 was filed by the petitioners but the same was denied by the CA. Hence, this petition. ISSUE: Whether petitioners Auza et al. illegally dismissed? RULING: This Court finds no merit in the petition. Petitioners voluntarily resigned from employment. After a careful scrutiny and review of the records of the case, this Court is inclined to affirm the findings of the CA that petitioners voluntarily resigned from MOL. "Resignation is the formal pronouncement or relinquishment of an office." 50 The overt act of relinquishment should be coupled with an intent to relinquish, which intent could be inferred from the acts of the employee before and after the alleged resignation.51 It appears that petitioners, on their own volition, decided to resign from their positions after being informed of the management’s decision that the Cebu branch would eventually be manned by a mere skeletal force. As proven by the email correspondences presented, petitioners were fully aware and had, in fact, acknowledged that Cebu branch has been incurring losses and was already unprofitable to operate.52 Cebu branch’s productivity had deteriorated as shown in a Profit and Loss Statement53 for the years 2001 and 2002. Also, there was a substantial reduction of workforce as all of the Cebu branch staff and personnel, except one, were not retained. On the other hand, petitioners’ assertions that the Cebu branch was performing well are not at all substantiated. What they presented was a document entitled "1999 Performance Standards", 54 which only provides for performance objectives but tells nothing about the branch’s progress. Likewise, the Cebu Performance Reports 55

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submitted which showed outstanding company performance only pertained to the year 1999 and the first quarter of year 2000. No other financial documents were submitted to show that such progress continued until year 2002. Contrary to their assertions, petitioners were not lured by any misrepresentation by respondents. Instead, they themselves were convinced that their separation was inevitable and for this, they voluntarily resigned. As aptly observed by the CA, no element of force can be deduced from their letters of resignation as the same even contained expressions of gratitude and thus contradicting their allegations that same were prepared by their employer. In Globe Telecom v. Crisologo, 56 we held that allegations of coercion are belied by words of gratitude coming from an employee who is just forced to resign. Petitioners aver that right after receiving their separation pay, they found out that the Cebu branch was not closed but merely transferred to a bigger office and staffed by newly hired employees. Notably, however, despite such knowledge, petitioners did not immediately contest their resignations but waited for more than a year or nearly 15 months before contesting them. This negates their claim that they were victims of deceit. 57 Moreover, no adequate proof was presented to show that the planned downsizing of Cebu branch did not take place. Similarly, petitioners’ allegations of bad faith on the part of respondents are unsupported by records. No proof whatsoever was advanced to show that there was threat of withholding their separation pay unless their resignation letters were submitted prior to the actual closure of the Cebu branch or that they were subjected to ill treatment and unpalatable working conditions immediately prior to their resignation.

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16. MORALES V METROBANK (G.R. NO. 182475, 21 NOV 2012) Sometime in August 1992, petitioner Lenn Morales was hired by Solidbank as Teller for its Rizal Avenue Branch in Tacloban City. With said bank’s merger with respondent Metropolitan Bank & Trust Company (Metrobank ) in September 2000, the latter, as surviving entity, absorbed Morales and assigned him to its Customer Service Relations-Reserve Pool (CSR-RP) which was composed of employees who, with no permanent places of assignment, acted as relievers whenever temporary vacancies arise in other branches. Designated as reliever for Metrobank’s Main Branch in Tacloban City, Morales was likewise assigned to work in the same capacity for the bank’s other Visayas Region III branches. From a job with a grade four rank, Morales was subsequently promoted in April 20034 to the position of Customer Service Representative (CSR), with a job grade 6 rank. It was while occupying the latter position that Morales was informed by Mariano, the Senior Manager of Metrobank’s Tacloban City Main Branch, that he was covered by the bank’s Special Separation Program (SSP) and that, in accordance therewith, his employment was going to be terminated on the ground of redundancy.5 On 27 August 2003, Morales was furnished a copy of a memorandum of the same date informing him that, after a review of its organizational structure, Metrobank had found his services redundant and will consider him separated effective 1 October 2003. Having signed a form on the same day signifying his unqualified and unconditional acceptance of Metrobank’s decision to terminate his employment,7 Morales executed on 10 November 2003 a Release, Waiver and Quitclaim acknowledging receipt of the sum of P158,496.95 as full payment of his monetary entitlements. 8 On 20 February 2004, Before the NLRC, Morales filed against Metrobank a complaint for illegal dismissal, separation pay, backwages, moral and exemplary damages as well as attorney’s fees.9 On 11 November 2005, Executive Labor Arbiter (LA) Latoja rendered a decision finding Morales’ termination from service illegal on the ground that his promotion in April 2003 contradicted Metrobank’s claim that his poor work performance contributed to his inclusion in the SSP. Brushing aside the Release, Waiver and Quitclaim for having been prepared by Metrobank, the LA ruled that Morales was entitled to reinstatement without loss of seniority rights, backwages, 13th month, quarterly bonus and CBA signing bonus. On the ground that Morales’ dismissal from service was tainted with bad faith and malice, the LA likewise held Metrobank liable to pay moral and exemplary damages and attorney’s fees. On appeal, the Fourth Division of the NLRC reversed and set aside the LA’s decision. Finding that Metrobank validly implemented the HRP on a nationwide scale in connection with the SSP, the NLRC ruled that Morales was legitimately terminated in view of his poor work performance and negative attitude which, at one point, gravely jeopardized the operations of the branch to which he was temporarily assigned. NLRC also upheld the validity of the Release, Waiver and Quitclaim. Morales’ motion for reconsideration of the decision was denied for lack of merit. Aggrieved, Morales filed the Rule 65 Petition for Certiorari docketed before the CA Cebu City 5, on the ground that the NLRC gravely abused its discretion in reversing the Labor Arbiter’s decision. The CA denied the foregoing petition for lack of merit. Upholding the validity of Morales’ termination from employment, the CA discounted the grave abuse of discretion imputed against the NLRC for ruling that Metrobank’s redundancy program legitimately entailed reduction of its workforce to make it more responsive to the actual demands and necessities of its business. Dissatisfied, Morales filed the Rule 45 petition for review with the SC. ISSUE: Whether the termination of Morales on the ground of redundancy is valid. RULING: One of the authorized causes for the dismissal of an employee, 20 redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. 21 A position is redundant when it is superfluous, and superfluity of a position or positions could be the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the dropping of a particular line or service previously manufactured or undertaken by the enterprise.22 Time and again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary for the operation of its business. 23 For the implementation of a redundancy program to be valid, however, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. 24 Contrary to the first and second errors Morales imputes against the CA, our perusal of the record shows that Metrobank has more than amply proven compliance with the third and fourth of the above-enumerated requisites for the validity of his termination from service on the ground of redundancy. Under the SSP which Metrobank adopted in 1995, employees who voluntarily gave up their employment were paid the amount of separation pay they were entitled under the law and a premium equivalent to 50%-75% of their salaries. In order to meet the challenges of the business and to make its operations efficient and cost effective, however, it was shown that Metrobank further conducted a bank-wide operational review and study which resulted in the adoption in March 2003 of the HRP, a major component of the SSP which was designed to reduce its workforce by 10%. Entailing various initiatives like conversion of regular branches into mini-branches,

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consolidation of branches, centralization of loans processing and branch headcount reduction, the HRP yielded 291 employees who could no longer be redeployed, fifteen (15) of whom belonged to Visayas Region III. 26 In implementing a redundancy program, it has been ruled that the employer is required to adopt a fair and reasonable criteria, taking into consideration such factors as (a) preferred status; (b) efficiency; and (c) seniority, 27 among others. Consistent with this principle, Metrobank established that, as a direct result of the adoption of the HRP, it was determined that the volume of transactions in Visayas Region III required the further reduction of its eight-man reserve pool by two employees.28 As these employees had no permanent place of assignment and merely acted as relievers whenever temporary vacancies arise in other branches, they were the most logical candidates for inclusion in the SSP. Already lacking preferred status in Metrobank’s hierarchy of positions, Morales was included in the SSP because of his poor work performance which reportedly caused complaints from the branches where he was temporarily assigned as reliever.29 To our mind, the foregoing circumstances contradict Morales’ claim that he was arbitrarily singled out for termination by Metrobank which, having validly determined the surplus in its manpower complement, appears to have appropriately identified him as a candidate for the SSP on account of his work attitude. The rule is settled that "the determination that the employee’s services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer."34 "While it is true that management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure,"35 the wisdom and soundness of such characterization or decision is not subject to discretionary review unless a violation of law or arbitrary or malicious action is shown. 36 Against Morales’ bare assertion that he was arbitrarily and maliciously terminated from service, Metrobank was able to establish that its action was based on the fair application of a criterion established in connection with the implementation of a well-thought redundancy program. For these reasons, we find that the CA cannot be faulted for upholding the NLRC’s finding that Morales’ termination pursuant to the SSP was valid. Morales, finally, argues that the CA erred in upholding the validity of the 10 November 2003 Release, Waiver and Quitclaim which he supposedly signed out dire economic necessity. While "it may be accepted as ground to annul a quitclaim if the consideration is unconscionably low and the employee was tricked into accepting it, dire necessity is not, however, an acceptable ground for annulling the release when it is not shown that the employee has been forced to execute it."45 Not having sufficiently proved that he was forced to sign said Release, Waiver and Quitclaim, Morales cannot expediently argue that quitclaims are looked upon with disfavor and considered ineffective to bar claims for the full measure of a worker’s legal rights. This Court has held that not all quitclaims are per se invalid or against public policy, except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face.46 These two instances are not present in this case.

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17. SAMEER OVERSEAS PLAC EMENT AGENCY V BAJARO (G.R. NO. 170029, 21 NOV 2012) Sameer Overseas Placement Agency, Inc. (Sameer) deployed respondents Bajaro, Morilla, Magdaong, Tabujara, Cancino, Meliang, Sumigcay, Saria, Angulo and Ingal (Bajaro et al.) to Taiwan to work as operators for its foreign principal, Mabuchi Motors Company, Ltd. under individual two-year employment contracts, with a monthly salary of Taiwan Dollars (NT$) 15,840.00 each. Prior to their deployment, each respondent paid Sameer the amount of P47,900.00 as placement fee. However, after only 11 months and before the expiration of the two-year period, Bajaro et al.’s employment contracts were terminated and they were repatriated to the Philippines. This prompted the filing of a complaint for illegal dismissal against petitioner company and its President and General Manager, individual petitioner Rizalina Lamson, with prayer for the payment of salaries and wages covering the unexpired portion of their employment contracts in lieu of reinstatement, and with allegations of illegal deductions and illegal collection of placement fees. In defense, petitioners claimed that respondents were validly retrenched due to severe business losses suffered by their foreign principal. The Labor Arbiter found Bajaro et al. to have been illegally dismissed for Sameer’s failure to substantiate their defense of a valid retrenchment, granting Bajaro et al. their money claims, in accordance with Section 10 of R.A. No. 8042. On appeal, the NLRC vacated and set aside the Labor Arbiter’s decision upon a finding that all the requirements for a valid retrenchment have been established, thus, Bajaro et al. were not illegally dismissed. Therefore, it found that the awards of salaries corresponding to the unexpired portion of the contracts and the refund of placement fees to be bereft of any basis in fact and in law. The CA reversed the decision of NLRC, and reinstated the Labor Arbiter’s decision. Issue: (1) Whether the CA erred in nullifying the NLRC issuances and in reinstating in toto the Decision of the Labor Arbiter; (2) Whether the Labor Arbiter misconstrued and misapplied Section 10 of R.A. 8042. RULING: The petition is bereft of merit. The Supreme Court affirmed the decision of the CA, ruling in favor of Bajaro et al. Section 10 of R.A. 8042 provides that “[i]f the recruitment/placement agency is a juridical being, the corporate officers and directors x x x shall themselves be jointly and solidarily liable with the corporation x x x” for any claims and damages that may be due to the overseas workers. Indisputably, Bajaro et al.’s illegal dismissal complaint with money claims is anchored on the overseas employment contracts with Sameer and the allegations that they were dismissed without just, valid or authorized cause. With these allegations, Section 10 clearly applies in this case. As Sameer failed to establish a valid retrenchment, Bajaro et al. were clearly dismissed without just, valid or authorized cause. Consequently, Lamson is solidarily liable with Sameer. Section 10 of R.A. 8042 provides that “[i]f the recruitment/placement agency is a juridical being, the corporate officers and directors x x x shall themselves be jointly and solidarily liable with the corporation x x x” for any claims and damages that may be due to the overseas workers. Notwithstanding the foregoing, however, the Court finds that a modification of the monetary award in the amount of NT$47,520.00 per respondent, corresponding to three (3) months’ worth of salaries, granted by the Labor Arbiter is in order. In the case of Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc., the Court En Banc declared unconstitutional, for being violative of the Constitutionally-guaranteed rights to equal protection and due process of the overseas workers, the clause “or for three months for every year of the unexpired term, whichever is less” found in Section 10 of R.A. 8042. Since the unexpired portion of Bajaro et al.’s individual two-year contracts is still for 13 months, as they worked in Taiwan for a period of only 1I months, each respondent is therefore entitled to a total amount of NT$205,920.0023 or its current equivalent in Philippine Peso, by way of unpaid salaries, in addition to the other monetary awards granted by the Labor Arbiter.

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18. MIRANT V. SARIO (G.R. NO. 197598, 21 NOV 2012) Danilo A. Sario (Sario) filed a complaint4 for illegal dismissal, backwages, damages and attorney’s fees against the petitioner, Mirant (Philippines) Corporation (company), and its officers, namely: Harris (President); Sliman(Executive Vice-President for Operations); and Aprieto (Officer-in-Charge, MMD). The company owns shares in Mirant Sual Corporation and Mirant Pagbilao Corporation which operate power stations in the provinces of Pangasinan and Quezon. Sario worked for the company as procurement officer from March 1998 to October 2005. Allegedly, the company discovered that some of its employees had been involved in the rampant practice of favoring certain suppliers, thereby seriously impairing transparency in its procurement process and compromising the quality of purchased materials. To curb the practice, the company issued the 2002 MMD Policies and Procedures Manual (2002 Procurement Manual) 6 for the guidance of its employees and officers in soliciting bid quotations and proposals from vendors, suppliers and contractors. The 2002 Procurement Manual was duly disseminated through seminars and it became effective in January 2002. The 2002 Procurement Manual was replaced by the 2004 Procurement Policies and Procedures Manual (2004 Procurement Manual)7 which was disseminated and which became effective on August 31, 2004. Again, seminars were conducted and a proficiency examination was administered to familiarize the company buyers/procurement officers and the team leaders with the 2004 Procurement Manual. Sario took the proficiency examination on September 28, 2004. On September 8, 2005, Sario received a Show Cause Notice8 from the company, advising him that based on an internal audit, he was found to have committed the following violations: 1. Non-compliance with the Minimum Bid/Quotation Requirements; 2. Non-compliance with the Single Tender Justification Requirement; 3. No Evidence of Independent Approval of the PRF; 4. No Evidence of Authorized Recommendation or Approval of the PO; 5. PO not Awarded to the lowest Bidder; and 6. No TAS Attached. Sario was given ten (10) days, or until September 18, 2005, to explain why no disciplinary action should be taken against him for the violations. He was also notified that an investigation would be conducted on the matter. He was placed on preventive suspension pending the investigation. As a result of the administrative hearing, Sliman sent Sario a letter10 informing him of the termination of his employment for his failure to comply with the standard operating procedures/instructions; for his serious misconduct or willful disobedience of the lawful orders of the company in connection with his work; and for his gross and habitual neglect of his duties. The company found Sario liable for his failure to comply with the 2002 and 2004 Procurement Manuals, especially his unabated practice of sending Requests for Quotation (RFQs) to suppliers who have a history of not responding to requests or of not sending quotes. The practice, the company lamented, resulted in the issuance of purchase orders to the lone bidders. Labor Arbiter (LA) Anni declared Sario to have been illegally dismissed. Consequently, he ordered: (1) Sario’s immediate reinstatement without loss of seniority rights and other privileges; and (2) the company, Sliman and Aprieto, jointly and severally, to pay Sario back wages, moral damages, exemplary damages and attorney’s fees. Labor Arbiter Anni absolved Harris from liability. The respondents appealed to the NLRC, which reversed the labor arbiter’s ruling12 and dismissed the complaint for lack of merit. Sario moved for reconsideration, but the NLRC denied the motion. He then sought relief from the CA, through a petition for certiorari under Rule 65 of the Rules of Court. In its decision, the CA granted the petition. It set aside the NLRC rulings and reinstated the Labor Arbiter’s decision, with modifications. It deleted the award of moral and exemplary damages, and absolved Harris, Sliman and Aprieto from liability in the case. Like the Labor Arbiter, it found the penalty of dismissal meted on Sario too harsh. The company moved for partial reconsideration, but the CA denied the motion; hence, the present recourse. ISSUE: Whether Sario was legally dismissed. RULING: We find the petition meritorious. The Supreme Court held in favor of Mirant, finding that Sario was legally dismissed. Under the law, the burden of proving that the termination of a worker’s employment was for a valid or authorized cause rests on the employer.24 In this case, the company was able to prove that Sario’s dismissal was for a valid cause. Through his repeated violations of the company’s 2002 and 2004 Procurement Manuals, Sario committed a serious misconduct or willful disobedience of the lawful directives or orders of his employer, constituting a just cause for termination of employment.25 Sario was not an ordinary rank-and-file employee. He was a procurement officer. While he did not occupy a high position in the company hierarchy, the nature of his work made him, as the company avers, a vital cog in its procurement program. The effectiveness of the program depended in no small measure on the people running it, i.e., from the lowliest

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employee to the highest official. Sario was one of these people and he was occupying, not a lowly but, a middle position. This position carries with it responsibilities which only he can, and should, answer for. As the records show, Sario failed to faithfully discharge his duties as procurement officer. Over a span of almost oneand-a-half years, from January 2004 to May 2005 (not two years as the company claims), Sario committed 27violations of the 2002 and 2004 Procurement Manuals in critical areas of the procurement process, in particular, non-compliance with the minimum bid/quotation requirements, non-compliance with the single tender justification requirement, failure to provide proof of approval of the purchase requisition form, failure to provide proof of authorized recommendation of the purchase order, failure to award purchase order to the lowest bidder, and no tender analysis summary. 28 Sario’s transgressions cannot be mitigated by the supposed approval of his actions by his superiors. Sario has to account for his own actions. The circumstance that his recommendations were approved by his superiors does not erase the fact that he repeatedly violated the 2002 and 2004 Procurement Manuals. He was well aware of his duties and their parameters, based on the 2002 and 2004 Procurement Manuals. He committed the violations for one-and-a-half years. These repeated violations can only indicate a willful disobedience to reasonable company rules and regulations. Based on the facts, the law and jurisprudence, Sario deserves to be dismissed for willful disobedience. In Gold City Integrated Port Services, Inc. v. NLRC,33 the Court stressed that willful disobedience of an employee contemplates the concurrence of at least two requisites: the employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been reasonable, lawful and made known to the employee, and must pertain to the duties which he had been engaged to discharge. We find the two requisites present in this case. Sario’s repeated violations of the company’s 2002 and 2004 Procurement Manuals – lawful orders in themselves as they provide the dos and, necessarily, the don’ts of a procurement officer – constitute willful disobedience. He committed the repeated violations because he knew or was confident that he would not get caught since his actions were being approved, as he claims, by his superiors, evidencing wrongful or perverse intent. While the Constitution urges the moderation of the sanction that may be applied to an employee where a penalty less punitive would suffice, as the Court pronounced in Marival Trading, Inc. v. NLRC,34 cited by the CA, we do not believe that such a moderation is proper in this case. Sario has become unfit to remain in employment. A contrary view would be oppressive to the employer. "The law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer."35

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19. BARBA V LICEO DE CAG AYAN UNIVERSITY (G.R. NO. 193857.

28 NOV 2012)

Petitioner Dr. Ma. Mercedes L. Barba was the Dean of the College of Physical Therapy of respondent Liceo de Cagayan University, Inc., a private educational institution with school campus located at Carmen, Cagayan de Oro City. Petitioner started working for respondent on July 8, 1993 as medical officer/school physician for a period of one school year or until March 31, 1994. In July 1994, she was chosen by respondent to be the recipient of a scholarship grant to pursue a three-year residency training in Rehabilitation Medicine at the Veterans Memorial Medical Center (VMMC). The Scholarship Contract provides: 5. That the SCHOLAR after the duration of her study and training shall serve the SCHOOL in whatever position the SCHOOL desires related to the SCHOLAR’s studies for a period of not less than ten (10) years;

After completing her residency training with VMMC in June 1997, petitioner returned to continue working for respondent. She was appointed as Acting Dean of the College of Physical Therapy and at the same time designated as Doctor-In-Charge of the Rehabilitation Clinic of the Rodolfo N. Pelaez Hall, City Memorial Hospital. On June 19, 2002, petitioner’s appointment as Doctor-In-Charge of the Rehabilitation Clinic was renewed and she was appointed as Dean of the College of Physical Therapy by respondent’s President, Dr. Jose Ma. R. Golez. Petitioner accepted her appointment and assumed the position of Dean of the College of Physical Therapy. In the school year 2003 to 2004, the College of Physical Therapy suffered a dramatic decline in the number of enrollees from a total of 1,121 students in the school year 1995 to 1996 to only 29 students in the first semester of school year 2003 to 2004. This worsened in the next year or in school year 2004 to 2005 where a total of only 20 students enrolled. Due to the low number of enrollees, respondent decided to freeze the operation of the College of Physical Therapy indefinitely. Respondent’s President wrote petitioner a letter informing her that her services as dean of the said college will end at the close of the school year. Thereafter, the College of Physical Therapy ceased operations on March 31, 2005, and petitioner went on leave without pay starting on April 9, 2005. Subsequently, respondent’s Executive Vice President, Dr.Lerin, sent petitioner a letter10 instructing petitioner to return to work on June 1, 2005 and report to Palomares, the Acting Dean of the College of Nursing, to receive her teaching load and assignment as a full-time faculty member in that department for the school year 2005-2006. In reply, petitioner informed Dr. Lerin that she had not committed to teach in the College of Nursing and that as far as she can recall, her employment is not dependent on any teaching load. She then requested for the processing of her separation benefits in view of the closure of the College of Physical Therapy. 11 Dr. Magdale, Vice-President for Academic Affairs, sent another letter14 to petitioner ordering her to report for work as she was still bound by the Scholarship Contract to serve respondent for two more years. But petitioner did not do so. Hence, on June 28, 2005, Dr. Magdale sent petitioner a notice terminating her services on the ground of abandonment. Meanwhile, on June 22, 2005, prior to the termination of her services, petitioner filed a complaint before the Labor Arbiter for illegal dismissal, payment of separation pay and retirement benefits against respondent, Dr. Magdale and Dr. Golez. She alleged that her transfer to the College of Nursing as a faculty member is a demotion amounting to constructive dismissal. Labor Arbiter (LA) found that respondent did not constructively dismiss petitioner; therefore, she was not entitled to separation pay. The Labor Arbiter held that petitioner’s assignment as full-time professor in the College of Nursing was not a demotion tantamount to constructive dismissal. Petitioner appealed the above decision to the NLRC. NLRC reversed the LA’s decision and held that petitioner was constructively dismissed. The NLRC held that petitioner was demoted when she was assigned as a professor in the College of Nursing because there are functions and obligations and certain allowances and benefits given to a College Dean but not to an ordinary professor. Respondent went to the CA on a petition for certiorari alleging that the NLRC committed grave abuse of discretion when it declared that petitioner’s transfer to the College of Nursing as full-time professor but without diminution of salaries and without loss of seniority rights amounted to constructive dismissal because there was a demotion involved in the transfer and because petitioner was compelled to accept her new assignment. The CA reversed and set aside the NLRC resolutions and reinstated the decision of the Labor Arbiter. The CA did not find merit in respondent’s assertion in its Supplemental Petition that the position of petitioner as College Dean was a corporate office. Instead, the appellate court held that petitioner was respondent’s employee. CA held that contrary to the allegation of petitioner, the position of Dean does not appear to be the same as that of a College Director. Aside from the obvious disparity in name, the By-Laws of LDCU provides for only one College Director. But as shown by LDCU itself, numerous persons have been appointed as Deans. If it is indeed the intention of LDCU to give its many Deans the rank of College Director, then it exceeded the authority given to it by its By-Laws because only one College Director is authorized to be appointed. It must amend its By-Laws. Petitioner filed a motion for reconsideration from the above decision, but her motion was denied by the CA. Hence, petitioner filed the present petition. ISSUE: Whether petitioner was constructively dismissed.

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RULING: We grant the petition. The Supreme Court ruled in favor of the University, finding that Barba was not constructively dismissed, but was instead validly transferred. On the issue of constructive dismissal, we agree with the Labor Arbiter and the appellate court’s earlier ruling that petitioner was not constructively dismissed. Petitioner’s letter of appointment specifically appointed her as Dean of the College of Physical Therapy and Doctor-in-Charge of the Rehabilitation Clinic “for a period of three years effective July 1, 2002 unless sooner revoked for valid cause or causes.” Evidently, petitioner’s appointment as College Dean was for a fixed term, subject to reappointment and revocation or termination for a valid cause. When respondent decided to close its College of Physical Therapy due to drastic decrease in enrollees, petitioner’s appointment as its College Dean was validly revoked and her subsequent assignment to teach in the College of Nursing was justified as it is still related to her scholarship studies in Physical Therapy. As we observed in Brent School, Inc. v. Zamora,38 also cited by the CA, it is common practice in educational institutions to have fixed-term contracts in administrative positions, thus: Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment with all that it implies does not appear ever to have been applied, Article 280 of the Labor Code notwithstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible. x x x (Emphasis supplied)

In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity.39 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. In this case, petitioner’s transfer was not unreasonable, inconvenient or prejudicial to her. On the contrary, the assignment of a teaching load in the College of Nursing was undertaken by respondent to accommodate petitioner following the closure of the College of Physical Therapy. Respondent further considered the fact that petitioner still has two years to serve the university under the Scholarship Contract. Petitioner’s subsequent transfer to another department or college is not tantamount to demotion as it was a valid transfer. There is therefore no constructive dismissal to speak of. That petitioner ceased to enjoy the compensation, privileges and benefits as College Dean was but a logical consequence of the valid revocation or termination of such fixed-term position. Indeed, it would be absurd and unjust for respondent to maintain a deanship position in a college or department that has ceased to exist. Under the circumstances, giving petitioner a teaching load in another College/Department that is related to Physical Therapy—thus enabling her to serve and complete her remaining two years under the Scholarship Contract—is a valid exercise of management prerogative on the part of respondent.

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20. CAREER PHILIPPINES SHIPMANAGEMENT V SERN A (G.R. NO. 172086, 03 DEC 2012) Antecedent Facts Serna entered into a nine-month contract of employment with petitioners Career Philippines Shipmanagement, Inc. (Career Phils.) and Societe Anonyme Monegasque Administratio Maritime Ft. Aeriennemonaco (Aeriennemonaco). He was employed as a bosun for M/V Hyde Park, a chemical tanker. Serna was pronounced fit to work after the required pre-employment medical examination, and boarded the vessel on October 25, 1998. Serna had worked for Career Phils. and its foreign principals since 1989, and he had always been hired to board chemical tankers. This was his third consecutive contract with Aeriennemonaco whose tankers transport chemicals such as methanol, phenol, ethanol, benzene, and caustic soda. While on board M/V Hyde Park, Serna experienced weakness and shortness of breath. He lost much weight. On several occasions, he requested for medical attention, but his immediate superior, Captain Jyong, denied his requests since the tanker had a busy schedule. Serna had no choice but to wait for his contract to finish on July 12, 1999. On July 14, 1999, upon his repatriation, he reported to the office of Career Phils. to communicate his physical complaints and to seek medical assistance. He was told that he would be referred to company-designated physicians. On July 27, 1999, while waiting for the referral and with his condition worsening, Serna visited the University of Perpetual Health Medical Center (UPHMC). Dr. Halili-Manabat diagnosed him to be suffering from toxic goiter, and attended to him from July 27 to August 25, 1999. On August 3, 1999, Serna received instructions from Career Phils. For him to report to the Seaman’s Hospital for a preemployment medical examination on August 5, 1999. The hospital’s company-designated physicians diagnosed him with atrial fibrillation and declared him unfit to work. In the meantime, he continued with his medical treatment at the UPHMC. A second personal physician, Dr. Torres, concurred with the toxic goiter diagnosis. Not fully aware of his rights, Serna sought legal assistance only in March 2001. On April 3, 2001, his counsel sent Career Phils. a written demand for the payment of disability benefits. Denial of the demand prompted him to file a complaint for disability benefits and damages on June 5, 2001. On June 16, 2001, Serna underwent a medical examination at Supra Care Medical Specialists. Dr. Caja stated that he has had a history of goiter with thyrotoxicosis since 1999, and further diagnosed him with thyrotoxic heart disease, chronic atrial fibrillation, and hypertensive cardiovascular disease. She gave him a disability rating of Grade 3 which – under the parties’ collective bargaining agreement (CBA)6 – is classified as permanent medical unfitness that entitles the covered seafarer to a 100% compensation. The Labor Arbiter ruled in favor of Serna, saying that considering that there was a showing that the illness of complainant was contracted during the term of his employment contract and such illness continues to exist, resulting to complainant’s disability with a grade of 3, Complainant is therefore entitled to 100% compensation x x x.” The NLRC and CA affirmed the LA’s decision. ISSUE: Whether Serna is entitled to the disability benefits even if there was alleged non-compliance with the mandatory reporting requirement of the POEA-SEC, and that no substantial evidence exists to show that the illness was work-related. RULING: SC affirms the ruling of the CA. Work-relatedness of illness is irrelevant to the 1996 POEA-SEC. We dismiss at the outset the petitioners’ contention on the causal connection between Serna’s illness and the work for which he was contracted. The causal connection the petitioners cite is a factual question that we cannot touch in Rule 45. 25 The factual question is also irrelevant to the 1996 POEA-SEC. In Remigio v. National Labor Relations Commission,26 we expressly declared that illnesses need not be shown to be work-related to be compensable under the 1996 POEA-SEC, which covers all injuries or illnesses occurring in the lifetime of the employment contract. We contrast this with the 2000 POEA-SEC27 which lists the compensable occupational diseases. Even granting that work-relatedness may be considered in this case, we fail to see, too, how the idiopathic character of toxic goiter and/or thyrotoxicosis excuses the petitioners, since it does not negate the probability, indeed the possibility, that Serna’s toxic goiter was caused by the undisputed work conditions in the petitioners’ chemical tankers. Substantial evidence exists that Serna acquired his illness during his employment. Under the 1996 POEA-SEC, it is enough that the seafarer proves that his or her injury or illness was acquired during the term of employment to support a claim for disability benefits.28 The petitioners claim that there is no substantial evidence on this point. We do not find this claim to be persuasive. In support of this point, Serna attached the following to his complaint: (a) the October 1998 contract; (b) the medical certificate issued by Dr. Manabat; (c) the medical certificate issued by Dr. Torres; (d) the August 5, 1999 Seaman’s Hospital

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Pre-Employment Medical Examination; and (e) the medical certificate issued by Dr. Caja. We find it significant that Serna was declared fit to work in the pre-employment medical examination for the October 1998 contract. He was not in this same state, however, when he disembarked. As the CA explained: The presumption that private respondent Serna was healthy and fit at the time he started working for the petitioners gains special prominence, considering that he would not have been employed by the petitioners and would not have passed the required Pre-employment Medical Examination, had he not been "medically and technically qualified." It certainly strains credulity to take petitioners’ stance that private respondent Serna’s illness was acquired by him after he signed-off their vessels or immediately after his contract of employment with them. Private respondent Serna’s illness is not a simple cough or colds that could have been acquired in a matter of days. This Court finds the evidence in favor of private respondent Serna substantial and convincing. That he was not well and was really ill after his disembarkation from petitioners’ vessel is confirmed by the fact that he immediately went to see a doctor, approximately fifteen (15) days after his arrival in the Philippines, i.e., July 27, 1999, and was diagnosed of having toxic goiter. Again, when private respondent Serna was examined by a company-designated physician during the pre-employment medical examination on August 5, 1999 at the Seaman’s Hospital, he was found to be suffering from Atrial Fibrillation and was declared unfit to work. These facts could only suggest, considering that the tests were conducted closely near to private respondent Serna’s disembarkation from the vessel of his latest employment, that the causative circumstances leading to his illness transpired prior to his disembarkation and during the course of his employment with the petitioners.29 No forfeiture of right to claim disability benefits in this case. The 1996 POEA-SEC, specifically Section 20(B)(3),34 requires that a disability claim be supported by a proper post-employment medical report;35 otherwise, the seafarer forfeits the right to claim the benefits. The labor arbiter, the NLRC, and the CA are one in finding that on July 14, 1999, or two days after his repatriation, Serna reported to the office of Career Phils. specifically to report his medical complaints, only to be told to wait for his referral to company-designated physicians. The referral came not on the following day, but nearly three (3) weeks after, on August 3, 1999. We note on this point that the obligation imposed by the mandatory reporting requirement under Section 20(B)(3) of the 1996 POEA-SEC is not solely on the seafarer. It requires the employer to likewise act on the report, and in this sense partakes of the nature of a reciprocal obligation. Reciprocal obligations are those which arise from the same cause, and where each party is effectively a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other.36 While the mandatory reporting requirement obliges the seafarer to be present for the post-employment medical examination, which must be conducted within three (3) working days upon the seafarer’s return, it also poses the employer the implied obligation to conduct a meaningful and timely examination of the seafarer. The petitioners failed to perform their obligation of providing timely medical examination, thus rendering meaningless Serna’s compliance with the mandatory reporting requirement. With his July 14, 1999 visit, Serna clearly lived up to his end of the agreement; it was the petitioners who defaulted on theirs.

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21. FETALINO V COMELEC (G.R. NO. 191890, 04 DEC 2012) On February 10, 1998, President Fidel V. Ramos extended an interim appointment to the petitioners as Comelec Commissioners, each for a term of seven (7) years, pursuant to Section 2, Article IX-D of the 1987 Constitution.6 Eleven days later (or on February 21, 1998), Pres. Ramos renewed the petitioners’ ad interim appointments for the same position. Congress, however, adjourned in May 1998 before the CA could act on their appointments. The constitutional ban on presidential appointments later took effect and the petitioners were no longer re-appointed as Comelec Commissioners.7 Thus, the petitioners merely served as Comelec Commissioners for more than four months, or from February 16, 1998 to June 30, 1998.8 Subsequently, on March 15, 2005, the petitioners applied for their retirement benefits and monthly pension with the Comelec, pursuant to R.A. No. 1568.9 The Comelec initially approved the petitioners’ claims. On February 6, 2007, the Comelec resolved to grantthe petitioners a pro-rated gratuity and pension.12 Subsequently, on October 5, 2007, the petitioners asked for a re-computation of their retirement pay on the principal ground that R.A. No. 1568,13 does not cover a pro-rated computation of retirement pay. The Comelec, on the basis of the Law Department’s study, completely disapproved the petitioners’ claim for a lump sum benefit under R.A. No. 1568. The Comelec reasoned out that: Of these four (4) modes by which the Chairman or a Commissioner shall be entitled to lump sum benefit, only the first instance (completion of term) is pertinent to the issue we have formulated above. It is clear that the non-confirmation and non-renewal of appointment is not a case of resignation or incapacity or death. The question rather is: Can it be considered as retirement from service for having completed one’s term of office? ISSUE: Whether the non-confirmation and non-renewal of appointment can be considered as retirement for having completed one’s term of office., thus entitling them to the lump sum benefit granted by R.A. No. 1568. RULING: We DISMISS the petition. Fetalino et al. are not entitled to the lump sum benefit. To be entitled to the five-year lump sum gratuity under Section 1 of R.A. No. 1568, any of the following events must transpire: (1) Retirement from the service for having completed the term of office; (2) Incapacity to discharge the duties of their office; (3) Death while in the service; and (4) Resignation after reaching the age of sixty (60) years but before the expiration of the term of office. In addition, the officer should have rendered not less than twenty years of service in the government at the time of retirement. “Resignation is defined as the act of giving up or the act of an officer by which he declines his office and renounces the further right to it. To constitute a complete and operative act of resignation, the officer or employee must show a clear intention to relinquish or surrender his position accompanied by the act of relinquishment.” In this sense, resignation likewise does not appear applicable as a ground because the petitioners did not voluntarily relinquish their position as Commissioners; their termination was merely a consequence of the adjournment of Congress without action by the CA on their ad interim appointments. Section 1 of R.A. No. 1568 allows the grant of retirement benefits to the Chairman or any Member of the Comelec who has retired from the service after having completed his term of office. The petitioners obviously did not retire under R.A. No. 1568, as amended, since they never completed the full seven-year term of office prescribed by Section 2, Article IX-D of the 1987 Constitution; they served as Comelec Commissioners for barely four months, i.e., from February 16, 1998 to June 30, 1998. In the recent case of Re: Application for Retirement of Judge Moslemen T. Macarambon under Republic Act No. 910, as amended by Republic Act No. 9946, 673 SCRA 602 (2012), where the Court did not allow Judge Macarambon to retire under R.A. No. 910 because he did not comply with the age and service requirements of the law, the Court emphasized: Strict compliance with the age and service requirements under the law is the rule and the grant of exception remains to be on a case to case basis. We have ruled that the Court allows seeming exceptions to these fixed rules for certain judges and justices only and whenever there are ample reasons to grant such exception. (emphasis ours; citations omitted) More importantly, we agree with the Solicitor General that the petitioners’ service, if any, could only amount to tenure in office and not to the term of office contemplated by Section 1 of R.A. No. 1568. Tenure and term of office have well-defined meanings in law and jurisprudence. While we characterized an ad interim appointment in Matibag v. Benipayo, 380 SCRA 49 (2002) “as a permanent appointment that takes effect immediately and can no longer be withdrawn by the President once the appointee has qualified into office,” we have also positively ruled in that case that “an ad interim appointment that has lapsed by inaction of the Commission on Appointments does not constitute a term of office.” We consequently ruled: However, an ad interim appointment that has lapsed by inaction of the Commission on Appointments does not constitute a term of office. The period from the time the ad interim appointment is made to the time it lapses is neither a fixed term nor an unexpired term. To hold otherwise would mean that the President by his unilateral action could start and complete the running of a term of office in the COMELEC without the consent of the Commission on Appointments. This interpretation renders inutile the confirming power of the Commission on Appointments. (emphasis ours; italics supplied) Based on these considerations, we conclude that the petitioners can never be considered to have retired from the service not only because they did not complete the full term, but,

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more importantly, because they did not serve a “term of office” as required by Section 1 of R.A. No. 1568, as amended. [Fetalino vs. Commission on Elections, 686 SCRA 813(2012)] The petitioners’ appeal to liberal construction of Section 1 of R.A. No. 1568 is misplaced since the law is clear and unambiguous. We emphasize that the primary modality of addressing the present case is to look into the provisions of the retirement law itself. Guided by the rules of statutory construction in this consideration, we find that the language of the retirement law is clear and unequivocal; no room for construction or interpretation exists, only the application of the letter of the law. [Fetalino vs. Commission on Elections, 686 SCRA 813(2012)] REYES, J., Dissenting Opinion: A liberal construction of R.A. No. 1568, as amended, would achieve the humanitarian purposes of the law so that efficiency, security and well-being of government employees may be enhanced. After all, retirement laws are designed to provide for the retiree’s sustenance and, hopefully, even comfort, when he no longer has the capability to earn a livelihood. Thus, the nonrenewal of the petitioners’ ad interim appointments should be tantamount to expiration of their respective terms and in line with the same dictates of justice and equity espoused in Ortiz, the petitioners, therefore, are deemed to have completed their terms of office and considered as retired from the service. The petitioners, however, are not entitled to the full five-year lump sum gratuity provided by R.A. No. 1568, as amended. Section 1 contains the proviso: “he or his heirs shall be paid in lump sum his salary for one year, not exceeding five years, for every year of service based upon the last annual salary that he was receiving at the time of retirement.” Said condition provides for the manner of computing the retirement benefits due to a COMELEC Chairperson or Commissioner. Consequently, a maximum of five-year lump gratuity is given to a Chairperson or Commissioner who retired and has served for at least five (5) years. If the years of service are less than five (5), then a retiree is entitled to a gratuity for every year of service. The same proviso also contemplates the situation when a Chairperson or Commissioner does not complete the full term of the office. This will occur, for example, when a Chairperson or Commissioner takes over in a case of vacancy resulting from certain causes―death, resignation, disability or impeachment―such that the appointee will serve only for the unexpired portion of the term of the predecessor. In such case, the retiree is entitled to gratuity depending on the years of service but not to exceed five (5) years. Given that the petitioners did not serve the full length of their term of office, the computation of their lump sum gratuity should be based on the foregoing proviso.

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22. BUILDING CARE CORP V MACARAEG (G.R. NO. 198357, 10 DEC 2012) Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers.3 Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and this compelled her to file the complaint for illegal dismissal.4 On the other hand, petitioners that respondent was relieved from her post as requested by the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job. Respondent filed a complaint for illegal dismissal with the Labor Arbiter. 6 The Labor Arbiter (LA) in favor of petitioners, holding that the dismissal of Macaraeg was valid, but ordered the former to pay a certain sum as financial assistance. The Appeal which respondent filed with the NLRC was for having been filed out of time. Hence, NLRC declared that the LA's Decision had become final and executory on June 16, 2009.8 Respondent elevated the case to the CA via a petition for certiorari. The CA reversed and set aside the decision of NLRC and declared Macaraeg to have been illegally dismissed. Petitioners were ordered to reinstate petitioner without loss of seniority rights, benefits and privileges; and to pay her backwages and other monetary benefits during the period of her illegal dismissal up to actual reinstatement. Petitioners' motion for reconsideration was denied. Hence, the present petition. ISSUE: Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time. RULING: The Court cannot sustain the CA's Decision. It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of justice. In Marohomsalic v. Cole,10 the Court stated: While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances. While litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. 11

The later case of Daikoku Electronics Phils., Inc. v. Raza, 12 further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of substantial justice. x x x The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse. x x x

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities,"14 considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss in following up her case with said lawyer. It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this rule would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the client’s case and obtain remedies and reliefs already lost by the operation of law. 15 It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also an essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally important as the right of the losing party to appeal or seek reconsideration within the prescribed period. 25 When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment.

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23. LOADSTART SHIPPING V HEIRS OF CALAWIGAN (G.R. NO. 187337, 05 DEC 2012) On 14 September 2004, Enrique C. Calawigan (Calawigan) was hired by petitioner Loadstar International Shipping, Inc. (LISI) as a Chief Engineer for the vessel M/V Foxhound, for a contract period of ten months.5 About a month prior to the expiration of his contract, however, it appears that Calawigan, citing personal reasons, filed with LISI a request for disembarkation/resignation letter postdated 20 June 2005. 7 With the approval of the request/resignation, Calawigan disembarked the vessel at the Port of Davao on 5 June 20058 and, upon receipt of his monetary entitlements in the sum of P39,441.32, executed a Release and Quitclaim dated 29 June 2005 in favor of LISI.9 Upon his 5 June 2005 disembarkation, Calawigan maintained that he requested for a medical examination from LISI which simply referred his request to the Social Security System (SSS) as a sickness benefit claim. As a consequence, he was supposedly constrained to consult Dr. Dr. Mendiola at the Manila Hearing Aid Center (MHAC) and to undergo an ultrasonography of his right eye at the St. Luke’s Medical Center (SLMC) where he was diagnosed to be suffering from "Retinal Detachment w/ Vitreous Opacities, O.D." 12 On the strength of the MHAC diagnosis that he was likewise suffering "moderate bilateral sensorineural hearing loss" in the right ear,13 Calawigan was issued a Medical Certificate dated 5 July 2005 by Dr. Mendiola who assessed his disability as Grade 314 under the POEA Standard Employment Contract for Filipino Seafarers OnBoard Ocean-Going Vessels (POEA-SEC). Ultimately, Calawigan asserted that LISI unjustifiably turned a deaf ear to his demands for payment of the disability and medical benefits due him.15 On 4 July 2005, Calawigan filed against LISI the complaint for medical reimbursement, sickness allowance, permanent disability benefits, compensatory damages, moral damages, exemplary damages and attorney’s fees before the NLRC.10 LISI, on the other hand, denied liability for Calawigan’s monetary claims. Maintaining that the latter complained of no ailment while on-board the vessel M/V Foxhound, LISI averred that Calawigan voluntarily preterminated his employment contract for personal reasons, as evidenced by his request for disembarkation/resignation letter. Not having been repatriated for medical reasons, Calawigan allegedly reported to LISI’s office to claim his last salary and benefits in the sum of P39,441.32 which he was accordingly paid as likewise evidenced by the Release and Quitclaim he executed in its favor on 29 June 2005. Calawigan perfected the appeal before the NLRC, but this was dismissed by the said tribunal. The motion for reconsideration filed by respondents was also denied. ISSUE: Whether Calawigan is not entitled to disability benefits and damages. RULING: The petition is impressed with merit. Calawigan is not entitled to money claims Deemed written in the seafarer’s contract of employment, the 2000 POEA-SEC was designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels. Anent a seafarer’s entitlement to compensation and benefits for injury and illness, Section 20-B (3) thereof provides as follows: Section 20-B. Compensation and Benefits for Injury and Illness.—x x x x 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician, but in no case shall this period exceed one hundred twenty (120) days. For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the employer and the seafarer. The third doctor’s decision shall be final and binding on both parties. In Coastal Safeway Marine Services v. Esguerra, 655 SCRA 300 (2011), we ruled that the foregoing provision means that “it is the company designated-physician who is entrusted with the task of assessing the seaman’s disability, whether total or partial, due to either injury or illness, during the term of the latter’s employment. Concededly, this does not mean that the assessment of said physician is final, binding or conclusive on the claimant, the labor tribunal or the courts. Should he be so minded, the seafarer has the prerogative to request a second opinion and to consult a physician of his choice regarding his ailment or injury, in which case the medical report issued by the latter shall be evaluated by the labor tribunal and the court, based on its inherent merit. For the seaman’s claim to prosper, however, it is mandatory that he should be examined by a company-designated physician within three days from his repatriation. Failure to comply with this mandatory reporting requirement without justifiable cause shall result in forfeiture of the right to claim the compensation and disability benefits provided under the POEA-SEC.” Calawigan failed to establish compliance with the requirement for him to undergo post-employment medical examination by a company-designated physician within three working days from his repatriation on 5 June 2005. Furthermore, for an occupational disease and the resulting disability to be compensable, all of the following conditions must be satisfied under the POEA-SEC: (1) the seafarer’s work must involve the risks described in the contract; (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

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part of the seafarer. Deafness is listed as an occupational disease for work in "any industrial operation having excessive noise particularly in the higher frequencies" or "any process carried on in compressed or rarified air." Sec. 32 of the POEA-SEC provides: SECTION 32. SCHEDULE OF DISABILITY OR IMPEDIMENT FOR INJURIES SUFFERED AND DISEASES INCLUDING OCCUPATIONAL DISEASES OR ILLNESS CONTRACTED. xxxx EARS 1. For the complete loss of the sense of hearing on both ears………. Gr. 3 2. Loss of two (2) external ears……………………………………… Gr. 8 3. Complete loss of the sense of hearing in one ear………………… Gr. 11 4. Loss of one external ear………………………………………….. Gr. 12 5. Loss of one half (1/2) of an external ear…………………………. Gr. 14 Calawigan was only diagnosed to be suffering from "moderate bilateral sensorineural hearing loss." LISI correctly argues that the CA erred in giving credence to Dr. Mendiola’s assessment of a Grade 3 disability rating which corresponds to complete loss of hearing on both ears. Absent a finding that the "ossicular disarticulation" detected on Calawigan’s right ear amounts to a complete loss of the sense of hearing in one ear, it would also appear that said seafarer is not even entitled to compensation for a Grade 11 disability rating. Granted that strict rules of evidence are not applicable in claims therefor, compensation and disability benefits under the POEA-SEC cannot be awarded to ailment or injuries not falling within its purview.

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24. MINDANAO TERMINAL AN D BROKERAGE SERVICE V NAGKAHIUSANG MAMUMUO SA MI NTERBROSOUTHERN PHILIPPINES FEDERATION OF LABOR (G.R. NO. 174300, 05 DEC 2012) Minterbro is a domestic corporation managed by De Castro and engaged in the business of providing arrastre and stevedoring services to its clientele at Port Area, Sasa, Davao City. It has a Contract for Use of Pier with Del Monte Philippines, Inc. (Del Monte). The docking of vessels at the piers in Davao City, including that of Minterbro, is being carried out by the Davao Pilots' Association, Inc. (DPAI). In a letter dated January 6, 1996, DPAI requested Minterbro to waive any claim of liability against it for any damage to the pier or vessel. DPAI alleged that Minterbro’s pier vibrates everytime a ship docks due to weak posts at the underwater portion. Minterbro denied the request explaining that DPAI’s observation had no basis as any damage to the pier was actually caused by a vessel under the control of DPAI which bumped the pier. DPAI replied informing Minterbro of its intention to refrain from docking vessels at Minterbro’s pier for security and safety reasons, until it is restored. This prompted Minterbro to bring up the matter to the Philippine Ports Authority (PPA). Minterbro engaged the Davao Engineering Works and Marine Services (Davao Engineering) to carry out the work of inspection and survey of the pier. In its Survey Report, Davao Engineering stated that Minterbro’s pier can still be used for loading and unloading of cargoes provided, however, that docking procedures were properly carried out. Subsequently, Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day, sent a letter to the Department of Labor and Employment (DOLE) to inform DOLE of Minterbro’s intention to temporarily suspend arrastre and stevedoring operations. On November 4, 1997, Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor (Union), composed of employees of Minterbro working on a rotation basis and employed for arrastre and stevedoring work depending on the actual requirements of the vessels serviced by Minterbro, filed a complaint for payment of separation pay against Minterbro. At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De Castro informed the union and its members that the rehabilitation of the pier had been completed and that they were just awaiting clearance to operate from the PPA. In a manifestation dated December 12, 1997, the union and its members stated, among others, that "they x x x are not anymore amenable to going back to work with [the] company, for the reason that the latter has not been operating for more than six (6) months, even if it resumes operation at a later date and would just demand that they be given Retirement or Separation Pay, as the case may be." On December 17, 1997, the PPA issued a Certification declaring Minterbro’s pier as safe and ready for operation. The Labor Arbiter ruled in favor of Minterbro, dismissing the complaint for separation pay for lack of merit and declaring the ninety-five (95) complainants named in the final list filed on February 3, 1998 to have lost their employment status for abandonment of work. Aggrieved, the union members appealed the Labor Arbiter’s Decision to the NLRC. The NLRC modified said decision, and awarded separation benefits to the Union. The CA affirmed the decision of NLRC, saying that separation benefits are proper on the ground that the lay-off exceeded 6 months. The motion for reconsideration was denied. Hence, this petition. ISSUE: Whether the Union is entitled to separation benefits. RULING: The Supreme Court ruled in favor of the Union, holding that they are entitled to separation pay under Article 286 of the Labor Code. As enunciated in Sebuguero, where a temporary lay-off lasts longer than six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law. The NLRC and the Court of Appeals found that the union members/employees were not given work starting April 14, 1997, the date when the last vessel was serviced, and that more than six months have elapsed after the union members were laid off when the next vessel was serviced at the Minterbro pier on December 22 to 28, 1997. Minterbro was aware that Del Monte’s decision to stop docking any of its vessels at its pier was basically related to the issue of the condition of the pier. Moreover, Minterbro may not rightfully shift the blame to Del Monte in view of the provision in their Contract for Use of Pier that Minterbro is responsible for maintaining the pier in good condition. Moreover, the said Survey Report expressly directs that "immediate attention should be given to the Pier damages in order to prevent further deterioration of its structural members."45 This directive contradicts petitioners’ stance that the Minterbro pier was in good condition even prior to its repair and rehabilitation in August 1997. Thus, the Court of Appeals did not err when it made the observation that “in view of the inspections and surveys conducted on the pier, it could not have failed to dawn upon petitioners that no vessel would take the risk of docking in their pier because of its damaged condition. ” In sum, Minterbro’s inaction on what they allege to be the unexplained abandonment by Del Monte of its obligations under the Contract for the Use of Pier coupled with its belated action on the damaged condition of the pier caused the absence

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of available work for the union members. As Minterbro was responsible for the lack of work at the pier and, consequently, the layoff of the union members, it is liable for the separation from employment of the union members on a ground similar to retrenchment. In this connection, this Court has ruled: A lay-off, used interchangeably with "retrenchment," is a recognized prerogative of management. It is an act of the employer of dismissing employees because of losses in operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court. However, when a lay-off is temporary, the employment status of the employee is not deemed terminated, but merely suspended. Article 286 of the Labor Code provides, in part, that the bona fide suspension of the operation of the business or undertaking for a period not exceeding six months does not terminate employment. When petitioners failed to make work available to the union members for a period of more than six months starting April 14, 1997 by failing to call the attention of Del Monte on the latter’s obligations under the Contract of Use of Pier and to undertake a timely rehabilitation of the pier, they are deemed to have constructively dismissed the union members. Six months is the period set by law that the operation of a business or undertaking may he suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus he liable for such dismissal. Lay-off is essentially retrenchment and under Article 283 of the Labor Code a retrenched employee is entitled to separation pay equivalent to one (1) month salary or one-half (12) month salary per year of service, whichever is higher.

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25. BEST WEAR GARMENTS V DE LEMOS (G.R. NO. 191281, 05 DEC 2012) Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida B. Respondents De Lemos (De Lemos et al ) were hired as sewers on piece-rate basis by petitioners. Respondents De Lemos et al. filed a complaint against Best Wear, alleging that in August 2003, Sitosta arbitrarily transferred them to other areas of operation of Best Wear’s garments company, which they said amounted to constructive dismissal as it resulted in less earnings for them. Respondents De Lemos claimed that after two months in her new assignment, she was able to adjust but Sitosta again transferred her to a "different operation where she could not earn as much as before because by-products require long period of time to finish." She said that the reason for her transfer was her refusal "to render overtime work up to 7:00 p.m." She further alleged that her last salary was withheld by Best Wear. Ocubillo, on the other hand, alleged that her transfer was precipitated by her having "incurred excessive absences since 2001." Her absences were due to the fact that her father became very sick, and she herself became very sickly. She claimed that from September to October 2003, Sitosta assigned her to different machines "whichever is available" and that "there were times, she could not earn for a day because there was no available machine to work with." Sitosta also allegedly required her to render overtime work up to 7:00 p.m. which she refused "because she was only paid up to 6:25 p.m." Best Wear denied having terminated the employment of Respondents De Lemos et al. who supposedly committed numerous absences without leave (AWOL). They claimed that sometime in February 2004, Respondents De Lemos informed Sitosta that due to personal problem, she intends to resign from the company. She then demanded the payment of separation pay. In March 2004, Ocubillo likewise intimated her intention to resign and demanded separation pay. Sitosta explained to both Respondents De Lemos and Ocubillo that the company had no existing policy on granting separation pay, and hence he could not act on their request. Respondents De Lemos never reported back to work since March 2004, while Ocubillo failed to report for work from October 2004 to the present. As to the allegation that the reason for their transfer was their refusal to render overtime work until 7:00 p.m., Best Wear asserted that Respondents De Lemos et al. are piece-rate workers and hence they are not paid according to the number of hours worked. The Labor Arbiter ruled in favor of Respondents De Lemos et al., holding that they were illegally dismissed and granting them separation pay and backwages. The NLRC reversed the decision, holding that there was no constructive dismissal and that the transfer of Respondents De Lemos et al. was a valid exercise of management prerogative. It also ordered Respondents De Lemos et al to report back to work since there was no dismissal. The CA reversed the decision of NLRC, and reinstated the decision of the Labor Arbiter. ISSUE: Whether Respondents De Lemos, et al. were constructively dismissed by petitioner. RULING: SC held that the CA erred in reversing the NLRC’s ruling that respondents were not constructively dismissed. Respondents De Lemos et al. were not dismissed. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. Thus, it has been held that the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment. Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended on the quality and quantity of finished products. That their work output might have been affected by the change in their specific work assignments does not necessarily imply that any resulting reduction in pay is tantamount to constructive dismissal. Workers under piece-rate employment have no fixed salaries and their compensation is computed on the basis of accomplished tasks. As admitted by Respondents De Lemos, some garments or by-products took a longer time to finish so they could not earn as much as before. Also, the type of sewing jobs available would depend on the specifications made by the clients of Best Wear. Under these circumstances, it cannot be said that the transfer was unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to work on different types of garments as dictated by present business necessity is within the ambit of management prerogative, which, in the absence of bad faith, ill motive or discrimination, should not be interfered with by the courts. The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be

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supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights that are entitled to respect and enforcement in the interest of simple fair play.

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26. CREW AND SHIP MANAGEMENT INTERNATIONAL V SORIA (G.R. NO. 175491, 10 DEC 2012) On August 7, 1995, Zosimo entered into a one-year contract of Employment5 with Salena Inc., through its local manning agent, Crew and Ship Management International Inc. (petitioners). He was employed as an Assistant Cook on board M.V. Sofia, later renamed M.V. Apollo, with a basic monthly salary of US$200.00. On June 5, 1996, Zosimo, during his routine duty inside M.V. Apollo’s engine room, suffered burns on his left knee when it accidentally brushed the hot engine. The vessel’s medical officer immediately attended and treated Zosimo’s injury with the appropriate medication. On June 9, 1996, M.V. Apollo arrived at New Orleans from Masinloc, Zambales, Philippines. On June 16, 1996, M.V. Apollo departed New Orleans and reached Guayaquil, Ecuador, on June 26, 1996. From June 9, 1996 to June 26, 1996, there were no reported complaints from Zosimo. On June 28, 1996, per M.V. Apollo’s Master’s Report,6 Zosimo requested for medical attention. Subsequently, Zosimo was confined in a hospital in Ecuador where the cleaning and dressing of the wound and skin grafting over the burn areas with skin taken from the left lateral aspect of the left thigh were performed. On July 10, 1996, Zosimo was discharged from the hospital and deemed fit for repatriation. Upon his repatriation to the Philippines, Zosimo immediately went to Legaspi City. On July 13, 1996, Zosimo sought medical attention for his burn wounds in Ago General Hospital, Legaspi City. In the Medical Certificate, 7 Zosimo was diagnosed with a "Healed Wound With Viable Skin Graft, Non-Infected; Dried Wound At Harvest Site, Lateral Aspect Of Left Thigh." On July 19, 1996, or nine days after repatriation to the Philippines, Zosimo reported to petitioner’s office in San Juan, Metro Manila, for payment of his contractual receivables. He was referred to Fatima Medical Clinic (FMC), the petitioners’ designated hospital. FMC’s Medical Report8 disclosed that Zosimo’s "wound is dry not infected with viable skin graft." 9 The same medical report also declared that Zosimo complained of "slight difficulty in flexing of left knee joint." 10 He was advised to return for another check-up after one week. On July 31, 1996, Zosimo died at the Ospital ng Makati. As stated in the Medico-Legal Report11 of the Philippine National Police (PNP) – Crime Laboratory, the cause of Zosimo’s death was "Pneumonia with Congestion of all visceral organs." On July 7, 1999, respondent filed a Complaint12 for death compensation benefits, child allowance, burial expenses, moral and exemplary damages, and attorney’s fees against petitioners before the Labor Arbiter (LA). Respondent alleged, among others, that Zosimo died of tetanus from the burns he sustained on board M.V. Apollo. The LA dismissed the complaint for lack of merit. On appeal, the NLRC reversed the LA’s ruling, holding that Zosimo’s death was compensable. However, upon motion for reconsideration, NLRC reversed itself. The CA reversed the decision of the NLRC, and held that the death was compensable. Petitioners moved for reconsideration, but their motion was denied by the CA. Hence, this petition. ISSUE: Whether the CA erred in awarding death benefits to the respondent. RULING: The petition is meritorious. The employment of seafarers, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired, as long as the stipulations therein are not contrary to law, morals, public order, or public policy, they have the force of law between the parties. POEA Memorandum Circular No. 41, series of 1989, or the “Revised Standard Employment Contract of All Filipino Seamen On Board Ocean-Going Vessels,” as amended by POEA Memorandum Circular No. 05, series of 1994, was the applicable contract then between Zosimo and petitioners. It provided for the minimum requirements prescribed by the government for the Filipino seafarer’s overseas employment. From the records, it appears that Zosimo failed to comply with the mandatory 72-hour post-employment medical examination deadline as provided for in said Section C(4)(c) of the 1989 POEA SEC. It was only on July 19, 1996, or nine days upon his arrival to the Philippines, that Zosimo sought medical attention from FMC, petitioners’ designated physician. The mandate of the aforementioned provision is to make the post-employment examination within three (3) working days from the seafarer’s arrival/repatriation to the Philippines compulsory, except when the seafarer is physically incapacitated to do so, before a claim for disability or death benefits can validly prosper. The purpose of the 3-day mandatory reporting requirement can easily be ascertained. Within 3 days from repatriation, it would be fairly manageable for the physician to identify whether the disease for which the seaman died was contracted during the term of his employment or that his working conditions increased the risk of contracting the ailment. The injury sustained by Zosimo on board the vessel was undeniably a burn injury defined as "injuries of skin or other tissue caused by thermal, radiation, chemical, or electrical contact." On the other hand, the various pieces of documentary evidence categorically and solely establish that Zosimo died of pneumonia, "a breathing (respiratory) condition in which there is an infection of the lungs." Soria, however, failed to adduce even a speck of evidence to establish any reasonable connection between the burn injury and pneumonia. Logically, the Court cannot and should not jump into the unwarranted conclusion that pneumonia was related to, or was brought about by his burn injury.

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While the Court adheres to the principle of liberality in favor of the seafarer in construing the POEA-SEC, it cannot allow claims for compensation based on conjectures and probabilities. When there is no evidence on record to permit compensability, the Court has no choice but to deny the claim, lest injustice is caused to the employer. The rule is that, in labor cases, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. The oft-repeated rule is that whoever claims entitlement to the benefits provided by law should establish his or her right thereto by substantial evidence. Substantial evidence is more than a mere scintilla. Any decision based on unsubstantiated allegations cannot stand as it will offend due process.

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Annex: ORIGINAL COPIES OF CASES

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