1. PHILIPPINE TOURISTERS, INC. and/or ALEJANDRO R. YAGUE,JR.

,
Petitioners, vs. MAS TRANSIT WORKERS UNION-ANGLO-KMU*
and its members, represented by ABRAHAM TUMALA, JR.,
Respondents.
G.R. No. 201237 September 3, 2014
PERLAS-BERNABE, J.:
Topic:
Procedure of Appeal from LA to NLRC

Facts:
On June 14, 2000 Samahan ng Manggagawa sa Mas Transit-Anglo-KMU (the Union) filed a
petition for certification election before the DOLE NCR. The DOLE granted the Union’s petition,
prompting Mas Transit Inc. (MTI) to file a motion for reconsideration which was, however, denied
in a Resolution dated February 7, 2001.

On September 15, 2000, MTI decided to sell its passenger buses together with its Certificate of
Public Convenience (CPC) to PTI for a total consideration of 98,345,834.43.

In light of the foregoing, MTI issued a "Patalastas" dated March 7, 2001 apprising all of its
employees of the sale and transfer of its operations to Philippine Tourister Inc (PTI), and the
former’s intention to pay them separation benefits in accordance with law and based on the
resources available.

The employees were also advised to apply anew with PTI should they be interested to transfer.
Thereafter, or on March 31, 2001, MTI sent each of the individual respondents a Memorandum
informing them of their termination from work, effective on said date, in line with the cessation of
its business operations caused by the sale of the passenger buses to the new owners.

Claiming that the sale was intended to frustrate their right to self-organization and that there was
no actual transfer of ownership of the passenger buses as the stockholders of MTI and PTI are one
and the same, the Union, on behalf of its 98 members (respondents), filed a complaint for illegal
dismissal, unfair labor practice, i.e., illegal lock out, and damages against MTI and/or Tomas
Alvarez (Alvarez), and PTI and Yague (petitioners), before the NLRC.

In their defense, MTI and Alvarez denied that the individual respondents were illegally dismissed
or locked out, contending that the closure of its business operations was valid and justified. They
claimed that the company was forced to sell its passenger buses to PTI as it was already suffering
from serious financial reverses; and that since there was nothing more to operate, it had no choice
but to cease operations.
For their part, petitioners denied any liability to the respondents considering that no employer-
employee relationship.

The LA Ruled in favor of the employees saying that they are guilty of ULP, finding MTI and
petitioners guilty of unfair labor practice, i.e., illegal lock out. LA said that were made to subvert
the right of the employees to self-organization.

In a Decision dated April 19, 2004, the NLRC dismissed the appeal for petitioners’ failure to post
the required bond equal to the full judgment award within the ten (10)-day reglementary period
prescribed under the NLRC Rules of Procedure.

Finding merit in petitioners’ motion for reconsideration, the NLRC, in an Order dated September
30, 2004, reinstated their appeal. It held that there was substantial compliance with the rules
considering the subsequent posting of an additional bond to complete the full judgment award,
adding too that petitioners’ initial motion to reduce bond was based on a meritorious ground –
that is, the inability of PTI to post the full amount due to its liquidity problems as evidenced by its
submitted AFS.

Thereafter, or on January 20, 2006, the NLRC rendered a Decision, modifying its April 19, 2004
Decision by dismissing the complaint against petitioners. The modification was brought about by
the NLRC’s finding that there were no factual and legal bases to hold petitioners jointly and
severally liable with MTI as the two corporationsare separate and distinct juridical entities with
different stockholders and owners.

Disagreeing with the NLRC, respondents filed a motion for Reconsideration which was, however,
denied in a Resolution dated June 30, 2006, prompting them to elevate the matter on certiorari
before the CA.

The CA annulled and set aside the modified ruling of the NLRC finding the latter to have acted with
grave abuse of discretion in applying a liberal interpretation of the rules on perfection of appeal.

Issue:
Whether NLRC gravely abused its discretion when it allowed the appeal despite partial
compliance

Ruling:
No. For an appeal from the LA’s ruling to the NLRC to be perfected, Article 223 (now
Article 229)61 of the Labor Code requires the posting of a cash or surety bond in an amount
equivalent to the monetary award in the judgment appealed from, viz.:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the
following grounds:

1. If there is a prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
2. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
3. If made purely on questions of law; and
4. If serious errors in the findings of facts are raised which would cause grave or irreparable
damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.

xxxx

While it has been settled that the posting of a cash or surety bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the decision of the LA, the Rules
of Procedure of the NLRC (the Rules), particularly Section 6, Rule VI thereof, nonetheless allows
the reduction of the bond upon a showing of (a) the existence of a meritorious ground for
reduction, and (b) the posting of a bond in a reasonable amount in relation to the monetary
award, viz.:

SEC. 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorney’s fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the
posting of a bond in a reasonable amount in relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal.

In this regard, it bears stressing that the reduction of the bond provided thereunder is not a
matter of right on the part of the movant and its grant still lies within the sound discretion of the
NLRC upon a showing of meritorious grounds and the reasonableness of the bond tendered under
the circumstances.
Here, it is not disputed that petitioners filed an appeal memorandum and complied with the other
requirements for perfecting an appeal, save for the posting of the full amount equivalent to the
monetary award of ₱12,833,210.00. Instead, petitioners filed a motion to reduce bond claiming
that they were suffering from liquidity problems and, in support of their claim, submitted PTI’s AFS
which showed a deficit in income. Since this claim was not amply controverted by respondents,
and considering further the significance of petitioners’ argument raised in their appeal, i.e., that
there exists no employer-employee relationship between PTI and the individual respondents, on
the basis of which lies their non-liability, the Court deems that the NLRC did not gravely abuse its
discretion in deciding that these circumstances constitute meritorious grounds for the reduction of
the bond.

The absence of grave abuse of discretion in this case is bolstered by the fact that petitioners’
motion toreduce bond was accompanied by a ₱5,000,000.00 surety bond which was seasonably
posted within the reglementary period to appeal. In McBurnie v. Ganzon,70 the Court ruled that,
"[f]or purposes of compliance with [the bond requirement under the 2011 NLRC Rules of
Procedure], a motion shall be accompanied by the posting of a provisional cash or suretybond
equivalent toten percent (10%) of the monetary award subject of the appeal, exclusive of
damages, and attorney’s fees." Seeing no cogent reason to deviate from the same, the Court
deems that the posting of the aforesaid partial bond, being evidently more than ten percent (10%)
of the full judgment award of ₱12,833,000.00, already constituted substantial compliance with the
governing rules at the onset.

WHEREFORE, the petition is GRANTED. The Decision dated November 25, 2011 and the Resolution
dated March 12, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 96000 are hereby
REVERSEDand SET ASIDE. Accordingly, the case is REMANDEDto the CA for the resolution of the
substantive issuesas discussed in this Decision.

SO ORDERED.
 2. ATTY. FORTUNATO PAGDANGANAN v. FLORENTINO P.
SARMIENTO
GR No. 206555, Sep 17, 2014
PERLAS-BERNABE, J.:
Facts:
On May 8, 2008, Sea Gem Maritime International, Inc. (Sea Gem), on behalf of its foreign principal,
Corinthian Maritime S. A. (Corinthian), hired Sarmiento as Chief Mate of the vessel M/T Intuition
for an initial period of seven (7) months.

On January 14, 2009, while M/T Setubal I was docked at Nigeria, Sarmiento felt a loss of strength
in his left arm and fingers. Upon examination at the Adeiza Clinic in Lagos, Nigeria, he was
diagnosed to have Mild Cardiovascular Stroke, Disused Atrophy of the Left Hand, and
Hypertension, for which his repatriation was recommended. Hence, on January 18, 2009,
Sarmiento was repatriated to the Philippines and referred to the MRI Diagnosis Center.

Subsequently, or on July 7, 2009, Sarmiento filed a complaint against Sea Gem before the NLRC for
the collection of: (a) his unpaid salaries in the sum of US$24,821.74; (b) disability benefits; (c)
sickness allowance; and (d) reimbursement of his medical expenses.

In a Decision dated January 19, 2010, the Labor Arbiter (LA) found petitioners, Sea Gem,
Corinthian, the Peñalosa Group, Torrefil, and Alican liable for Sarmiento's money claims and
directed them to jointly and severally pay him the aggregate sum of US$32,821.00, representing
his unpaid wages and sickness allowance.

However, the LA debunked Sarmiento's claim for disability benefits and medical expenses
reimbursement, explaining that in the absence of a competent physician's declaration as to the
degree of a seafarer's disability, disability benefits may not be awarded.

NLRC affirmed the LA's Ruling with modification absolving petitioners from any liability in
connection with Sarmiento's money claims, considering that they were no longer connected with
Sea Gem at the time Sarmiento's cause of action arose.

The CA did not address the issue raised by petitioners regarding the timeliness of the filing of
Sarmiento's CA petition. Instead, it ascribed grave abuse of discretion on the part of the NLRC and
thereby ordered the reinstatement of the LA Decision.

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

To this end, the Court cannot give credence to Sarmiento's contention that Atty. Borromeo had
been discharged as counsel even before Sarmiento received the December 30, 2010 Resolution,
considering that Atty. Borromeo never filed a formal withdrawal of appearance prior thereto,
conformably with Section 26, Rule 138 of the Rules. For his failure to observe the proper legal
formalities, Atty. Borromeo remained as Sarmiento's counsel on record. Fundamental is the rule
that until a counsel's dismissal or withdrawal is formally made, any court record sent to him binds
the client, despite an internal arrangement between them terminating their professional
relationship, as in this case.

WHEREFORE, the petition is GRANTED. The Decision dated October 23, 2012 and the Resolution
dated March 26, 2013 of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision
dated September 30, 2010 and the Resolution dated December 30, 2010 of the National Labor
Relations Commission are REINSTATED.
 3. JOEL N. MONTALLANA, Petitioner, vs. LA CONSOLACION
COLLEGE MANILA, SR. IMELDA A. MORA, and ALBERT D.
MANALILI,* Respondents.
G.R. No. 208890 December 8, 2014
PERLAS-BERNABE, J.:
Fact:
On January 12, 2009 while Dean’s Secretary Ann Ruiz (Ruiz) and student assistant Kathlyn
Saez (Saez) were numbering the lockers, pursuant to a policy implemented by Juan. At that time,
Montallana was conversing with a co-faculty member, Dr. Beatriz V. Pabito (Pabito), when the
latter asked Ruiz and Saez what they were doing.

Upon learning of the reassignment of lockers of faculty members through drawing of lots, Pabito
commented, saying "para naman tayong bata nyan," to which Montallana followed suit and, in a
loud voice, remarked "oo nga naman para tayong mga grade one nyan, anong kabubuhan ng grade
one yan." Juan heard Montallana’s remark and confronted him, resulting in a heated altercation
that ended with the latter walking out of the room while Juan was still talking to him.

After due investigation, La Consolacion’s fact-finding committee found Montallana guilty of

serious misconduct in making derogatory and insulting remarks about his superior, aggravated by
the fact that he made such remarks in a loud voice so that Juan would hear them. While noting
that the foregoing may be considered as a just cause for Montallana’s termination, the committee
observed that it was his first offense and stressed on the reformative and redemptive facets of the
case.

In fine, Montallana was only meted the penalty of suspension without pay for a period of two (2)
months and directed him to submit a written public apology to Juan in a tenor satisfactory to her
and La Consolacion’s Human Resource Department (HRD).

In a letter dated April 22, 2009, Montallana sought reconsideration of his suspension and
explained that a written public apology was inappropriate at that time in view of the pendency of
a criminal complaint for grave oral defamation filed by Juan against him before the City
Prosecutor’s Office.

The request having been denied by La Consolacion’s President, respondent Sr. Imelda A. Mora
(Mora), in her letter dated May 12, 2009, Montallana filed a complaint for illegal suspension and
unfair labor practice, with prayer for payment of salaries during the period of suspension, and
moral and exemplary damages against respondents La Consolacion and Mora before the NLRC,
docketed as NLRC NCR Case No. 05-07667-09 (illegal suspension case).
The Labor Arbiter (LA) ruled in favor of Montallana, holding that his actions did not constitute
serious misconduct.

On appeal the NLRC disagreed with the findings of the LA and found Montallana’s acts to be
constitutive of serious misconduct and against the rule of honor and decency expected of any
teacher. While it found sufficient basis to impose the penalty of termination, the NLRC
nonetheless sustained the two (2)-month suspension in deference to the school’s prerogative to
discipline its employees.

Thereafter, on June 1, 2011, La Consolacion, through its HRD Director, respondent Albert D.
Manalili (Manalili), directed Montallana to explain in writing why he should not be dismissed for
failure to submit his written public apology which formed part of the disciplinary sanction that was
sustained with finality by the NLRC.

In a letter dated June 9, 2011, Montallana begged for La Consolacion’s indulgence, explaining that
he had no intention of defying the directive to submit a written public apology and that his
inability to comply therewith was, to reiterate, only in view of the pendency of the criminal case
against him. He, nonetheless, expressed his willingness to comply with the directive once the said
case was resolved with finality. Finding Montallana’s written explanation unsatisfactory, Manalili
terminated him from work on June 13, 2011.

In respondents’ defense, they contended that since the directive to apologize was part of the
penalty imposed on Montallana, his refusal and/or failure to comply merited further sanctions.
They denied having dismissed Montallana for his union activities, pointing out that even the Union
President agreed to his suspension for his misbehavior.

LA dismissed Montallana’s complaint, holding that his refusal to apologize – in light of his chosen
profession as a teacher and La Consolacion’s right to maintain a certain standard of behavior
among its faculty, who serve as models for its students – was tantamount to serious misconduct
and, hence, warranted his termination.

NLRC reversed and set aside the LA’s verdict, and thus, ordered respondents to reinstate
Montallana and to pay him backwages from the time he was illegally dismissed up to his
reinstatement.

It ruled that Montallana’s failure to submit a written public apology was not an open defiance of
respondents’ order since he even begged for the latter’s indulgence, believing that the issuance of
a letter of apology would incriminate him in the on-going criminal case filed by Juan.

The CA gave due course to respondents’ petition and eventually reversed and set aside the NLRC’s
Decision.
Issue:
Whether the refusal of Montallana to apologize to Juan may be considered as willful
disobedience and warranted termination

Ruling:
NO. It is well to stress that it is the employer who bears the burden of proving, through
substantial evidence, that the aforesaid just cause – or any other authorized cause for that matter
– forms the basis of the employee’s dismissal from work. Failing in which, the dismissal should be
adjudged as illegal.

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

As culled from the records, aside from the administrative complaint filed by Juan against
Montallana for his serious misconduct, the former also filed a criminal complaint for grave oral
defamation for the utterances he made arising from the same incident before the Manila City
Prosecutor’s Office. In the honest belief that issuing a letter of apology would incriminate him in
the said criminal case – and upon the advice of his own lawyer at that – Montallana wrote to
respondents and voluntarily communicated that he was willing to issue the required apology, but
only had to defer the same in view of his legal predicament.

As the Court sees it, the tenor of his letters, and the circumstances under which they were taken,
at the very least, exhibited Montallana’s good faith in dealing with respondents. This, therefore,
negates the theory that his failure to abide by respondents’ directive to apologize was attended by
a "wrong and perverse mental attitude rendering the employee’s act inconsistent with proper
subordination," which would warrant his termination from employment.

Besides, even on the assumption that there was willful disobedience, still, the Court finds the
penalty of dismissal too harsh. It bears to stress that not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal. The penalty to be
imposed on an erring employee must be commensurate with the gravity of his offense.

To the Court’s mind, the case of an employee who is compelled to apologize for a previous
infraction but fails to do so is not one which would properly warrant his termination, absentany
proof that the refusal was made in brazen disrespect of his employer. While there is no question
that teachers are held to a peculiar standard of behavior in view of their significant role in the
rearing of our youth, educational institutions are, in the meantime, held against a legal standard
imposed against all employers, among which, is the reservation of the ultimate penalty of
dismissal for serious infractions enumerated as just causes under Article 296 of the Labor Code.
Unfortunately, respondents herein failed to prove the seriousness of Montallana’s omission by the
evidentiary benchmark of substantial evidence. And to add, on a related note, while La
Consolacion’s Administrative Affairs Manual72 discloses that acts of insubordination (particularly,
that of refusing or neglecting to obey the school’s lawful directive) are dismissible violations, they
are only so if imposed as a third sanction. In the same vein, records are bereft of any showing that
Montallana's failure to apologize was being punished as such.
 4. CONCEPCION A. VILLENA VS. BATANGAS II ELECTRIC
COOPERATIVE, INC. AND GEORGE A. DIN
G.R. No. 205735, February 04, 2015
PERLAS-BERNABE, J.:
Facts:
Villena was hired by respondent Batangas II Electric Cooperative, Inc. (BATELEC II) as bookkeeper
in 1978. She rose from the ranks and was promoted as Finance Manager in 1985. In 1994, she was
demoted to the position of Auditor, which caused her to file a complaint for constructive dismissal
before the Labor Arbiter (LA).

In a Decision dated July 22, 1998, the LA dismissed Villena's complaint, prompting her to seek
recourse before the National Labor Relations Commission (NLRC).

The ruling of the LA was reversed whereby the NLRC declared Villena to have been illegally
dismissed, and thus, ordered BATELEC II to reinstate her to her former position as Finance
Manager, or its equivalent, and to pay her salary differentials.

The CA modified the January 31, 2000 NLRC Resolution and declared Villena to be "entitled to the
difference between the salary of the Finance Manager and that of the auditor, plus allowances
and any other benefits pertaining to the position of Finance Manager at the time she was removed
therefrom up to the date of her actual reinstatement.

In a Resolution dated March 22, 2007 (March 22, 2007 NLRC Resolution), the NLRC granted the
appeal of Villena, holding that since reinstatement was no longer possible, separation pay in lieu
of reinstatement was justified.

With no further action having been taken by BATELEC II, the March 22, 2007 NLRC Resolution
attained finality. Thus, Villena moved for its execution.

The Executive Labor Arbiter issued an Order dated November 24, 2009 (November 24, 2009 LA
Order), finding Villena to be entitled to the following benefits: (a) salary differentials; (b) 13th
month pay; (c) 14th month pay; (d) bonus cash gift; (e) unused sick leave; (f) leave of absence; (g)
uniform allowance; (h) separation pay; (i) representation allowance;[23] (j) transportation
allowance; (k) cellular phone allowance; (l) retirement pay;[26] and (m) attorney's fees, in the total
amount of P6,294,290.99 net of the amount earlier partially satisfied.

Insisting that Villena was not entitled to salary differentials, allowances and benefits of a Finance
Manager, separation pay, and allowances for representation, transportation, and cellular phone
usage, BATELEC II appealed to the NLRC.
The NLRC partly granted the appeal and excluded from the computation of monetary awards the
sums for representation, transportation, and cellular phone usage allowances, as well as
retirement pay.

With the substantial modification, Villena moved for partial reconsideration,[32] which the NLRC
partly granted in a Resolution dated May 17, 2011 (May 17, 2011 Resolution), deleting the award
for separation pay and in lieu thereof, ordering the payment of retirement pay in the interest of
justice and fairness.

The CA reversed and set aside the ruling of the NLRC, pointing out that the earlier August 31, 2001
CA Decision finding Villena to have been illegally dismissed and the March 22, 2007 NLRC
Resolution ordering the payment of separation pay in lieu of reinstatement had both become final
and executory and, thus, immutable and unalterable

Issue:
Whether (a) retirement pay, and (b) representation, transportation, and cellular phone
usage allowances should be awarded in favor of Villena.

Ruling
No. On Retirement Pay.
As the Court sees it, the "other benefits" mentioned in these rulings cannot be construed
to include retirement pay for the primary reason that they adjudged awards relative to Villena's
illegal dismissal complaint, which remains barren of a specific cause of action for retirement pay.
In order for her retirement pay claim to be considered, Villena's complaint should have
contained substantial allegations which would show that she (a) had applied for the same, and
(b) her application squares with the requirements of entitlement under the terms of the
company's retirement plan, i.e., Policy No. 03-003, which, in fact, was issued on September 20,
2003, or after the August 31, 2001 CA Decision had already attained finality.

However, based on the records, what she sought for in her illegal dismissal complaint were the
reliefs of reinstatement, payment of salary differentials, all benefits and allowances that she may
have received as Finance Manager, attorney's fees, and damages. Thus, as the matter left for
determination is whether or not the aforesaid rulings, when executed, should include retirement
pay and representation, transportation, and cellular phone usage allowances, the Court will
harken back only to the context of the illegal dismissal complaint from which such awards of
"other benefits" stemmed from.

Verily, the Court is not unaware of its rulings wherein it pronounced that retirement pay and
separation pay are not mutually exclusive (unless there is a specific prohibition in the collective
bargaining agreement or retirement plan against the payment of both benefits);[43] however,
with Villena's entitlement to retirement pay not included as an issue in an illegal dismissal case
which had already been finally decided, it is quite absurd for Villena to submit a
"contemporaneous" claim for retirement pay on the execution phase of these proceedings. In fine,
the plea to include retirement pay in the execution of the final and executory August 31, 2001 CA
Decision and March 22, 2007 NLRC Resolution, under the phrase "other benefits," cannot be
granted.

Yes. On Transportation, Representation, and Cellular Phone Usage Allowances.

Meanwhile, on the matter of the claimed allowances, it is clear from BATELEC II's pleadings and
submissions that representation allowance,[45] transportation allowance,[46] and cellular phone
usage allowance[47] are given to the Finance Manager/Department Manager as part of their
benefits,[48] unlike the separate entitlement to retirement pay which may be recovered only upon
a meritorious subsequent application when the employee decides to retire. Consequently, these
allowances ought to be included in the "other benefits pertaining to the position of Finance
Manager" to which Villena is entitled to and which were awarded to her under the final and
executory CA Decision and NLRC Resolution.

With the award of the "other benefits pertaining to the position of Finance Manager" made by the
CA in its August 31, 2001 Decision lapsing into finality, the same had already become immutable
and unalterable;[49] this means that they may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or law.
[50] Thus, it was an error on the part of the CA to still consider, rule upon, and vary the previous
CA Ruling, i.e., August 31, 2001 CA Decision, on the entitlement of Villena to the benefits of
representation, transportation, and cellular phone usage allowances. On this score, therefore, the
claim of Villena is granted.
 5. BAHIA SHIPPING SERVICES, INC. AND/OR V-SHIP NORWAY
AND/OR CYNTHIA C. MENDOZA, Petitioners, v. CARLOS L. FLORES,
JR.,* Respondent.
G.R. No. 207639, July 01, 2015
PERLAS-BERNABE, J.:
Facts:
On January 9, 2009, petitioner Bahia Shipping Services, Inc. hired respondent to work as a
"Fitter" on board the vessel Front Fighter owned by V-Ship Norway, for a period of nine (9)
months, with such being covered by an employment contract and a Collective Bargaining
Agreement between the Associated Marine Officers' and Seamen's Union of the Philippines and
petitioners (CBA).

On April 15, 2009 and while on board overhauling the relief valve of the vessel, a spring valve flew
and hit the left side of respondent's face, causing severe injuries to his teeth as well as multiple
abrasions to his cheek, lips, and nose. He was taken to a hospital in Singapore, where he was
diagnosed to be suffering from "blunt injuries to the left side of face" and was declared to be unfit
to return to ship. After undergoing an operation to treat his injury, respondent was repatriated to
the Philippines on April 18, 2009 for further treatment.

Upon repatriation, respondent went to petitioners' accredited doctors for immediate care and
treatment who then made him undergo a series of tests for months. On July 17, 2009, Dr. Wilanie
Romero-Dacanay, the company-designated physician, gave respondent an interim disability rating
of Grade 7 (moderate residual or disorder).

On September 4, 2009, respondent sought a second opinion from an independent physician, Dr.
Rimando C. Saguin, who diagnosed him to have "Blunt injury on the Left Face with multiple
abrasions, error of refraction, senile nuclear/corticol cataract, both eyes, vitreous floating left eye"
and certified that because of his condition, he cannot work as a seafarer in any capacity. Thus, on
September 10, 2009, respondent filed a complaint before the NLRC against petitioners for
disability benefits, among others. This notwithstanding, respondent continued to undergo
treatment from the company-designated physician to treat his condition until October 12, 2009.
Thereafter, respondent's treatment stopped and the company-designated physician did not issue
his final disability rating.

In defense, petitioners countered, inter alia, that respondent's complaint should be dismissed on
account of prematurity, considering that he was still undergoing treatment when he filed his
complaint.
The Labor Arbiter (LA) ruled in respondent's favor, and accordingly, ordered petitioners to jointly
and severally pay him the amounts due to him.

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

The CA affirmed the NLRC ruling. It held, inter alia, that respondent's disability should be viewed as
permanent and total in view of the fact that the company-designated physician failed to declare
him fit for duty or issue a final disability assessment within 120 days from his repatriation.

Issue:
Whether the Court of Appeals is correct in holding the respondent entitled to permanent
disability benefits.

Ruling:
Yes. The CA is correct, at the outset, the Court notes that petitioners correctly ascribed
error on the part of the CA in holding that respondent's inability to obtain gainful employment for
more than 120 days after his repatriation, and that the failure of the company-designated
physician to declare him fit to work or to give him a final disability rating within the same period
ipso facto rendered respondent's disability to be permanent and total.

In Vergara v. Hammonia Maritime Services, Inc., the Court held that the company-designated
physician is given a leeway of an additional 120 days, or a total of 240 days from repatriation, to
give the seafarer further treatment and, thereafter, make a declaration as to the nature of the
latter's disability. Thus, it is only upon the lapse of 240 days from repatriation, or when so declared
by the company-designated physician, that a seafarer may be deemed totally and permanently
disabled.

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

Be that as it may, the CA is nevertheless correct in holding that respondent is deemed to be

suffering from a permanent total disability. Records reveal that after respondent was repatriated
on April 18, 2009, he underwent continuous medical care from the company-designated physician.
He was even given an interim disability rating of Grade 7 (moderate residual or disorder) on July
17, 2009,27 and thereafter, went through further tests and procedures. However, after October
12, 2009, respondent's treatment stopped without him recovering from his ailment. Notably, the
company-designated physician neither issued to respondent a fit-to-work certification nor a final
disability rating on or before December 14, 2009, the 240th day since respondent's repatriation.

Case law instructs that, if after the lapse of the 240-day period, the seafarer is still incapacitated to
perform his usual sea duties and the company-designated physician had not yet declared him fit to
work or permanently disabled, whether total or permanent, the conclusive presumption that the
seafarer is totally and permanently disabled arises.28 Perforce, it is but proper to hold that
respondent was permanently and totally disabled, and hence, entitled to the corresponding
benefits stated under the CBA.
 6. MAGSAYSAY MARITIME CORPORATION v. ROMEO V.
PANOGALINOG
GR No. 212049, Jul 15, 2015
PERLAS-BERNABE, J.:
Facts:

Respondent was employed by petitioner Magsaysay Maritime Corporation (MMC) for its
foreign principal, Princess Cruise Lines, Ltd. (PCL) as Mechanical Fitter on board the vessel "Star
Princess" under a ten (10) month contract that commenced on December 18, 2009, with a basic
salary of US$508.00 per month, exclusive of overtime and other benefits.

On April 27, 2010, respondent suffered injuries when he hit his right elbow and forearm on a
sewage pipe during a maintenance work conducted on board the vessel. He was immediately
provided medical treatment at the ship's clinic and was diagnosed by the ship doctor with "Lateral
Epicondylitis, Right". However, despite treatment, his condition did not improve. Hence, he was
medically repatriated on May 9, 2010.

On May 14, 2010, the company-designated physicians also diagnosed respondent with "Lateral
Epicondylitis, Right" and, thus, the latter was advised to undergo physical therapy. On June 2,
2010, Dr. Robert Lim (Dr. Lim), the company-designated doctor, found that "[p]atient claims
almost resolution of both lateral elbow paid, decreased pain on the right wrist, slight limitation of
motion of the right wrist, fair grip."

On June 23, 2010, another medical bulletin was issued by Dr. Lim stating that "[p]atient claims
improvement with physical therapy." On September 15, 2010, Dr. William Chuasuan, Jr. (Dr.
Chuasuan), also a company-designated physician, issued a medical report stating that respondent
was fit to return to work.

After the company-designated physicians declared him fit to work, respondent sought the services
of an independent physician, Dr. Manuel C. Jacinto, Jr. (Dr. Jacinto), who, on the other hand, found
him "physically unfit to go back to work" as declared in a medical certificate dated October 13,
2010.

Respondent filed a complaint for the payment of permanent total disability compensation in
accordance with the parties' collective bargaining agreement (CBA), medical expenses, moral and
exemplary damages, and other benefits provided by law and the CBA against MMC, its President,
Marlon R. Rofio, and its foreign principal, PCL (petitioners), before the Labor Arbiter (LA).

In his Position Paper, respondent averred that he was unfit to perform his job for more than 120
days, and that his injuries in his right elbow and forearm were never resolved and in fact,
deteriorated despite medical treatment. And since by reason thereof he had lost his capacity to
obtain further sea employment and an opportunity to earn an income, respondent sought for the
payment of permanent total disability compensation in the amount of US$80,000.00 pursuant to
the CBA that was enforced during his last employment contract. He also sought for the payment of
moral and exemplary damages in view of petitioners' unjustified refusal to settle the matter under
the CBA and their evident bad faith in dealing with him, as well as attorney's fees for having been
compelled to litigate.

The LA ruled in favor of respondent, ordering petitioners to jointly and severally pay the former
the sum of US$80,100.00, or its peso equivalent at the time of payment, as permanent total
disability benefits, as well as moral and exemplary damages in the amount of P50,000.00 each.

The LA held that since the treatment of respondent's work related injury and declaration of fitness
to work exceeded the 120-day period under the POEA Standard Employment Contract.

NLRC reversed and set aside the appealed LA decision and instead, dismissed respondent's
complaint. It held that the medical certificate of the independent physician, Dr. Jacinto, in support
of respondent's claim for permanent total disability benefits cannot prevail over the medical
reports of the company-designated physicians who actually treated him.

The CA granted the certiorari petition and reinstated the LA's Decision dated April 7, 2011. It ruled
that respondent was entitled to full permanent total disability benefits, considering that a period
of more than 120 days had elapsed before the company-designated physicians made their
findings, and that respondent was no longer redeployed by petitioners despite the finding of
fitness to work by the company-designated physicians

Issue:

Whether the respondent is entitled to disability benefits

Ruling:

It is doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter
governed not only by medical findings but by law and by contract. The relevant legal provisions are
Articles 191 to 193 of the Labor Code and Section 2, Rule X of the Amended Rules on Employees'
Compensation (AREC), while the relevant contracts are the POEA Standard Employment Contract
(POEA-SEC), the parties' Collective Bargaining Agreement (CBA), if any, and the employment
agreement between the seafarer and employer.

In this case, the parties entered into a contract of employment in accordance with the POEA-SEC
which, as borne from the records, was covered by an overriding International Transport Workers'
Federation (ITF) Cruise Ship Model Agreement For Catering Personnel, i.e., the CBA, that was
effective from January 1, 2010 until December 31, 2010. Since respondent's injury on board the
vessel "Star Princess" that caused his eventual repatriation was sustained on April 27, 2010, or
during the effectivity of the CBA, his claim for the payment of permanent total disability
compensation shall be governed by Article 12 (2) of the CBA which provides:
 2. Disability:

A Seafarer who suffers injury as a result of an accident from any cause whatsoever
whilst in the employment of the Owners/Company, regardless of fault, including
accidents occurring whilst traveling to or from the Ship and whose ability to work is
reduced as a result thereof, shall in addition to his sick pay, be entitled to
compensation according to the provisions of this Agreement.

The compensation which the Owner/Company, Manager, Manning Agent, and any
other legal entity substantially connected with the vessel shall be jointly and severally
liable to pay shall be calculated by reference to an agreed medical report, with the
Owners/Company and the Seafarer both able to commission their own and when
there is disagreement the parties to this Agreement shall appoint a third doctor
whose findings shall be binding on all parties. The aforesaid medical report
determines the Degree of Disability and the table below the Rate of Compensation.

xxxx

Regardless of the degree of disability an injury or illness which results in loss of profession will
entitle the Seafarer to the full amount of compensation, USD eighty-thousand (80,000) for Ratings
(Group B, C & D) and USD one-hundred-and-twenty-thousand (120,000) for Officers (Group A). For
the purposes of this Article, loss of profession means when the physical condition of the Seafarer
prevents a return to sea service, under applicable national and international standards and/or
when it is otherwise clear that the Seafarer's condition will adversely prevent the Seafarer's future
of comparable employment on board ships.

Based on the afore-cited provision, a seafarer shall be entitled to the payment of the full amount
of disability compensation only if his injury, regardless of the degree of disability, results in loss of
profession, i.e., his physical condition prevents a return to sea service. Based on the submissions
of the parties, this contractual attribution refers to permanent total disability compensation as
known in labor law. Thus, the Court examines the presence of such disability in this case.

Preliminarily, the task of assessing the seaman's disability or fitness to work is entrusted to the
company-designated physician.

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.
Under the Labor Code, there are three kinds of disability, namely: (1) temporary total disability; (2)
permanent total disability; and (3) permanent partial disability. Section 2, Rule VII of the AREC
differentiates the disabilities as follows:

SEC. 2. Disability - (a) A total disability is temporary if as a result of the injury or sickness the
employee is unable to perform any gainful occupation for a continuous period not exceeding 120
days, except as otherwise provided in Rule X of these Rules.

(b) A disability is total and permanent if as a result of the injury or sickness the employee is unable
to perform any gainful occupation for a continuous period exceeding 120 days, except as
otherwise provided for in Rule X of these Rules.

(c) A disability is partial and permanent if as a result of the injury or sickness the employee suffers
a permanent partial loss of the use of any part of his body. (Emphasis supplied)

In this case, despite the finding of fitness to work by the company--designated physicians, the CA
declared respondent entitled to permanent total disability benefits for failure of the former to
declare the latter fit to work within the 120-day period provided under Section 20 (B) (3) of the
2000 POEA-SEC, citing the ruling in the cases of Valenzona v. Fair Shipping Corporation[32]
(Valenzona) and Maersk Filipinas Crewing, Inc. v. Mesina[33] (Maersk Filipinas Crewing, Inc.) that
declared a seafarer permanently disabled if it lasts continuously for more than 120 days. Both
Valenzona and Maersk Filipinas Crewing, Inc. stemmed from the ruling in Crystal Shipping, Inc. v.
Natividad that characterized permanent disability as the inability of a worker to perform his job for
more than 120 days, regardless of whether or not he loses the use of any part of his body.

However, recent jurisprudence now holds that the said 120-day rule is not a magic wand that
automatically warrants the grant of total and permanent disability benefits in his favor. As clarified
by the Court in the later case of Vergara v. Hammonia Maritime Services, Inc.:

[T]he petitioner has repeatedly invoked our ruling in Crystal Shipping, Inc. v. Natividad, apparently
for its statement that the respondent in the case "was unable to perform his customary work for
more than 120 days which constitutes permanent total disability." This declaration of a permanent
total disability after the initial 120 days of temporary total disability cannot, however, be simply
lifted and applied as a general rule for all cases in all contexts

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. Thus, temporary total disability only becomes
permanent when so declared by the company-designated physician within the periods he is
allowed to do so, or upon the expiration of the maximum 240-day medical treatment period
without a declaration of either fitness to work or the existence of a permanent disability.
Finally, as the NLRC aptly pointed out, respondent even signed the certification of fitness to work,
which thus operates as an admission in petitioners' favor. The burden of proof to show that his
consent was vitiated in signing said certification befalls upon respondent; a burden the latter,
however, failed to discharge.

In fine, absent a showing that respondent is entitled to the full disability compensation under the
CBA as afore-discussed, the Court finds that the NLRC did not commit grave abuse of discretion in
dismissing respondent's complaint. The CA ruling should therefore be reversed.
 7. VISAYAN ELECTRIC COMPANY EMPLOYEES UNION-ALU-TUCP
AND CASMERO MAHILUM, Petitioners, v. VISAYAN ELECTRIC
COMPANY, INC. (VECO), Respondent.
G.R. No. 205575, July 22, 2015
PERLAS-BERNABE, J.:
Facts:
Respondent Visayan Electric Company, Inc. (VECO) is a corporation engaged in the supply and
distribution of electricity in Cebu City and its neighboring cities, municipalities, and barangays. The
Union is the exclusive bargaining agent of VECO's rank-and-file employees, and Mahilum was the
Union's president from October 2007 until his termination from employment on October 28, 2010.

Before Mahilum was elected as union officer, he was transferred several times. At the time of his
election as union president, VECO management allegedly: (a) terminated active union members
without going through the grievance machinery procedure prescribed under the Collective
Bargaining Agreement (CBA); (b) refused to implement the profit-sharing scheme provided under
the same CBA; (c) took back the motorbikes issued to active union members; and (d) revised the
electricity privilege granted to VECO's employees.

Thus, on May 1, 2009, union members marched on the streets of Cebu City to protest VECO's
refusal to comply with the political and economic provisions of the CBA. Mahilum and other union
officers were interviewed by the media, and they handed out a document containing their
grievances against VECO. On May 8, 2009, Mahilum was issued a Notice to Explain why he should
not be terminated from service due to loss of trust and confidence, as well as in violating the
Company Code of Discipline, for causing the publication of what VECO deemed as a libelous
article.

On May 20, 2009, the union officers were notified of the administrative investigation to be
conducted relative to the charges against them. .

On even date, the Union filed another Notice of Strike with the NCMB against VECO on the
grounds of unfair labor practice, specifically union busting for the dismissal and/or suspension of
its union president and officers, refusal to bargain collectively, as well as non-observance of the
grievance procedure in their CBA. To avert any work stoppage that will prejudice VECO's power
distribution activity, the Secretary of Labor intervened and issued an Order dated November 10,
2010 certifying the labor dispute to the NLRC for compulsory arbitration. Consequently, the strike
was enjoined; Mahilum was ordered reinstated in the payroll; and the parties were directed to
refrain from committing any act that would exacerbate the situation.
NLRC Ruling
The NLRC Seventh Division rendered on June 30, 2011 dismissing the charge of unfair labor
practice against VECO for lack of merit, and declaring Mahilum's dismissal from employment as
legal.

CA ruling:
the CA deemed as not filed the Manifestation/Explanation filed by Atty. Asis, and dismissed the
certiorari petition for failure of Atty. Saladero to comply with the Resolution dated February 29,
2012.

The Issue
Whether Mahilum is validly dismissed?

Ruling
YES. Petitioners failed to satisfactorily show that the refusal of VECO to follow the grievance
machinery procedure under Section 4, Article XVII of the CBA in the suspension and termination
from employment of the other union officers and members constituted unfair labor practice.

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

Section 4, Article XVII of the CBA states that "(a)ny difference of opinion, controversy, dispute
problem or complaint arising from Company Union or Company-Worker relations concerning the
interpretation or application of this Agreement or regarding any matter affecting Company Union
or Company-Worker relations shall be considered a grievance."65 On the other hand, under
Section 13, Article XIV, "(t)he Company agrees that henceforth there shall be a fair and uniform
application of its rules and regulations. It is understood that disciplinary actions imposed on
employee or laborer shall be governed by the rules and regulations promulgated by the Company
as well as those provided for by existing laws on the matter."66redarclaw

The Court is in accord with the ratiocination of the NLRC that the sweeping statement "any matter
affecting Company-Union or Company Worker relations shall be considered a grievance" under
Section 4, Article XVII is general, as opposed to Section 13, Article XIV of the CBA, which is specific,
as it precisely refers to "what governs employee disciplinary actions."67 Thus, the NLRC correctly
ruled that VECO acted within the bounds of law when it proceeded with its administrative
investigation of the charges against other union officers and members.

This is consistent with jurisprudential rulings supporting an employer's free reign and "wide
latitude of discretion to regulate all aspects of employment, including the prerogative to instill
discipline in its employees and to impose penalties, including dismissal, upon erring employees.
This is management prerogative, where the free will of management to conduct its own affairs to
achieve its purpose takes form. The only criterion to guide the exercise of its management
prerogative is that the policies, rules[,] and regulations on work-related activities of the employees
must always be fair and reasonable[,] and the corresponding penalties, when prescribed, are
commensurate to the offense involved and to the degree of the infraction."68 The Labor Code
does not excuse employees from complying with valid company policies and reasonable
regulations for their governance and guidance.

Delving now into the merits of Mahilum's dismissal, the Court holds that the two requisites for a
valid dismissal from employment have been met, namely: (1) it must be for a just or authorized
cause; and (2) the employee must be afforded due process.70redarclaw

VECO anchored its termination of Mahilum on Article 282 (c) of the Labor Code and Articles 5.1
and 4.471 of VECO's Company Code of Discipline, which read as follows:
Article 282 (c) of tile Labor Code:

Art. 282. Termination By Employer. - An employer may terminate an employment for any of the
following causes:
xxxx

(c) fraud or willful breach of trust by the employee of the trust reposed in him by his employer or
duly authorized representative;
Company Code of Discipline:

Art. 5.1 Every employee shall uphold company trust and confidence as well as the trust
relationship between the company and its customers/suppliers.

Art. 4.4 Every employee shall willfully respect the honor or person of his immediate superior
and/or department head or company officers.
VECO found the following "Press Release", which Mahilum, together with other union officers,
caused to be published, as libelous for dishonoring and blackening the memory of then corporate
officer Luis Alfonso Y. Aboitiz, as well as for maliciously impeaching and besmirching the
company's name and reputation:

Mahilum's attempt to rationalize his act as part of his "moral, legal or social duty x x x to make
known his legitimate perception" against VECO does not, in any way, detract from the indubitable
fact that he intentionally, knowingly, and purposely caused the aforequoted "disparaging
publication."

Moreover, the Court is unmoved by Mahilum's insistence that there was nothing in his position
which called for management's trust and confidence in him.78 The NLRC, whose findings of facts
and conclusions are generally accorded not only great weight and respect but even with finality,
correctly held that, as Customer Service Representative, Mahilum occupied a position of
responsibility especially in dealing with VECO's clients.79 His duties and responsibilities included:
(1) accepting pertinent documents and processing electrical service applications; (2) verifying
authenticity of documents submitted; (3) interviewing customer-applicant on applications,
complaints, and requests; (4) preparing job assignment of service inspectors; (5) filing all service
orders of inspectors; (6) assessing and accepting bill deposits; (7) preparing and facilitating signing
of Metered Service Contract; (8) issuing service order for meter-related activities; (9) verifying
existing account of customer-applicant and approving account clearances; (10) accepting payment
of bills from customer-applicant for account clearances; and (11) processing payment
arrangements of customers.80 His performance was measured according to how he: (1) handled
customers' transactions; (2) made decisions in processing customers' applications and payment
arrangements; and (3) maintained posture at all times in handling customers' transactions even
wi.th angry customers.

It is clear from the foregoing that Mahilum was not an ordinary rank and-file employee. His job
entailed the observance of proper company procedures relating to processing and determination
of electrical service applications culminating in the signing of service contracts, which constitutes
the very lifeblood of VECO's existence. He was further entrusted with handling the accounts of
customers and accepting payments from them. Not only that, it was his duty to address customer
complaints and requests. Being a frontliner of VECO, with the most consistent and direct
interaction with customers, Mahilum's job involved a high degree of responsibility requiring a
substantial amount of trust and confidence on the part of his employer, i.e., VECO.

However, with the derogatory statements issued by Mahilum that were intended to incite, not just
public condemnation of VECO, but antagonism and obstruction against rate increases in electricity
that it may be allowed, by law, to fix, there can be no dispute that VECO, indeed, had lost its trust
and confidence in Mahilum and his ability to perform his tasks with utmost efficiency and loyalty
expected of an employee entrusted to handle customers and funds. Settled is the rule that an
employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests
of the employer. A company has the right to dismiss its employee if only as a measure of self-
protection.82redarclaw

Thus, Mahilum was terminated for a just and valid cause. Moreover, as declared by the NLRC,
VECO complied with the procedural due process requirements of furnishing Mahilum with two
written notices before the termination of employment can be effected. On May 8, 2009,83
Mahilum was apprised of the particular acts for which his termination was sought; and, after due
investigation, he was given a Notice of Decision84 on October 28, 2010 informing him of his
dismissal from service.
 8. CENTRAL AZUCARERA DE BAIS v. JANET T. SIASON
GR No. 215555, Jul 29, 2015
PERLAS-BERNABE, J.:
Facts:
The instant case stemmed from a complaint for illegal dismissal, nonpayment of wages, separation
pay, service incentive leave pay, retirement benefits, emergency cost of living allowance, with
damages and attorney's fees filed by Siason against petitioners before the NLRC.

Siason alleged that sometime in July 1988, petitioners hired her as a Purchasing Assistant, and
eventually, promoted her to the position of Purchasing Officer.

On October 3, 2011, Chan confronted her on the propriety of the delivery of a machine part via air
freight in lieu of a previously approved sea freight. She responded by explaining to Chan that such
delivery benefited the company, but the latter considered the same as a "big infraction of the
rules and regulations of [CABI]. Later that day, Siason received a letter signed by Chan informing
her that she had been committing various purchasing policy violations over the past 12 months
which are very unfavorable to CABI, and that the management could no longer tum a blind eye on
such violations; as such, she should tender her immediate resignation from CABI, "rather than [to]
force [his] hand. Siason was constrained to draft resignation letter which was acceptable to
petitioners.

On November 14, 2011, Siason filed the instant complaint against petitioners alleging that Chan
forced her to resign as shown by his October 3, 2011 letter.

In their defense, petitioners claimed that Siason was not constructively dismissed since she
voluntarily resigned from CABI. They explained that CABI's accounting department audited the
purchases made by Siason and discovered irregularities in the procurement of several supplies,
such as when she increased price quotations without the approval of CABI or of the supplier
concerned.

The LA Ruling
In a Decision dated May 24, 2012, the Labor Arbiter (LA) dismissed Siason's complaint for lack of
merit. Nevertheless, Siason was awarded separation pay equivalent to one (1) month pay for every
year of service in the amount of P923,210.00 in the interest of equity and compassion.

In ruling for petitioners, the LA found that petitioners did not constructively dismiss Siason, since
the latter voluntarily resigned from her job.

The NLRC Ruling

In a Decision dated December 26, 2012, the NLRC reversed the LA ruling and held that petitioners
constructively dismissed Siason.

Accordingly, it ordered petitioners to pay Siason the aggregate amount of P1,736,041.95

representing backwages, separation pay, and attorney's fees.

Contrary to the LA's findings, the NLRC found that Chan coerced Siason to resign, as may be
gleaned from his October 3, 2011 letter addressed to the latter.

The CA Ruling
In a Decision dated March 14, 2014, the CA affirmed the NLRC ruling. It held that petitioners
constructively dismissed Siason, considering that the latter would not have resigned from her job
had it not been for the pressure exerted by Chan on her.

Issue:
Whether Siason was constructively dismissed

Ruling:
No. Resignation is the formal pronouncement or relinquishment of a position or office. It is the
voluntary act of an employee who is in a situation where he believes that personal reasons cannot
be sacrificed in favor of the exigency of the service, and he has then no other choice but to
disassociate himself from employment. The intent to relinquish must concur with the overt act of
relinquishment; hence, the acts of the employee before and after the alleged resignation must be
considered in determining whether he in fact intended to terminate his employment. In illegal
dismissal cases, it is a fundamental rule that when an employer interposes the defense of
resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily
resigned.

In contrast, constructive dismissal exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion
in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise,
exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it could foreclose any choice by him except to forego
his continued employment.[41] It must be noted, however, that bare allegations of constructive
dismissal, when uncorroborated by the evidence on record, cannot be given credence.

Guided by the foregoing considerations, the Court finds that the CA erred in affirming the NLRC
ruling, which found Siason to have been constructively dismissed by petitioners.

A judicious review of the records reveals that CABI's accounting department indeed made an audit
of the purchases made by the company through its Purchasing Officer, Siason. This resulted in the
discovery of a number of questionable discrepancies in several purchasing transactions
undertaken by Siason, consisting in different price quotations for identical items contained in
various purchase documents prepared by Siason herself.[43]

Taking into consideration Siason's long tenure at CABI, as well as her close relationship with Chan,
the latter sent her the October 3, 2011 letter asking her to resign "rather than [to] force [his]
hand"[44] - which should be construed as Chan telling Siason to resign or be faced with an
administrative complaint. On October 4, 2011, Atty. Ner-Tiangco sent Siason another letter,
essentially confirming if the latter was going to resign or if she is subjecting herself to an
administrative investigation. Ultimately, Siason chose to tender her resignation to save herself
from the trouble of besmirching her employment record.

The foregoing facts belie Siason's argument that petitioners constructively dismissed her. These
circumstances show that she was given the option to voluntarily resign from CABI, instead of
dealing with an investigation which might result in her dismissal. Verily, Chan's decision to give
Siason a graceful exit rather than to file an action for redress is perfectly within the discretion of
the former; as it is not uncommon that an employee is permitted to resign to avoid the
humiliation and embarrassment of being terminated for just cause after the exposure of her
malfeasance.[45] It is settled that there is nothing reprehensible or illegal when the employer
grants the employee a chance to resign and save face rather than smear the latter's employment
record,[46] as in this case.

In sum, petitioners did not constructively dismiss Siason; but rather, the latter voluntarily resigned
from her job in order to avoid a full-blown administrative trial regarding her misdeeds which could
potentially result in her termination for just cause. While it may be said that she did not tender her
resignation wholeheartedly, circumstances of her own making did not give her any other option
but to voluntarily do so.[47] Therefore, in view of her voluntary resignation from CABI, she is not
entitled to any separation pay in the absence of any agreement with petitioners providing for
such.[48]

WHEREFORE, the petition is GRANTED. The Decision dated March 14, 2014 and the Resolution
dated November 25, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 130708 are hereby
REVERSED and SET ASIDE. Accordingly the Decision dated May 24, 2012 of the Labor Arbiter in
NLRC-NCR-CASE No. 11-17043-11 is REINSTATED with MODIFICATION in that the award of
separation pay is DELETED.

SO ORDERED.

Leonardo-De Castro,* (Chairperson), Peralta,** Bersamin, and Perez, JJ., concur.

PHILIPPINE AIRLINES, INC., PETITIONER, VS. ALEXANDER P.
BICHARA, RESPONDENT.
G.R. No. 213729, September 02, 2015
PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari[1] are the Decision[2] dated January 24, 2014 and
the Resolution[3] dated July 30, 2014 rendered by the Court of Appeals (CA) in CA-G.R. SP. No.
118777, which reversed and set aside the Decision[4] dated November 23, 2010 and the
Resolution[5] dated January 21, 2011 of the National Labor Relations Commission (NLRC) in NLRC
NCR 00-04-03414-94 (CA No. 013528-97) (AE-03-09), and thereby, ordered petitioner Philippine
Airlines, Inc. (PAL) to pay respondent Alexander P. Bichara (Bichara) salary differentials,
backwages, and retirement benefits.

The Facts

On October 28, 1968, PAL hired Bichara as a flight attendant. Sometime in 1971, PAL implemented
a retrenchment program. By April of that year, Bichara voluntarily resigned. On May 15, 1975, he
was rehired.[6]

In August 1993, Bichara was included in PAL's Purser Upgrading Program in which he graduated on
December 13, 1993. As flight purser, he was required to take five (5) check rides for his
performance evaluation and earn at least an 85% rating for each ride. However, Bichara failed in
the two (2) check rides with ratings of 83.46% and 80.63%. Consequently, on March 21, 1994,
Bichara was demoted to the position of flight steward.[7]
On March 22, 1994, Bichara appealed his demotion to PAL, but no action was taken; hence, he
filed a complaint for illegal demotion against PAL[8] before the NLRC-Regional Arbitration Branch,
docketed as NLRC NCR 04-03414-94 (illegal demotion case). Eventually, or on June 16, 1997, Labor
Arbiter Ricardo C. Nora (LA Nora) issued a Decision[9] (June 16, 1997 Decision) declaring Bichara's
demotion as illegal, and accordingly, ordered PAL to reinstate Bichara to his position as flight
purser.[10] PAL filed an appeal before the NLRC and later before the CA, both of which, however,
upheld LA Nora's finding. PAL no longer appealed to the Court, thus, it rendered the June 16, 1997
Decision final and executory on February 5, 2004.[11]

During the pendency of the illegal demotion case[12] before the CA, however, or on July 15, 1998,
PAL implemented another retrenchment program that resulted in the termination of Bichara's
employment.[13] This prompted him, along with more than 1,400 other retrenched flight
attendants, represented by the Flight Attendants and Stewards Association of the Philippines
(FASAP), to file on June 22, 1998, a separate complaint for unfair labor practice, illegal
retrenchment with claims for reinstatement and payment of salaries, allowances, backwages, and
damages[14] against PAL, docketed as NLRC-NCR Case No. 06-05100-98[15] (illegal retrenchment
case)[16] This case was appealed all the way to this Court, docketed as G.R. No. 178083 entitled
"Flight Attendants and Stewards Assn. of the Phils, v. PAL, Patria T. Chiong, and CA" (FASAP case),
which remains pending as of this time.[17]

On July 9, 2005, Bichara reached the 60 year-old compulsory retirement age under the PAL-FASAP
Collective Bargaining Agreement (CBA).[18]

On January 31, 2008, Bichara filed a motion for execution of LA Nora's June 16, 1997 Decision,[19]
which PAL opposed[20] by arguing that the "complaint for illegal demotion x x x was overtaken by
supervening events, i.e., the retrenchment of [Bichara] in 1998 and his having reached [the]
compulsory retirement age in 2005."[21]

The LA Ruling

In an Order[22] dated February 4, 2009 (February 4, 2009 Order), Labor Arbiter Antonio R. Macam
(LA Macam) granted Bichara's motion for execution, thus, directing the issuance of a writ of
execution against PAL and/or a certain Jose Garcia to jointly and severally pay Bichara: (a)
separation pay in lieu of reinstatement equivalent to one (1) month's pay for every year of service
counting from October 28, 1968 up to the present, excluding the period from April 1, 1971 until
May 15, 1975, or a period of 35 years; and (b) attorney's fees in the amount of P20,000.00.[23]

LA Macam declared that, notwithstanding the pendency before this Court of the illegal
retrenchment case, i.e., FASAP case, Bichara's termination was invalid, given that: (a) PAL did not
use a fair and reasonable criteria in effecting the retrenchment; (b) PAL disregarded the labor
arbiters' rulings in the illegal demotion and illegal retrenchment cases which were both
immediately executory; and (c) retrenchment was made during the pendency of the illegal
demotion case without the permission of the court where the case was pending.[24] For these
reasons, Bichara was entitled to reinstatement to his position as flight purser. However, since
Bichara may no longer be reinstated in view of his compulsory retirement in accordance with the
CBA, LA Macam, instead, ordered PAL to pay Bichara separation pay with the salary base of a flight
purser.[25]

Aggrieved, PAL appealed to the NLRC.

The NLRC Ruling

In a Decision[26] dated November 23, 2010, the NLRC reversed and set aside LA Macam's February
4, 2009 Order and denied the motion for execution for being moot and academic, considering
Bichara's compulsory retirement in 2005,[27] without prejudice to the latter's entitlement to
backwages and retirement benefits of a flight steward pursuant to this Court's final decision in the
FASAP case.[28]

At the outset, the NLRC ruled that Bichara's reinstatement could have taken effect, if at all, only on
January 31, 2008 when he sought the execution of the said relief.[29] In this light, his
reinstatement and corresponding backwages prior to said date must therefore be based on the
salary rate and other benefits attached to the position of flight steward to which he was
demoted/reverted.[30] (However, it declared that reinstatement is no longer possible as the same
was rendered moot and academic when he compulsorily retired in 2005.[31] On the other hand,
the NLRC concluded that the matter of payment of monetary benefits is not for it to order since it
is a relief pertaining to the pending FASAP case; as such, Bichara should pursue payment of
backwages when the decision in the FASAP case is due for execution. In this relation, the NLRC
remarked that LA Macam exceeded his authority in awarding separation pay in lieu of
reinstatement, since such relief is not contemplated in the decision sought to be executed, i.e., the
June 16, 1997 Decision.[32]

Both parties moved for reconsideration, which were, however, denied in a Resolution[33] dated
January 21, 2011. Dissatisfied, Bichara elevated the case to the CA through a petition for review on
certiorari.

The CA Ruling

In a Decision[34] dated January 24, 2014, the CA reversed and set aside the NLRC's ruling. It did
not find LA Macam to have exceeded his authority in ordering the payment of separation pay in
lieu of reinstatement since, in a long line of cases, this Court has consistently held that when
reinstatement is not possible due to over age, payment of separation pay is in place.[35] The CA,
however, observed that since Bichara was one of the retrenched employees involved in the FASAP
case, this Court's Decision dated October 2, 2009, wherein it ruled that the retrenchment was
illegal and thereby stated that "[f]light attendants who have reached their compulsory retirement
age of retirement shall receive backwages up to the date of their retirement only,"[36] should be
made to apply. Thus, instead of separation pay, Bichara is entitled to backwages from the time of
his retrenchment up to the time he reached the compulsory retirement age of 60. In addition,
since the June 16, 1997 Decision, rendered in the illegal demotion case, had already become final
and executory, he is entitled to salary differentials of a flight purser from a flight attendant from
March 21, 1994, i.e., the date of his demotion, up to the time of his retrenchment in July 1998.[37]
He is also entitled to retirement benefits in accordance with the existing CBA at the time of his
retirement.[38]

PAL moved for reconsideration[39] which was denied in a Resolution[40] dated July 30, 2014;
hence, this petition.

The Issue Before the Court

The essential issue to be resolved is whether or not the CA erred in reversing the NLRC's Decision
and thereby awarding Bichara the aforementioned monetary awards.

The Court's Ruling

The petition is partly meritorious.

A judgment should be implemented according to the terms of its dispositive portion is a long and
well-established rule.[41] As such, where the writ of execution is not in harmony with and exceeds
the judgment which gives it life, the writ has pro tanto no validity.[42]

A companion to this rule is the principle of immutability of final judgments, which states that a
final judgment may no longer be altered, amended or modified, even if the alteration, amendment
or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law
and regardless of what court renders it. Any attempt to insert, change or add matters not clearly
contemplated in the dispositive portion violates the rule on immutability of judgments.[43] But
like any other rule, this principle has exceptions, namely: (1) the correction of clerical errors; (2)
the so-called nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and
(4) whenever circumstances transpire after the finality of the decision rendering its execution
unjust and inequitable.[44]

In this case, the final judgment sought to be executed is LA Nora's June 16, 1997 Decision, which
was confined to the directive that PAL reinstate Bichara as a flight purser in view of his illegal
demotion to the position of flight attendant:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered declaring the illegality of
complainant's [Bichara] demotion/reversion to Flight Steward and ordering the respondents [PAL]
to reinstate the complainant to his position as Flight Purser within ten (10) days from receipt of
this Decision.
The claim for damages is dismissed for lack of merit.

SO ORDERED.[45]
Evidently, LA Macam went beyond the terms of the June 16, 1997 Decision when he, in his
February 4, 2009 Order, directed the issuance of a writ of execution ordering the payment of
separation pay in lieu of reinstatement:
WHEREFORE, finding merit in the complainant's [Bichara] Motion for Execution, the same is
hereby GRANTED. Let a Writ of Execution be issued ordering the respondents Philippine Airlines,
Inc. and/or Jose Garcia, in lieu of reinstating the complainant to the position of Flight Purser, to
jointly and severally PAY to the complainant his separation pay equivalent to one (1) month's pay
for every year of service counting from October 28, 1968 up to the present, excluding the period
from April 1, 1971 until May 15, 1975, or a period of thirty-five (35) years and to pay the
complainant the sum of Twenty Thousand Pesos (P20,000.00) for and as attorney's fees.

SO ORDERED.[46]
Unlike the cases[47] cited by the CA, which all involved illegal dismissal cases, it would not be
proper to accord such relief in this case since, in those cases, the awards of separation pay in lieu
of reinstatement were all hinged on the validity of the employee's dismissal. Here, the validity of
Bichara's termination is the subject matter of a separate case, i.e., the FASAP case, which is still
pending before this Court, and is also beyond the ambit of the illegal demotion proceedings.
Hence, LA Macam exceeded his authority when he ruled on this issue and directed PAL to pay
Bichara separation pay in lieu of reinstatement.

PAL's supervening retrenchment of its employees, which included Bichara, in July 1998, and his
compulsory retirement in July 2005, however, prevent the enforcement of the reinstatement of
Bichara to the position of flight purser under the June 16, 1997 Decision. Nonetheless, since this
Decision had already settled the illegality of Bichara's demotion with finality, this Court finds that
Bichara should, instead, be awarded the salary differential of a flight purser from a flight steward
from the time of his illegal demotion on March 21, 1994 up until the time he was retrenched in
July 1998. Notably, unlike LA Macam's award of separation pay in lieu of reinstatement, the award
of salary differential is not dependent on the validity of his termination, as it is, in fact, intrinsically
linked to the illegality of Bichara's demotion. Hence, with this direct relation, there should be no
obstacle in rendering this award.

Further, it should be pointed out that the principle of immutability of judgments, from which the
above-stated rule on writ of executions proceed, allow courts, as an exception, to recognize
circumstances that transpire after the finality of the decision which would render its execution
unjust and inequitable and act accordingly. Thus, in view of the supervening events above-
mentioned, this Court deems the award of salary differential to be the just and equitable award
under the circumstances herein prevailing. Jurisprudence holds that courts may modify or alter the
judgment to harmonize the same with justice and the facts when after judgment has been
rendered and the latter has become final, facts and circumstances transpire which render its
execution impossible or unjust,[48] as in this case.

As a last point, it deserves mentioning that since Bichara's illegal demotion has been finally
decreed, he should be entitled to (a) backwages, at the salary rate of a flight purser, from the time
of retrenchment in July 1998 up until his compulsory retirement in July 2005; (b) retirement
benefits of a flight purser in accordance with the existing CBA at the time of Bichara's retirement;
and (c) attorney's fees, moral, and exemplary damages, if any, but only if this Court, in the FASAP
case, finally rules that the subject retrenchment is invalid. Otherwise, he should only be entitled to
the above-stated salary differential, as well as the corresponding separation pay required under
the relevant CBA, or Article 297[49] (formerly Article 283) of the Labor Code if no such CBA
provision exists. The awards of backwages, and retirement benefits, including attorney's fees,
moral, and exemplary damages, if any, cannot, however, be executed in these proceedings since
they are incidents which pertain to the illegal retrenchment case, hence, executable only when the
FASAP case is finally concluded.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated January 24, 2014 and the
Resolution dated July 30, 2014 of Court of Appeals in CA-G.R. SP. No. 118777 are hereby
REVERSED and SET ASIDE. A new one is entered ORDERING petitioner Philippine Airlines, Inc. to
pay respondent Alexander P. Bichara the salary differential of a flight purser from a flight
attendant from the time of his illegal demotion on March 21, 1994 up until the time he was
retrenched on July 15, 1998.

SO ORDERED.

PHILIPPINE TRANSMARINE CARRIERS v. CESAR C. PELAGIO +

GR No. 211302, Aug 12, 2015
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated December 21, 2012
and the Resolution[3] dated February 17, 2014 of the Court of Appeals (CA) in CA-G.R. SP No.
122771, which dismissed the certiorari petition of petitioners Philippine Transmarine Carriers, Inc.
(PTCI), Carlos C. Salinas, and Norwegian Crew Management A/S (petitioners) before the CA on the
ground that the issues raised therein had become moot and academic on account of the
compromise agreement between petitioners and respondent Cesar C. Pelagio (Pelagio).

The Facts

PTCI, for and on behalf of his foreign principal, Norwegian Crew Management A/S, hired Pelagio as
a Motorman on board the vessel MN Drive Mahone for a period of six (6) months, under a
Philippine Overseas Employment Administration (POEA)-approved employment contract[4] dated
September 29, 2009, as well as the collective bargaining agreement[5] between Norwegian Crew
Management A/S and Associated Marine Officers' and Seamen's Union of the Philippines (CBA).
After being declared fit for employment, Pelagio boarded M/V Drive Mahone on November 3,
2009.[6]

Sometime in February 2010, Pelagio experienced difficulty in breathing and pains on the nape,
lower back, and joints while at work. Pelagio was then referred to a port doctor in Said, Egypt,
where he was diagnosed with "Myositis"[7] and declared unfit to work.[8] On March 2, 2010,
Pelagio was repatriated back to the Philippines for further medical treatment, and thereafter,
promptly sought the medical attention of the company--designated physician, Dr. Robert D. Lim
(Dr. Lim), at the Metropolitan Medical Center.[9]

After a series of medical and laboratory examinations, including chest x-ray, pulmonary function
tests, electroencephalogram, and other related physical examinations, Pelagio was finally
diagnosed to have Carpal Tunnel Syndrome, Bilateral L5-S1 Radiculopathy, Mild Degenerative
Changes, and Lumbosacral Spine[10] with an assessment of disability rating of Grade 11 - "slight
loss of lifting power of the trunk."[11]

On August 18, 2010, Pelagio sought a second opinion from a private orthopedic surgeon physician,
Dr. Manuel Fidel M. Magtira (Dr. Magtira), who assessed him with a Grade 8 disability - moderate
rigidity or two-thirds loss of motion or lifting power of the trunk- and declared him "permanently
UNFIT TO WORK in any capacity at his previous occupation."[12]

Pelagio sought payment of permanent total disability benefits from petitioners, but to no avail.
Hence, he filed a complaint[13] for disability benefits, reimbursement of medical expenses, illness
allowance, damages, and attorney's fees against petitioners before the Arbitration Branch of the
National Labor Relations Commission (NLRC), docketed as NLRC-NCR No. (M) 09-13299-10.[14]
Essentially, Pelagio contended that his inability to work for more than 120 days from repatriation
entitles him to permanent total disability benefits.[15]

For their part,[16] petitioners countered that Pelagio is not entitled to permanent total disability
benefits, considering that the independent physician, Dr. Magtira, assessed him with a Grade 8
impediment. In this relation, petitioners likewise claimed that on August 5, 2010, the company--
designated physician, Dr. Lim, assessed Pelagio with a Grade 11 disability - "slight loss of lifting
power of the trunk."[17] In view of the conflicting findings of the company-designated and
independent physicians, petitioners suggested that they seek a third mutually-appointed doctor to
comply with the provisions of the POEA-Standard Employment Contract, but Pelagio refused.[18]
Finally, petitioners averred that they offered the amount of US$13,437.00, the amount of benefit
corresponding to a Grade 11 impediment, pursuant to the CBA, but Pelagio rejected such
offer.[19]
The LA Ruling

In a Decision[20] dated April 29, 2011, the LA found that Pelagio was suffering from a permanent
partial disability, and accordingly, ordered petitioners to jointly and severally pay him the amount
of US$13,437.00.[21] The LA ruled that Pelagio's mere inability to work for 120 days from his
repatriation did not ipso facto mean that he is suffering from a permanent total disability,
especially in view of the disability assessments given by both the company-designated and the
independent physicians.[22] On this note, the LA gave weight to the findings of the company-
designated physician that Pelagio was suffering from a Grade 11 impediment, and thus, must only
be awarded disability benefits corresponding thereto.[23]

Dissatisfied, Pelagio appealed to the NLRC.[24]

The NLRC Ruling

In a Decision[25] dated August 24, 2011, the NLRC reversed and set aside the LA ruling, and
accordingly, awarded Pelagio the amount of US$77,000.00 at its peso equivalent at the time of
actual payment representing permanent total disability benefits and attorney's fees.[26]

The NLRC found that the records are bereft of anything that would support petitioners' claim that
the company-designated physician indeed gave Grade 11 disability rating, and thus, deemed that
there was no assessment made on him.[27] In view thereof, the NLRC ruled that Pelagio's disability
went beyond 240 days without a declaration that he is fit to resume work or an assessment of
disability rating, and as such, he is already entitled to permanent total disability benefits as stated
under the CBA.[28]

Petitioners moved for reconsideration,[29] which was, however, dismissed in a Resolution[30]

dated October 4, 2011. Aggrieved, petitioners filed a petition for certiorari[31] before the CA,
docketed as CA G.R. SP No. 122771.

During the pendency of the certiorari proceedings before the CA, the parties executed a
Satisfaction of Judgment [32] dated December 21, 2011 stating that petitioners had already given
Pelagio the amount of P3,313,772.00 as full and complete satisfaction of the NLRC ruling.
However, it is likewise stated therein that such satisfaction of judgment "is without prejudice to
[petitioners'] petition for certiorari pending with the [CA] x x x," and that the same was "being
made only to prevent imminent execution being undertaken by the NLRC and [Pelagio]."[33] On
even date, Pelagio likewise executed a Receipt of Paymene[34] acknowledging receipt of the
aforesaid amount, but recognizing that such payment is "understood to be without prejudice to
the pending petition for certiorari filed by [petitioners] before the [CA]."[35] Pelagio further
executed an Affidavit of Claimant[36] stating that he "understand[s] that payment is hereby being
made by the shipowners/manning agents to [him] only to prevent further execution proceedings
that [he has] initiated with the NLRC;" and that he "recognize[s] the NLRC's jurisdiction on
Restitution proceedings, in case of a reversal of judgment by the Higher Courts x x x."[37] On
February 10, 2012, the NLRC issued an Order[38] approving the settlement and considered the
case closed and terminated.

The CA Ruling

In a Decision[39] dated December 21, 2012, the CA dismissed the certiorari petition, ruling that
the Satisfaction of Judgment executed by the parties is in the nature of a compromise agreement,
which was properly approved by the NLRC, as it did not contravene any law, morals, public policy,
or public order.[40] In this regard, the CA held that the issues raised in the petition had already
been rendered moot and academic, and as such, the petition must be dismissed without going
into the merits of the case.[41]

Petitioners moved for reconsideration[42] but was denied in a Resolution[43] dated February 17,
2014; hence, this petition.

The Issue Before the Court

The primordial issue for the Court's resolution is whether or not the CA correctly dismissed the
certiorari petition on the basis of the compromise agreement between the parties. Otherwise
stated, the issue is whether or not the execution of the Satisfaction of Judgment between the
parties rendered the certiorari proceedings before the CA moot and academic.

The Court's Ruling

The petition is meritorious.

A compromise agreement is a contract whereby the parties, by making reciprocal concessions,

avoid a litigation or put an end to one already commenced.[44] To be considered valid and binding
between the contracting parties, a compromise agreement must be: (a) not contrary to law,
morals, good customs, public order, and public policy; (b) freely and intelligently executed by and
between the parties; and (c) compliant with the requisites and principles of contracts.[45] Once
entered into, it has the effect and the authority of res judicata upon the parties.[46] In other
words, a valid compromise agreement may render a pending case moot and academic. However,
the parties may opt to put therein clauses, conditions, and the like that would prevent a pending
case from becoming moot and academic - such as when the execution of such agreement is
without prejudice to the final disposition of the said case. After all, a compromise agreement is
still a contract by nature, and as such, the parties are free to insert clauses to modify its legal
effects, so long as such modifications are not contrary to law, morals, good customs, public order,
or public policy.[47]
In the instant case, it is undisputed that the parties had entered into a Satisfaction of Judgment
signifying that petitioners had already given Pelagio the amount of P3,313,772.00 as full and
complete satisfaction of the NLRC ruling. While this document may be properly deemed as a
compromise agreement, it is conditional in nature, considering that it is without prejudice to the
certiorari proceedings pending before the CA, i.e., it obliges Pelagio to return the aforesaid
proceeds to petitioners should the CA ultimately rule in the latter's favor. In Leonis Navigation Co.,
Inc. v. Villamater[48] (Leonis Navigation), the Court held that such an agreement will not render a
pending case moot and academic as it does not preclude the employer from recovering from the
employee should the courts ultimately decide in favor of the former, to wit:
Simply put, the execution of the final and executory decision or resolution of the NLRC shall
proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper
court. In the present case, petitioners already paid Villamater's widow, Sonia, the amount of
P3,649,800.00, representing the total and permanent disability award plus attorney's fees,
pursuant to the Writ of Execution issued by the Labor Arbiter. Thereafter, an Order was issued
declaring the case as "closed and terminated." However, although there was no motion for
reconsideration of this last Order, Sonia was, nonetheless, estopped from claiming that the
controversy had already reached its end with the issuance of the Order closing and terminating
the case. This is because the Acknowledgment Receipt she signed when she received petitioners'
payment was without prejudice to the final outcome of the petition for certiorari pending before
the CA.[49] (Emphasis and underscoring supplied)
However, in Career Philippines Ship Management, Inc. v. Madjus[50] (Career Philippines), the
Court made a seemingly contrary ruling from that in Leonis Navigation, holding that such an
agreement is tantamount to an absolute amicable settlement, thus, rendering the certiorari
petition before the CA dismissible for being moot and academic, viz.:
In effect, while petitioner had the luxury of having other remedies available to it such as its
petition for certiorari pending before the appellate court, and an eventual appeal to this Court,
respondent, on the other hand, could no longer pursue other claims, including for interests that
may accrue during the pendency of the case.

Contrary to petitioner's assertion, it could not, at the time respondent moved for the execution of
the Labor Arbiter's monetary awards, have been compelled to immediately pay the judgment
award, for it had filed with the NLRC an appeal bond, intended to assure respondent that if he
prevailed in the case, he would receive the money judgment in his favor upon the dismissal of the
employer's appeal. The Labor Arbiter and the appellate court may not thus be faulted for
interpreting petitioner's "conditional settlement" to be tantamount to an amicable settlement of
the case resulting in the mootness of the petition for certiorari.[51] (Emphasis supplied,
underscoring in the original)
Fortunately, the Court had the opportunity to reconcile the ostensibly opposing pronouncements
in the Leonis Navigation and Career Philippines cases in Philippine Transmarine Carriers, Inc. v.
Legaspi,[52] (Philippine Transmarine) in this wise:
In Career Philippines, believing that the execution of the LA Decision was imminent after its
petition for injunctive relief was denied, the employer filed before the LA a pleading embodying a
conditional satisfaction of judgment before the CA and, accordingly, paid the employee the
monetary award in the LA decision. In the said pleading, the employer stated that the conditional
satisfaction of the judgment award was without prejudice to its pending appeal before the CA and
that it was being made only to prevent the imminent execution.

The CA later dismissed the employer's petition for being moot and academic, noting that the
decision of the LA had attained finality with the satisfaction of the judgment award. This Court
affirmed the ruling of the CA, interpreting the "conditional settlement" to be tantamount to an
amicable settlement of the case resulting in the mootness of the petition for certiorari,
considering (i) that the employee could no longer pursue other claims, and (ii) that the employer
could not have been compelled to immediately pay because it had filed an appeal bond to ensure
payment to the employee.

Stated differently, the Court ruled against the emvlover because the conditional satisfaction of
judgment signed by the parties was highly prejudicial to the employee. The agreement stated that
the payment of the monetary award was without prejudice to the right of the employer to file a
petition for certiorari and appeal, while the employee agreed that she would no longer file any
complaint or prosecute any suit of action against the employer after receiving the payment.

In contrast, in Leonis Navigation, after the NLRC resolution awarding disability benefits became
final and executory, the employer paid the monetary award to the employee. The CA dismissed
the employer's petition for certiorari, ruling that the final and executory decisions or resolutions of
the NLRC rendered appeals to superior courts moot and academic. This Court disagreed with the
CA and held that final and executed decisions of the NLRC did not prevent the CA from reviewing
the same under Rule 65 of the Rules of Court. It was further ruled that the employee was
estopped from claiming that the case was closed and terminated, considering that the employee's
Acknowledgment Receipt stated that such was without prejudice to the final outcome of the
petition for certiorari pending before the CA.[53] (Emphases and underscoring supplied)
Ultimately, in Philippine Transmarine, the Court ruled that since the agreement in that case was
fair to the parties in that it provided available remedies to both parties, the certiorari petition was
not rendered moot despite the employer's satisfaction of the judgment award, as the respondent
had obliged himself to return the payment if the petition would be granted.[54]

In the instant case, the body of the Satisfaction of Judgment entered into by petitioners and
Pelagio reads:
1. That complainant Cesar C. Pelagio received the sum of Three Million Three Hundred Thirteen
Thousand Seven Hundred [Seventy-Two] Pesos (PHP3,313,772.00), as full and complete
satisfaction of the Decision and Resolution of this Honorable Commission (Fourth Division) dated
24 August 2011 and 4 October 2011. That payment is hereby made to complainant only to prevent
imminent execution that the NLRC and the complainant are undertaking.
2. That said payment was made by means of Citibank Check No. 1000006094 dated 21 December
2011 in the sum of Three Million Three Hundred Thirteen Thousand Seven Hundred (Seventy-Two]
Pesos (PHP3,313,772.00) payable to complainant Cesar C. Pelagio.

3. That by virtue of said payment, which is in full and complete satisfaction of the judgment award
as indicated in the Decision and Resolution of this Honorable Commission (Fourth Division) dated
24 August 2011 and 4 October 2011 respectively, herein complainant has no further claims against
respondents Philippine Transmarine Carriers, Inc./Mr. Carlos C. Salinas and/or Norwegian Crew
Mangament A/S and will no longer pursue the execution proceedings he initiated by virtue of the
judgment award of the NLRC.

4. That this Satisfaction of Judgment is without prejudice to herein respondents' Petition for
Certiorari pending with the Court of Appeals docketed as case entitled "Philippine Transmarine
Carriers, Inc./Mr. Carlos C. Salinas and/or Norwegian Crew Mangament A/S vs. NLRC and Cesar C.
Pelagio" and this Satisfaction of Judgment is being made only to prevent imminent execution
being undertaken by the NLRC and complainant.[55]
On the other hand, the Receipt for Payment executed by Pelagio provides:
Received from DEL ROSARIO & DEL ROSARlO Citibank Check No. 1000006094 dated 20 December
2011 in the sum of Three Million Three Hundred Thirteen Thousand Seven Hundred [Seventy-Two]
Pesos (PHP3,313,772.00) payable to Cesar C. Pelagio, in full and complete payment of the
judgment award. That payment is hereby made to the complainant only to prevent imminent
execution of the Decision and the Resolution of the NLRC (Fourth Division) dated 24 August 2011
and 4 October 2011 docketed as NLRC LAC Case No. M-05-000458-11-M/NLRC NCR Case No. 09-
13299-10-M case entitled "Cesar C. Pelagio vs. Transmarine Carriers, Inc. et al." This payment is
also understood to be without prejudice to the pending Petition for Certiorari filed by the
respondents before the Court of Appeals, case entitled "Philippine Transmarine Carriers, Inc.
and/or Mr. Carlos C. Salinas and Norwegian Crew Management A/S versus National Labor
Relations Commission and Cesar C. Pelagio.

I hereby certify and warrant that if any other person will claim from the vessel, her Owners,
manager, charterers, agents or P & I Club his compensation/damages in connection with my
illness, I shall hold said vessel/persons free and harmless from any and all claims and liabilities
whatsoever.[56]
Finally, pertinent parts of the Affidavit of Claimant executed by Pelagio states:
3. That in connection with my claim, I have discussed this matter with my lawyer (Valmores and
Valmores Law Offices-Atty. Romulo P. Valmores/Atty. Christopher Rey P. Valmores) and Del
Rosario & Del Rosario and the manning agents and after discussion, to my full and complete
satisfaction, I have freely and voluntarily agreed to a full and final payment of all my past, present
and future claims against the vessel MV Drive Mahone her Owners, agents and operators in an
amount not exceeding US$77,000.00 or its equivalent in Philippine currency. That I understand
that payment is hereby being made by the shipowners/manning agents to me only to prevent
further execution proceedings that I have initiated with the NLRC.
4. That I understand that the payment of the judgment awards in the amount of US$77,000.00 or
its equivalent in Philippine currency is without prejudice to the shipowners'/manning agents'
Petition for Certiorari pending with the Court of Appeals case entitled "Philippine Transmarine
Carriers, Inc. and/or Mr. Carlos C. Salinas and Norwegian Crew Management A/S versus National
Labor Relations Commission and Cesar C. Pelagio";

5. That I understand that in case of reversal and/or modification of the Decision and the
Resolution dated 24 August 2011 and 4 October 2011 of the NLRC by the Court of Appeals and/or
the Supreme Court, I shall return whatever is due and owing to shipowners/manning agents
without need of further demand;

6. That I recognize the NLRC's jurisdiction on Restitution proceedings, in case of a reversal of

judgment by the Higher Courts by virtue of the NLRC 2011 Rules of Procedure, Rule XI, Section 14
thereof, to wit:
"SECTION 14. EFFECT OF REVERSAL OF EXECUTED JUDGMENT. - Where the executed judgment is
totally or partially reversed or annulled by the Court of Appeals or the Supreme Court, the Labor
Arbiter shall, on motion, issue such orders of restitution of the executed awards, except wages
paid during reinstatement pending appeal."[57]
A reading of the foregoing documents reveals that: (a) petitioners paid Pelagio P3,313,772.00 as
full and complete satisfaction of the NLRC rulings; (b) such payment is made in order to prevent
imminent execution of such rulings being undertaken by the NLRC and Pelagio; (c) such payment is
without prejudice to the outcome of the certiorari proceedings before the CA; and (d) in case of
partial or complete reversal of the NLRC judgment by the CA, Pelagio is obliged to reimburse
petitioners accordingly. More importantly, the foregoing documents do not have any clause
prohibiting either of the parties from seeking further redress against each other. Thus, both
petitioners and Pelagio may pursue any of the available legal remedies should any eventuality
arise in their dispute, i.e., when the CA renders a ruling adverse to their respective interests. It can,
therefore, be said that similar to the Philippine Transmarine case above-cited, the agreement
entered into by the petitioners and Pelagio is fair and is not prejudicial to either party, and thus,
such agreement did not render the certiorari proceedings before the CA moot and academic.

In sum, the CA erred in dismissing the certiorari petition before it on the basis of the compromise
agreement between petitioners and Pelagio. In view of the fact that such dismissal was not based
on the merits, the Court deems it appropriate to remand the case to the CA for further
proceedings.

WHEREFORE, the petition is GRANTED. Accordingly the Decision dated December 21, 2012 and the
Resolution dated February 17, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 122771 are
hereby REVERSED and SET ASIDE. CA-G.R. SP No. 122771 is REINSTATED and REMANDED to the
CA, which is hereby directed to resolve the case on the merits.
SO ORDERED.

JOSE RUDY L. BAUTISTA v. ELBURG SHIPMANAGEMENT

PHILIPPINES
GR No. 206032, Aug 19, 2015
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated September 6, 2012
and the Resolution[3] dated February 19, 2013 of the Court of Appeals (CA) in CA-G.R. SP No.
117921, which reversed and set aside the Decision[4] dated September 20, 2010 and the
Resolution[5] dated December 20, 2010 of the National Labor Relations Commission (NLRC) in
NLRC NCR Case No. (M) 09-13249-09, and dismissed petitioner Jose Rudy L. Bautista's (petitioner)
claim for total and permanent disability benefits.

The Facts

On August 7, 2008, petitioner entered into a nine (9)-month Contract of Employment with
respondent Elburg Shipmanagement Philippines, Inc. (Elburg) on behalf of its foreign principal,
respondent Augustea Shipmanagement Italy (Augustea), as Chief Cook on board the vessel "MV
Lemno." Prior to his embarkation, petitioner underwent a Pre-Employment Medical Examination
(PEME), and was certified as fit for sea duty by the company-designated physician. He then
boarded the vessel on August 14, 2008.[6]

During petitioner's employment, he complained of breathing difficulty, weakness, severe fatigue,

dizziness, and grogginess. Upon referral to a portside hospital, he was suspected to have "thoracic
aneurysm," and thus, was recommended for medical repatriation. Following his repatriation on
May 8, 2009, petitioner was referred to Elburg's designated physicians at the Metropolitan
Medical Center (MMC) for further evaluation and medical treatment. After several tests, he was
diagnosed with "Hypertensive Cardiovascular Disease" and "Diabetes Mellitus II," and thoracic
aneurysm was eventually ruled out.[7] On September 4, 2009, the company-designated physician,
Dr. Melissa Co Sia (Dr. Sia) issued a working impression that petitioner was suffering from
"Hypertension", "Dyslipidemia", and "Chronic Obstructive Pulmonary Disease," with a declaration
that he would be cleared to go back to his duties as a seafarer as soon as his blood pressure and
lipid levels stabilize.[8]

On September 16, 2009, petitioner filed a complaint against respondents Augustea, Elburg, and
the latter's President, Captain Antonio S. Nombrado (respondents), seeking to recover disability
benefits applicable to officers amounting to US$118,800.00[9] pursuant to their Collective
Bargaining Agreement[10] (CBA), as well as damages, and attorney's fees, alleging that: (a) his
illnesses were occupational diseases as they were developed, enhanced, and aggravated by the
nature of his work, as well as the environment at the jobsite; and (b) he was unable to return to
work within 120 days, thereby rendering his disability permanent and total.[11]

For their part,[12] respondents maintained that petitioner's Diabetes Mellitus II was familial or
genetic in nature, and thus, not work-connected. Additionally, they averred that his Hypertensive
Cardiovascular Disease was a mere complication thereof, and as such, is also not work-related.[13]

Thereafter, petitioner submitted the medical certificate and evaluation dated January 6, 2010 of
his own physician, Dr. Efren R. Vicaldo (Dr. Vicaldo), who opined that his illnesses - i.e.,
"Hypertensive atherosclerotic cardiovascular disease" and "Diabetes mellitus" - rendered him unfit
to work as seaman in any capacity, and were considered work-related/ aggravated.[14] The said
documents were only attached by petitioner in his reply during the proceedings before the Labor
Arbiter (LA).[15]

The LA Ruling

In a Decision[16] dated February 19, 2010, the LA ordered respondents, jointly and severally, to
pay petitioner US$89,100.00 representing total and permanent disability benefits under the CBA,
plus ten percent (10%) thereof as attorney's fees.

The LA ruled that petitioner's condition was undoubtedly contracted during the term of his
contract when he experienced the symptoms of his ailment, considering that he was declared fit
for sea duty in his PEME. The LA also lent more credence to the medical certificate issued by Dr.
Vicaldo, as being more reflective of petitioner's actual condition. Moreover, while the LA conceded
that Diabetes Mellitus II was not a compensable ailment, since petitioner was likewise diagnosed
with Hypertensive Cardiovascular Disease, an occupational disease, by no less than the company-
designated doctor, his illness remained compensable. Finally, the LA upheld the presumption of
incapacity in favor of petitioner considering that his ailment subsisted for more than 120 days.[17]
Aggrieved, respondents appealed to the NLRC.[18]

The NLRC Ruling

In a Decision[19] dated September 20, 2010, the NLRC dismissed respondents' appeal and
affirmed the LA's findings. It ruled that while it is true that Diabetes Mellitus II is not an
occupational disease, still, the medical diagnosis of petitioner included a finding of Hypertensive
Cardiovascular Disease which is listed under Section 32-A of the Philippine Overseas Employment
Administration - Standard Employment Contract (POEA-SEC). It further noted that petitioner's
medical reports did not state that he suffered from Diabetes Mellitus II with Hypertensive
Cardiovascular Disease which would have implied that the latter ailment was a mere necessary
complication thereof. Aside from echoing the findings of Dr. Viealdo that petitioner's illnesses
were work-related, the NLRC ruled that absent any showing that his illnesses were pre-existing,
the reasonable presumption is that he obtained them during the period of his employment, and
that they were aggravated by the nature of his work as Chief Cook.[20]

Respondents moved for reconsideration[21] which the NLRC denied in a Resolution[22] dated
December 20, 2010. Undeterred, they filed a petition for certiorari before the Court of Appeals
(CA).

Meanwhile, the NLRC issued an entry of judgment in the case, constraining respondents to settle
the full judgment award.[23]

The CA Ruling

In a Decision[24] dated September 6, 2012, the CA granted respondents' certiorari petition and
thereby dismissed petitioner's complaint for disability benefits. It ruled that petitioner failed to
prove, through substantial evidence, that his Hypertension and Cardiovascular Disease were
suffered during the effectivity of his employment, and that they were connected to his work as
Chief Cook. It did not give probative weight to the medical evaluation issued by Dr. Viealdo as he
attended to petitioner only once and never conducted any medical tests on him, and in fact,
merely limited himself to a medical history review and physical examination of petitioner, noting
too that petitioner only sought Dr. Viealdo's medical opinion four months after he filed his
complaint. Finally, the CA concluded that the "120-day rule" is not absolute but is dependent on
the circumstances of each case, and that petitioner's mere failure to return to his work after 120
days does not ipso facto entitle him to maximum disability benefits.[25]

Undaunted, petitioner sought reconsideration, which was, however, denied in a Resolution[26]

dated February 19, 2013; hence, this petition.

The Issue Before the Court

The core issue in this case is whether or not the the CA correctly ruled that the NLRC committed
grave abuse of discretion in granting petitioner's claim for total and permanent disability benefits.

The Court's Ruling

The petition is meritorious.

The entitlement of overseas seafarers to disability benefits is a matter governed, not only by
medical findings, but also by law and contract.[27] The pertinent statutory provisions are Articles
197 to 199[28] (formerly Articles 191 to 193) of the Labor Code in relation to Section 2,[29] Rule X
of the Rules implementing Title II, Book IV of the said Code;[30] while the relevant contracts are:
(a) the POEA-SEC, which is a standard set of provisions that is deemed incorporated in every
seafarer's contract of employment; (b) the CBA, if any; and (c) the employment agreement
between the seafarer and his employer.[31]

In this case, petitioner executed his employment contract with respondents on August 7, 2008.
Accordingly, the provisions of the 2000 POEA-SEC are applicable and should govern their relations.
Sec. 20 (B) (6), of the 2000 POEA-SEC provides:

SECTION 20. COMPENSATION AND BENEFITS

xxxx

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

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

xxxx

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness
the seafarer shall be compensated in accordance with the schedule of benefits arising from an
illness or disease shall be governed by the rates and the rules of compensation applicable at the
time the illness or disease was contracted. (Emphasis supplied.)

Pursuant to the afore-quoted provision, two (2) elements must concur for an injury or illness to be
compensable: first, that the injury or illness must be work-related; and second, that the work-
related injury or illness must have existed during the term of the seafarers employment
contract.[32]

The 2000 POEA-SEC defines "work-related injury" as "injury(ies)" resulting in disability or death
arising out of and in the course of employment" and "work-related illness" as "any sickness
resulting to disability or death as a result of an occupational disease listed under Section 32-A of
this contract with the conditions set therein satisfied," viz.:

The seafarer's work must involve the risks described herein;

The disease was contracted as a result of the seafarer's exposure to the described risks;
The disease was contracted within a period of exposure and under such other factors necessary to
contract it; and
There was no notorious negligence on the part of the seafarer.

Section 32-A (11) of the 2000 POEA-SEC expressly considers Cardiovascular Disease (CVD) as an
occupational disease if it was contracted under any of the following instances, to wit:

(a) If the heart disease was known to have been present during employment, there must be proof
that an acute exacerbation was clearly precipitated by the unusual strain by reasons of the nature
of his work.

(b) The strain of work that brings about an acute attack must be sufficient

severity and must be followed within 24 hours by the clinical signs of cardiac insult to constitute
causal relationship.

(c) If a person who was apparently asymptomatic before being subjected to strain at work showed
signs and symptoms of cardiac injury during the performance of his work and such symptoms and
signs persisted, it is reasonable to claim a causal relationship. (Emphasis supplied)

Consequently, for CVD to constitute as an occupational disease for which the seafarer may claim
compensation, it is incumbent upon said seafarer to show that he developed the same under any
of the three conditions identified above.[33]

Records reveal that sometime during the performance of his duties as Chief Cook on board MV
Lemno, petitioner complained of breathing difficulty, weakness, severe fatigue, dizziness, and
grogginess, necessitating portside medical intervention and consequent medical repatriation,
albeit, on the basis of suspected "thoracic aneurysm." Shortly after repatriation, he was
diagnosed, inter alia, with Hypertensive Cardiovascular Disease, also known as hypertensive heart
disease, which refers to a heart condition caused by high blood pressure.[34]

Petitioner's condition was apparently asymptomatic[35] since he manifested no signs and

symptoms of any cardiac injury prior to his deployment onboard MV Lemno and was, in fact,
declared fit for sea duty following his PEME. Notably, petitioner's physical discomforts on-board
the vessel already bore the hallmarks of CVD for which he was eventually diagnosed upon his
repatriation. The said diagnosis was recognized by both the company-designated doctors and
petitioner's own doctor, and was well-documented. Thus, absent any showing that petitioner had
a pre-existing cardiovascular ailment prior to his embarkation, the reasonable presumption is that
he acquired his hypertensive cardiovascular disease in the course of his employment pursuant to
Section 32-A (11) (c) of the 2000 POEA-SEC, which recognizes a "causal relationship" between a
seafarer's CVD and his job, and qualifies his CVD as an occupational disease. In effect, the said
provision of law establishes in favor of a seafarer the presumption of compensability of his
disease.

A party in whose favor the legal presumption exists may rely on and invoke such legal presumption
to establish a fact in issue.[36] The effect of a presumption upon the burden of proof is to create
the need of presenting evidence to overcome the prima facie case created, thereby which, if no
contrary proof is offered, will prevail.[37] However, other than their bare and self-serving
assertion that petitioner's Hypertensive Cardiovascular Disease was a mere complication of his
Diabetes Mellitus II, respondents failed to introduce countervailing evidence that would otherwise
overcome the disputable presumption of compensability of the said disease.

Verily, it is not required that the employment of petitioner as Chief Cook should be the sole factor
in the development of his hypertensive cardiovascular disease so as to entitle him to claim the
benefits provided therefor. It suffices that his employment as such had contributed, even in a
small degree, to the development of the disease.[38] Thus, it is safe to presume that, at the very
least, the nature of petitioner's employment had contributed to the aggravation of his illness,
considering that as Chief Cook, he was exposed to constant temperature changes, stress, and
physical strain.

The fact that petitioner was also diagnosed as having Diabetes Mellitus II was of no moment since
the incidence of a listed occupational disease, whether or not associated with a non-listed ailment,
is enough basis for compensation, although modern medicine has in fact recognized that diabetes,
heart complications, hypertension and even kidney disorders are all inter-related diseases.[39]
Besides, Section 20 (B) (4)[40] of the 2000 POEA-SEC explicitly establishes a disputable
presumption of compensability in favor of the seafarer and the burden rests upon the employer to
overcome the statutory presumption,[41] which respondents failed to discharge. Notably, it was
not disputed that from the time of petitioner's repatriation until the filing of the present petition,
he was not able to return to his customary work.

Accordingly, the Court finds that the CA committed reversible error in granting respondents'
certiorari petition since the NLRC did not gravely abuse its discretion in awarding total and
permanent disability benefits in favor of petitioner, the same being amply supported by
substantial evidence.

WHEREFORE, the petition is GRANTED. The Decision dated September 6, 2012 and the Resolution
dated February 19, 2013 of the Court of Appeals in CA-G.R. SP No. 117921 are hereby REVERSED
and SET ASIDE. The Decision dated September 20, 2010 and the Resolution dated December 20,
2010 of the National Labor Relations Commission in NLRC NCR Case No. (M) 09-13249-09 granting
petitioner Jose Rudy L. Bautista's claim for total and permanent disability benefits are
REINSTATED.

SO ORDERED.
CEBU PEOPLE'S MULTI-PURPOSE COOPERATIVE and MACARIO G.
QUEVEDO, Petitioners, vs. NICERATO E. CARBONILLA, JR.,
Respondent.
January 27, 2016 G.R. No. 212070
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated June 25, 2013 and the
Resolution3 dated March 17, 2014 of the Court of Appeals (CA) in CA-G.R. CEB SP No. 05403,
which reversed and set aside the Decision4 dated April 29, 2010 and the Resolution5 dated June
30, 2010 of the National Labor Relations Commission (NLRC) in NLRC Case No. VAC-10-000977-
2009, and accordingly, declared respondent Nicerato E. Carbonilla, Jr. (Carbonilla, Jr.) to have been
illegally dismissed by petitioner Cebu People's Multi-Purpose Cooperative (CPMPC).

The Facts

On November 14, 2005, CPMPC hired Carbonilla, Jr. as a Credit and Collection Manager and, as
such, was tasked with the handling of the credit and collection activities of the cooperative, which
included recommending loan approvals, formulating and implementing credit and collection
policies, and conducting trainings.6 Sometime in 2007, CPMPC underwent a reorganization
whereby Carbonilla, Jr. was also assigned to perform the duties of Human Resources Department
(HRD) Manager, i.e., assisting in the personnel hiring, firing, and handling of labor disputes.7 In
2008, he was appointed as Legal Officer and subsequently, held the position of Legal and
Collection Manager.8

However, beginning February 2008, CPMPC, through its HRD Manager, Ma. Theresa R. Marquez
(HRD Manager Marquez), sent various memoranda to Carbonilla, Jr. seeking explanation on the
various infractions he allegedly committed. The aforesaid memoranda, as well as his replies
thereto, are detailed as follows:

CPMPC'S MEMORANDA:

CARBONILLA, JR.'S REPLIES:

HRD 202 File 2008.02.19.017 dated February 19, 20089

- Memorandum relative to his non-attendance to the CLIMBS HOME PROTEK Dinner Meeting.
He claimed that he was belatedly informed and was not given any written notification of the said
meeting, and that he did not find any relation of the said meeting to his job as a Legal Officer.10

HRD 202 File 2008.02.26.034 dated February 26, 200811- Memorandum relative to his non-
submission of Weekly Executive Summary Reports and Itinerary for the months of January and
February.

No reply.
HRD 202 File 2008.02.26.035 dated February 26, 200812 - Memorandum on why he allowed
Joelito Aguipo (Aguipo), a contractual collector for the Bantayan Branch, to drive a motorcycle
without a driver's license and not being the owner thereof.

He stated that there was no policy requiring field collectors to own – in a strict legal sense - a
motorcycle, but merely to possess the same so he can effect collections more efficiently. Besides,
Aguipo was allowed to drive due to the urgency of collecting from the Bantayan Branch. In any
case, there is an Affidavit of Undertaking13 exonerating CPMPC from any liability.14

HRD 202 File 2008.02.26.036 dated

February 26, 200815- Memorandum on why he failed to: (a) account for a motorcycle being used
by a former employee under his branch; and ( b) reclassify the vehicle of another employee.

He sought clarification of the charges against him, and at the same time, threatened HRD Manager
Marquez that if this Memorandum is "proven malicious, [she] might be answerable to a certain
degree of civil liability which the 1987 Constitution has given to individuals."16

HRD 202 File 2008.06.26.086 dated June 26, 200817

- Memorandum on why he insulted his superior, CPMPC Chief Operation Officer Agustina L.
Bentillo (COO Bentillo), in front of her subordinates, with the statement: "Ikaw ra may di mosalig
ba, ka kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka" 18 or "You're the only
one who doesn't trust her, she is very qualified, you even lose in comparison to her."19

He dismissed the charge as made with malicious intent and aimed to discredit his person, claiming
that he only had a discussion with his superior, particularly, about Alfonso Vasquez (Vasquez), who
was unsystematically pulled out from his department without his consent. He added that if COO
Bentillo was indeed offended by his remarks, then it should not have taken almost a month before
his attention was called regarding the matter.20

HRD 202 File 2008.06.26.087 dated June 26, 200821

- Memorandum on his alleged acts of insubordination and gross disrespect when he questioned
the authority of HRD Manager Marquez to refuse the hiring of a new staff.

Citing the Philippine Law Dictionary, he explained that "[i]nsubordination means a quality or state
of being insubordinate to a person in authority." He maintained that he did not commit
insubordination as he merely sought clarification about the deferment of the hiring of a working
student by HRD Manager Marquez despite having prior approval of CPMPC Chief Executive Officer
(CEO), petitioner Macario G. Quevedo (CEO Quevedo ).22

HRD 202 File 2008.06.26.088 dated June 26, 200823

- Memorandum on his alleged acts of insubordination and gross disrespect when he insisted
before CEO Quevedo that he had the authority as Legal and Collection Manager to hire a new
staff.

Reiterating the definition of "insubordination" in Philippine Law Dictionary, he maintained that his
act of clarifying with the CEO the policy on hiring working students did not constitute
insubordination, but rather, was made in the exercise of his right to express.24

HRD 202 File 2008.06.27.091 dated

June 27, 200825

- Memorandum asking Carbonilla, Jr. to tum-over to the officer-in-charge custody of the following
documents: Banco de Oro contract on staff loans, CPMPC firearm contracts and licenses, branch
offices rentals, and others.26

He only reviewed the subject documents and they were never entrusted to him for safekeeping.27

HRD 202 File 2008.07.03.094 dated

July 3, 200828

- Memorandum on his alleged acts of gross negligence in: (a) failing to submit the employment
assessment of one Marcelina M. Remonde (Remonde ); ( b) promoting one Mary Grace R. Batain
(Batain) despite lack of any performance appraisal; ( c) failing to report the shortage of Batain

amounting to Pl08,254.55; (d) disseminating a wrong schedule of mediation activity which caused
confusion and pressure among branch managers; ( e) failing to annotate the encumbrance on the
certificate of title offered as collateral to CPMPC; (j) failing to review and verify its contract with
the BISDA Security Agency (agency) which exposed CPMPC to third-party liability for failure of the
agency to remit the Social Security System, Philhealth and Pag-IBIG premiums of its security guards
to the government; (g) failing to inform the branch managers of any

settlements or compromise agreements entered into by the head office resulting in confusion as
to payments; and (h) failing to submit to HRD Manager Marquez the status of the firearms and
licenses assigned to the branch managers.

He interposed the following defenses:29 (a) he was not responsible for employment assessments
having been transferred to the Legal Department; ( b) as then HRD Manager, it was within his
discretion to promote Batain whose appointment has been previously concurred in by the CEO; (
c) he was not informed of the shortage committed by Batain nor was it within his primary
obligation to disclose the same; (d) the printing of invitation was managed only by his legal
assistant, Joel Semblante (Semblante) and Vasquez. However, the latter was unexpectedly
transferred to another job assignment, leaving only Semblante to do the job, which may have
caused the unintentional mistake;30 (e) a certain Brenda Dela Cruz was the one responsible for
the annotation of the encumbrances of real and personal properties; (j) he was not responsible for
the review of the contract between the agency and its security guards as CPMPC had no employer-
employee relationship with them; (g) he was unaware of the complaints of the branch managers
regarding the payment confusion as a result of settlements or compromise agreements; and (h) it
was not his duty to determine the status, custody, and licenses of the firearms.31

HRD 202 File 2008.07.04.095 dated July 4, 200832

- Memorandum on the allegations he made against the CEO during the Board of Directors' inquiry
hearing, which constituted gross misconduct, gross disrespect, and loss of trust and confidence.

His acts did not constitute gross misconduct, gross disrespect, or loss of trust and confidence as he
only questioned the suspicious transactions of CEO Quevedo regarding the sale of a titled parcel of
land owned by the cooperative for an inadequate consideration. He then added that as a member
of CPMPC, he has the right to demand transparency of all the transactions made by CEO Quevedo,
of which its consequences will affect the cooperative.33

HRD 202 File 2008.07 .08.098 dated July 8, 200834

- Memorandum on his failure to attend the management and operations committee meeting held
on July 7, 2008 despite prior notices.

The said meeting was scheduled outside the regular meeting day and he was only informed about
it on the day of the meeting at which time, he was personally handling collection cases.35
HRD 202 File 2008.07.09.103 dated July 9, 200836 – Memorandum relative to the mediation
settlements which were forwarded for notarization to one Atty. Miñoza who is not the authorized
legal retainer of CPMPC.

He admitted that as head of the Legal Department, he endorsed the documents for notarization to
his friend who only charged P50.00 per document as compared to the legal retainers who charged
Pl00.00 per document. He added that "[t]he same is more advantageous and secured rather than
having it notarized- by a 'murio-murio' notary public at the back of the Cebu City Hall."37

HRD 202 File 2008.07.09.104 dated July 9, 200838

- Memorandum on his failure to update the CEO and management committee of the dismissal of
the cases filed by CPMPC against Spouses Alex and Alma Monisit in Civil Case No. R-52633 and
against Spouses Helen and Rogelio Lopez in Civil Case No. R-53274.

The two cases were re-filed before the Regional Trial Court on May 29, 2008 as the amounts
involved were beyond the jurisdiction of the Municipal Trial Court (MTC). He also explained that
he was not aware of the filing of these cases before the MTC as he was occupying the position of
the HRD Manager at that time.39

HRD 202 File 2008.07.15.106 dated July 15, 200840

- Memorandum relative to Carbonilla, Jr. 's instruction to Semblante to pull out important records
and vital documents, i.e., Compromise/ Settlement Agreement, Mediation Tracking Form,
Agreement to Mediate, Mediator's Report, Evaluation of Mediation, among others, from the head
office without the knowledge and approval of the management, which documents were later on
returned tampered and altered.

He explained that as head of the Legal Department, he was responsible for the proper disposal of
all legal documents and contracts, and the cancellation of said documents were done to protect
the interest of the cooperative. Moreover, he claimed that the erasures were caused by the

cancellation of the notarial subscription since Carbonilla, Jr. found the requirements of the notary
public - which required all 125 respondents to appear personally and present their community tax
certificates - impractical. Moreover, he claimed that the cancellation of the documents "was not
for the purpose of falsifying or tampering the same[,] but merely to protect the interest of the
cooperative against possible sanctions [or] circulating bogus documents. "41

HRD 202 File 2008.07.16.107 dated July 16, 200842 – Memorandum relative to the unliquidated
cash advances of the notarial transactions of the mediation agreements.43
The delay in liquidation was due to the "agreement" he had with the notary public about the
disposition of the notarized documents. He claimed that in the afternoon of the same day, he
turned over the amount of P6,250.00 to the Accounting Department.44

HRD 202 File 2008.07.19.111 dated July 19, 200845 - Memorandum on the alleged tampering and
loss of CPMPC's vital records and documents, i.e., two (2) copies of the compromise settlement
agreement.

No reply.
Unconvinced by Carbonilla, Jr.'s explanations, CPMPC scheduled several clarificatory hearings,46
but the former failed to attend despite due notice.47 Later, CPMPC conducted a formal
investigation where it ultimately found Carbonilla, Jr. to have committed acts prejudicial to
CPMPC's interests.48 As such, CPMPC, CEO Quevedo, sent Carbonilla, Jr. a Notice of Dismissal49
dated August 5, 2008 informing the latter of his termination on the grounds of: (a) loss of trust and
confidence; (b) gross disrespect; (c) serious misconduct; (d) gross negligence; (e) commission of a
crime of falsification/inducing Aguipo to violate the law or the Land Transportation and Traffic
Code; and (e) committing acts highly prejudicial to the interest of the cooperative.50

Consequently, Carbonilla, Jr. filed the instant case for illegal dismissal, non-payment of salaries,
13th month pay, as well as damages and backawages, against CPMPC, before the NLRC, docketed
as NLRC RAB VII-08-1856-2008.51 In support of his claims, Carbonilla, Jr. denied the administrative
charges against him, asserting that the Management and Board of Directors of CPMPC merely
orchestrated means to unjustly dismiss him from employment.52

In defense, CPMPC maintained that the totality of Carbonilla, Jr.'s infractions was sufficient to
warrant his dismissal, and that it had complied with the procedural due process in terminating
him.53 Further, CPMPC pointed out that Carbonilla, Jr. had been fully paid of all his benefits,
notwithstanding his unsettled obligations to it in the form of loans, insurance policy premiums,
and cash advances, among others, amounting to a total of P129,455.00.54

The LA Ruling

In a Decision55 dated July 1, 2009, the Labor Arbiter (LA) dismissed Carbonilla, Jr.' s complaint for
lack of merit.56 The LA found that Carbonilla, Jr. committed a litany of infractions, the totality of
which constituted just cause for the termination of his employment.57 Likewise, it was
determined that CPMPC afforded Carbonilla, Jr. procedural due process prior to his termination, as
evinced by the former's issuance of a series of memoranda, as well as its conduct of investigation
with notices to the latter.58 Furthermore, the LA denied his claims for unpaid salaries and 13th
month pay, as records show that the aggregate amount of his monetary claims is not even enough
to pay his accountabilities to CPMPC in the total amount of P129,455.00.59
Aggrieved, Carbonilla, Jr. appealed to the NLRC, which was docketed as NLRC Case No. VAC-10-
000977-2009.60

The NLRC Ruling

In a Decision61 dated April 29, 2010, the NLRC affirmed the LA ruling. It found CPMPC to have
substantially proven the existence of just causes in dismissing Carbonilla, Jr., i.e., abuse of
authority; disrespect to his colleagues and superiors; being remiss in his duties; and commission of
acts of misrepresentation.62 It further held that Carbonilla, Jr. was given the opportunity to
present his side and to disprove the charges against him, but failed to do so.63 Finally, the NLRC
explained that while Carbonilla, Jr. may indeed be entitled to his claims for unpaid salaries and
13th month pay, the same cannot be granted as his accountabilities with CPMPC were larger than
said claims.64

Carbonilla, Jr. moved for reconsideration,65 which was, however, denied in a Resolution66 dated
June 30, 2010. Undaunted, he elevated the matter to the CA via a petition for certiorari.67

The CA Ruling

In a Decision68 dated June 25, 2013, the CA reversed and set aside the NLRC ruling and
accordingly, ordered Carbonilla, Jr.'s reinstatement and the remand of the case to the LA for the
computation of his full backwages, inclusive of allowances and other benefits, as well as attorney's
fees.69 It held that the NLRC gravely abused its discretion in declaring Carbonilla, Jr.'s dismissal as
valid, considering that, other than CPMPC's series of memoranda and self-serving allegations, it
did not present substantial documents to support a conclusion that would warrant Carbonilla, Jr.'s
valid dismissal.70 In fine, CPMPC failed to discharge the burden of proving that Carbonilla, Jr. 's
dismissal was for just causes.71

Dissatisfied, petitioners moved for reconsideration,72 but the same was denied in a Resolution73
dated March 17, 2014; hence, this petition.

The Issue Before the Court

The core issue for the Court's resolution is whether or not the CA correctly ascribed grave abuse of
discretion on the part of the NLRC in ruling that Carbonilla, Jr. 's dismissal was valid.

The Court's Ruling

The petition is impressed with merit.

To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily show
that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic
manner by reason of passion or personal hostility, the character of which being so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.74

In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its
findings and conclusions are not supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion.75

Guided by the foregoing considerations, the Court finds that the CA committed reversible error in
granting Carbonilla, Jr. 's certiorari petition since the NLRC did not gravely abuse its discretion in
ruling that he was validly dismissed from employment as CPMPC was able to prove, through
substantial evidence, the existence of just causes warranting the same.

Basic is the rule that an employer may validly terminate the services of an employee for any of the
just causes enumerated under Article 296 (formerly Article 282) of the Labor Code,76 namely:

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

(b) Gross and habitual neglect by the employee of his duties;

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

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

As may be gathered from the tenor of CPMPC's Notice of Dismissal, it is apparent that Carbonilla,
Jr.'s employment was terminated on the grounds of, among others, serious misconduct and loss of
trust and confidence.77

On the first ground, case law characterizes misconduct as a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies
wrongful intent and not mere error injudgment.78 For misconduct to be considered as a just cause
for termination, the following requisites must concur: (a) the misconduct must be serious; (b) it
must relate to the performance of the employee's duties showing that the employee has become
unfit to continue working for the employer; and (c) it must have been performed with wrongful
intent. 79
All of the foregoing requisites have been duly established in this case. Records reveal that
Carbonilla, Jr. 's serious misconduct consisted of him frequently exhibiting disrespectful and
belligerent behavior, not only to his colleagues, but also to his superiors. He even used his stature
as a law graduate to insist that he is "above" them, often using misguided legalese to weasel his
way out of the charges against him, as well as to strong-arm his colleagues and superiors into
succumbing to his arrogance. Carbonilla Jr.'s obnoxious attitude is highlighted by the following
documents on record: (a) his reply to HRD 202 File 2008.02.26.036 dated February 26, 2008
wherein he threatened HRD Manager Marquez with a lawsuit, stating that if the memorandum is
"proven malicious, [she] might be answerable to a certain degree of civil liability which the 1987
Constitution has given to individuals";80 (b) HRD 202 File 2008.06.26.086 dated June 26, 200881
wherein he berated COO Bentillo in front of her subordinates with the statement: "[i]kaw ra may
di mosalig ba, ka kwalipikado adto niya, maski mag contest pa mo, lupigon gani ka"82 or "[y ]ou're
the only one who doesn't trust her, she is very qualified, you even lose in comparison to her[,]"83
and his reply thereto wherein he dismissed the charge as made with malicious intent and aimed to
discredit his person;84 (c) HRD 202 File 2008.06.26.088 dated June 26, 200885 wherein he argued
with the CEO Quevedo, insisting that he had the authority to hire a new staff, and his reply thereto
where he cited the Philippine Law Dictionary to maintain that his act did not amount to
insubordination;86 (d) HRD 202 File 2008.06.26.087 dated June 26, 200887 wherein he openly
questioned the authority of HRD Manager Marquez in refusing to hire a new staff and his reply
thereto where he again cited the Philippine Law Dictionary to insist that he did not commit acts of
insubordination;88 and (e) HRD 202 File 2008.07.04.095 dated July 4, 200889 wherein he openly
and improperly confronted the CPMPC CEO during a Board of Directors' inquiry hearing, to which
he again maintained that his acts did not constitute misconduct, gross disrespect, and loss of trust
and confidence as he was only looking after the welfare of the cooperative.90

Indisputably, Carbonilla, Jr. 's demeanor towards his colleagues and superiors is serious in nature
as it is not only reflective of defiance but also breeds of antagonism in the work environment.
Surely, within the bounds of law, management has the rightful prerogative to take away dissidents
and undesirables from the workplace. It should not be forced to deal with difficult personnel,
especially one who occupies a position of trust and confidence, as will be later discussed, else it be
compelled to act against the best interest of its business. Carbonilla, Jr.'s conduct is also clearly
work-related as all were incidents which sprung from the performance of his duties. Lastly, the
misconduct was performed with wrongful intent as no justifiable reason was presented to excuse
the same. On the contrary, Carbonilla, Jr. comes off as a smart aleck who would even go to the
extent of dangling whatever knowledge he had of the law against his employer in a combative
manner. As succinctly put by CPMPC, "[e]very time [Carbonilla, Jr.'s] attention was called for some
inappropriate actions, he would always show his Book, Philippine Law Dictionary and would ask
the CEO or HRD Manager under what provision of the law he would be liable for the complained
action or omission."91 Irrefragably, CPMPC is justified in no longer tolerating the grossly
discourteous attitude of Carbonilla, Jr. as it constitutes conduct unbecoming of his managerial
position and a serious breach of order and discipline in the workplace.92
With all these factored in, CPMPC's dismissal of Carbonilla, Jr. on the ground of serious misconduct
was amply warranted.1âwphi1

For another, Carbonilla, Jr. 's dismissal was also justified on the ground of loss of trust and
confidence. According to jurisprudence, loss of trust and confidence will validate an employee's
dismissal when it is shown that: (a) the employee concerned holds a position of trust and
confidence; and ( b) he performs an act that would justify such loss of trust and confidence.93
There are two (2) classes of positions of trust: first, managerial employees whose primary duty
consists of the management of the establishment in which they are employed or of a department
or a subdivision thereof, and to other officers or members of the managerial staff; and second,
fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in
the normal exercise of their functions, regularly handle significant amounts of money or property.
These employees, though rank-and-file, are routinely charged with the care and custody of the
employer's money or property, and are thus classified as occupying positions of trust and
confidence.94

Records reveal that Carbonilla, Jr. occupied a position of trust and confidence as he was employed
as Credit and Collection Manager, and later on, as Legal and Collection Manager, tasked with the
duties of, among others, handling the credit and collection activities of the cooperative, which
included recommending loan approvals, formulating and implementing credit and collection
policies, and conducting trainings.95 With such responsibilities, it is fairly evident that Carbonilla,
Jr. is a managerial employee within the ambit of the first classification of employees afore-
discussed. The loss of CPMPC's trust and confidence in Carbonilla, Jr., as imbued in that position,
was later justified in light of the latter's commission of the following acts: (a) the forwarding of the
mediation settlements for notarization to a lawyer who was not the authorized legal retainer of
CPMPC (HRD 202 File 2008.07.09.103 dated July 9, 200896); (b) the pull-out of important records
and vital documents from the office premises, which were either lost or returned already
tampered and altered (HRD 202 File 2008.07.15.106 dated July 15, 200897 and HRD 202 File
2008.07.19.111 dated July 19, 200898); and (c) the incurring of unliquidated cash advances related
to the notarial transactions of the mediation agreements (HRD 202 File 2008.07.16.107 dated July
16, 200899). While Carbonilla, Jr. posited that these actuations were resorted with good intentions
as he was only finding ways for CPMPC to save up on legal fees, this defense can hardly hold,
considering that all of these transactions were not only highly irregular, but also done without the
prior knowledge and consent of CPMPC's management. Cast against this light, Carbonilla, Jr.'s
performance of the said acts therefore gives CPMPC more than enough reason to lose trust and
confidence in him. To this, it must be emphasized that "employers are allowed a wider latitude of
discretion in terminating the services of employees who perform functions by which their nature
require the employer's full trust and confidence. Mere existence of basis for believing that the
employee has breached the trust and confidence of the employer is sufficient and does not
require proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of
trust or his employer has ample reason to distrust him, a labor tribunal cannot deny the employer
the authority to dismiss him,"100 as in this case.
Perforce, having established the actual breaches of duty committed by Carbonilla, Jr. and CPMPC's
observance of due process, the Court no longer needs to further examine the other charges
against Carbonilla, Jr., as it is already clear that the CA erred in ascribing grave abuse of discretion
on the part of the NLRC when the latter declared that CPMPC validly dismissed Carbonilla, Jr. from
his job. The totality and gravity of Carbonilla, Jr. 's infractions throughout the course of his
employment completely justified CPMPC's decision to finally terminate his employment. The
Court's pronouncement in Realda v. New Age Graphics, Inc.101 is instructive on this matter, to wit:

The totality of infractions or the number of violations committed during the period of employment
shall be considered in determining the penalty to be imposed upon an erring employee. The
offenses committed by petitioner should not be taken singly and separately. Fitness for continued
employment cannot be compartmentalized into tight little cubicles of aspects of character,
conduct and ability separate and independent of each other. While it may be true that petitioner
was penalized for his previous infractions, this does not and should not mean that his employment
record would be wiped clean of his infractions. After all, the record of an employee is a relevant
consideration in determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper imposable
penalty[.] Despite the sanctions imposed upon petitioner, he continued to commit misconduct and
exhibit undesirable behavior on board. Indeed, the employer cannot be compelled to retain a
misbehaving employee, or one who is guilty of acts inimical to its interests. 102 (Emphases and
underscoring supplied)

On a final point, the Court notes that Carbonilla, Jr.'s award of unpaid salaries and 13th month pay
were validly offset by his accountabilities to CPMPC in the amount of P129,455.00.103 Pursuant to
Article 1278104 in relation to Article 1706105 of the Civil Code and Article 113 (c)106 of the Labor
Code, compensation can take place between two persons who are creditors and debtors of each
other.107 Considering that Carbonilla, Jr. had existing debts to CPMPC which were incurred during
the existence of the employer-employee relationship, the amount which may be due him in wages
was correctly deducted therefrom.

WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2013 and the Resolution dated
March 17, 2014 of the Court of Appeals in CA-G.R. CEB SP No. 05403 are hereby REVERSED and
SET ASIDE. Accordingly, the Decision dated April 29, 2010 and the Resolution dated June 30, 2010
of the National Labor Relations Commission in NLRC Case No. VAC-10-000977-2009 declaring
respondent Nicerato E. Carbonilla, Jr. to have been validly dismissed by petitioner Cebu People's
Multi-Purpose Cooperative are REINSTATED.

SO ORDERED.
PNCC SKYWAY CORPORATION, Petitioner, v. THE SECRETARY OF
LABOR AND EMPLOYMENT AND PNCC SKYWAY CORPORATION
EMPLOYEES UNION, Respondents.
G.R. No. 213299, April 19, 2016
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated September 30, 2013 and
the Resolution3 dated June 11, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 111201, which
affirmed the Decision4 dated August 29, 2008 and the Resolution5 dated August 26, 2009 of the
Secretary of the Department of Labor and Employment (DOLE) holding petitioner PNCC Skyway
Corporation (PSC) liable for P30,000.00 as indemnity to each of its terminated employees, for
failure to comply with the thirty (30)-day notice requirement under Article 298 (formerly Article
283) of the Labor Code, as amended.6

The Facts

In October 1977, the Republic of the Philippines, through the Toll Regulatory Board (TRB), and the
Philippine National Construction Corporation7 (PNCC) entered into a Toll Operation Agreement
(TOA)8 for the latter's operation and maintenance of the South Metro Manila Skyway (Skyway).9

On November 27, 1995, a Supplemental TOA (STOA)10 was executed by the TRB, PNCC, and Citra
Metro Manila Tollways Corporation (CITRA), whereby CITRA, as an incoming investor, agreed,
under a build-and-transfer scheme,11 to finance, design, and construct the Skyway.12 However,
PNCC retained the right to operate and maintain the toll facilities,13 and for such purpose,
undertook to incorporate a subsidiary company that would assume its rights and obligations under
the STOA:
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6.16. Operator's Subsidiary Company

Subject to all relevant existing laws, rules, and regulations, [PNCC] shall incorporate a subsidiary
company (the "Subsidiary Company") at least 6 months prior to the Partial Operation Date [PNCC]
shall be the sole stockholder of the Subsidiary Company. The powers and functions of the
Subsidiary Company shall only be to undertake and perform the obligations of [PNCC] under this
Agreement, including without limitation Operation and Maintenance.14
Thus, on December 15, 1998, PSC was incorporated as a subsidiary of PNCC to operate the Skyway
on PNCC's behalf. As such, it was tasked to maintain the toll facilities, ensure traffic safety, and
collect toll fees at the Skyway.15

On July 18, 2007, the TRB, PNCC, and CITRA entered into an Amended STOA (ASTOA).16 Under the
ASTOA, the operation and management of the Skyway would be transferred from PSC to a new
Replacement Operator, which turned out to be the Skyway O & M Corporation (SOMCO).17 A
transition period of 5 1/2 months was provided commencing on the date of signing of the ASTOA
until December 31, 2007, during which period, PSC continued to operate the Skyway.18

In line with the above-mentioned transfer, PSC, on December 28, 2007, issued termination letters
to its employees and filed a notice of closure with the DOLE - National Capital Region, advising
them that it shall cease to operate and maintain the Skyway, and that the services of the
employees would be consequently terminated effective January 31, 2008.19 In this regard, PSC
offered its employees a separation package consisting of 250% of their basic monthly salary for
every year of service, gratuity pay of P40,000.00 each, together with all other remaining benefits
such as 13th month pay, rice subsidy, cash conversion of leave credits, and medical
reimbursement.20

On the same date, the PSC Employees Union (PSCEU) filed a Notice of Strike on the ground of
unfair labor practice resulting in union busting and dismissal of workers. On December 31, 2007,
the DOLE Secretary intervened and assumed jurisdiction over the labor incident.21

The DOLE Secretary's Ruling

In a Decision22 dated August 29, 2008, the DOLE Secretary dismissed the charges of unfair labor
practice and union busting, as well as the counter--charges of illegal strike, but ordered PSC to pay
its terminated employees P30,000.00 each as indemnity after finding that the notices of their
dismissal were invalid.23

The DOLE Secretary held that while there was a valid and sufficient legal basis for PSC's closure - as
it was a mere consequence of the termination of its contract to operate and maintain the Skyway
in view of the amendment of the STOA - PSC, nonetheless, foiled to comply with the thirty (30)-
day procedural notice requirement in terminating its employees, as provided under Article 283
(now, Article 298) of the Labor Code.24 It was observed that while PSC stated in the notices of
termination to the employees (as well as in the notice to the DOLE) that the dismissal of the
employees would take effect on January 31, 2008, it admitted that it actually ceased to operate
and maintain the Skyway upon its turnover to SOMCO on December 31, 2007.25 As such, PSC fixed
the termination date at January 31, 2008 only to make it appear that it was complying with the
one-month notice requirement, Thus, citing the case of Agabon v. National Labor Relations
Commission (Agabon),26 the DOLE Secretary ordered PSC to pay each of its terminated employees
P30,000.00 as indemnity.27cralawred

On September 12, 2008, PSC filed a Motion for Partial Reconsideration and Clarification,28 while
the PSCEU filed a Motion for Reconsideration,29 which were both denied in a Resolution30 dated
August 26, 2009.31 Dissatisfied, PSC elevated the case to the Court of Appeals (CA) through a
petition for certiorari.32

The CA Ruling

In a Decision33 dated September 30, 2013, the CA affirmed34 the DOLE Secretary's ruling after
observing that PSC held inconsistent and conflicting positions with regard to the date of
termination of its employees' services.35

The CA pointed out that in the Establishment Termination Report submitted to the DOLE, PSC
stated that it shall close or shut down its operations effective January 31, 2008. However, in its
Position Paper submitted to the DOLE, PSC stated that it "ceased to operate and maintain the
[Skyway] upon its turnover to SOMCO effective December 31, 2007."36 According to the CA, the
apparent inconsistency as to the date of effectivity of the dismissal of the PSC employees must be
resolved in favor of the employees who must then be deemed to have been terminated on
December 31, 2007, consistent with Article 437 of the Labor Code which states that all doubts
shall be resolved in favor of labor.38

The CA further held that it is of no moment that the PSC employees were paid their salaries and
benefits for the whole month of January 2008 since they were already out of service as of
December 31, 2007, explaining too that this defeated the purpose behind the thirty (30)-day
notice requirement, which is to give the employees time to prepare for the eventual loss of their
employment.39

Anent PSC's argument that the PSCEU had been informed as early as September 2007 of the
impending takeover of the operation of the Skyway by a new operator, the CA cited Smart
Communications, Inc. v. Astorga40 (Smart Communications, Inc.) and thereby, ruled that "actual
knowledge of the reorganization cannot replace the formal and written notice required by law."41
The CA denied PSC's motion for reconsideration42 in a Resolution43 dated June 11, 2014; hence,
the instant petition.

The Issue Before the Court

The sole issue in this case is whether or not the CA erred in affirming the DOLE Secretary's ruling
that PSC failed to comply with the 30-day notice requirement under Article 298 (formerly, Article
283) of the Labor Code, as amended.

The Court's Ruling

The petition is meritorious.

Closure of business is an authorized cause for termination of employment, Article 298 (formerly,
Article 283) of the Labor Code, as amended, reads:
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ART. 298. Closure of Establishment and Reduction of Personnel. - The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions
of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment
at least one (1) month before the intended date thereof. x x x. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year. (Emphases supplied)
In this relation, jurisprudence provides that "[t]he determination to cease operations is a
prerogative of management which the State does not usually interfere with, as no business or
undertaking must be required to continue operating simply because it has to maintain its workers
in employment, and such act would be tantamount to a taking of property without due process of
law. As long as the company's exercise of the same is in good faith to advance its interest and not
for the purpose of circumventing the rights of employees under the law or a valid agreement, such
exercise will be upheld."44

Procedurally, Article 298 (formerly, Article 283) of the Labor Code, as amended provides for three
(3) requirements to properly effectuate termination on the ground of closure or cessation of
business operations. These are: (a) service of a written notice to the employees and to the DOLE at
least one (1) month before the intended date of termination; (b) the cessation of business must be
bona fide in character; and (c) payment to the employees of termination pay amounting to one (1)
month pay or at least one-half month pay for every year of service, whichever is higher.45
Case law has settled that an employer who terminates an employee for a valid cause but does so
through invalid procedure is liable to pay the latter nominal damages.46 In Agabon, the Court
pronounced that, where the dismissal is for a just cause, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or ineffectual.47 However, the employer should
indemnify the employee for the violation of his statutory rights. Thus, in Agabon, the employer
was ordered to pay the employee nominal damages in the amount of P30,000.00.48 Proceeding
from the same ratio, the Court modified Agabon in the case of Jaka Food Processing Corporation v.
Pacot49 (Jaka) where it created a distinction between procedurally defective dismissals due to a
just cause, on the one hand, and those due to an authorized cause, on the other. In Jaka, it was
explained that if the dismissal is based on a just cause under Article 282 (now, Article 297) of the
Labor Code but the employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process was, in effect, initiated by
an act imputable to the employee; if the dismissal is based on an authorized cause under Article
283 (now, Article 298) of the Labor Code but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by the
employer's exercise of his management prerogative. Hence, in Jaka, where the employee was
dismissed for an authorized cause of retrenchment - as contradistinguished from the employee in
Agabon who was dismissed for a just cause of neglect of duty - the Court ordered the employer to
pay the employee nominal damages at the higher amount of P50,000.00.50

The sole issue in this case is whether or not PSC properly complied with the thirty (30)-day prior
notice rule, which is the first prong of the termination procedure under Article 298 (formerly
Article 283) of the Labor Code, as amended. The Court rules in the affirmative; hence, there is no
basis to award any indemnity in favor of PSC's terminated employees.

As admitted by both parties, the PSC employees and the DOLE were notified on December 28,
2007 that PSC intended to cease operations on January 31, 2008. The PSC employees and the
DOLE were, therefore, notified 34 days ahead of the impending closure of PSC. Clearly, the mere
fact that PSC turned over the operation and management of the Skyway to SOMCO and ceased
business operations on December 31, 2007, should not be taken to mean that the FSC employees
were ipso facto terminated on the same date. The employees were notified that despite the
cessation of its operations on December 31, 2007 - which, as a consequence thereof, would result
in the needlessness of their services - the effective date of their termination from employment
would be on January 31, 2008:
chanRoblesvirtualLawlibrary
Pursuant to the amended Supplemental Toll Operations Agreement entered into on July 18, 2007
by and among the Republic of the Philippines thru the Toll Regulatory Board, Philippine National
Construction Corporation and Citra Metro Manila Tollways Corporation, a new Operation and
Maintenance Company (OMCO) has been nominated to replace the PNCC Skyway Corporation
(PSC). As a consequence thereof, PSC shall then cease to operate and maintain the South Metro
Manila Skyway upon its turn over to the new OMCO which may happen not earlier than December
31, 2007. It is unfortunate therefore that all PSC employees shall be separated from service but
shall be given a generous separation package more than, what the law provides.

In this regard please be advised that your employment with PNCC Skyway Corporation will be
terminated effective January 31, 2008. In consideration thereof, you will accordingly receive the
following separation package.

x x x x51 (Emphases and underscoring supplied)

That the effectivity of the PSC employees' termination is on January 31, 2008, and not on
December 31, 2007, is lucidly evinced by the unrefuted fact that they were still paid their salaries
and benefits for the whole month of January 2008.52 Surely, it would go against the stream of
practical business logic to retain employees on payroll a month after they had already been
terminated.

On top of that, it deserves mentioning that PSC undisputedly paid its dismissed employees
separation pay in amounts more than that required by law. As the records show, PSC's separation
package to its employees was a generous one consisting of no less than 250% of the basic monthly
pay per year of service, a gratuity pay of P40,000.00, rice subsidy, cash conversion of vacation and
sick leaves and medical reimbursement.53 On the other hand, the legally-mandated rate for
separation pay provided under Article 298 (formerly, Article 283) of the Labor Code, as amended,
in cases such as the present, is equivalent to "one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher."

Ultimately, it was within PSC's prerogative and discretion as employer to retain the services of its
employees for one month after the turn-over date to SOMCO and to continue paying their salaries
and benefits corresponding to that period even when there is no more work to be done, if only "to
ensure a smooth transition and gradual phasing in of the new operator, which had yet to
familiarize itself with the business."54

Case law teaches that an employer may opt not to require the dismissed employees to report for
work during the 30-day notice period.

In Associated Labor Unions - VIMCONTU v. National Labor Relations Commission,55 the Court held
that there was "more than substantial compliance" with the notice requirement where a written
notice to the employees on August 5, 1983 had informed them that their services would cease at
the end of that month but that they would nevertheless be paid their salaries and benefits for five
days, from September 1 to 5, 1983, even if they rendered no service for the period.56

Similarly, in Kasapian ng Malayang Manggagawa sa Coca-Cola (KASAMMA-CCO)-CFW Local 245 v.

CA,57 the Court dismissed the union employees' argument that there was non-compliance with
the one-month notice because they were no longer allowed to report for work effective
immediately upon receipt of the notice of termination, ruling therein that the payment of salaries
from December 9, 1999 to February 29, 2000 although the employees did not render service for
the period is, by analogy, "more than substantial compliance with the law."58

To clarify, the case of Smart Communications, Inc., which was cited by the CA in holding that the
actual knowledge by the PSCEU of the impending takeover cannot replace the formal written
notice required by law, is inapplicable to this case. In Smart Communications, Inc., the employee
received the notice of her dismissal only two (2) weeks before its effectivity date although it was
issued by the employer at least thirty (30) days prior to the intended date of her dismissal. Given
that the employee was evidently shortchanged of the mandated period of notice, the Court ruled
that actual knowledge could not replace the formal written notice required by law.59

In contrast, PSC complied with the mandated thirty (30)-day notice requirement. Although PSC
informed its employees that it would be turning over its operations to SOMCO not earlier than
December 31, 2007, they were duly notified that the effective date of their termination was set on
January 31, 2008. In light of valid business reasons, i.e., the transfer of operations to SOMCO
pursuant to the ASTOA, PSC asked its employees not to report for work beginning December 31,
2007 but were still retained on payroll until January 31, 2008. Evidently, their employment with
PSC did not cease by the sole reason that they were told not to render any service.

In addition, since the employees were not reporting for work although retained on payroll, they
had, in fact, more free time to look for job opportunities elsewhere after December 31, 2007 up
until January 31, 2008. As aptly observed by PSC:
chanRoblesvirtualLawlibrary
Indeed, instead of reporting in their office and wasting time doing nothing in view of the cessation
of PSC's business operation, the concerned employees can and actually devoted one month to
look for another employment with pay.60ChanRoblesVirtualawlibrary
This meets the purpose of the notice requirement as enunciated in, among others, the case of
G.J.T. Rebuilders Machine Shop v. Ambos:61
Notice of the eventual closure of establishment is a "personal right of the employee to be
personally informed of his [or her] proposed dismissal as well as the reasons therefor." The reason
for this requirement is to "give the employee some time in prepare for the eventual loss of his [or
her] job."62 (Emphasis supplied)
Ail told, considering that PSC had complied with Article 298 (formerly, Article 283) of the Labor
Code, as amended, the indemnity award in favor of the terminated employees was grossly
improper and must therefore be nullified, in this respect, the DOLE Secretary gravely abused its
discretion and the CA erred in ruling otherwise. When, a lower court or tribunal patently violates
the Constitution, the law, or existing jurisprudence, grave abuse of discretion is committed,63 as in
this case.chanrobleslaw

WHEREFORE, the petition is GRANTED. The Decision dated September 30, 2013 and the Resolution
dated June 11, 2014 of the Court of Appeals in CA-G.R. SP No. 111201 are hereby REVERSED and
SET ASIDE.
SO ORDERED.cralawlawlibrary

CAGAYAN ELECTRIC POWER & LIGHT COMPANY, INC. (CEPALCO)

AND CEPALCO ENERGY SERVICES CORPORATION (CESCO),
FORMERLY CEPALCO ENERGY SERVICES & TRADING
CORPORATION (CESTCO), Petitioners, v. CEPALCO EMPLOYEE'S
LABOR UNION-ASSOCIATED LABOR UNIONS-TRADE UNION
CONGRESS OF THE PHILIPPINES (TUCP), Respondent.
G.R. No. 211015 and G.R. No. 213835, June 20, 2016
PERLAS-BERNABE, J.:
Before the Court are petitions for review on certiorari1 which assail: (a) in G.R. No. 211015, the
Decision2 dated September 14, 2012 and the Resolution3 dated January 15, 2014 of the Court of
Appeals (CA) in CA-G.R. SP No. 03169-MIN; and (b) in G.R. No. 213835, the Decision4 dated
November 11, 2013 and the Resolution5 dated July 17, 2014 of the CA in CA-G.R. SP No. 04296-
MIN. In both cases, the CA absolved herein petitioners Cagayan Electric Power & Light Company,
Inc. (CEPALCO) and CEPALCO Energy Services Corporation (CESCO), formerly CEPALCO Energy
Services & Trading Corporation,6 from the charges of Unfair Labor Practice (ULP) filed by herein
respondent CEPALCO Employee's Labor Union-Associated Labor Unions-Trade Union Congress of
the Philippines (respondent), but nonetheless, pronounced that CESCO was engaged in labor-only
contracting and that, in consequence, the latter's employees are actually the regular employees of
CEPALCO in the same manner and extent as if they were directly employed by CEPALCO.

The Facts

Respondent is the duly certified bargaining representative of CEPALCO's regular rank-and-file

employees. On the other hand, CEPALCO is a domestic corporation engaged in electric distribution
in Cagayan de Oro and other municipalities in Misamis Oriental; while CESCO is a business entity
engaged in trading and services.

On February 19, 2007, CEPALCO and CESCO (petitioners) entered into a Contract for Meter
Reading Work8 where CESCO undertook to perform CEPALCO's meter-reading activities. As a
result, several employees and union members of CEPALCO were relieved, assigned in floating
positions, and replaced with CESCO workers,9 prompting respondent to file a complaint10 for ULP
against petitioners, docketed as NLRC Case No. RAB-10-07-00408-2007. Respondent alleged that
when CEPALCO engaged CESCO to perform its meter-reading activities, its intention was to evade
its responsibilities under the Collective Bargaining Agreement (CBA) and labor laws, and that it
would ultimately result in the dissipation of respondent's membership in CEPALCO.11 Thus,
respondent claimed that CEPALCO's act of contracting out services, which used to be part of the
functions of the regular union members, is violative of Article 259 (c)12 of the Labor Code, as
amended, governing ULP of employers. It further averred that for engaging in labor-only
contracting, the workers placed by CESCO must be deemed regular rank-and-file employees of
CEPALCO, and that the Contract for Meter Reading Work be declared null and
void.14chanrobleslaw

In defense,15 petitioners averred that CESCO is an independent job contractor and that the
contracting out of the meter-reading services did not interfere with CEPALCO's regular workers'
right to self-organize, denying that none of respondent's members was put on floating status.16
Moreover, they argued that the case is only a labor standards issue, and that respondent is not the
proper party to raise the issue regarding the status of CESCO's employees and, hence, cannot seek
that the latter be declared as CEPALCO's regular employees.17chanrobleslaw

In a Decision18 dated August 20, 2008, the Labor Arbiter (LA) dismissed the complaint for lack of
merit. The LA found that petitioners have shown by substantial evidence that CESCO carries on an
independent business of contracting services, in this case for CEPALCO's meter-reading work, and
that CESCO has an authorized capital stock of P100,000,000.00, as well as equipment and
materials necessary to carry out its business.19 As an independent contractor, CESCO is the
statutory employer of the workers it supplied to CEPALCO pursuant to their contract.20 Thus,
there is no factual basis to say that CEPALCO committed ULP as there can be no splitting or erosion
of the existing rank-and-file bargaining unit that negates interference with the exercise of
CEPALCO workers' right to self-organize.21chanrobleslaw

On appeal22 by respondent, the National Labor Relations Commission (NLRC), in a Decision23

dated April 30, 2009, affirmed the LA's ruling in toto, finding that the evidence proffered by
respondent proved inadequate in establishing that the service contract amounted to the
interference of the right of the union members to self-organization and collective
bargaining.24chanrobleslaw
Respondent's motion for reconsideration25cralawred was denied in a Resolution26 dated June 30,
2009; hence, it filed a petition for certiorari27 before the CA, docketed as CA-G.R. SP No. 03169-
MIN.

Pending resolution of CA-G.R. SP No. 03169-MIN, or on January 5, 2010, CEPALCO and CESCO
entered into another Contract of Service,28 this time for the warehousing works of CEPALCO.
Alleging that three (3) union members who were assigned at the warehouse of the logistics
department were transferred to other positions and departments without their conformity and,
eventually, were replaced by workers recruited by CESCO, respondent filed another complaint29
for ULP against petitioners, docketed as NLRC Case No. RAB-10-12-00602-2009, similarly decrying
that CEPALCO was engaged in labor-only contracting and, thus, committed ULP.30chanrobleslaw

As in the first case against them, petitioners posited31 that CEPALCO did not engage in ULP when
it contracted out its warehousing works32 and that CESCO is an independent contractor.33 They
further reiterated their argument that respondent is not the proper party to seek any form of
relief for the CESCO employees.34chanrobleslaw

In a Decision35 dated July 29, 2010, the LA dismissed the case for lack of merit, citing its earlier
decision in NLRC Case No. RAB-10-07-00408-2007. It explained that the only difference between
the previous case and the present case was that in the former, CEPALCO contracted out its meter-
reading activities, while in the latter, it contracted out its warehousing works. However, both cases
essentially raised the same issue between the same parties, i.e., whether or not the contracting
out of services being performed by the union members constitute ULP.36 As such, the NLRC
applied the principle of res judicata under the rule on eonclusiveness of judgment and dismissed
the complaint for ULP.37 At any rate, it found that respondent failed to present substantial
evidence that CEPALCO's contracting out of the warehousing works constituted
ULP.38chanrobleslaw

On appeal39 by respondent, the NLRC, in a Resolution40 dated February 21, 2011, dismissed the
appeal and affirmed the LA's ruling in toto. Respondent's motion for reconsideration41 was denied
in a Resolution42 dated April 15, 2011; hence, it elevated the matter to the CA via petition for
certiorari,43 docketed as CA-G.R. SP No. 04296-MIN.

The Ruling in CA-G.R. SP No. 03169-MIN

In a Decision44 dated September 14, 2012, the CA partially granted respondent's certiorari
petition and reversed and set aside the assailed NLRC issuances.

Preliminarily, the CA found that CESCO was engaged in labor-only contracting in view of the
following circumstances: (a) there was absolutely no evidence to show that CESCO exercised
control over its workers, as it was CEPALCO that established the working procedure and methods,
supervised CESCO's workers, and evaluated them;45 (b) there is no substantial evidence to show
that CESCO had substantial capitalization as it only had a paid-up capital of P51,000.00 as of May
30, 1984, and there was nothing on CESCO's list of machineries and equipment that could have
been used for the performance of the meter-reading activities contracted out to it;46 and (c) the
workers of CESCO performed activities that are directly related to CEPALCO's main line of
business.47 Moreover, while CESCO presented a Certificate of Registration48 with the Department
of Labor and Employment, the CA held that it was not a conclusive evidence of CESCO's status as
an independent contractor.49 Consequently, the workers hired by CESCO pursuant to the service
contract for the meter-reading activities were declared regular employees of
CEPALCO.50chanrobleslaw

However, the CA found no substantial evidence that CEPALCO was engaged in ULP, there being no
showing that when it contracted out the meter-reading activities to CESCO, CEPALCO was
motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees'
right to self-organize.51chanrobleslaw

Petitioners' motion for reconsideration52 was denied in a Resolution53 dated January 15, 2014;
hence, the present petition docketed as G.R. No. 211015.

The Ruling in CA-G.R. SP No. 04296-MIN

In a Decision54 dated November 11, 2013, the CA partially granted respondent's petition, finding
that CESCO was a labor-only contractor as it had no substantial capitalization, as well as tools,
equipment, and machineries used in the work contracted out by CEPALCO.55 As such, it stated
that CESCO is merely an agent of CEPALCO, and that the latter is still responsible to the workers
recruited by CESCO in the same manner and extent as if those workers were directly employed by
CEPALCO.56chanrobleslaw

Nonetheless, same as the ruling in CA-G.R. SP No. 03169-MIN, the CA found that CEPALCO
committed no ULP for lack of substantial evidence to establish the same.57chanrobleslaw

Petitioners' motion for reconsideration58 was denied in a Resolution59 dated July 17, 2014;
hence, the present petition docketed as G.R. No. 213835.

The Issues Before the Court

In both G.R. Nos. 211015 and 213835,60 petitioners lament that the CA erred in declaring CESCO
as a labor-only contractor notwithstanding the fact that CEPALCO has already been absolved of
the charges of ULP. To this, petitioners argue that the issue of whether or not CESCO is an
independent contractor was mooted by the finality of the finding that there was no ULP on the
part of CEPALCO.61 Also, they aver that respondent is not a party-in-interest in this issue because
the declaration of the CA t&at the employees of CESCO are considered regular employees will not
even benefit the respondent.62 If there is anyone who stands to benefit from such rulings, they
are the employees of the CESCO who are not impleaded in these cases. In any event, petitioners
insist that CESCO is a legitimate contractor. Overall, they prayed that the assailed CA rulings be
reversed and set aside insofar as the CA found CESCO as engaged in labor-only contracting and
that its employees are actually the regular employees of CEPALCO.63chanrobleslaw

The Court's Ruling

The petitions are partly meritorious.

At the outset, it is well to note that the status of CESCO as a labor-only contractor was raised in
respondent's complaints before the labor tribunals only in relation to the charges of ULP. In
particular, respondent, in its complaint in NLRC Case No. RAB-10-07-00408-2007, mainly argued
that the "[labor-only] contracting agreement between CEPALCO and [CESCO] discriminates regular
union member employees and will ultimately result in the dissipation of its ranks in the line
maintenance and construction department."64 This is similar to the thrust of its complaint in NLRC
Case No. RAB-10-12-00602-2009, wherein they averred that "the [labor-only] contracting
arrangement between CEPALCO and [CESCO] discriminates union members and restrains or
coerces employees in the exercise of their rights to [self-organization] and collective bargaining[,]
and amounts to union busting."65 As the LA in the latter case aptly observed, "the essential issue
between the same parties remain[s] identical: whether the contracting out of activities or services
being performed by [u]nion members constitute [ULP]."66chanrobleslaw

Under Article 10667 of the Labor Code, as amended, labor-only contracting is an arrangement
where the contractor, who does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, supplies workers to an employer and the
workers recruited are performing activities which are directly related to the principal business of
such employer. Section 5 of Department Order No. 18-02, Series of 2002, otherwise known as the
"Rules Implementing Articles 106 to 109 of the Labor Code, As Amended" (DO 18-02), provides the
following criteria to gauge whether or not an arrangement constitutes labor-only contracting:
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared
prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal, and any of the following elements are present:

chanRoblesvirtualLawlibrary
i)
The contractor or subcontractor does not have substantial capital or investment which relates to
the job, work or service to be performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly related to the main
business of the principal; or
ii)
the contractor does not exercise the right to control over the performance of the work of the
contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the
Labor Code, as amended.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case
of corporations, tools, equipment, implements, machineries and work premises, actually and
directly used by the contractor or subcontractor in the performance or completion of the job,
work or service contracted out.

The "right to control" shall refer to the right reserved to the person for whom the services of the
contractual workers are performed, to determine not only the end to be achieved, but also the
manner and means to be used in reaching that end. (Emphases supplied)
Labor-only contracting is considered as a form of ULP when the same is devised by the employer
to "interfere with, restrain or coerce employees in the exercise of their rights to self-
organization."68 Article 259 of the Labor Code, as amended, which enumerates certain prohibited
activities constitutive of ULP, provides:ChanRoblesVirtualawlibrary
Article 259. Unfair Labor Practices of Employers. - It shall be unlawful for an employer to commit
any of the following unfair labor practice:

chanRoblesvirtualLawlibrary
xxxx

(c) To contract out services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their rights to self-organization.

x x x x (Emphasis and underscoring supplied)

The need to determine whether or not the contracting out of services (or any particular activity or
scheme devised by the employer for that matter) was intended to defeat the workers' right to self-
organization is impelled by the underlying concept of ULP. This is stated in Article 258 of the Labor
Code, as amended, to wit:ChanRoblesVirtualawlibrary
Article 258. Concept of Unfair Labor Practice and Procedure for Prosecution Thereof. - Unfair labor
practices violate the constitutional right of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and management, including their right to bargain
collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect,
disrupt industrial peace and hinder the promotion of healthy and stable labor-management
relations.

x x x x (Emphases and underscoring supplied)

Thus, in Great Pacific Employees Union v. Great Pacific Life Assurance Corporation,69 the Court
observed:ChanRoblesVirtualawlibrary
There should be no dispute that all the prohibited acts constituting unfair labor practice in essence
relate to the workers' right to self-organization. Thus, an employer may be held liable under this
provision if his conduct affects in whatever manner the right of an employee to self-
organize.70chanroblesvirtuallawlibrary
Similarly, in Bankard, Inc. v. NLRC:71
The Court has ruled that the prohibited acts considered as ULP relate to the workers' right to self-
organization and to the observance of a CBA. It refers to "acts that violate the workers' right to
organize." Without that element, the acts, even if unfair, are not ULP. Thus, an employer may only
be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner
the right of his employees to self-organize.72 (Emphasis and underscoring supplied)
In these cases, the Court agrees with the CA that CEPALCO was engaged in labor-only contracting
as its Contract for Meter-Reading Work dated February 19, 2007 and Contract of Service To
Perform Warehousing Works dated January 5, 2010 (subject contracts) with CESCO fit the criteria
provided for in Section 5 of DO 18-02, as above-highlighted.

To be specific, petitioners failed to show that CESCO has substantial capital or investment which
relates to the job, work or service to be performed. While it is true that: (a) CESCO's Amended
Articles of Incorporation73 as of November 26, 2008 shows that CESCO's authorized capital stock
is P200,000,000.00 as of September 26, 2008,74 which was increased from P100,000,000.0075 on
May 30, 2007; and (b) its financial statement76 as of 2010 and 2011 shows that its paid-up capital
stock is in the sum of P81,063,000.00,77 there is no available document to show CESCO's
authorized capital stock at the time of the contracting out of CEPALCO's meter-reading activities to
CESCO on February 19, 2007. As it is, the increases in its authorized capital stock and paid-up
capital were only made after November 26, 2008, hence, are only relevant with regard to the time
CEPALCO contracted out its warehousing works to CESCO on January 5, 2010. Since the amount of
CESCO's authorized capital stock at the time CEPALCO contracted out its meter-reading activities
was not shown, the Court has no means of determining whether it had substantial capital at the
time the contract therefor was entered into. Furthermore, the list78 of CESCO's office equipment,
furniture and fixtures, and vehicles offered in evidence by petitioners does not satisfy the
requirement that they could have been used in the performance of the specific work contracted
out, i.e., meter-reading service. As the CA aptly pointed out,79 the tools and equipment utilized by
CESCO in the meter-reading activities are owned by CEPALCO, emphasizing the fact that CESCO
has no basic equipment to carry out the service contracted out by CEPALCO.

It is also evident that meter-reading is a job that is directly related to the main business of
CEPALCO, considering that the latter is an electric distribution utility,80 which is necessarily tasked
with the evaluation and appraisal of meters in order to bill its clients.

More significantly, records are devoid of evidence to prove that the work undertaken in
furtherance of the meter-reading contract was made under the sole control and supervision of
CESCO. Instead, as noted81 by the CA, it was CEPALCO that established the working procedure and
methods and supervised CESCO's workers in their tasks.
On the other hand, although it may be said that CESCO had substantial capital when CEPALCO
contracted out its warehousing works on January 5, 2010, there is, however, lack of credible
evidence to show that CESCO had the aforesaid substantial investment in the form of equipment,
tools, implements, machineries, and work premises to perform the warehousing activities on its
own account. Similarly, the job contracted out is directly related to CEPALCO's electric distribution
business, which involves logistics, inventories, accounting, billing services, and other related
operations. Lastly, same as above, no evidence has been offered to establish that CESCO exercised
control with respect to the manner and methods of achieving the warehousing works, or that it
supervised the workers assigned to perform the same.

The foregoing findings notwithstanding, the Court, similar to the CA and the labor tribunals, finds
that CEPALCO's contracting arrangements with CESCO did not amount to ULP. This is because
respondent was not able to present any evidence to show that such arrangements violated
CEPALCO's workers' right to self-organization, which, as above-mentioned, constitutes the core of
ULP. Records do not show that this finding was further appealed by respondent. Thus, the
complaints filed by respondent should be dismissed with finality.

At this juncture, it should be made clear that the disposition of these cases should be limited only
to the foregoing declaration. Again, the complaints filed by respondent were only for ULP. While
there is nothing infirm in passing upon the matter of labor-only contracting since it was vigorously
litigated in these proceedings, the resolution of the same must only be read in relation to the
charges of ULP. As earlier stated, labor-only contracting was invoked by respondent as a
prohibited act under Article 259 (c) of the Labor Code, as amended. As it turned out, however,
respondent failed to relate the arrangement to the defining element of ULP, i.e., that it violated
the workers' right to self-organization. Hence, being a preliminary matter actively argued by
respondent to prove the charges of ULP, the same was not rendered moot and academic by the
eventual dismissal of the complaints as an issue only becomes moot and academic if it becomes a
"dead" issue, devoid of any practical value or use to be passed upon. In Pormento v. Estrada:82
An action is considered "moot" when it no longer presents a justiciable controversy because the
issues involved have become academic or dead or when the matter in dispute has already been
resolved and hence, one is not entitled to judicial intervention unless the issue is likely to be raised
again between the parties. There is nothing for the court to resolve as the determination thereof
has been overtaken by subsequent events.83chanroblesvirtuallawlibrary
For another, the Court also observes that while respondent did ask for the nullification of the
subject contracts between petitioners, and even sought that the employees provided by CESCO to
CEPALCO be declared as the latter's own employees, petitioners correctly argue that respondent is
not a real party-in-interest and hence, had no legal standing insofar as these matters are
concerned. This is because respondent failed to demonstrate how it stands to be benefited or
injured by a judgment on the same, or that any personal or direct injury would be sustained by it if
these reliefs were not granted. In Joya v. Presidential Commission on Good Government,84 the
Court explained:ChanRoblesVirtualawlibrary
"Legal standing" means a personal and substantial interest in the case such that the party has
sustained or will sustain direct injury as a result of the x x x act being challenged. The term
"interest" is material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental interest.
Moreover, the interest of the party plaintiff must be personal and not one based on a desire to
vindicate the constitutional right of some third and unrelated party.85chanroblesvirtuallawlibrary
If at all, it would be the employees of CESCO who are entitled to seek the foregoing reliefs since in
cases of labor-only contracting, "the person or intermediary shall be considered merely as an
agent 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."86 However, they have not been impleaded in these
cases. Thus, as prayed for by petitioners, the Court must set aside the portions of the assailed CA
Decisions declaring: (a) the workers hired by CESCO, pursuant to the contracts subject of these
cases, as regular employees of CEPALCO; and (b) the latter responsible to said workers in the same
manner and extent as if they were directly employed by it. This pronouncement not only squares
with the rules on real party-in-interest and legal standing, but also with the precept that no one
shall be affected by any proceeding to which he is a stranger, and that strangers to a case are not
bound by any judgment rendered by the court.87chanrobleslaw

With the principal issues already resolved, the Court sees no need to delve into other ancillary
issues that would have no effect to the conclusion of these cases.

WHEREFORE, the petitions are PARTLY GRANTED. The portions of the Decisions and Resolutions of
the Court of Appeals (CA) in CA-G.R. SP No. 03169-MIN and CA-G.R. SP No. 04296-MIN declaring
that the workers hired by CESCO, pursuant to the contracts subject of these cases, are regular
employees of CEPALCO, and that the latter is responsible to said workers in the same manner and
extent as if those workers were directly employed by CEPALCO are hereby DELETED. The rest of
the CA Decisions stand.

SO ORDERED.chanRob
JAKERSON G. GARGALLO v. DOHLE SEAFRONT CREWING
GR No. 215551, Aug 17, 2016
PERLAS-BERNABE, J.:
For the Court's resolution are the Motion for Reconsideration[1] and Motion for Partial
Reconsideration[2] filed by petitioner Jakerson G. Gargallo (petitioner), and respondents Dohle
Seafront Crewing (Manila), Inc. (Dohle Seafront), Dohle Manning Agencies, Inc. (Dohle Manning),
and Mr. Mayronilo B. Padiz (Padiz; collectively, respondents), respectively, of the Court's
Decision[3] dated September 16, 2015, which affirmed the Decision[4] dated June 10, 2014 and
the Resolution[5] dated November 21, 2014 of the Court of Appeals (CA) in CA-G.R. SP No. 130266,
dismissing petitioner's claim for permanent total disability benefits, but ordered respondents
Dohle Seafront and Dohle Manning, jointly and severally, to pay petitioner his income benefit for
one hundred ninety-four (194) days, plus 10% of the total amount of the income benefit as
attorney's fees.

The Facts

On July 20, 2012, petitioner filed a complaint for permanent total disability benefits against
respondents before the National Labor Relations Commission (NLRC).[6] The complaint stemmed
from his claim that: (a) he accidentally fell on deck while lifting heavy loads of lube oil drum, with
his left arm hitting the floor first, bearing his full body weight;[7] (b) he has remained permanently
unfit for further sea service despite major surgery and further treatment by the company-
designated physicians;[8] and (c) his permanent total unfitness to work was duly certified by his
chosen physician whose certification must prevail over the palpably self-serving and biased
assessment of the company-designated physicians.[9]
For their part, respondents countered that the fit-to-work findings of the company-designated
physicians must prevail over that of petitioner's independent doctor, considering that: (a) they
were the ones who continuously treated and monitored petitioner's medical condition; and (b)
petitioner failed to comply with the conflict-resolution procedure under the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC). Respondents further
averred that the filing of the disability claim was premature since petitioner was still undergoing
medical treatment within the allowable 240-day period at the time the complaint was filed.[10]

The Labor Arbiter (LA)[11] and the NLRC[12] gave more credence to the medical report of
petitioner's independent doctor and, thus, granted petitioner's disability claim, and ordered
respondents to jointly and severally pay petitioner his permanent total disability benefits, albeit at
different amounts.[13]

However, the CA disagreed with the conclusions of the LA and the NLRC, and dismissed
petitioner's complaint.[14] It ruled that the claim was premature because at the time the
complaint was filed: (a) petitioner was still under medical treatment by the company-designated
physicians; (b) no medical assessment has yet been issued by the company-designated physicians
as to his fitness or disability since the allowable 240-day treatment period during which he is
considered under temporary total disability has not yet lapsed; and (c) petitioner has not yet
consulted his own doctor, hence, had no sufficient basis to prove his incapacity.[15] The CA
likewise gave more credence to the fit to work assessment of the company-designated physician
who treated and closely monitored petitioner's condition, over the contrary declaration of
petitioner's doctor who attended to him only once, two (2) months after the filing of the
complaint.[16]

In its September 16, 2015 Decision, the Court upheld the CA's dismissal of petitioner's claim for
permanent total disability benefits, but ordered Dohle Seafront and Dohle Manning, jointly and
severally, to pay petitioner the income benefit arising from his temporary total disability which
lasted for 194 days from his repatriation on March 11, 2012 until his last visit to the company-
designated physician on September 21, 2012[17] (the date when he was declared fit to work)[18]
plus 10% of the total amount of the income benefit as attorney's fees.[19] Meanwhile, the Court
found no basis hold Padiz solidarity liable with Dohle Seafront and Dohle Manning for payment of
the monetary awards to petitioner, absent any showing that acted beyond the scope of his
authority or with malice.[20]

Dissatisfied, both parties filed their respective motions for reconsideration of the Court's
September 16, 2015 Decision.[21]

I. Petitioner's Motion for Reconsideration

At the outset, the Court notes that, except as to the issue of respondents' liability for the payment
of income benefit, the arguments propounded in petitioner's Motion for Reconsideration had
been adequately passed upon in its September 16, 2015 Decision. In essence, petitioner argues
that: (a) the lapse of the 120-day period from the onset of disability rendered him permanently
and totally disabled because the extension of the medical treatment was unjustified;[22] and (b)
resort to a third doctor is am directory, not a mandatory requirement.[23]

Such arguments remain untenable.

The Court had already disposed of the foregoing matters in its September 16, 2015 Decision,
dismissing the complaint on the grounds of: (a) premature filing; and (b) failure to comply with the
mandated conflict-resolution procedure under the POEA-SEC, viz.:
It is undisputed that petitioner was repatriated on March 11, 2012 and immediately subjected to
medical treatment. Despite the lapse of the initial 120-day period on July 9, 2012, such treatment
continued due to persistent pain complained of by petitioner, which was observed until his 180th
day of treatment on September 7, 2012. In this relation, the CA correctly ruled that the tiling of
the complaint for permanent total disability benefits on July 20, 2012 was premature, and should
have been dismissed for lack of cause of action, considering that at that time: (a) petitioner was
still under the medical treatment of the company-designated physicians within the allowable 240-
day period; (b) the latter had not yet issued any assessment as to his fitness or disability; and (c)
petitioner had not yet secured any assessment from his chosen physician, whom he consulted only
more than two (2) months thereafter, or on October 2, 2012.

Moreover, petitioner failed to comply with the prescribed procedure under the afore-quoted
Section 20 (A) (3) of the 2010 POEA-SEC on the joint appointment by the parties of a third doctor,
in case the seafarer's personal doctor disagrees with the company-designated physician's fit-to-
work assessment. The [2008-2011 ver.di. IMEC IBF CBA (IBF CBA)] similarly outlined the procedure,
viz.:
25.2
The disability suffered by the seafarer shall be determined by a doctor appointed by the Company.
If a doctor appointed by or on behalf of the seafarer disagrees with the assessment, a third doctor
may be nominated jointly between the Company and the Union and the decision of this doctor
shall be final and binding on both parties.
xxxx
25.4.
A seafarer whose disability, in accordance with 25.2 above is assessed at 50% or more shall, for
the purpose of this paragraph, be regarded as permanently unfit for further sea service in any
capacity and be entitled to 100% compensation. Furthermore, any seafarer assessed at less than
50% disability but certified as permanently unfit for further sea service in any capacity by the
Company-nominated doctor, shall also be entitled to 100% compensation. Any disagreement as to
the assessment or entitlement shall be resolved in accordance with clause 25.2 above.
In the recent case of Veritas Maritime Corporation v. Gepanaga, Jr. [(see G.R. No. 206285,
February 4, 2015, 750 SCRA 104, 117-118)], involving an almost identical provision of the CBA, the
Court reiterated the well-settled rule that the seafarer's non-compliance with the mandated
conflict-resolution procedure under the POEA-SEC and the CBA militates against his claims, and
results in the affirmance of the fit-to-work certification of the company-designated physician,
thus:
The [POEA-SEC] and the CBA clearly provide that when a seafarer sustains a work-related illness or
injury while on board the vessel, his fitness or unfitness for work shall be determined by the
company-designated physician.

If the physician appointed by the seafarer disagrees with the company-designated physician's
assessment, the opinion of a third doctor may be agreed jointly between the employer and the
seafarer to be the decision final and binding on them.

Thus, while petitioner had the right to seek a second and even a third opinion, the final
determination of whose decision must prevail must be done in accordance with an agreed
procedure. Unfortunately, the petitioner did not avail of this procedure; hence, we have no option
but to declare that the company-designated doctor's certification is the final determination that
must prevail. xxx[24]
There being no cogent reason to depart from the aforementioned ruling, the Court denies
petitioner's Motion for Reconsideration insofar as it seeks to reinstate the NLRC's ruling finding
petitioner entitled to permanent total disability benefits.

Nonetheless, the Court concurs with petitioner's asseveration that it was erroneous to absolve
Padiz from joint and several liability with Dchle Seafront and Dohle Manning for the payment of
the income benefit arising from his temporary total disability,[25] in view of Section 10 of Republic
Act No. (RA) 8042,[26] otherwise known as the "Migrant Workers and Overseas Filipinos Act of
1995," as amended by RA 10022[27] (RA 8042, as amended), which pertinently reads:
SECTION. 10. Money Claims. - xxx

The liability of the principal/employer and the recruitment/placement agency for any and all
claims under this section shall be joint and several. This provision shall be incorporated in the
contract for overseas employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as provided by law, shall be
answerable for all money claims or damages that may be awarded to the workers. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be, shall themselves be jointly and solidarity liable with the corporation
or partnership for the aforesaid claims and damages.[28] (Emphasis and underscoring supplied)
Section 10 of RA 8042, as amended, expressly provides for joint and solidary liability of corporate
directors and officers with the recruitment/placement agency for all money claims or damages
that may be awarded to Overseas Filipino Workers (OFWs). While a corporate director, trustee, or
officer who entered into contracts in behalf of the corporation generally. cannot be held
personally liable for the liabilities of the latter, in deference to the separate and distinct legal
personality of a corporation from the persons composing it, personal liability of such corporate
director, trustee, or officer, along (although not necessarily) with the corporation, may validly
attach when he is made by a specific provision of law personally answerable for his corporate
action,[29] as in this case. Thus, in the recent case of Sealanes Marine Services, Inc. v. Dela
Torre,[30] the Court had sustained the joint and solidary liability of the manning agency, its foreign
principal and the manning agency's President in accordance with Section 10 of RA 8042, as
amended.

In addition, Dohle Seafront is presumed to have submitted a verified undertaking by its officers
and directors that they will be jointly and severally liable with the company over claims arising
from an employer-employee relationship when it applied for a license to operate a seafarer's
manning agency, as required under the 2003 POEA Rules and Regulations Governing the
Recruitment and Employment of Seafarers (POEA Rules).[31]

"Applicable laws form part of, and are read into, contracts without need for any express reference
thereto; more so, when it pertains to a labor contract which is imbued with public interest. Each
contract thus contains not only what was explicitly stipulated therein, but also the statutory
provisions that have any bearing on the matter."[32] As applied herein, Section 10 of RA 8042, as
amended, and the pertinent POEA Rules are deemed incorporated in petitioner's employment
contract with respondents. These provisions are in line with the State's policy of affording
protection to labor and alleviating the workers' plight,[33] and are meant to assure OFWs
immediate and sufficient payment of what is due them.[34] Thus, as the law provides, corporate
directors and officers are themselves solidarily liable with the recruitment/placement agency for
all money claims or damages that may be awarded to OFWs.

Based on the foregoing premises, the Court, therefore, finds Padiz jointly and solidarily liable with
Dohle Seafront and Dohle Manning for the payment of the income benefit arising from petitioner's
temporary total disability, and, to such extent, grants petitioner's motion for reconsideration, and,
in consequence, modifies the September 16, 2015 Decision accordingly.

II. Respondents' Motion for Partial Reconsideration

Petitioner's entitlement to income benefit was clearly shown in this case, in light of the
undisputed fact that he needed continuous medical treatment for 194 days from his repatriation
on March 11, 2012, until his last visit with the company-designated physician on September 21,
2012,[35] when he was declared fit to work.[36]

In this relation, the Court cannot subscribe to respondents' contention that entitlement to income
benefit is applicable only to land-based employees compulsorily registered with the Social Security
System (SSS),[37] considering that the 2010 POEA-SEC accords upon the manning agency/foreign
principal the duty to cover Filipino seafarers under the SSS and other social protection government
agencies.[38] Neither is the Court persuaded by respondents' argument that the obligation to pay
the same falls on the SSS in view of their compliance with the above duty,[39] because the income
benefit arising from a covered employee's temporary total disability is to be advanced by the
employer, subject to reimbursement by the SSS[40] upon compliance with the conditions set forth
under Section 1,[41] Rule X of the Rules Implementing Title II, Book IV of the Labor Code.
Consequently, the Court finds no reason to reverse or modify the directive for respondents to
jointly and severally pay petitioner his income benefit for 194 days, save for the inclusion of Padiz
as a solidary debtor.

However, after surveying existing jurisprudence on the matter, the Court finds merit in
respondents' supplication[42] that the award of attorney's fees must be deleted. As a rule, the
mere fact of having been forced to litigate to protect one's interest does not amount to a
compelling legal reason to justify an award of attorney's fees in the claimant's favor.[43] Verily,
jurisprudence is replete with cases holding that attorney's fees may be awarded to a claimant who
is compelled to litigate with third persons or incur expenses to protect his interest by reason of an
unjustified act or omission on the part of the party from whom it is sought only when there is
sufficient showing of bad faith on the part of the latter in refusing to pay.[44]

However, in the case of Montierro v. Rickmers Marine Agency Phils., Inc. (Montierro),[45] similarly
involving a claim for permanent total disability benefits filed by a seafarer, the Court had
pronounced that in labor cases, the withholding of wages and benefits need not be coupled with
malice or bad faith to warrant the grant of attorney's fees since all that is required is that the
refusal to pay was without justification, thus, compelling the employee to litigate.[46]
Nonetheless, since the complaint in Montierro was filed: (a) when the petitioner therein was still
under treatment; (b) prior to the assessment of the company-designated physician within the
allowable 240-day period; and (c) without complying with the prescribed conflict-resolution
procedure, the Court declared that there was no unlawful withholding of benefits, rendering the
award of attorney's fees to be improper. Thus, considering that similar circumstances obtain in the
present case, the Court finds it proper to rule in the same way.

WHEREFORE, the Court hereby RESOLVES to:

1. PARTLY GRANT petitioner Jakerson G. Gargallo's (petitioner) Motion for Reconsideration and,
hereby, DECLARE respondent Mr. Mayronilo B. Padiz (Padiz) jointly and severally liable with
respondents Dohle Seafront Crewing (Manila), Inc. (Dohle Seafront) and Dohle Manning Agencies,
Inc. (Dohle Manning), to pay petitioner his income benefit for one hundred ninety-four (194) days;
and

2. PARTLY GRANT the Motion for Partial Reconsideration fi ed by respondents Dohle Seafront,
Dohle Manning, and Padiz, thereby, deleting the award of attorney's fees equivalent to 10% of the
adjudged income benefit in favor of petitioner.

The rest of the Court's September 16, 2015 Decision stands.

SO ORDERED.
MARIO N. FELICILDA, Petitioner, v. MANCHESTEVE H. UY,
Respondent.
G.R. No. 221241, September 14, 2016
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 10, 2015 and the
Resolution3 dated October 21, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 129784, which
set aside the Decision4 dated November 16, 2012 and the Resolution5 dated February 28, 2013 of
the National Labor Relations Commission (NLRC) in NLRC LAC No. 08-002277-12 / NLRC NCR Case
No. 12-18409-11 and, instead, dismissed Mario N. Felicilda's (petitioner) complaint for illegal
dismissal with money claims for lack of merit.

The Facts

Petitioner alleged that on October 29, 2010, respondent Manchesteve H. Uy (respondent) hired
him as a truck driver for the latter's trucking service under the business name "Gold Pillars
Trucking"6 (GPT). In connection, therewith, petitioner was issued a company identification card
(ID), assigned in one of GPT's branches in Manila, and paid on a percentage basis.7 On December
9, 2011, petitioner took a nap at the work station while waiting for his truck to be loaded with
cargoes, all of which were delivered to respondent's clients on schedule. The next day, or on
December 10, 2011, respondent's helper told petitioner that his employment was already
terminated due to his act of sleeping while on the job.8 Claiming that he was dismissed without
just cause and due process, and that his act of taking a nap did not prejudice respondent's
business, petitioner filed a complaint9 for illegal dismissal with money claims against respondent,
before the NLRC, docketed as NLRC NCR Case No. 12-18409-11.10chanrobleslaw
In his defense,11 respondent denied the existence of an employer�-employee relationship
between him and petitioner, considering that petitioner was: (a) paid merely on a per trip
"percentage" basis and was not required to regularly report for work; (b) free to offer his services
to other companies; and (c) not under respondent's control with respect to the means and
methods by which he performed his job as a truck driver. Respondent added that petitioner's
company ID did not indicate that the latter was his employee, but only served the purpose of
informing the GPT's clients that petitioner was one of respondent's authorized drivers. Finally,
respondent averred that it no longer engaged petitioner's services due to the latter's "serious
transgressions and misconduct."12chanrobleslaw

The Labor Arbiter's Ruling

In a Decision13 dated June 29, 2012, the Labor Arbiter (LA) ruled in petitioner's favor and,
accordingly, ordered respondent to pay the aggregate sum of P80,145.52 representing his
backwages and separation pay.14chanrobleslaw

Finding that petitioner's service as truck driver was indispensable to respondent's business
operations, the LA concluded that petitioner was respondent's regular employee and, thus, may
only be dismissed for just or authorized cause and with due process. Absent any showing of a clear
and valid cause to terminate petitioner's employment, respondent was, therefore, guilty of illegal
dismissal.15chanrobleslaw

Aggrieved, respondent appealed16 to the NLRC, docketed as NLRC LAC No. 08-002277-12.

The NLRC Ruling

In a Decision17 dated November 16, 2012, the NLRC affirmed the LA ruling. It ruled that an
employer-employee relationship existed between the parties, considering that: (a) respondent
engaged petitioner's services without the aid of a third party or a manpower agency; (b) the
payment of wages on a percentage basis did not negate such existence; (c) respondent's power to
dismiss petitioner was inherent in his selection and engagement of the latter as truck driver; and
(d) respondent exercised control and supervision over petitioner's work as shown in the former's
determination of the latter's delivery areas and schedules.18 Considering that respondent failed to
show a lawful cause for petitioner's dismissal, the NLRC sustained the order of payment of
monetary awards in petitioner's favor.19chanrobleslaw

Respondent moved for reconsideration,20 but was denied in a Resolution21 dated February 28,
2013. Undaunted, respondent filed a petition for certiorari22 before the CA.

The CA Ruling
In a Decision23 dated July 10, 2015, the CA set aside the NLRC ruling and, instead, dismissed
petitioner's complaint for illegal dismissal with money claims for lack of merit.24 Contrary to the
findings of the LA and the NLRC, the CA held that the elements of payment of wages and control in
determining an employer-employee relationship were absent, considering that petitioner was not
paid wages, but commissions only, which amounts varied depending on the kind of cargo, length
of trip, and fuel consumption. The CA observed that there was no evidence to show that
respondent exercised control over the means and methods by which petitioner was to perform his
duties. Further, petitioner failed to refute the claims that: (a) the payment of his commission was
dependent on his efficiency, discipline, and industry, which factors were beyond respondent's
control; (b) he was not required to regularly report for work and may make himself available to
other companies; and (c) the company ID was merely issued to him for the purpose of apprising
respondent's clients that he was the authorized driver.25cralawredchanrobleslaw

Petitioner moved for reconsideration,26 but was denied in a Resolution27 dated October 21,
2015; hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the CA correctly ascribed grave abuse of
discretion on the part of the NLRC in ruling that no employer-employee relationship existed
between petitioner and respondent and, thus, the latter could not have illegally dismissed the
former.

The Court's Ruling

The petition is impressed with merit.

At the outset, it should be mentioned that the jurisdiction of the Supreme Court in cases brought
before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of
law and does not extend to a re-evaluation of the sufficiency of evidence upon which the courts a
quo had based its determination. This rule, however, is not ironclad and a departure therefrom
may be warranted where the findings of fact of the LA and the NLRC, on the one hand, and the CA,
on the other, are contradictory, as in this case. There is therefore a need to review the records to
determine whether the CA, in the exercise of its certiorari jurisdiction, erred in finding grave abuse
of discretion on the part of the NLRC in ruling that respondent was not illegally
dismissed.28chanrobleslaw

To justify the grant of the extraordinary remedy of certiorari, petitioner must satisfactorily show
that the court or quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes a capricious and whimsical exercise of judgment, done in a despotic
manner by reason of passion or personal hostility, the character of which being so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act at all in contemplation of law.29chanrobleslaw
In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its
findings and conclusions are not supported by substantial evidence, or that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a
conclusion.30chanrobleslaw

Guided by the foregoing considerations, the Court finds that the CA committed reversible error in
granting respondent's certiorari petition since the NLRC did not gravely abuse its discretion in
ruling that petitioner was respondent's regular employee and, hence, was illegally dismissed by
the latter. In this case, respondent disclaims any liability for illegal dismissal, considering that, in
the first place, no employer-employee relationship existed between him and petitioner.

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably

adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee's
conduct, or the so-called "control test."31 Verily, the power of the employer to control the work of
the employee is considered the most significant determinant of the existence of an employer-
employee relationship. This is the so-called "control test," and is premised on whether the person
for whom the services are performed reserves the right to control both the end achieved and the
manner and means used to achieve that end.32 It must, however, be stressed that the "control
test" merely calls for the existence of the right to control, and not necessarily the exercise thereof.
To be clear, the test does not require that the employer actually supervises the performance of
duties by the employee.33chanrobleslaw

Contrary to respondent's submission, which was upheld by the CA, the Court agrees with the labor
tribunals that all the four (4) elements are present in this case:

chanRoblesvirtualLawlibraryFirst. It is undisputed that respondent hired petitioner to work as a

truck driver for his private enterprise, GPT.

Second. Petitioner received compensation from respondent for the services he rendered. Contrary
to the findings of the CA, while the wages paid was determined on a "per trip" or commission
basis, it has been constantly ruled that such does not negate employment relationship.34 Article
97 (f) of the Labor Code broadly defines the term "wage" as "the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether fixed or ascertained
on a time, task, piece, or commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten contract of employment for
work done or to be done, or for services rendered or to be rendered x x x."35 That petitioner was
paid on a "per trip" or commission basis is insignificant as this is merely a method of computing
compensation and not a basis for determining the existence or absence of an employer�-
employee relationship.36chanrobleslaw
Third. Respondent's power to dismiss was inherent in the selection and engagement of petitioner
as truck driver.

Fourth. The presence of the element of control, which is the most important element to
determine the existence or absence of employment relationship, can be safely deduced from the
fact that: (a) respondent owned the trucks that were assigned to petitioner; (b) the cargoes loaded
in the said trucks were exclusively for respondent's clients; and (c) the schedule and route to be
followed by petitioner were exclusively determined by respondent. The latter's claim that
petitioner was permitted to render service to other companies was not substantiated and there
was no showing that he indeed worked as truck driver for other companies. Given all these
considerations, while petitioner was free to carry out his duties as truck driver, it cannot be
pretended that respondent, nonetheless, exercised control over the means and methods by which
the former was to accomplish his work. To reiterate, the power of control refers merely to the
existence of the power. It is not essential for the employer to actually supervise the performance
of duties of the employee, as it is sufficient that the former has a right to wield the power,37 as in
this case.

Having established that an employer-employee relationship exists between the parties, it is now
incumbent for the Court to determine whether or not respondent validly terminated petitioner's
employment.

For a dismissal to be valid, the rule is that the employer must comply with both the substantive
and procedural due process requirements. Substantive due process requires that the dismissal
must be pursuant to either a just or an authorized cause under Articles 297, 298, and 299
(formerly Articles 282, 283 or 284)38 of the Labor Code, as amended.39chanrobleslaw

Procedural due process, on the other hand, mandates that the employer must observe the twin
requirements of notice and hearing before a dismissal can be effected.40chanrobleslaw

In this case, suffice it to say that aside from respondent's averment that petitioner committed
"serious transgressions and misconduct" resulting in the former's loss of trust and confidence, no
other evidence was shown to substantiate the same. Such averment should be properly deemed
as a self� serving assertion that deserves no weight in law.41 Neither was petitioner accorded
procedural due process as he was merely informed by respondent's helper that he was already
terminated from his job. Clearly, respondent illegally dismissed petitioner, and as such, the latter is
entitled to backwages and separation pay in lieu of reinstatement, as correctly ruled by the labor
tribunals.

WHEREFORE, the petition is GRANTED. The Decision dated July 10, 2015 and the Resolution dated
October 21, 2015 of the Court of Appeals in CA-G.R. SP No. 129784 are hereby REVERSED and SET
ASIDE. The Decision dated November 16, 2012 and the Resolution dated February 28, 2013 of the
National Labor Relations Commission in NLRC LAC No. 08-002277-12 / NLRC NCR Case No. 12-
18409-11 are REINSTATED.

SO ORDERED.chanRob

ISIDRO QUEBRAL, ALBERTO ESQUILLO, RENANTE SALINSAN,

JEROME MACANDOG, EDGARDO GAYORGOR, JIM ROBERT
PERFECTO, NOEL PERFECTO, DENNIS PAGAYON, AND HERCULANO
MACANDOG Petitioners, v. ANGBUS CONSTRUCTION, INC. AND
ANGELO BUSTAMANTE, Respondents.
G.R. No. 221897, November 07, 2016
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated July 27, 2015 and the
Resolution3 dated November 2, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 138885, which
annulled and set aside the Decision4 dated December 26, 2013 of the National Labor Relations
Commission (NLRC) in NLRC NCR Case Nos. 07-10288-12, 07-10636-12, 07-10708-12, and 07-
10992-12, declaring that petitioners Isidro Quebral, Alberto Esquillo, Renante Salinsan, Jerome
Macandog, Edgardo Gayorgor, Jim Robert Perfecto, Noel Perfecto, Dennis Pagayon, and Herculano
Macandog (petitioners) are regular employees of respondent Angbus Construction, Inc. (Angbus)
and were illegally dismissed from employment.chanroblesvirtuallawlibrary

The Facts

Petitioners alleged that Angbus employed them as construction workers on various dates from
2008 to 2011. They claimed to be regular employees since they were engaged to perform tasks
which are necessary and desirable to the usual business of Angbus, and that they have rendered
services to the latter's construction business for several years already.5 They were, however,
summarily dismissed from work on June 28, 2012 and July 14, 2012 without any just or authorized
cause and due process. Thus, they filed consolidated cases for illegal dismissal with prayer for
reinstatement and payment of full backwages, salary differential, ECOLA, 13th month pay, service
incentive leave pay, overtime and holiday pay, including moral and exemplary damages as well as
attorney's fees.6

For their part, respondents maintained that petitioners were first employed by Angelfe
Management and Consultancy (Angelfe) for a one� time project only. Two or three years after
the completion of the Angelfe project, they were then hired by Angbus, which is a separate and
distinct business entity from the former. Thus, petitioners were hired only for two project
employment contracts - one each with Angelfe and Angbus. Respondents further stated that a
long period of time between the first project employment and the other intervened, which meant
that petitioners were not re-hired repeatedly and continuously.7

However, respondents failed to present petitioners' employment contracts, payrolls, and job
application documents either at Angelfe or Angbus. They averred that these documents were
completely damaged by the flood caused by the "habagat" on August 6 to 12, 2012, as evinced by
a Certification issued by the Chairman of Barangay Rosario, Pasig City, (Brgy. Rosario Certification)
where Angelfe and later, Angbus purportedly held offices.8

The LA Ruling

In a Decision9 dated March 27, 2013, the Labor Arbiter (LA) found that petitioners were not
illegally dismissed. The LA observed that despite the non-submission of the project employment
contracts between the parties (which were completely damaged by flood as stated in the Brgy.
Rosario Certification), there was still sufficient basis to support respondents' claim that petitioners
were hired for specific projects with specific durations by two different companies, i.e., Angbus
and Angelfe. In this relation, the LA gave credence to the Establishment Employment Reports
submitted to the Department of Labor and Employment (DOLE Reports) which showed that the
cause for petitioners' termination was project completion. Finally, the LA pointed out that the
hiring of petitioners for a definite period for a certain phase of a project was an industry practice
in the construction business.10

Separately, however, the LA ordered Angbus and Angelfe to pay petitioners their salary
differentials and claims for 13th month pay and holiday pay as these liabilities were admitted by
them. Meanwhile, individual respondent Angelo Bustamante, Jr. (Bustamante) was relieved of any
liability for want of basis.11

Aggrieved, petitioners filed an appeal to the NLRC.chanroblesvirtuallawlibrary

The NLRC Ruling

In a Decision12 dated December 26, 2013, the NLRC reversed the LA's ruling and declared that
petitioners were regular employees who were illegally dismissed on June 14, 2012; hence, they are
entitled to reinstatement and full backwages, including their other monetary claims.

The NLRC stressed that respondents had control over the company records but failed to present
the project employment contracts signed by the workers to rebut petitioners' claim that they were
regular employees. The Brgy. Rosario Certification attempting to justify the contracts' non�
submission was not given credence as respondents' business address was in Quezon City and not
in Rosario, Pasig. Instead, the NLRC observed that a certification from the barangay captain of the
place where their business address is located should have been presented.13

Moreover, the NLRC noted that Angbus hired all the petitioners almost at the same time in 2012,
giving the impression that these workers were continuously hired in one project after another and
that their employment, first with Angelfe and then with Angbus, was uninterrupted. The NLRC did
not give any credence to the allegation that Angbus and Angelfe were separate and distinct
companies considering that they maintained the same business address, are owned by the same
owner, and are engaged in the same construction business, where petitioners were continuously
employed. Neither did the NLRC give merit to the DOLE Reports as these were not submitted
within 30 days prior to the displacement of the workers.14

In a Resolution15 dated December 29, 2014, the NLRC denied the motion for reconsideration filed
by Angbus and Bustamante. On the allegation that petitioners' appeal was filed out of time, the
NLRC pointed out that the dates appearing on the mailing envelope on record and on the registry
receipt show that the appeal memorandum was mailed on May 20, 2013, which was the last day
of the reglementary period. It gave credence to the certification of Postmaster Larry S. Laureta
(Laureta's certification), the custodian of records at the Philippine Overseas Employment
Administration (POEA) Post Office at the time the mail matter was posted, that confirmed the said
mailing date.16

On the merits, the NLRC still refused to give weight to the Brgy. Rosario Certification. It added that
although the project site is in Pasig City, the employer is required to keep employment records in
its main office, not in the temporary project site or extension office. It also upheld the finding that
petitioners were regular employees in view of Angbus' failure to substantiate its claim that they
were project employees. In examining the entries in the DOLE Reports, the NLRC deduced that the
real reason for petitioners' termination from work is retrenchment and not project completion.
Thus, Angbus should have filed a notice of retrenchment to the DOLE thirty (30) days prior to the
employees' actual termination in observance of procedural due process, failing in which amounted
to illegal dismissal.17

Dissatisfied, respondents elevated their case to the CA on certiorari.chanroblesvirtuallawlibrary

The CA Ruling

In a Decision18 dated July 27, 2015, the CA held that the NLRC gravely abused its discretion when
it: (a) gave due course to petitioners' appeal even though it was filed out of time; and (b) ruled
that petitioners were regular employees of Angbus.

On the timeliness of the appeal's filing, the CA ascribed no evidentiary value to Registry Receipt
No. 2468 (registry receipt) due to the lack of an authenticating affidavit by the person who mailed
it. Petitioners presented the registry receipt to prove that they filed their memorandum of appeal
together with the appeal fee on the last day of the reglementary period on May 20, 2013. The CA
refused to give weight to Laureta's certification that the document covered by the registry return
was indeed mailed at the POEA Post Office on the said date. In so ruling, the CA explained that
Laureta's certification was issued without authority because it was issued only on February 17,
2014 when Laureta was no longer assigned at the POEA Office. Thus, the NLRC erred in
considering the registry receipt as conclusive proof of petitioners' timely filing of their appeal.19

On the substantive aspect, the CA reinstated the LA's finding that petitioners were project
employees, noting that the absence of a project employment contract does not automatically
confer regular status to the employees. It also observed that the Brgy. Rosario Certification
adequately explained the non-submission of the employment contracts, and that the DOLE
Reports showed petitioners' status as project employees. Likewise, the CA pointed out that the
NLRC erred in treating Angelfe and Angbus as one and the same entity just because the two
companies have the same business address, the same owner, and were engaged in the same
construction business. Consequently, it ordered respondents to return to petitioners whatever
amount the former has received by virtue of the NLRC Decision.20

Petitioners filed a motion for reconsideration, which was, however, denied in a Resolution21
dated November 2, 2015; hence, this petition.chanroblesvirtuallawlibrary

The Issue Before the Court

The core issue for the Court's resolution is whether the CA erred in (a) holding that petitioners'
appeal before the NLRC was filed out of time and (b) declaring petitioners as project employees of
Angbus and consequently, holding their dismissal to be valid.chanroblesvirtuallawlibrary

The Court's Ruling

The petition is meritorious.

Preliminarily, the Court stresses the distinct approach in reviewing a CA's ruling in a labor case. In a
Rule 45 review, the Court examines the correctness of the CA's Decision in contrast with the
review of jurisdictional errors under Rule 65. Furthermore, Rule 45 limits the review to questions
of law. In ruling for legal correctness, the Court views the CA Decision in the same context that the
petition for certiorari was presented to the CA. Hence, the Court has to examine the CA's Decision
from the prism of whether the CA correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision.22

Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that
is tantamount to lack of jurisdiction. To be considered "grave," discretion must be exercised in a
despotic manner by reason of passion or personal hostility, and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to
act at all in contemplation of law.23

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence,24 which refers to that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a conclusion.25 Thus, if the
NLRC's ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition.26

Viewed from these lenses, the Court finds that the NLRC's Decision in this case was supported by
substantial evidence and is consistent with law and jurisprudence as to the issues raised in the
petition. Hence, the CA incorrectly held that the NLRC gravely abused its discretion in giving due
course to petitioners' appeal filed before it and in declaring that the petitioners were regular
employees of Angbus. Accordingly, the NLRC's ruling must be reinstated.

On the procedural aspect, the Court notes that the issue of the timeliness of the filing of the
appeal is a factual issue that requires a review of the evidence presented on when the appeal was
actually filed.27 Thus, it is generally not covered by a Rule 45 review. In this case, however, the
conflicting findings of the CA and the NLRC on this matter pave the way for the Court to review
this factual issue even in a Rule 45 review.28

In this case, the CA held that the NLRC should not have given due course to petitioners' appeal for
being filed out of time. Although both the registry receipt and the date stamped on the envelope
showed that the date of posting was May 20, 2013 or the last day of the reglementary period, the
CA was not convinced that the appeal was actually mailed on that date at the POEA Post Office.
The CA held that petitioners should have submitted, together with the registry receipt, an
authenticating affidavit of the person who mailed the memorandum of appeal. It also refused to
give credence to Laureta's certification on the ground that it was issued without authority, having
been issued only on February 17, 2014 when Laureta was no longer assigned at the POEA Post
Office. It therefore concluded that the NLRC erred in considering the registry receipt as conclusive
proof that May 20, 2013 is the date of filing the appeal.

After reviewing the evidence on record, the Court disagrees with the CA that the appeal was not
timely filed.
Section 3, Rule 13 of the Rules of Court provides that where pleadings are filed by registered mail,
the date of mailing as shown by the post office stamp on the envelope or the registry receipt shall
be considered as the date of filing. Based on this provision, the date of filing is determinable from
two sources: (1) from the post office stamp on the envelope or (2) from the registry receipt, either
of which may suffice to prove the timeliness of the filing of the pleadings.29

The Court previously ruled that if the date stamped on one is earlier than the other, the former
may be accepted as the date of filing.30 This presupposes, however, that the envelope or registry
receipt and the dates appearing thereon are duly authenticated before the tribunal where they
are presented.31 When the photocopy of a registry receipt bears an earlier date but is not
authenticated, the Court held that the later date stamped on the envelope shall be considered as
the date of filing.32

In the present case, the petitioners submitted these pieces of evidence to show the timeliness of
their appeal: (a) the registry receipt; (b) a copy of the envelope that contained the memorandum
of appeal and appeal fee; and (c) Laureta's certification. As the CA noted, all three documents
indicate May 20, 2013 as the date of mailing at the POEA Post Office in Mandaluyong City.
Considering that there is no variance in the dates stated on these documents, there is no reason
for the Court to mark another date as the date of mailing.

Laureta's certification corroborates the date of filing specified in the registry receipt and on the
envelope. The Court recognizes that, ideally, the incumbent postmaster in the POEA Post Office
should be the one to certify the date of mailing based on the post office records, considering that
he or she is the person duly authorized to do so. Nevertheless, the Court finds that Laureta's
certification as the postmaster at the time of mailing, together with the pieces of evidence earlier
mentioned, constitutes substantial compliance with the authentication requirement.

On the substantive aspect, Article 29533 of the Labor Code,34 as amended, distinguishes a project
employee from a regular employee, to wit:chanRoblesvirtualLawlibrary
Art. 295 [280]. Regular and casual employment. - The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration of the
season.

x x x x (Emphasis and underscoring supplied)

A project-based employee is assigned to a project which begins and ends at determined or
determinable times.35 Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as project-
based employees may be lawfully terminated at the completion of the project.36

To safeguard the rights of workers against the arbitrary use of the word "project" to preclude
them from attaining regular status, jurisprudence provides that employers claiming that their
workers are project-based employees have the burden to prove that these two requisites concur:
(a) the employees were assigned to carry out a specific project or undertaking; and (b) the
duration and scope of which were specified at the time they were engaged for such project.37

In this case, Angbus failed to discharge this burden. Notably, Angbus did not state the specific
project or undertaking assigned to petitioners. As to the second requisite, not only was Angbus
unable to produce petitioners' employment contracts, it also failed to present other evidence to
show that it informed petitioners of the duration and scope of their work.

The Court previously ruled that although the absence of a written contract does not by itself grant
regular status to the employees, it is evidence that they were informed of the duration and scope
of their work and their status as project employees at the start of their engagement.38 When no
other evidence is offered, the absence of employment contracts raises a serious question of
whether the employees were sufficiently apprised at the start of their employment of their status
as project employees.39 Absent such proof, it is presumed that they are regular employees, thus,
can only be dismissed for just or authorized causes upon compliance with procedural due
process.40

The Court agrees with the NLRC that the Brgy. Rosario Certification cannot be given credence as it
was issued by the barangay captain in Rosario, Pasig City rather than in Quezon City.

Section 11, Rule X, Book III of the Omnibus Rules Implementing the Labor Code41 (Rules) requires
the employer to keep all employment records in the main or branch office where the employees
are assigned. It also prohibits the keeping of employees' records elsewhere. In the present case,
Angbus has consistently declared in its pleadings, in its General Information Sheet, and the DOLE
Reports that its main office is located at 16 Pratt Street, Filinvest 2, Batasan Hills, Quezon City. As
aptly ruled by the NLRC, the extension office in the project site in Brgy. Rosario, Pasig City is not a
branch office contemplated by the Rules where employees' records may be kept but merely a
temporary office. Hence, the Brgy. Rosario Certification, stating that petitioners' employment
records were destroyed by flood, does not justify the non-presentation of the employment
contracts. Besides, Angbus could still have presented other evidence to prove project employment
but it did not do so, relying on the convenient excuse that the documents were destroyed by
flood.42

The Court further observes that the CA placed unwarranted emphasis on the DOLE Reports or
termination reports submitted by Angbus as basis to rule that petitioners were project employees.
Section 2.2 of Department Order No. 19, Series of 1993, entitled "Guidelines Governing the
Employment of Workers in the Construction industry," issued by the DOLE, provides
that:chanRoblesvirtualLawlibrary
2.2 Indicators of project employment. - Either one or more of the following circumstances, among
others, may be considered as indicators that an employee is a project employee.

(a) The duration of the specific/identified undertaking for which the worker is engaged is
reasonably determinable.

(b) Such duration, as well as the specific work/service to be performed, is defined in an

employment agreement and is made clear to the employee at the time of hiring.

(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.

(d) The employee, while not employed and awaiting engagement, is free to offer his services to
any other employer.

(e) The termination of his employment in the particular project/undertaking is reported to the
Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the
workplace within 30 days following the date of his separation from work, using the prescribed
form on employees' terminations/dismissals/suspensions.

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

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

As a final point, it may not be amiss to state that petitioners' entitlement to their monetary claims,
such as salary differentials, thirteenth month pay, and holiday pay,43 was not contested further by
the parties. Neither did they question the NLRC's computation of the monetary awards due to
petitioners. Hence, the Court finds no reason to disturb it.

WHEREFORE, the petition is GRANTED. The Decision dated July 27, 2015 and the Resolution dated
November 2, 2015 of the Court of Appeals in CA-G.R. SP No. 138885 are hereby REVERSED and SET
ASIDE. The Decision dated December 26, 2013 and the Resolution dated December 29, 2014 of the
National Labor Relations Commission in NLRC Case Nos. 07-10288-12, 07-10636-12, 07-10708-12
and 07-10992-12 are REINSTATED.

SO ORDERED.

TOYOTA PASIG, INC., Petitioner, v. VILMA S. DE PERALTA,

Respondent.
G.R. No. 213488, November 07, 2016
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Resolutions dated April 14, 20142 and July
24, 20143 of the Court of Appeals (CA) in CA-G.R. SP Nos. 131495 and 131558, upholding the
Decision4 dated May 15, 2013 of the National Labor Relations Commission (NLRC) in LAC No. 03-
000954-13 NCR-03-03689-12 which, inter alia, found petitioner Toyota Pasig, Inc. (petitioner)
liable to respondent Vilma S. De Peralta (respondent) in the amount of P617,248.08 representing
the latter's unpaid commissions, tax rebate for achieved monthly targets, salary deductions,
unpaid salary for the month of January 2012, and success share/profit sharing for the year
2011.chanroblesvirtuallawlibrary

The Facts

The instant case stemmed from a complaint5 for illegal dismissal, illegal deduction, unpaid
commission, annual profit sharing, damages, and attorney's fees filed by respondent against
petitioner and/or Severino C. Lim, Jnalyn P. Lim, Jason Ian Yap, Jorge Tuason, Marissa Opera�a,
and Arturo P. Lopez (Lim, et al.) before the NLRC, docketed as NLRC-NCR� CASE No. 03-03689-
12.6 Essentially, respondent alleged that petitioner - a corporation engaged in the business of car
dealership, including service and sales of parts and accessories of Toyota motor vehicles7 initially
hired her as a cashier in March 1997.8 Eventually in 2004, she worked her way up to the position
of Insurance Sales Executive (ISE) which she held from 2007 to 2012 and where she received
various distinctions from petitioner, including "Best Insurance Sales Executive" for the years 2007
and 2011.9 However, things turned sour when her husband, Romulo "Romper" De Peralta, also
petitioner's employee and the President of the Toyota Shaw-Pasig Workers Union - Automotive
Industry Workers Alliance (TSPWU-AIWA), organized a collective bargaining unit through a
certification election.10 According to respondent, petitioner suddenly dismissed from service the
officials/directors of TSPWU-AIWA, including her husband.11 Thereafter, petitioner allegedly
started harassing respondent for her husband's active involvement in TSPWU-AIWA, which
resulted to the issuance of a Notice to Explain dated January 3, 2012 accusing her of "having
committed various acts" relative to the processing of insurance of three (3) units as "outside
transactions" and claiming commissions therefor, instead of considering the said transactions as
"new business accounts" under the dealership's marketing department.12 Accordingly, she was
preventively suspended because of such charge. On February 3, 2012, respondent received a
Notice of Termination,13 which prompted her to file the instant complaint, where she also prayed
for the payment of her earned substantial commissions, tax rebates, and other benefits dating
back from July 2011 to January 2012, amounting to P617,248.08.14

In their defense, petitioner and Lim, et al. maintained that respondent was dismissed from service
for just cause and with due process. They explained that respondent was charged and proven to
have committed acts of dishonesty and falsification by claiming commissions for new business
accounts which should have been duly credited to the dealership's marketing department.15 They
further averred that respondent's claims for commissions, tax rebates, and other benefits were
unfounded and without documentation and validation.16

The LA Ruling

In a Decision17 dated January 25, 2013, the Labor Arbiter (LA) dismissed the complaint for lack of
merit, but ordered petitioner to pay respondent the amount of P11,111.50 representing the
latter's salary for January 2012.18

It found that respondent herself admitted through her letter �explanation to the Notice to
Explain that she indeed processed the insurance of units from petitioner's own dealership, and as
a result, received commissions which were rightly attributable to the dealership's marketing
department not being "outside transactions."19 According to the LA, respondent's acts
constituted dishonesty which is tantamount to serious misconduct, a just cause for dismissal.20
Anent respondent's claims for unpaid commissions, the LA found no basis to grant the same,
considering that the documents submitted in support thereof were mere computations which are
insufficient proof of her entitlement thereto.21

Aggrieved, respondent appealed22 to the NLRC.chanroblesvirtuallawlibrary

The NLRC Ruling

In a Decision23 dated May 15, 2013, the NLRC affirmed the LA ruling with modification finding
petitioner liable to respondent in the amount of P617,248.08 representing the latter's unpaid
commissions, tax rebate for achieved monthly targets, salary deductions, salary for the month of
January 2012, and success share/profit sharing.24

The NLRC agreed with the LA's finding that respondent's act of taking credit in the form of
commissions on accounts rightly attributable to the dealership's marketing department
constituted serious misconduct, which justified her termination from employment.25 As such,
respondent is not entitled to backwages, separation pay, damages, and attorney's fees.26

However, with regard to respondent's other monetary claims, the NLRC held petitioner liable for
the same as it failed to present documents showing that respondent is not entitled to said claims,
as per her computation. The NLRC, however, exculpated Lim, et al. from such liability as it was not
shown that they acted with gross negligence or bad faith in directing petitioner's affairs.27

Dissatisfied, the parties separately elevated the case to the CA via petitions for certiorari28 In their
respective petitions before the CA, respondent assailed the legality of her dismissal, while
petitioner questioned NLRC's award of the amount of P617,248.08 in respondent's favor.
Eventually, their separate petitions were consolidated and docketed as CA� G.R. SP Nos. 131495
and 131558.29

The CA Ruling

In a Resolution dated April 14, 2014,30 the CA dismissed the consolidated petitions and,
accordingly, affirmed the NLRC ruling in toto. It held that the NLRC did not gravely abuse its
discretion in declaring respondent to have been dismissed for just cause as such finding conform
with the facts and the law on the matter. Similarly, it held that no grave abuse of discretion may
be ascribed to the NLRC in awarding respondent her other monetary claims, considering that
petitioner failed to discharge its burden of proving that respondent was not entitled to the
same.31

Both parties moved for reconsideration,32 which were however, denied in a Resolution33 dated
July 24, 2014; hence, this petition filed by petitioner.

It also appears that respondent filed a separate petition before the Court, docketed as G.R. No.
213691.34 In a Resolution dated November 24, 2014,35 the Court denied respondent's separate
petition for her failure to show that the CA committed reversible error in upholding the legality of
her dismissal. Said ruling had then lapsed into finality.36

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly upheld petitioner's
liability to respondent in the amount of P617,248.08 representing the latter's unpaid commissions,
tax rebate for achieved monthly targets, salary deductions, salary for the month of January 2012,
and success share/profit sharing.chanroblesvirtuallawlibrary

The Court's Ruling

The petition primarily argues that the CA erred in awarding respondent her monetary claims
despite failing to prove her entitlement thereto. Corollary, it likewise contends that such monetary
claims do not partake of unpaid wages/salaries, as well as the labor standard benefits of
employees as provided by law - e.g., 13th month pay, overtime pay, service incentive leave pay,
night differential pay, holiday pay - and as such, petitioner, as employer, did not bear the burden
of proving the payment of such monetary claims or that respondent was not entitled thereto.37

The petition is without merit.

Section 97 (f) of the Labor Code reads:chanRoblesvirtualLawlibrary

ART. 97. Definitions. - As used in this Title:cralawlawlibrary

xxxx

(f) "Wage" paid to any employee shall mean the remuneration of earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece,
or commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done,
or for services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of board, lodging, or other facilities
customarily furnished by the employer to the employee. "Fair and reasonable value" shall not
include any profit to the employer, or to any person affiliated with the employer. (Emphasis and
underscoring supplied)
The aforesaid provision explicitly includes commissions as part of wages. In Iran v. NLRC,38 the
Court thoroughly explained the wisdom behind such inclusion as
follows:chanRoblesvirtualLawlibrary
This definition explicitly includes commissions as part of wages. While commissions are, indeed,
incentives or forms of encouragement to inspire employees to put a little more industry on the
jobs particularly assigned to them, still these commissions are direct remunerations for services
rendered. In fact, commissions have been defined as the recompense, compensation or reward of
an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the profit to the principal. The
nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a salesman's wage or salary.

xxxx
The NLRC asserts that the inclusion of commissions in the computation of wages would negate the
practice of granting commissions only after an employee has earned the minimum wage or over.
While such a practice does exist, the universality and prevalence of such a practice is questionable
at best. In truth, this Court has taken judicial notice of the fact that some salesmen do not receive
any basic salary but depend entirely on commissions and allowances or commissions alone,
although an employer-employee relationship exists. Undoubtedly, this salary structure is intended
for the benefit of the corporation establishing such, on the apparent assumption that thereby its
salesmen would be moved to greater enterprise and diligence and close more sales in the
expectation of increasing their sales commissions. This, however, does not detract from the
character of such commissions as part of the salary or wage paid to each of its salesmen for
rendering services to the corporation.39 (Emphases and underscoring supplied)
In this case, respondent's monetary claims, such as commissions, tax rebates for achieved monthly
targets, and success share/profit sharing, are given to her as incentives or forms of
encouragement in order for her to put extra effort in performing her duties as an ISE. Clearly, such
claims fall within the ambit of the general term "commissions" which in turn, fall within the
definition of wages pursuant to prevailing law and jurisprudence. Thus, respondent's allegation of
nonpayment of such monetary benefits places the burden on the employer, i.e., petitioner, to
prove with a reasonable degree of certainty that it paid said benefits and that the employee, i.e.,
respondent, actually received such payment or that the employee was not entitled thereto.40 The
Court's pronouncement in Heirs of Ridad v. Gregorio Araneta University Foundation41 is
instructive on this matter, to wit:chanRoblesvirtualLawlibrary
Well-settled is the rule that once the employee has set out with particularity in his complaint,
position paper, affidavits and other documents the labor standard benefits he is entitled to, and
which he alleged that the employer failed to pay him, it becomes the employer's burden to prove
that it has paid these money claims. One who pleads payment has the burden of proving it, and
even where the employees must allege non-payment, the general rule is that the burden rests on
the employer to prove payment, rather than on the employees to prove non-payment. The reason
for the rule is that the pertinent personnel files, payrolls, records, remittances, and other similar
documents which will show that overtime, differentials, service incentive leave, and other claims
of the worker have been paid - are not in the possession of the worker but in the custody and
absolute control of the employer.42 (Emphasis and underscoring supplied)
In this case, petitioner simply dismissed respondent's claims for being purely self-serving and
unfounded, without even presenting any tinge of proof showing that respondent was already paid
of such benefits or that she was not entitled thereto. In fact, during the proceedings before the LA,
petitioner was even given the opportunity to submit pertinent company records to rebut
respondent's claims but opted not to do so, thus, constraining the LA to direct respondent to
submit her own computations.43 It is well-settled that the failure of employers to submit the
necessary documents that are in their possession gives rise to the presumption that the
presentation thereof is prejudicial to its cause.44

Indubitably, petitioner failed to discharge its afore-described burden. Hence, it is bound to pay the
monetary benefits claimed by respondent. As aptly pointed out by the NLRC, since respondent
already earned these monetary benefits, she must promptly receive the same, notwithstanding
the fact that she was legally terminated from employment.45

WHEREFORE, the petition is DENIED. The Resolutions dated April 14, 2014 and July 24, 2014 of the
Court of Appeals in CA-G.R. SP Nos. 131495 and 131558 are hereby AFFIRMED in toto.

SO ORDERED.Cha

PENINSULA EMPLOYEES UNION v. MICHAEL B. ESQUIVEL

GR NO. 218454, Dec 01, 2016
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari [1] assailing the Decision[2] dated February
9, 2015 and the Resolution[3] dated May 21, 2015 of the Court of Appeals (CA) in CA-G.R. SP No.
124566, which annulled and set aside the Order[4] dated March 6, 2012 (March 6, 2012 Order) of
the Office of the Secretary (OSEC) of the Department of Labor and Employment (DOLE) in OS-AJ-
0024-07 declaring petitioner Peninsula Employees Union (PEU) National Union of Workers in Hotel
Restaurants and Allied Industries (NUWHRAIN)[5] entitled to collect the amount of two percent
(2%) agency fees from The Peninsula Manila Hotel Labor Union (TPMHLU), the former collective
bargaining agent,[6] and the non-affiliated employees (NAE;[7] collectively, non-PEU members),
herein represented by respondents Michael B. Esquivel, Domingo G. Mabutas, Randell V. Afan, et
al. (respondents), retroactively from July 2010.

The Facts

On December 13, 2007, PEU's Board of Directors passed Local Board Resolution No. 12, series of
2007[8] authorizing (a) the affiliation of PEU with NUWHRAIN, and the direct membership of its
individual members thereto; (b) the compliance with all the requirements therefor; and (c) the
Local President to sign the affiliation agreement with NUWHRAIN upon acceptance of such
affiliation.[9] On the same day, the said act was submitted to the general membership, and was
duly ratified by 223 PEU members.[10]

Beginning January 1, 2009, PEU-NUWHRAIN sought to increase the union dues/agency fees from
one percent (1%) to two percent (2%) of the rank and file employees' monthly salaries, brought
about by PEU's affiliation with NUWHRAIN, which supposedly requires its affiliates to remit to it
two percent (2%) of their monthly salaries.[11]
Meanwhile, in a Decision[12] dated October 10, 2008 (October 10, 2008 Decision), the OSEC
resolved the collective bargaining deadlock between PEU-NUWHRAIN and The Peninsula Manila
Hotel (Hotel), ordering the parties to execute a collective bargaining agreement (CBA)
incorporating the dispositions therein (arbitral award).[13] The parties have yet to actually sign a
CBA but have, for the most part, implemented the arbitral award.[14]

In March 2009, PEU-NUWHRAIN requested[15] the OSEC for Administrative Intervention for
Dispute Avoidance[16] (AIDA) pursuant to DOLE Circular No. 1, series of 2006[17] in relation to the
issue, among others, of its entitlement to collect increased agency fees from the non-PEU
members,[18] which was docketed as OSEC-AIDA-03-001-09.[19]

The non-PEU members objected to the assessment of increased agency fees arguing that: (a) the
new CBA is unenforceable since no written CBA has been formally signed and executed by PEU-
NUWHRAIN and the Hotel; (b) the 2% agency fee is exorbitant and unreasonable; and (c) PEU-
NUWHRAIN failed to comply with the mandatory requirements for such increase.[20]

The OSEC's Ruling

In a Decision[21] dated June 2, 2010 (June 2, 2010 Decision), the OSEC upheld PEU-NUWHRAIN's
right to collect agency fees from the non-PEU members in accordance with Article 4, Section 2 of
the expired CBA, which was declared to be in full force and effect pursuant to the October 10,
2008 Decision, but only at the rate of one percent (1%),[22] and denied its bid to increase the
agency fees to two percent (2%) for failure to show that its general membership approved the
same, noting that: (a) the October 28, 2008 General Membership Resolution[23] (GMR) submitted
in support of the claimed increase dealt with the approval of the payment of attorney's fees from
the CBA backwages, without reference to any approval of the increase in union dues; and (b) the
minutes[24] of its October 28, 2008 general membership meeting (October 28, 2008 minutes)
merely stated that there was a need to update the individual check-off authorization to implement
the two percent (2%) union dues, but was silent as to any deliberation and formal approval
thereof.[25] The OSEC pointed out that the only direct proof presented for the claimed increase in
union dues was the PEU President's application for union membership with PEU-NUWHRAIN[26]
dated October 29, 2008, together with his Individual Check-Off Authorization[27] purportedly
dated May 11, 2008, which precedes such application and, thus, cannot be given credence.[28]

Dissatisfied, PEU-NUWHRAIN moved for reconsideration,[29] attaching thereto copies of: (a) the
July 1, 2010 GMR[30] confirming and affirming the alleged approval of the deduction of two
percent (2%) union dues from the members' monthly basic salaries; (b) the individual check-off
authorizations[31] dated November 26 and 27, 2008 from three (3) members authorizing the
deduction of two percent (2%) union dues from their monthly basic salaries; and (c) payslips[32] of
some PEU-NUWHRAIN members purportedly showing the deduction of two percent (2%) union
dues from their monthly basic pay beginning January 2009.
On March 6, 2012, the OSEC issued an Order[33] partially granting PEU-NUWHRAIN's motion for
reconsideration, and declaring it entitled to collect two percent (2%) agency fees from the non-
PEU members beginning July 2010 since the GMR showing approval for the increase of the union
dues from one percent (1%) to two percent (2%) was only procured at that time.[34]

Unperturbed, respondents filed a petition for certiorari[35] with the CA, docketed as CA-GR. SP
No. 124566, alleging that the OSEC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in allowing PEU-NUWHRAIN to collection increased agency fees despite non-
compliance with the legal requirements therefor.[36]

The CA Ruling

In a Decision[37] dated February 9, 2015, the CA set aside the OSEC's March 6, 2012 Order, and
reinstated the June 2, 2010 Decision.[38] It ruled that PEU-NUWHRAIN failed to prove compliance
with the requisites for a valid check-off since the October 28, 2008 minutes do not show that the
increase in union dues was duly approved by its general membership. It also found the July 1, 2010
GMR suspicious considering that it surfaced only after PEU received the OSEC's June 2, 2010
Decision disallowing the collection of increased agency fees.[39]

PEU-NUWHRAIN moved for reconsideration,[40] which was, however, denied in a Resolution[41]

dated May 21, 2015; hence, the present petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA committed reversible error
in ruling that PEU-NUWHRAIN had no right to collect the increased agency fees.

The Court's Ruling

The petition lacks merit.

The recognized collective bargaining union which successfully negotiated the CBA with the
employer is given the right to collect a reasonable fee called "agency fee" from non-union
members who are employees of the appropriate bargaining unit, in an amount equivalent to the
dues and other fees paid by union members, in case they accept the benefits under the CBA.[42]
While the collection of agency fees is recognized by Article 259[43] (formerly Article 248) of the
Labor Code, as amended, the legal basis of the union's right to agency fees is neither contractual
nor statutory, but quasi-contractual, deriving from the established principle that non-union
employees may not unjustly enrich themselves by benefiting from employment conditions
negotiated by the bargaining union.[44]

In the present case, PEU-NUWHRAIN's right to collect agency fees is not disputed. However, the
rate of agency fees it seeks to collect from the non-PEU members is contested, considering its
failure to comply with the requirements for a valid increase of union dues, rendering the collection
of increased agency fees unjustified.

Case law interpreting Article 250 (n) and (o)[45] (formerly Article 241) of the Labor Code, as
amended, mandates the submission of three (3) documentary requisites in order to justify a valid
levy of increased union dues. These are: (a) an authorization by a written resolution of the
majority of all the members at the general membership meeting duly called for the purpose; (b)
the secretary's record of the minutes of the meeting, which shall include the list of all members
present, the votes cast, the purpose of the special assessment or fees and the recipient of such
assessment or fees;[46] and (c) individual written authorizations for check-off duly signed by the
employees concerned.[47]

In the present case, however, PEU-NUWHRAIN failed to show compliance with the foregoing
requirements. It attempted to remedy the "inadvertent omission" of the matter of the approval of
the deduction of two percent (2%) union dues from the monthly basic salary of each union
member through the July 1, 2010 GMR,[48] entitled "A GENERAL MEMBERSHIP RESOLUTION
AUTHORIZING THE DEDUCTION OF TWO PERCENT (2%) UNION DUES FROM THE MONTHLY BASIC
SALARY OF EACH UNION MEMBER," which stated, among others, that:

the General Membership Assembly (Assembly) "approved the deduction of two percent (2%)
union dues from the monthly basic salary of each union member" during its 8th General
Membership Meeting, as shown in the October 28, 2008 minutes;

"through inadvertence, the [October 28, 2008 GMR] failed to include the Assembly's approval of
the two percent (2%) deduction of union dues;"

the July 1, 2010 GMR is being issued "to confirm and affirm what was agreed upon during the 8th
General Membership Meeting dated October 28, 2008."[49]

On the other hand, the adverted October 28, 2008 minutes[50] stated, inter alia, that:

"the [two percent (2%)] Union dues will have to be implemented since PEU was already affiliated
with NUWHRAIN [in] 2007";[51]

"it was discussed, deliberated and approved by the majority of members the (sic) 10% of total CBA
back wages through [the Assembly] resolution authorizing the payment of attorney's fees."[52]
It is evident from the foregoing that while the matter of implementing the two percent (2%) union
dues was taken up during the PEU-NUWHRAIN's 8th General Membership Meeting on October 28,
2008, there was no sufficient showing that the same had been duly deliberated and approved. The
minutes of the Assembly itself belie PEU-NUWHRAIN's claim that the increase in union dues and
the corresponding check-off were duly approved since it merely stated that "the [two percent
(2%)] Union dues will have to be implemented,"[53] meaning, it would still require the submission
of such matter to the Assembly for deliberation and approval Such conclusion is bolstered by the
silence of the October 28, 2008 GMR on the matter of two percent (2%) union dues, in contrast to
the payment of 10% attorney's fees from the CBA backwages which was clearly spelled out as
having been "discussed and approved."[54] Thus, as aptly pointed out by the CA: "[i]f indeed
majority of the members of [PEU-NUWHRAIN] approved the increase in union dues, the same
should have been mentioned in the [October 28, 2008 minutes], and reflected in the GMR of the
same date."[55]

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

Corollarily, no individual check-off authorizations can proceed therefrom, and the submission of
the November 2008 check-off authorizations[56] becomes inconsequential. Jurisprudence states
that the express consent of the employee to any deduction in his compensation is required to be
obtained in accordance with the steps outlined by the law, which must be followed to the
letter;[57] however, PEU-NUWHRAIN failed to comply. Thus, the CA correctly ruled that there is no
legal basis to impose union dues and agency fees more than that allowed in the expired CBA, i.e.,
at one percent (1%) of the employee's monthly basic salary.

In fine, the Court finds no reversible error on the part of the CA in granting petitioner's certiorari
petition, and finding that the OSEC gravely abused its discretion in declaring PEU-NUWHRAIN's
entitlement to collect two percent (2%) agency fees from the non-PEU members beginning July
2010. The OSEC's March 6, 2012 Order is patently contrary to law, hence, imbued with grave
abuse of discretion correctible through certiorari.[58]

WHEREFORE, the petition is DENIED. The Decision dated February 9, 2015 and the Resolution
dated May 21, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 124566 are hereby AFFIRMED.
SO ORDERED.

EDRON CONSTRUCTION CORPORATION AND EDMER Y. LIM,

PETITIONERS, V. THE PROVINCIAL GOVERNMENT OF SURIGAO DEL
SUR, REPRESENTEGOVERNOR VICENTE T. PIMENTEL, JR.,
RESPONDENT.
G.R. No. 220211, June 05, 2017
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated November 26, 2014
and the Resolution[3] dated September 8, 2015 of the Court of Appeals (CA) in CA-G.R. CV No.
99539, which reversed and set aside the Decision[4] dated December 28, 2010 and the
Order[5]dated September 16, 2011 of the Regional Trial Court of Quezon City, Branch 77 (RTC) in
Civil Case No. Q-08-63154, and consequently, dismissed the complaint filed by petitioners Edron
Construction Corporation and Edmer Y. Lim (petitioners) against respondent the Provincial
Government of Surigao Del Sur, represented by Governor Vicente T. Pimentel, Jr. (respondent).
The Facts

The instant petition stemmed from a Complaint[6] for specific performance and damages filed by
petitioners Edron Construction Corporation and Edmer Y. Lim (Lim; collectively, petitioners)
against respondent before the RTC. Petitioners alleged that they entered into three (3) separate
construction agreements[7] with respondent for the construction of the Learning Resource Center
of Tandag, Tandag Bus/Jeepney Terminal, and Tandag Public Market. Petitioners claimed that
despite their completion and respondent's consequent acceptance of the works as evidenced by
Certificates of Final Acceptance,[8] the latter had yet to pay them the aggregate amount of
P8,870,729.67, despite numerous oral and written demands. Thus, they filed the instant complaint
to claim the aforesaid amount, plus P500,000.00 as actual damages and P250,000.00 as attorney's
fees.[9]

In its Answer with Counterclaim[10] dated January 6, 2009, respondent admitted the existence of
the aforesaid construction contracts. However, it nevertheless maintained, inter alia, that: (a)
there is no unpaid balance; (b) petitioners are in fact liable for underruns and defective works; (c)
petitioners had already waived or abandoned their right to collect any amount on the ground of
prescription; and (d) petitioners are guilty of non-observance of the specifications indicated in the
construction contracts.[11]

More than a year after the filing of its Answer, respondent filed a Motion to Dismiss[12] dated
May 24, 2010 on the ground of failure to state a cause of action. It argued that under Paragraph
4.3, Article IV of the construction agreements, final payment to petitioners shall be made only
after the submission of a sworn statement attesting to the fact that all of the latter's obligations
for labor and materials under the contracts have been fully paid. In this regard, respondent
contended that since petitioners have yet to submit such sworn statement, then the latter do not
have a cause of action against it.[13] The motion was, however, denied in an Order[14] dated
August 11, 2010.

Meanwhile, during trial, Lim testified that: (a) petitioners referred the instant matter to a
Presidential Flagship Committee, which valued respondent's alleged arrears at P4,326,174.50, and
that the former accepted such valuation and agreed to be paid such reduced amount, but
respondent still failed to pay the same;[15] and (b) petitioners no longer executed a separate
affidavit referred to in Paragraph 4.3, Article IV of the construction agreements, maintaining that
everything that was needed in claiming full payment from respondent were already attached in
the final billings they submitted to the latter.[16] On the other hand, witnesses for respondent
testified, among others, that respondent accepted the projects subject of the construction
agreements, free from major defects and deficiencies, but nonetheless resisted making payments
due to discrepancies in the valuations arising from petitioners' alleged deviations from project
specifications. [17]
The RTC Ruling

In a Decision[18] dated December 28, 2010, the RTC ruled in petitioners' favor, and accordingly,
ordered respondent to pay them: (a) P4,326,174.50 with interests of six percent (6%) per annum
computed from June 20, 2000, and thereafter, twelve percent (12%) per annum from the filing of
the complaint on August 5, 2008; (b) P50,000.00 as attorney's fees; and (c) the costs of suit.[19]
The RTC found that in light of respondent's admission that the construction works were
satisfactorily completed, free from major defects, and that it has accepted the same, petitioners
have amply proven their entitlement to the payment of their claim in the reduced amount of
P4,326,174.50 based on the Presidential Flagship Committee's valuation, which petitioners had
accepted. On the other hand, the RTC pointed out that respondent's witnesses had not shown the
alleged deviations, much less submitted the list of defects and deficiencies on the projects subject
of the construction agreements, on which respondent justified its reason for non-payment of
petitioners' claims.[20]

Respondent moved for reconsideration[21] which was denied in an Order[22] dated September
16, 2011. Aggrieved, respondent appealed to the CA.[23]

The CA Ruling

In a Decision[24] dated November 26, 2014, the CA reversed and set aside the RTC ruling, and
consequently, dismissed the complaint for lack of cause of action.[25] It held that by the very
terms of the construction agreements, specifically Paragraph 4.3, Article IV thereof, the
contractor's submission of the sworn statement attesting that all its obligations for labor and
materials under the contracts have been fully paid is a condition sine qua non in demanding final
payment from the owner. Hence, in view of petitioners': (a) admission in open court that no such
sworn statement was submitted; and (b) failure to submit evidence showing that a sworn
statement was submitted to respondents, petitioners could not validly make a demand for final
payment from respondent. In other words, petitioners' cause of action against respondent has not
yet accrued.[26]

Undaunted, petitioners moved for reconsideration,[27] which was, however, denied in a

Resolution[28] dated September 8, 2015; hence, this petition.

The Issue Before the Court

The primordial issue for the Court's resolution is whether or not the CA correctly reversed and set
aside the RTC ruling, and consequently, dismissed petitioners' complaint for lack of cause of
action.

The Court's Ruling

The petition is meritorious.

At the outset, the Court notes that the CA's dismissal of petitioners' complaint is heavily-grounded
on the latter's alleged non-submission of the sworn statement required in Paragraph 4.3, Article
IV[29] of the construction agreements.

Such reliance is misplaced.

Section 1, Rule 9 of the Rules of Court reads:

Section 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that
there is another action pending between the same parties for the same cause, or that the action is
barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

It may be gleaned from the said provision that except for the defenses of: (a) lack of jurisdiction
over the subject matter of the case; (b) litis pendentia; (c) res judicata; and/or (d) prescription,
other defenses must be invoked when an answer or a motion to dismiss is filed in order to prevent
a waiver thereof. Otherwise stated, if a defendant fails to raise a defense not specifically excepted
in Section 1, Rule 9 of the Rules of Court either in a motion to dismiss or in the answer, such
defense shall be deemed waived, and consequently, defendant is already estopped from relying
upon the same in further proceedings.[30]

In the instant case, a judicious review of the records reveals that respondent's Answer with
Counterclaim[31] dated January 6, 2009 did not raise as an issue or as a defense petitioners' non-
execution of the sworn statement pertained to in Paragraph 4.3, Article IV of the construction
agreements. In fact, such matter was only raised in its Motion to Dismiss[32] filed more than a
year later after the Answer, or on May 24, 2010, to support the ground relied upon in the said
Motion, which is failure to state a cause of action. However, it must be pointed out that the
Motion and the arguments supporting it can no longer be considered since it was filed out of time
as Section 1, Rule 16 of the Rules of Court explicitly provides that motions to dismiss should be
filed "[w]ithin the time for but before the filing the answer to the complaint or pleading asserting a
claim." More importantly, such matter/defense raised in the motion does not fall within the
exceptions laid down in Section 1, Rule 9 of the Rules of Court. As such, respondent was already
precluded from raising such issue/defense. Hence, the RTC cannot be faulted in: (a) issuing an
Order[33] dated August 11, 2010 denying the Motion to Dismiss; and (b) not including a discussion
of said issue/defense in its Decision[34] dated December 28, 2010 and Order[35] dated September
16, 2011.
In light of the foregoing, the CA erred in dismissing petitioners' complaint on a ground belatedly
and improperly raised by respondent. Thus, the Court is constrained to overturn said dismissal and
in turn, uphold the RTC's finding of liability on the part of respondents, especially considering that
it issued Certificates of Final Acceptance[36] essentially stating that the projects were satisfactorily
completed, free from major defects, and that it was formally accepting the same. As a result,
respondent is hereby adjudged to be liable to petitioners in the amount of P4,326,174.50, which is
the valuation of such liability according to the Presidential Flagship Committee's valuation
accepted by petitioners.

Finally and in line with prevailing jurisprudence, such amount shall earn legal interest of twelve
percent (12%) per annum, computed from first demand on June 20, 2000 to June 30, 2013, and six
percent (6%) per annum from July 1, 2013 until finality of the Decision. Said sum, as well as the
other amounts awarded by the RTC (i.e., P50,000.00 as attorney's fees and the costs of suit) shall
then earn legal interest of six percent (6%) per annum from finality of the Decision until fully
paid.[37]

WHEREFORE, the petition is GRANTED. The Decision dated November 26, 2014 and the Resolution
dated September 8, 2015 of the Court of Appeals in CA-G.R. CV No. 99539 are hereby REVERSED
and SET ASIDE. Accordingly, the Decision dated December 28, 2010 and the Order dated
September 16, 2011 of the Regional Trial Court of Quezon City, Branch 77 in Civil Case No. Q-08-
63154 are hereby REINSTATED with MODIFICATION, in that respondent the Provincial Government
of Surigao Del Sur, represented by Governor Vicente T. Pimentel, Jr., is liable to petitioners Edron
Construction Corporation and Edmer Y. Lim for the amounts of: (a) P4,326,174.50 plus legal
interest of twelve percent (12%) per annum, computed from first demand on June 20, 2000 to
June 30, 2013, and six percent (6%) per annum from July 1, 2013 until finality of the Decision; (b)
P50,000.00 as attorney's fees; and (c) the costs of suit. Furthermore such amounts shall earn an
additional six percent (6%) per annum from finality of the Decision until fully paid.

SO ORDERED.
JOY T. SAMONTE, COMPLAINANT, VS. ATTY. VIVENCIO V. JUMAMIL,
RESPONDENT.
A.C. No. 11668, July 17, 2017
PERLAS-BERNABE, J.:

For the Court's resolution is a Complaint[1] dated March 15, 2013, filed before the Integrated Bar
of the Philippines (IBP), by complainant Joy T. Samonte (complainant) against respondent Atty.
Vivencio V. Jumamil (respondent), praying that the latter be disbarred for acts unbecoming of a
lawyer and betrayal of trust.

The Facts

Complainant alleged that sometime in October 2012, she received summons from the National
Labor Relations Commission (NLRC), Regional Arbitration Branch XI, Davao City, relative to an
illegal dismissal case, i.e., NLRC Case RAB-XI-10-00586-12, filed by four (4) persons claiming to be
workers in her small banana plantation.[2] Consequently, complainant engaged the services of
respondent to prepare her position paper, and paid him the amount of P8,000.00[3] as attorney's
fees.[4] Despite constantly reminding respondent of the deadline for the submission of her
position paper, complainant discovered that he still failed to file the same.[5] As such, on January
25, 2013, the Labor Arbiter rendered a Decision[6] based on the evidence on record, whereby
complainant was held liable to the workers in the total amount of P633,143.68.[7] When
complainant confronted respondent about the said ruling, the latter casually told her to just sell
her farm to pay the farm workers.[8] Because of respondent's neglect, complainant claimed that
she was left defenseless and without any remedy to protect her interests against the execution of
the foregoing judgment;[9] hence, she filed the instant complaint.

In an Order[10] dated March 26, 2013, the IBP Commission on Bar Discipline (IBP-CBD) directed
respondent to submit his Answer to the complaint.
In his Answer[11] dated April 19, 2013, respondent admitted that he indeed failed to file a position
paper on behalf of complainant. However, he maintained that said omission was due to
complainant's failure to adduce credible witnesses to testify in her favor. In this relation,
respondent averred that complainant instructed her to prepare an Affidavit[12] for one Romeo P.
Baol (Romeo), who was intended to be her witness; nevertheless, respondent was instructed that
the contents of Romeo's affidavit were not to be interpreted in the Visayan dialect so that the
latter would not know what he would be testifying on. Respondent added that complainant's
uncle, Nicasio Ticong, who was also an intended witness, refused to execute an affidavit and
testify to her lies. Thus, it was complainant who was deceitful in her conduct and that the
complaint against him should be dismissed for lack of merit.[13]

The IBP's Report and Recommendation

In its Report and Recommendation[14] dated March 14, 2014, the IBP-CBD found respondent
administratively liable and, accordingly, recommended that he be suspended from the practice of
law for a period of one (1) year. Essentially, the IBP-CBD found respondent guilty of violating Rule
10.01, Canon 10, and Rule 18.03, Canon 18 of the Code of Professional Responsibility (CPR), as well
as the 2004 Rules on Notarial Practice.[15]

In a Resolution[16] dated December 13, 2014, the IBP Board of Governors adopted and approved
the aforesaid Report and Recommendation, finding the same to be fully supported by the
evidence on record and the applicable laws and rules.

The Issue Before the Court

The sole issue in this case is whether or not respondent should be held administratively liable.

The Court's Ruling

The Court concurs with and affirms the findings of the IBP, with modification, however, as to the
penalty in order to account for his breach of the rules on notarial practice.

The relationship between a lawyer and his client is one imbued with utmost trust and confidence.
In this regard, clients are led to expect that lawyers would be ever-mindful of their cause, and
accordingly, exercise the required degree of diligence in handling their affairs. Accordingly, lawyers
are required to maintain, at all times, a high standard of legal proficiency, and to devote their full
attention, skill, and competence to their cases, regardless of their importance, and whether they
accept them for a fee or for free.[17] To this end, lawyers are enjoined to employ only fair and
honest means to attain lawful objectives.[18] These principles are embodied in Rule 10.01 of
Canon 10 and Rule 18.03 of Canon 18 of the CPR, which respectively read as follows:

CANON 10 – A LAWYER OWES CANDOR, FAIRNESS AND GOOD FAITH TO THE COURT.

Rule 10.01 – A lawyer shall not do any falsehood, nor consent to the doing of any in court; nor
shall he mislead, or allow the Court to be misled by any artifice.

CANON 18 – A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE.

Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable.

In this case, it is undisputed that a lawyer-client relationship was forged between complainant and
respondent when the latter agreed to file a position paper on her behalf before the NLRC and, in
connection therewith, received the amount of P8,000.00 from complainant as payment for his
services. Case law instructs that a lawyer-client relationship commences when a lawyer signifies
his agreement to handle a client's case and accepts money representing legal fees from the
latter,[19] as in this case. From then on, as the CPR provides, a lawyer is duty-bound to "serve his
client with competence and diligence," and in such regard, "not neglect a legal matter entrusted to
him."

However, it is fairly apparent that respondent breached this duty when he admittedly failed to file
the necessary position paper before the NLRC, which had, in fact, resulted into an adverse ruling
against his client, i.e., herein complainant. To be sure, it is of no moment that complainant
purportedly failed to produce any credible witnesses in support of her position paper; clearly, this
is not a valid justification for respondent to completely abandon his client's cause. By voluntarily
taking up complainant's case, respondent gave his unqualified commitment to advance and
defend the latter's interest therein. Verily, he owes fidelity to such cause and must be mindful of
the trust and confidence reposed in him.[20] In Abay v. Montesino,[21] it was explained that
regardless of a lawyer's personal view, the latter must still present every remedy or defense within
the authority of the law to support his client's cause:

Once a lawyer agrees to take up the cause of a client, the lawyer owes fidelity to such cause and
must always be mindful of the trust and confidence reposed in him. He must serve the client with
competence and diligence, and champion the latter's cause with wholehearted fidelity, care, and
devotion. Otherwise stated, he owes entire devotion to the interest of the client, warm zeal in the
maintenance and defense of his client's rights, and the exertion of his utmost learning and ability
to the end that nothing be taken or withheld from his client, save by the rules of law, legally
applied. This simply means that his client is entitled to the benefit of any and every remedy and
defense that is authorized by the law of the land and he may expect his lawyer to assert every
such remedy or defense. If much is demanded from an attorney, it is because the entrusted
privilege to practice law carries with it the correlative duties not only to the client but also to the
court, to the bar, and to the public. A lawyer who performs his duty with diligence and candor not
only protects the interest of his client; he also serves the ends of justice, does honor to the bar,
and helps maintain the respect of the community to the legal profession.[22] (Emphasis and
underscoring supplied)

In light of the foregoing, the Court therefore agrees with the IBP that respondent should be held
administratively liable for violation of Rule 18.03, Canon 18 of the CPR.

Likewise, the IBP correctly found that respondent violated Rule 10.01, Canon 10 of the CPR.
Records show that he indeed indulged in deliberate falsehood when he admittedly prepared[23]
and notarized[24] the affidavit of complainant's intended witness, Romeo, despite his belief that
Romeo was a perjured witness. In Spouses Umaguing v. De Vera,[25] the Court highlighted the
oath undertaken by every lawyer to not only obey the laws of the land, but also to refrain from
doing any falsehood, viz.:

The Lawyer's Oath enjoins every lawyer not only to obey the laws of the land but also to refrain
from doing any falsehood in or out of court or from consenting to the doing of any in court, and to
conduct himself according to the best of his knowledge and discretion with all good fidelity to the
courts as well as to his clients. Every lawyer is a servant of the law, and has to observe and
maintain the rule of law as well as be an exemplar worthy of emulation by others. It is by no
means a coincidence, therefore, that the core values of honesty, integrity, and trustworthiness are
emphatically reiterated by the Code of Professional Responsibility. In this light, Rule 10.01, Canon
10 of the Code of Professional Responsibility provides that "[a] lawyer shall not do any falsehood,
nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to be misled by
any artifice."[26] (Emphases supplied)

Notably, the notarization of a perjured affidavit also constituted a violation of the 2004 Rules on
Notarial Practice. Section 4 (a), Rule IV thereof pertinently provides:

SEC. 4. Refusal to Notarize. – A notary public shall not perform any notarial act described in these
Rules for any person requesting such an act even if he tenders the appropriate fee specified by
these Rules if:

(a)
the notary knows or has good reason to believe that the notarial act or transaction is unlawful or
immoral[.] (Emphasis supplied)
On this score, it is well to stress that "notarization is not an empty, meaningless routinary act. It is
invested with substantive public interest. It must be underscored that the notarization by a notary
public converts a private document into a public document, making that document admissible in
evidence without further proof of authenticity thereof. A notarial document is, by law, entitled to
full faith and credit upon its face. For this reason, a notary public must observe with utmost care
the basic requirements in the performance of their duties; otherwise, the confidence of the public
in the integrity of this form of conveyance would be undermined."[27]

Having established respondent's administrative liability, the Court now determines the proper
penalty.

The appropriate penalty to be meted against an errant lawyer depends on the exercise of sound
judicial discretion based on the surrounding facts. In Del Mundo v. Capistrano,[28] the Court
suspended the lawyer for a period of one (1) year for his failure to perform his undertaking under
his retainership agreement with his client. Similarly, in Conlu v. Aredonia, Jr.,[29] the same penalty
was imposed on a lawyer for his inexcusable negligence in failing to file the required pleading to
the prejudice of his client. Hence, consistent with existing jurisprudence, the Court adopts the
penalty recommended by the IBP and accordingly suspends respondent from the practice of law
for a period of one (1) year. Moreover, as in the case of Dela Cruz v. Zabala,[30] where the notary
public therein notarized an irregular document, the Court hereby revokes respondent's notarial
commission and further disqualifies him from being commissioned as a notary public for a period
of two (2) years.

WHEREFORE, respondent Atty. Vivencio V. Jumamil is found GUlLY of violating Rule 10.01, Canon
10 and Rule 18.03, Canon 18 of the Code of Professional Responsibility. Accordingly, he is hereby
SUSPENDED for a period of one (1) year, effective upon his receipt of this Resolution. Moreover, in
view of his violation of the 2004 Rules on Notarial Practice, his notarial commission, if still existing,
is hereby REVOKED, and he is DISQUALIFIED from being commissioned as a notary public for a
period of two (2) years. Finally, he is STERNLY WARNED that a repetition of the same or similar
offense shall be dealt with more severely.

Let a copy of this Decision be furnished the Office of the Bar Confidant to be appended to
respondent's personal record as a member of the Bar. Likewise, let copies of the same be served
on the Integrated Bar of the Philippines and the Office of the Court Administrator, which is
directed to circulate them to all courts in the country for their information and guidance.

SO ORDERED.
DE LA SALLE ARANETA UNIVERSITY, INC., PETITIONER, VS. DR.
ELOISA G. MAGDURULANG, RESPONDENT.
G.R. No. 224319, November 20, 2017
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari[1] are the Decision[2] dated November 9, 2015
and the Resolution[3] dated April 22, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 123219,
which modified the Decision[4] dated July 15, 2011 and the Resolution[5] dated December 12,
2011 of the National Labor Relations Commission (NLRC) in NLRC Case No. NCR-08-11300-10, and
accordingly, ordered petitioner De La Salle Araneta University, Inc. (petitioner) to pay respondent
Dr. Eloisa G. Magdurulang (respondent) backwages corresponding to her full monthly salaries for
three (3) semesters, i.e., first and second semesters of school year (SY) 2010-2011 and first
semester of SY 2011-2012, as well as pro-rated 13th month pay.

The Facts

This case stemmed from an amended complaint[6] for constructive dismissal with prayer for
reinstatement and payment of salaries and other benefits filed by respondent against
petitioner.[7] Respondent alleged that petitioner initially hired her as a part-time faculty member
for the latter's College of Business for the second semester of SY 2007-2008 (November 5, 2007-
March 18, 2008), as well as the summer semester of 2008 (March 31, 2008-May 13, 2008).[8] For
the second semester of SY 2008-2009 (October 13, 2008-May 31, 2009), she was then appointed
as a full-time faculty member/BSBA Program Coordinator,[9] with such designation being renewed
for the first and second semesters of SY 2009-2010 (June 1, 2009-May 31, 2010).[10] During the
pendency of respondent's contract for SY 2009-2010, the University's Acting Assistant Dean
recommended to the University President that respondent be already accorded a permanent
status, effective the second semester of SY 2009-2010.[11] While the University President initially
acceded to such recommendation, he ended up not extending a permanent appointment to
respondent, pursuant to Section 117 of the Manual of Regulations for Private Higher Education
(MORPHE) which provides that "[t]he probationary employment of academic teaching personnel
shall not be more than a period of six (6) consecutive semesters or nine (9) consecutive trimesters
of satisfactory service, as the case may be."[12] Thus, on November 4, 2009, the University
President instead issued a re-appointment to respondent as full-time faculty member/BSBA
Program Coordinator for the first and second semesters of SY 2010-2011 (June 1, 2010-May 31,
2011), with a re-classified ranking of Assistant Professor 4 and on contractual basis.[13]

As a result, respondent wrote a letter[14] dated January 18, 2010 to the University President,
asking clarification as to why: (a) her rank was changed from Associate Professor 2 to Assistant
Professor 4 in her re-appointment for SY 2010-2011, resulting in diminution of salaries and
benefits; and (b) she was not extended a permanent appointment despite the favorable
recommendation from the Acting Assistant Dean.[15] In response thereto, the University
President wrote respondent a letter[16] dated February 23, 2010, explaining to her, among others,
that she cannot be extended a regular and permanent appointment as of the moment as she has
yet to finish the probationary period of six (6) straight semesters, as provided under Section 3.1.3
of the 2009 DLSAU Personnel Handbook,[17] which in turn, expressly adopts Section 117 of the
MORPHE.[18] On July 20, 2010, respondent wrote another letter[19] reiterating her concerns, this
time addressed to the new University President. However, before the new University President
could answer, respondent filed the instant complaint,[20] claiming that despite her re-
appointment for SY 2010-2011, she was no longer given any teaching load and that her academic
administrative position as BSBA Program Coordinator was likewise discontinued.[21] Respondent
also insisted that she had already attained the status of a regular employee since she has been
teaching for about three (3) years beginning in 2007,[22] and considering too that the Acting
Assistant Dean already recommended her permanent appointment.[23]

In its defense,[24] petitioner countered that it neither constructively nor actually dismissed
respondent, maintaining that it could not appoint respondent to a regular and permanent position
as she has yet to complete the probationary period of six (6) consecutive semesters, as laid down
in the MORPHE, as well as in the 2009 DLSAU Personnel Handbook.[25] In this regard, petitioner
pointed out that respondent's appointments all throughout her probationary employment were
on a fixed-term basis, which she voluntarily and freely accepted.[26] As such, it is within the
university's prerogative to re-hire her or not at the end of such contracts.[27]

The Labor Arbiter's (LA) Ruling

In a Decision[28] dated February 16, 2011, the LA dismissed the complaint for lack of merit.[29]
The LA found that since petitioner is a private educational institution for higher education,
respondent's employment status therein is covered not only by the MORPHE but also the 2009
DLSAU Personnel Handbook.[30] Since respondent has not held a full time academic teaching
position for a period of six (6) consecutive semesters or nine (9) straight trimesters, she is not
eligible for permanent appointment. Moreover, considering that respondent's employment
contracts were on a fixed-term basis, her services may be subject to termination.[31]

Aggrieved, respondent appealed[32] to the NLRC.

The NLRC Ruling

In a Decision[33] dated July 15, 2011, the NLRC reversed and set aside the LA ruling, and
accordingly, declared respondent to have been constructively dismissed.[34] Consequently, it
ordered petitioner to reinstate her to the position of Associate Professor with full backwages
reckoned from the first semester of SY 2010-2011 up to her actual reinstatement, and to pay her
all other monetary benefits which inure to such position during the time she was not given any
teaching load, as well as the honorarium for the position of BSBA Program Director until the end of
her term on May 31, 2011.[35]

The NLRC held that while petitioner has yet to complete the probationary period of six (6)
consecutive semesters, such period was effectively shortened when the Acting Assistant Dean
recommended her for a permanent status, which was initially formally acted upon by the
University President.[36] In this regard, petitioner's act of voluntary shortening respondent's
probationary period effectively accorded the latter the status of a regular employee. Perforce, for
not having been given any teaching load, as well as discontinuing her appointment as BSBA
Program Coordinator, respondent was deemed to have been constructively dismissed.[37]

Petitioner moved for reconsideration,[38] which was, however, denied in a Resolution[39] dated
December 12, 2011. Dissatisfied, it filed a petition for certiorari[40] before the CA.

The CA Ruling

In a Decision[41] dated November 9, 2015, the CA modified the NLRC ruling, deleting respondent's
reinstatement. In lieu thereof, it ordered petitioner to pay respondent backwages corresponding
to her full monthly salaries for three (3) semesters, i.e., the first and second semester of school
year (SY) 2010-2011 and the first semester of SY 2011-2012, as well as pro-rated 13th month
pay.[42]

Contrary to the NLRC's ruling, the CA held that respondent has no vested right to a permanent
appointment since she had not completed the pre-requisite six (6) consecutive semesters
necessary to be eligible for the same. Nonetheless, as a probationary employee, respondent still
enjoys a limited security of tenure, and therefore, cannot be terminated except for just or
authorized causes, or if she fails to qualify in accordance with the reasonable standards set by
petitioner.[43] As respondent was not given any teaching load for SY 2010-2011 and her services
as BSBA Program Coordinator were discontinued without any justifiable reason, she was deemed
to have been constructively dismissed. As such, respondent is entitled to receive the benefits
appurtenant to the remainder of her probationary period, namely, both semesters of SY 2010-
2011 and the first semester of SY 2011-2012. However, the CA pointed out that due to the dispute
of the litigating parties in this case, it may be inferred with certainty that petitioner had already
opted not to retain respondent in its employ beyond her probationary period.[44]
Undaunted, petitioner moved for reconsideration,[45] but the same was denied in a
Resolution[46] dated April 22, 2016; hence, this petition.[47]

The Issue Before the Court

The issue for the Court's resolution is whether or not the CA correctly ruled that respondent was:
(a) a probationary employee; and (b) constructively dismissed by petitioner, thereby entitling her
to the benefits appurtenant to the remainder of her probationary period.

The Court's Ruling

Preliminarily, the Court stresses the distinct approach in reviewing a CA's ruling in a labor case. In a
Rule 45 review, the Court examines the correctness of the CA's Decision in contrast to the review
of jurisdictional errors under Rule 65. Furthermore, Rule 45 limits the review to questions of law.
In ruling for legal correctness, the Court views the CA Decision in the same context that the
petition for certiorari was presented to the CA. Hence, the Court has to examine the CA's Decision
from the prism of whether the CA correctly determined the presence or absence of grave abuse of
discretion in the NLRC decision.[48]

Case law states that grave abuse of discretion connotes a capricious and whimsical exercise of
judgment, done in a despotic manner by reason of passion or personal hostility, the character of
which being so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law.[49]

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and
conclusions are not supported by substantial evidence, which refers to that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a conclusion. Thus, if the
NLRCs ruling has basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare, and accordingly, dismiss the petition.[50]

Guided by the foregoing considerations and as will be explained hereunder, the Court finds that
the CA correctly ascribed grave abuse of discretion on the part of the NLRC, as the latter's finding
that respondent had attained a regular status patently deviates from the evidence on record, as
well as settled legal principles of labor law. Further, while the CA correctly ruled that petitioner
constructively dismissed respondent, it erred in holding that respondent is entitled to the benefits
pertaining to the remainder of her probationary period i.e., both semesters of SY 2010-2011 and
the first semester of SY 2011-2012.

A probationary employee or probationer is one who is on trial for an employer, during which the
latter determines whether or not the former is qualified for permanent employment. During this
period, the employer, on the one hand, is given the opportunity to observe the fitness of an
employee while at work in order to ascertain the latter's efficiency and productivity; on the other
hand, the employee seeks to prove to his employer that he has the qualifications to meet the
reasonable standards for permanent employment. As used to describe such phase of employment,
the word "probationary" implies the purpose of such term or period, and not necessarily its
length.[51]

Indeed, the employer has the right, or is at liberty, to choose who will be hired and who will be
declined. As a component of this right to select his employees, the employer may set or fix a
probationary period within which the latter may test and observe the conduct of the former
before hiring him permanently.[52] Notably, the exercise of such right is regulated by law insofar
as it sets a maximum allowable period within which the employer may subject an employee to a
probationary period. As a general rule, such limit is set under Article 296[53] of the Labor
Code,[54] as amended:
Article 296. [281] Probationary Employment. - Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.
As an exception, however, case law has provided that the probationary period of employment of
academic personnel such as professors, instructors, and teachers - including the determination as
to whether they have attained regular or permanent status - shall not be governed by the Labor
Code but by the standards established by the Department of Education and the Commission on
Higher Education, as the case may be.[55] In this regard, Section 92 of the 1992 Revised Manual of
Regulations for Private Schools (8th Edition) explicitly provides that: (a) for those in elementary
and secondary levels, the probationary period shall not be more than three (3) consecutive years
of satisfactory service; and (b) for those in the tertiary level, such period shall be six (6)
consecutive semesters or nine (9) consecutive trimesters, as the case may be.[56]

The rule on the probationary employment of elementary and secondary academic personnel is
reiterated in Section 63 of the 2010 Manual of Regulations for Private Schools in Basic Education,
which reads:
Section 63. Probationary Period; Regular or Permanent Status. - A probationary period of not more
than three (3) years in the case of the school teaching personnel and not more than six (6) months
for non--teaching personnel shall be required for employment in all private schools. A school
personnel who has successfully undergone the probationary period herein specified and who is
fully qualified under the existing rules and standards of the school shall be considered permanent.
The rule relative to private higher education institutions[57] is likewise reiterated in Sections 117
and 118 of the MORPHE:
Section 117. Probationary Period. - An academic teaching personnel who does not possess the
minimum academic qualifications prescribed under Sections 35 and 36 of this Manual shall be
considered as part-time employee, and therefore cannot avail of the status and privileges of a
probationary employment. A part-time employee cannot acquire regular permanent status, and
hence, may be terminated when a qualified teacher becomes available.

The probationary employment of academic teaching personnel shall not be more than a period of
six (6) consecutive semesters or nine (9) consecutive trimesters of satisfactory service, as the case
may be.

Section 118. Regular or Permanent Status. - A full-time academic teaching personnel who has
satisfactorily completed his/her probationary employment, and who possesses the minimum
qualifications required by the Commission and the institution, shall acquire a regular or permanent
status if she/she is re-hired or re-appointed immediately after the end of his/her probationary
employment. However, a regular or permanent academic teaching personnel who requests a
teaching load equivalent to a part-time load, shall be considered resigned, and hence, may forfeit
his/her regular or permanent status at the discretion of the management of the higher education
institution and shall thereby be covered by a term-contract employment.
Thus, for an academic personnel to acquire a regular and permanent employment status, it is
required that: (a) he is considered a full-time employee; (b) he has completed the required
probationary period; and (c) his service must have been satisfactory.[58] However, it must be
emphasized that mere completion of the probationary period does not, ipso facto, make the
employee a permanent employee of the educational institution, as he could only qualify as such
upon fulfilling the reasonable standards for permanent employment as faculty member. This is
especially true in the case of institutions of higher education which, consistent with academic
freedom and constitutional autonomy, has the prerogative to provide standards for its academic
personnel and determine whether the same have been met. Thus, at the end of the probation
period, the decision to re-hire a probationary employee, and thus, vest upon him a regular and
permanent status, belongs to the educational institution as the employer alone.[59] Otherwise
stated, upon the expiration of their contract of employment, academic personnel on probation
cannot automatically claim security of tenure and compel their employers to renew their
employment contracts which would then transform them into regular and permanent
employees.[60]

A judicious perusal of the records in this case reveals that while the respondent complied with the
first and third requisites, as she is a full-time professor and has consistently received satisfactory
ratings for her services, the second requisite is noticeably absent. As aptly pointed out by the CA:
(a) respondent's appointments for the second semester of SY 2007-2008 and the summer
semester of SY 2008 were on a part-time basis only, and thus, cannot be counted for purposes of
regularization; (b) her full-time appointments for the second semester of SY 2008-2009 and both
semesters of SY 2009-2010, where she was actually given teaching loads and an administrative
function as BSBA Program Coordinator, only consist of three (3) consecutive semesters; and (c)
even if her full-time appointment for both semesters of SY 2010-2011 - the time when she was no
longer given a teaching load and her administrative function was discontinued- were to be
counted in her favor, she would only have a total of five (5) consecutive semesters as a full-time
professor, and thus, would not have made her eligible for regular and permanent appointment.
Hence, the CA correctly declared that respondent failed to acquire a regular and permanent
status.

To be sure, the Court finds the NLRC's conclusion that respondent's probationary period was
effectively shortened when the Acting Assistant Dean recommended her for a permanent
appointment effective the second semester of SY 2009-2010 to be untenable.[61] Suffice it to say
that while there was indeed such recommendation and that the University President was initially
inclined to approve the same, the latter ended up not going through with such recommendation
and instead renewed respondent's appointment for both semesters of SY 2010-2011. While the
period of probation may be reduced if the employer voluntarily extends a permanent appointment
even before the end of such period, it must be pointed out that absent circumstances which
unmistakeably show that an abbreviated probationary period has been agreed upon, the default
probationary term still governs,[62] as in this case.

Nonetheless, as a probationary employee, respondent still enjoys limited security of tenure during
the period of her probation-that is, she cannot be terminated except for just or authorized causes,
or if she fails to qualify in accordance with reasonable standards prescribed by Eetitioner for the
acquisition of permanent status of its teaching personnel.[63] Hence, the CA was also correct in
ruling that petitioner's unjustified acts of depriving her of teaching loads, as well as her functions
as BSBA Program Coordinator during the pendency of her appointment for both semesters of SY
2010-2011, constitute constructive dismissal,[64] for which it should be made liable to respondent
for the latter's benefits appurtenant thereto.

However, the CA erred in holding that respondent is entitled to complete her final three (3)
semesters of probationary employment, considering that at the time of her constructive dismissal,
her existing contract with petitioner was only fixed for both semesters of SY 2010-2011, or the
fourth and fifth semesters of her probationary employment.[65] In Magis Young Achievers'
Learning Center v. Manalo,[66] the Court held that it is an accepted practice among educational
institutions that the probationary employment is split into numerous fixed-term contracts so that
the employer will be given the flexibility to no longer continue with the employee's probationary
employment should it become apparent that the latter does not meet the former's standards; and
that it is only when the probationary contract does not indicate any period that it will be assumed
that the employee was hired for the entire duration of the probationary employment, viz.:
The common practice is for the employer and the teacher to enter into a contract, effective for
one school year. At the end of the school year, the employer has the option not to renew the
contract, particularly considering the teacher's performance. If the contract is not renewed, the
employment relationship terminates. If the contract is renewed, usually for another school year,
the probationary employment continues. Again, at the end of that period, the parties may opt to
renew or not to renew the contract. If renewed, this second renewal of the contract for another
school year would then be the last year - since it would be the third school year - of probationary
employment. At the end of this third year, the employer may now decide whether to extend a
permanent appointment to the employee, primarily on the basis of the employee having met the
reasonable standards of competence and efficiency set by the employer. For the entire duration of
this three-year period, the teacher remains under probation. Upon the expiration of his contract
of employment, being simply on probation, he cannot automatically claim security of tenure and
compel the employer to renew his employment contract. x x x

It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the contract
is binding for the full three-year probationary period.[67] (Emphasis and underscoring supplied)
Records show that petitioner did not hire respondent for the entire duration of the latter's
probationary period. In fact, respondent's probationary employment with petitioner lasting five
(5) semesters was split into three (3) separate fixed-term contracts, to wit: (a) Appointment[68]
dated September 23, 2008 for the second semester of SY 2008-2009; (b) Appointment[69] dated
May 26, 2009 for both semesters of SY 2009-2010; and (c) Appointment[70] dated November 4,
2009 for both semesters of SY 2010-2011. Since respondent's constructive dismissal occurred
during the effectivity of her last contract, she is entitled only to the benefits arising from such.
Consequently, petitioner cannot be made to pay her benefits corresponding to respondent's last
semester of probationary employment as there is simply no contract covering the same.

In sum, the CA correctly ruled that respondent is a probationary employee who was constructively
dismissed by petitioner during the course of her probationary employment. However, the CA
erred in awarding respondent benefits pertaining to the remainder of her probationary
employment spanning three (3) semesters as the duration of her last contract with petitioner only
lasts for two (2) semesters. As such, respondent is only entitled to the benefits sourced therefrom.

Finally, as a result of the foregoing proceedings, the CA aptly inferred that respondent's
employment no longer ripened into a regular and permanent status, and as such, petitioner is no
longer bound to reinstate her.

WHEREFORE, the petition is PARTLY GRANTED. Accordingly, the Decision dated November 9, 2015
and the Resolution dated April 22, 2016 of the Court of Appeals in CA-G.R. SP No. 123219 are
AFFIRMED with MODIFICATION, in that the order of backwages corresponding to respondent Dr.
Eloisa G. Magdurulang's supposed salaries and benefits for the first semester of school year 2011-
2012 is hereby DELETED. The rest of the ruling STANDS.

SO ORDERED.