Labor Compiled

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Justice Teresita Leonardo-De Castro Cases (2008-2015) Labor Law

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ILLEGAL RECRUITMENT

PEOPLE OF THE PHILIPPINES vs. ROSARIO "ROSE" OCHOAG.R. No. 173792, August 31, 2011, J. Leonardo-De Castro

To prove illegal recruitment, it must be shown that appellant gave complainants the distinct

impression that she had the power or ability to send complainants abroad for work such that the

latter were convinced to part with their money in order to be employed. All eight private complainants

consistently declared that Ochoa promised them employment overseas after they submit their bio-

data, birth certificates,passports and payment for placement and medical fees.

Facts:

The Information filed before the RTC and docketed as Criminal Case No. 98-77300, charged

Ochoa with illegal recruitment in large scale, allegedly committed as follows:

That on or about the period of February 1997 up to April 1998 Rosario Ochoa (Ochoa) didthen and there willfully, unlawfully and feloniously recruit Robert Gubat, Junior Agustin, CesarAquino, Richard Luciano, Fernando Rivera, Mariano R. Mislang, Helen B. Palogo, JoebertDecolongon, Corazon S. Austria, Cristopher A. Bermejo, Letecia D. Londonio, Alma Borromeo,Francisco Pascual, Raymundo A. Bermejo and Rosemarie A. Bermejo for a consideration rangingfrom P2,000.00 to P32,000.00 or a total amount of P124,000.00 as placement fee which thecomplainants paid to Ochoa without the accused having secured the necessary license from theDepartment of Labor and Employment.

Three other Informations were filed before the RTC and docketed as Criminal Case Nos. 98-

77301, 98-77302, and 98-77303, this time charging Ochoa with three counts of estafa, committedseparately upon three private complainants Robert Gubat (Gubat), Cesar Aquino (Cesar), and JuniorAgustin (Agustin). The Information in Criminal Case No. 98-77301 accuses Ochoa of the followingacts constituting estafa:

That on or about March 3, 1998, Ochoa did then and there willfully, unlawfully andfeloniously recruit and promise employment in Taiwan to one ROBERT GUBAT for a considerationof P18,800.00 as placement fee, knowing that she has no power, capacity or lawful authority andwith no intention to fulfill her said promise, but merely as scheme or excuse to get and exact moneyfrom said complainant.

The two other Informations for estafa were similarly worded as the Information, except asto the name of the private complainants and the amount purportedly collected by Ochoa from them,particularly:

Docket No. Private Complainant Amount Collected

Criminal Case No. 98-773025 Cesar Aquino P19.000.00

RECRUITMENT AND PLACEMENT


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Criminal Case No. 98-773036 Junior Agustin P32,000.00

As prayed for by the State Prosecutor, all four criminal cases against Ochoa before the RTC wereconsolidated.

Ochoa stated that she was employed by AXIL International Services and Consultant (AXIL)as recruiter and was paid on a commission basis. AXIL had a temporary license to recruit Filipinoworkers for overseas employment. She admitted recruiting private complainants and receivingfrom them substantial amounts as placement and medical fees. Ochoa claimed though that sheremitted private complainants’ money to a person named Mercy, the manager of AXIL, but AXILfailed to issue receipts because the private complainants did not pay in full.

On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond reasonabledoubt of the crimes of illegal recruitment in large scale (Criminal Case No. 98-77300) and threecounts of estafa (Criminal Case Nos. 98-77301, 98-77302, 98-77303).

The Court of Appeals promulgated its Decision affirming the appealed RTC decision. Ochoafiled a Motion for Reconsideration which the People opposed for being bereft of merit.

In its Resolution dated August 6, 2003, the Court of Appeals declared that it had nojurisdiction over Ochoa’s appeal, ratiocinating thus:

While neither the accused-appellant nor the Office of the Solicitor General representing the peopleever raised the issue of jurisdiction, our second look at the suit proved worthwhile because wecame to realize that we mistakenly assumed jurisdiction over this case where it does not obtain.

It was error to consider accused-appellant ’s appeal from a trial court judgment imposing

life imprisonment in Criminal Case No. Q-98-77300 for illegal recruitment in a large scale.Consequently, the judgment we rendered is null and void.

Despite its lack of jurisdiction over Ochoa’s appeal, the Court of Appeals did not dismiss thesame and merely ordered its transfer to us: While the Supreme Court Circular No. 2-90 directs thedismissal of appeals filed before the wrong court, the Supreme Court has in practice allowed thetransfer of records from this Court to the highest court. In which case, we shall subscribe to thispractice in the interest of substantial justice.

Issue:

Can the court a quo erred when it ruled that Ochoa is guilty of illegal recruitment in large

scale and estafa?

Ruling:

No, We find no reversible error in the assailed Court of Appeals decision.

Illegal recruitment in large scale


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Ochoa was charged with violation of Section 6 of Republic Act No. 8042. Said provisionbroadens the concept of illegal recruitment under the Labor Code and provides stiffer penalties,especially for those that constitute economic sabotage, i.e., illegal recruitment in large scale andillegal recruitment committed by a syndicate.

Section 6 of Republic Act No. 8042 defines illegal recruitment as follows:

SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing,enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring,contract services, promising or advertising for employment abroad, whether for profit or not, whenundertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) ofPresidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines:Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for afee employment abroad to two or more persons shall be deemed so engaged. It shall likewiseinclude the following acts, whether committed by any person, whether a non-licensee, non-holder,licensee or holder of authority:

x x x x

(m) Failure to reimburse expenses incurred by the worker in connection with his documentationand processing for purposes of deployment, in cases where the deployment does not actually takeplace without the worker's fault. Illegal recruitment when committed by a syndicate or in largescale shall be considered an offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)or more persons conspiring or confederating with one another. It is deemed committed in largescale if committed against three (3) or more persons individually or as a group.

It is well-settled that to prove illegal recruitment, it must be shown that appellant gave

complainants the distinct impression that she had the power or ability to send complainants abroadfor work such that the latter were convinced to part with their money in order to be employed. Alleight private complainants herein consistently declared that Ochoa offered and promised thememployment overseas. Ochoa required private complainants to submit their bio-data, birthcertificates, and passports, which private complainants did. Private complainants also gave variousamounts to Ochoa as payment for placement and medical fees as evidenced by the receipts Ochoaissued to Gubat, Cesar, and Agustin. Despite private complainants ’ compliance with all therequirements Ochoa specified, they were not able to leave for work abroad. Private complainantspleaded that Ochoa return their hard-earned money, but Ochoa failed to do so.

Section 6 of Republic Act No. 8042 clearly provides that any person, whether a non-licensee,non-holder, licensee or holder of authority may be held liable for illegal recruitment for certain acts

as enumerated in paragraphs (a) to (m) thereof. Among such acts, under Section 6(m) of RepublicAct No. 8042, is the "failure to reimburse expenses incurred by the worker in connection with hisdocumentation and processing for purposes of deployment, in cases where the deployment doesnot actually take place without the worker’s fault." Ochoa committed illegal recruitment asdescribed in the said provision by receiving placement and medical fees from private complainants,evidenced by the receipts issued by her, and failing to reimburse the private complainants theamounts they had paid when they were not able to leave for Taiwan and Saudi Arabia, through nofault of their own.


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Ochoa further argues in her defense that she should not be found personally and criminallyliable for illegal recruitment because she was a mere employee of AXIL and that she had turnedover the money she received from private complainants to AXIL.

We are not convinced. Ochoa’s claim was not supported by any corroborating evidence. ThePOEA verification and presented by Ochoa during trial, pertains only to the status of AXIL as aplacement agency with a "limited temporary authority" which had already expired. Said verificationdid not show whether or not Ochoa was employed by AXIL. Strangely, for an alleged employee ofAXIL, Ochoa was not able to present the most basic evidence of employment, such as appointmentpapers, identification card (ID), and/or payslips. The receipts presented by some of the privatecomplainants were issued and signed by Ochoa herself, and did not contain any indication thatOchoa issued and signed the same on behalf of AXIL. Also, Ochoa was not able to present any proofthat private complainants’ money were actually turned over to or received by AXIL.

Under the last paragraph of Section 6 of Republic Act No. 8042, illegal recruitment shall beconsidered an offense involving economic sabotage if committed in a large scale, that is, committed

against three or more persons individually or as a group. Here, there are eight private complainantswho convincingly testified on Ochoa’s acts of illegal recruitment.

In view of the overwhelming evidence presented by the prosecution, we uphold the verdictof the RTC, as affirmed by the Court of Appeals, that Ochoa is guilty of illegal recruitmentconstituting economic sabotage.

Section 7(b) of Republic Act No. 8042 provides that the penalty of life imprisonment and afine of not less than P500,000.00 nor more than P1,000.000.00 shall be imposed when the illegalrecruitment constitutes economic sabotage.

Estafa

We affirm as well the conviction of Ochoa for estafa committed against three privatecomplainants in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. The very same evidenceproving Ochoa’s criminal liability for illegal recruitment also established her criminal liability forestafa.

It is settled that a person may be charged and convicted separately of illegal recruitmentunder Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315, paragraph2(a) of the Revised Penal Code. We explicated in People v. Cortez and Yabut that:

In this jurisdiction, it is settled that a person who commits illegal recruitment may becharged and convicted separately of illegal recruitment under the Labor Code and estafa under par.

2(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitumwhere the criminal intent of the accused is not necessary for conviction, while estafa is malum in sewhere the criminal intent of the accused is crucial for conviction. Conviction for offenses under theLabor Code does not bar conviction for offenses punishable by other laws. Conversely, convictionfor estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegalrecruitment under the Labor Code. It follows that one’s acquittal of the crime of estafa will notnecessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.


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Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:

Art. 315. Swindling (estafa). - Any person who shall defraud another by any of the meansmentioned hereinbelow x x x:

x x x x

2. By means of any of the following false pretenses or fraudulent acts executed prior to orsimultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,property, credit, agency, business or imaginary transactions; or by means of other similar deceits.

The elements of estafa are: (a) that the accused defrauded another by abuse of confidence or bymeans of deceit, and (b) that damage or prejudice capable of pecuniary estimation is caused to theoffended party or third person.

Both elements are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303.Ochoa’s deceit was evident in her false representation to private complainants Gubat, Cesar, andAgustin that she possessed the authority and capability to send said private complainants toTaiwan/Saudi Arabia for employment as early as one to two weeks from completion of therequirements, among which were the payment of placement fees and submission of a medicalexamination report. Ochoa promised that there were already existing job vacancies overseas forprivate complainants, even quoting the corresponding salaries. Ochoa carried on the deceit byreceiving application documents from the private complainants, accompanying them to the clinicfor medical examination, and/or making them go to the offices of certain recruitment/placementagencies to which Ochoa had actually no connection at all. Clearly deceived by Ochoa ’s words andactions, private complainants Gubat, Cesar, and Aquino were persuaded to hand over their moneyto Ochoa to pay for their placement and medical fees. Sadly, private complainants Gubat, Cesar, and

Aquino were never able to leave for work abroad, nor recover their money.

OVERSEAS EMPLOYMENT

SANTOSA B. DATUMAN vs. FIRST COSMOPOLITAN MANPOWER AND

PROMOTION SERVICES, INC.

G.R. No. 156029, November 14, 2008, J. De Castro

The subsequently executed side agreement of an overseas contract worker with her foreign

employer which reduced his salary below the amount approved by the POEA is void because it is

against our existing laws, morals and public policy. The said side agreement cannot supersede the

terms of the standard employment contract approved by the POEA. Consequently, the solidary liabilityof respondent with petitioner’s foreign employer for the money claims continues although she was

forced to sign another contract. It is the terms of the original POEA-approved employment contract

that shall govern the relationship of petitioner with the respondent recruitment agency and the

foreign employer.

Facts:


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Respondent First Cosmopolitan Manpower & Promotion Services, Inc. recruited petitionerSantosa B. Datuman to work in Bahrain as Saleslady with a basic monthly salary of US$370.00 for aperiod of one (1) year. On April 17, 1989, petitioner was deployed however, her employer took herpassport and instead of working as a saleslady, she was forced to work as a domestic helper with asalary of Forty Bahrain Dinar (BD40.00), equivalent only to US$100.00.

On September 1, 1989, her employer compelled her to sign another contract, transferringher to another employer as housemaid with a salary of BD40.00 for the duration of two (2)years. She continued working against her will. Worse, she even worked without compensation fromSeptember 1991 to April 1993. In May 1993, she was able to finally return tothe Philippines through the help of the Bahrain Passport and Immigration Department.

In May 1995, petitioner filed a complaint before the POEA Adjudication Office againstrespondent for underpayment and non-payment of salary, vacation leave pay and refund of herplane fare. Respondent countered that petitioner actually agreed to work in Bahrain as a housemaidfor one (1) year because it was the only position available then. However, since such position wasnot yet allowed by the POEA at that time, they mutually agreed to submit the contract to the POEA

indicating petitioner’s position as saleslady. Respondent raised the defense of prescription of causeof action since the claim was filed beyond the three (3)-year period from the time the right accrued,reckoned from either 1990 or 1991.

The Labor Arbiter rendered a decision finding respondent liable for violating the terms ofthe employment contract and ordered to pay the petitioner US$4,050.00 representing her salarydifferentials. On appeal, the NLRC affirmed the decision but reduced the award of salarydifferentials to US$2,970.00 and held that the claims for salary differentials accruing earlier thanApril of 1993 had already prescribed since the complainant had filed her complaint on May 31,1995. Upon elevation to CA, the CA reversed the Labor Arbiter and NLRC and ruled that all ofpetitioner’s monetary claims have prescribed pursuant to Article 291 of the Labor Code. Further, itruled that when the NLRC decreed that the money claims accruing before April 1993 as havingprescribed, it has no more jurisdiction to hold respondent for salary differentials after that period.The local agency is liable only for all the claims in connection with the implementation of the firstcontract.

Issue:

Whether or not respondent liable for petitioner’s money claims pursuant to their Contractof Employment.

Ruling:

Yes, respondent is liable.

Private employment agencies are held jointly and severally liable with the foreign-basedemployer for any violation of the recruitment agreement or contract of employment. The Court didnot agree with the view of the CA that the solidary liability of respondent extends only to the firstcontract (i.e. the original, POEA-approved contract which had a term of until April 1990). Thesigning of the substitute contracts with the foreign employer/principal before the expiration of thePOEA-approved contract and any continuation of petitioners employment beyond the original one-year term, against the will of petitioner, are continuing breaches of the original POEA-approved


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contract. The diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) permonth is void for violating the POEA-approved contract which set the minimum standards, terms,and conditions of her employment.

The three-year prescriptive period should be not reckoned from September 1, 1989 when

petitioner was forced to sign another contract against her will as declared by the CA. The right toclaim unpaid salaries (or in this case, unpaid salary differentials) accrue as they fall due. Thus,petitioner’s cause of action to claim salary differential for October 1989 only accrued after she hadrendered service for that month (or at the end of October 1989). Her right to claim salarydifferential for November 1989 only accrued at the end of November 1989, and so on and so forth.To determine for which months petitioners right to claim salary differentials has not prescribed, wemust count three years prior to the filing of the complaint on May 31, 1995. Thus, only claimsaccruing prior to May 31, 1992 have prescribed when the complaint was filed on May 31,1995. Petitioner is entitled to her claims for salary differentials for the period May 31, 1992 to April1993, or approximately eleven (11) months. The NLRC correctly computed the salary differentialdue to petitioner at US$2,970.00 (US$370.00 as approved salary rate US$100.00 as salary received= US$290 as underpaid salary per month x 11 months). However, it should be for the period May

31, 1992 to April 1993 and not May 1993 to April 1994 as erroneously stated in the NLRCsDecision.

WAGES (Non-Diminution of Benefits)

METROPOLITAN BANK AND TRUST COMPANY vs. NATIONAL LABOR RELATIONS

COMMISSION, FELIPE E. PATAG AND BIENVENIDO C. FLORA

G.R. No. 152928, June 18, 2009, J. Leonardo De-Castro

It is a jurisprudential rule that where there is an established employer practice of regularly,knowingly and voluntarily granting benefits to employees over a significant period of time, despite the

lack of a legal or contractual obligation on the part of the employer to do so, the grant of such benefits

ripens into a vested right of the employees and can no longer be unilaterally reduced or withdrawn by

the employer.

Facts:

Respondents Felipe Patag and Bienvenido Flora were former employees of petitionerMetropolitan Bank and Trust Company. Both of them availed of the bank’s compulsory retirementplan in accordance with the 1995 Officers’ Benefits Memorandum. At the time of their retirement,both of them received their respective retirement benefits computed at 185% of their gross

monthly salary for every year of service as provided under the said 1995 Memorandum.Meanwhile, early in 1998, Collective Bargaining Agreement negotiations were ongoing betweenMetrobank and its rank and file employees for the period 19982000 and was later on signed. BothPatag and Flora wrote letters to Metrobank requesting the bank to use as basis in the computationof their retirement benefits the increased rate of 200% as embodied in the just concluded CBAbetween the bank and its rank and file employees but the latter denied their requests. Recordsshow that since the 19861988 CBA, and continuing with each CBA concluded thereafter with itsrank and file employees, Metrobank would issue a Memorandum granting similar or better benefits

LABOR STANDARDS


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to its managerial employees or officers, retroactive to January 1st of the first year of effectivity ofthe CBA. When the 19982000 CBA was approved, Metrobank, in line with its past practice, issuedon June 10, 1998, a Memorandum. Pertinently, the compulsory retirement benefit for officers wasincreased from 185% to 200% effective January 1, 1998, but with the condition that the benefitsshall only be extended to those who remain in service as of June 15, 1998. Respondents Patag and

Flora sought reconsideration of above- mentioned conditions but the same was once again deniedby Metrobank hence this present case.

Issue:

Whether respondents can still recover higher benefits under the 1998 Officers’ BenefitsMemorandum despite the fact that they have compulsorily retired prior to the issuance of saidmemorandum and did not meet the condition therein requiring them to be employed as of June 15,1998.

Ruling:

Yes, they can.

It appears from the facts that there was an established company practice or policy ofgranting improved benefits to its officers effective January 1 of the year and without any conditionthat the officers should remain employees of Metrobank as of a certain date. For over a decade,Metrobank has consistently, deliberately and voluntarily granted improved benefits to its officers,after the signing of each CBA with its rank and file employees, retroactive to January 1st of the sameyear as the grant of improved benefits and without the condition that the officers should remainemployees as of a certain date. This undeniably indicates a unilateral and voluntary act onMetrobank’s part, to give said benefits to its officers, knowing that such act was not required by lawor the company retirement plan. Such voluntary act cannot be unilaterally withdrawn ordiminished by the employer without violating the spirit and intent of Art. 100 of the Labor Code, to

wit:

“Art. 100. Prohibition against elimination or diminution of benefits. —Nothing in this Bookshall be construed to eliminate or in any way diminish supplements, or other employeebenefits being enjoyed at the time of promulgation of this Code.”

Ordinarily, an employee would have no right to demand benefits that the employer was notobligated by law or contract to give. However, it is the jurisprudential rule that where there is anestablished employer practice of regularly, knowingly and voluntarily granting benefits toemployees over a significant period of time, despite the lack of a legal or contractual obligation onthe part of the employer to do so, the grant of such benefits ripens into a vested right of theemployees and can no longer be unilaterally reduced or withdrawn by the employer.

DISABILITY BENEFITS

MAGSAYSAY MARITIME CORP. and/or CONRADO N. DELA CRUZ and ODF JELL ASA vs. JAIME

M. VELASQUEZ and THE HONORABLE COURT OF APPEALS

G.R. No. 179802, November 14, 2008, J. Leonardo-De Castro


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Respondent’s disability can only be assessed by the company-designated physician. If thecompany-designated physician declares him fit to work, then the seaman is bound by such declaration.

In order to claim disability benefits under the Standard Employment Contract, it is the company-

designated physician who must proclaim that the seaman suffered a permanent disability, whether

total or partial, due to either injury or illness, during the term of the latter’s employment.

Facts:

Respondent Jaime M. Velasquez was hired by petitioner Magsaysay Maritime Corporation assecond cook for its foreign principal, co-petitioner ODF Jell ASA. While on duty as second cook onboard a vessel, respondent suffered high fever and was unable to work. He took fever relievingmedicine but his condition worsened. By the fourth day, his body temperature reached 40.9C. Hisextremities were swollen and he could not walk. Respondent was brought to a hospitalin Singapore where he was confined from August 12 to October 13, 2003. Thereafter, he wasrepatriated to the Philippines.

Respondent alleged that upon his repatriation, he was not confined to St.

Luke’s Medical Center as he expected. He claimed that he was compelled to seek medical treatmentfrom an independent doctor. He consulted a certain Dr. Efren Vicaldo who concluded thatrespondent was unfit to resume work as seaman in any capacity. Hence, respondent filed a claim fordisability benefits, illness allowance/ reimbursement of medical expenses, damages and attorney’sfees but petitioners refused to pay. Petitioners, on the other hand, maintained that uponrespondents repatriation, he was immediately referred to a company designated physician forfurther medical care and treatment; that he was under the care of said physician for three (3)months; that he was admitted and confined at St. Luke’s Medical Center from October 13, 2003 toNovember 11, 2003; that progress reports on his recovery have been issued; that by January 5,2004, respondent was declared as cleared to work resumption as seafarer; and that petitionerswere the ones who shouldered respondents hospitalization expenses.

The Labor Arbiter rendered a decision in favor of respondent. Petitioners filed an appealwith the NLRC which rendered a decision reversing that of the Labor Arbiter and dismissedrespondent’s complaint for lack of merit. Respondent elevated the matter to the CA via petition forcertiorari. The CA rendered a decision setting aside the decision of the NLRC and reinstating that ofthe labor arbiter. It upheld the findings of respondent’s private physician rather than the findings ofthe company-designated physician.

Issue:

Whether or not the CA erred in upholding the findings of the private physician rather thanthe company-designated physician.

Ruling:

The POEA standard contract is clear in its provisions when it provided who shoulddetermine the disability grading or fitness to work of seafarers. The POEA contract recognizes onlythe disability grading provided by the company-designated physicians. Section 20 B.3 of the POEAcontract provides:


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

The POEA Contract, of which the parties are both signatories, is the law between them andas such, its provisions bind both of them. Thus, the parties are both bound by the provisions of thePOEA Contract which declares that the degree of disability or fitness to work of a seafarer should beassessed by the company-designated physician. Jurisprudence is replete with pronouncements thatit is the company-designated physician’s findings which should form the basis of any disabilityclaim of the seafarer. In this particular case, respondent refused to accept the assessment made bythe company-designated physician that he is fit to work. It is beyond cavil that it is the company-designated physician who is entrusted with the task of assessing the seaman’s disability.

The company-designated physician cleared respondent for work resumption upon findingthat his infection has subsided after successful medication. We agree with the NLRC that the doctormore qualified to assess the disability grade of the respondent seaman is the doctor who regularly

monitored and treated him. The company-designated physician possessed personal knowledge ofthe actual condition of respondent. Since the company-designated physician in this case deemed therespondent as fit to work, then such declaration should be given credence, considering the amountof time and effort the company doctor gave to monitoring and treating respondent’s condition. It isundisputed that the recommendation of Dr. Vicaldo was based on a single medical report whichoutlined the alleged findings and medical history of respondent despite the fact that Dr. Vicaldotreated or examined respondent only once. On the other hand, the company-designated physicianoutlined the progress of respondent’s successful treatment over a period of several months inseveral reports, as can be gleaned from the record. As between the findings of the company-designated physician (Dr. Alegre) and the physician appointed by respondent (Dr. Vicaldo), theformer deserves to be given greater evidentiary weight.

PHILASIA SHIPPING AGENCY CORPORATION AND/OR INTERMODAL SHIPPING, INC. vs. ANDRES G. TOMACRUZ

G.R. No. 181180, August 15, 2012, J. De Castro

The petitioners are mistaken in their notion that only the POEA SEC should be considered in

resolving the issue involving a seafarer. The applicability of the Labor Code provisions on permanent

disability, particularly Article 192(c)(1), to seafarers, is already a settled matter. Section 29 of the

1996 POEA Standard Employment Contract itself provides that "all rights and obligations of the

parties to the Contract, including the annexes thereof, shall be governed by the laws of the Republic of

the Philippines, international conventions, treaties and covenants where the Philippines is a

signatory." Even without this provision, a contract of labor is so impressed with public interest that the

New Civil Code expressly subjects it to the "special laws on labor unions, collective bargaining, strikes

and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."

Facts:

Andres G. Tomacruz (Tomacruz) was a seafarer, whose services were engaged by PHILASIAShipping Agency Corp., (PHILASIA) on behalf of Intermodal Shipping Inc. (petitioners) as Oiler #1on board the vessel M/V Saligna. A total of five Philippine Overseas Employment Administration(POEA) Contracts of Employment were completed by Tomazruz for the petitioners.For all five


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contracts, Tomacruz was required to undergo a pre-employment medical examination and obtain a"fit to work" rating before he could be deployed.

Having been issued a clean bill of health, Tomacruz boarded M/V Saligna performed hisduties without any incident. However, during the term of his last contract, Tomacruz noticed blood

in his urine. Tomacruz immediately reported this to the Ship Captain. Eventually, Tomacruz wasrepatriated to the Philippines and referred to Dr. Nicomedes Cruz, the company-designatedphysician. On July 25, 2003, Dr. Cruz declared Tomacruz fit to work despite a showing that therewere stones about 0.4 cm in size found in both his kidneys, and there was the possibility ofhematoma. Doubting the veracity of his "fit to work" declaration, he sought the medical opinion ofanother physician, Dr. Vicaldo, who found out that he is unfit to resume work as seaman in anycapacity. Months later, or on November 3, 2003, Tomacruz filed a complaint for disability benefits,sickness wages, damages, and attorney’s fees against the petitioners before the Arbitration Branchof the NLRC.

The Labor Arbiter Virginia T. Luya-Azarraga dismissed the complaint. The Labor Arbitersaid that the company-designated physician’s assessment of Tomacruz’s medical condition should

be more accurate than that of the subsequent doctor’s second medical opinion, which was notsupported by sufficient evidence to warrant consideration. Aggrieved, Tomacruz appealed thisdecision to the NLRC. Not impressed, the NLRC agreed with the Labor Arbiter and declared that theopinion of the company-designated physician, as the one with the sole accreditation by law todetermine the fitness or unfitness of a seafarer under POEA SEC, should prevail over the secondopinion of Tomacruz’s doctor of choice. Via a Rule 65 petition for certiorari, Tomacruz elevated hiscase to the Court of Appeals. Not agreeing with the Labor Arbiter and the NLRC, the Court ofAppeals, on June 16, 2007, granted the petition, on the premise that Tomacruz suffered frompermanent total disability.

Issue:

1. Whether or not the CA erred in granting the Rule 65 petition filed by Tomacruz before itsince the NLRC committed no grave abuse of discretion and the petition merely raisedpossible errors of law and misappreciation of evidence by the NLRC in denying the claim.

2. Whether or not the CA is correct in awarding disability benefits to Tomacruz on the basis ofthe Labor Code provisions on disability, and despite the company-designated physician’sdeclaration of his fitness to work.

Ruling:

1. No.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition

for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. NationalLabor Relations Commission. This Court held that the proper vehicle for such review was a SpecialCivil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed inthe Court of Appeals in strict observance of the doctrine of the hierarchy of courts. A perusal of thechallenged decision before us will reveal that the Court of Appeals actually sustained the factualfindings of the tribunals below. However, it found itself unable to affirm their rulings, in light of theapplicable law on the matter. Thus, it was compelled to go beyond the issue of grave abuse ofdiscretion.


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2. Yes.

The petitioners are mistaken in their notion that only the POEA SEC should be considered inresolving the issue at hand. The applicability of the Labor Code provisions on permanent disability,

particularly Article 192(c)(1), to seafarers, is already a settled matter. Section 29 of the 1996 POEAStandard Employment Contract itself provides that "all rights and obligations of the parties to theContract, including the annexes thereof, shall be governed by the laws of the Republic of thePhilippines, international conventions, treaties and covenants where the Philippines is a signatory."Even without this provision, a contract of labor is so impressed with public interest that the NewCivil Code expressly subjects it to the "special laws on labor unions, collective bargaining, strikesand lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."

Elucidating on the combination of the Labor Code provisions and the POEA SEC, this Court,in Vergara Case said:

As these provisions operate, the seafarer, upon sign-off from his vessel, must report to thecompany-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 seamanis on temporary total disability as he is totally unable to work. He receives his basic wageduring this period until he is declared fit to work or his temporary disability isacknowledged by the company to be permanent, either partially or totally, as his conditionis defined under the POEA Standard Employment Contract and by applicable Philippinelaws. If the 120 days initial period exceeded and no such declaration is made because theseafarer requires further medical attention, then the temporary total disability period maybe extended up to a maximum of 240 days, subject to the right of the employer to declarewithin this period that a permanent partial or total disability already exists. The seamanmay of course also be declared fit to work at any time such declaration is justified by hismedical condition.

Now, a temporary total disability only becomes permanent when so declared by thecompany-designated physician within the periods he is allowed to do so as stated above, or uponthe expiration of the maximum 240-day medical treatment period without a declaration of eitherfitness to work or the existence of a permanent disability. Applying the foregoing considerations inthe case at bar, we affirm the Court of Appeals’ ruling. While the Court of Appeals held thatTomacruz’s disability was permanent since he was unable to perform his job for more than 120days, this Court has clarified in Vergara and likewise in Magsaysay , that this "temporary totaldisability period may be extended up to a maximum of 240 days." This clarification, however, doesnot change the judgment. The sequence of events is undisputed and uncontroverted. From the timeTomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatmentof the company-designated physician. When the company-designated physician made a declarationon July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time

he was repatriated. As such, his temporary total disability should be deemed total and permanent,pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule and thus clearly beentitled to disability benefits.

On the contention that the opinion of Tomacruz’s doctor of choice should not prevail overthat of the company-designated physician, this Court deems this issue now irrelevant as Tomacruz’sentitlement to disability benefits had been decided on the bases of law and contract, and not on themedical findings of either doctor.


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FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD. vs. JOSELITO T. MEDELG.R. No. 177907, August 29, 2012, J. Leonardo-De Castro

The statement of Dr. Ong was not a categorical attestation as to the actual fitness of Medel to

resume his occupation as a seafarer. Plainly, after Medel underwent cranioplasty to repair the fracturein his skull, it is not farfetched to assume that he still needed additional time for his wound to heal and

to recuperate in order to restore himself to his former state of health. To our mind, the medical

certificate of Dr. Lim and not of Dr. Ong is the definitive declaration on the physical condition of Medel.

Unfortunately for petitioners, however, this declaration was issued beyond the 240-day period

pursuant to Section 2 in Rule X of the Implementing Rules of Book IV of the Labor Code (Amended

Rules on Employees Compensation ). Hence, Medel has right to the disability benefits.

Facts:

Medel was hired by petitioner Fair Shipping Corporation, for and in behalf of its foreignprincipal petitioner Kohyu Marine Co., Ltd. Medel was employed as an Able Seaman of the vessel

M/V Optima for a period of 12 months. Medel boarded subsequently the M/V Optima andcommenced the performance of his duties therein. On March 1, 1999, while the M/V Optima wasdocked in Ho Chi Minh City, Vietnam, Medel figured in an unfortunate accident. During the conductof emergency drills aboard the vessel, one of Medel’s co-workers lost control of the manual handleof a lifeboat, causing the same to turn uncontrollably and it struck Medel in the forehead. Medel wasimmediately brought to the Choray Hospital in Ho Chi Minh City on said date.

After undergoing surgical procedure to treat his fractured skull, Medel was discharged fromthe hospital. Medel’s attending physician then recommended his "repatriation for further treatmentat the patient’s request" and that he should "see a neurosurgeon and an ophthalmologist in thePhilippines." Medel was repatriated to the Philippines on March 13, 1999 and was admitted to theMetropolitan Hospital on the said date. In a letter dated March 16, 1999, Dr. Robert D. Lim, the

company-designated physician and Medical Coordinator of the Metropolitan Hospital, informedpetitioners that Medel was seen by a neurologist, an ENT specialist, and an ophthalmologist. Medelsubsequently underwent multiple medical operations from April to October 1999. On October 25,1999, Dr. Daniel L. Ong, a neurologist at the Metropolitan Hospital, sent a report to Dr. Lim statingthat patient can resume sea duties without any disability. Months after, in a letter dated February15, 2000, Dr. Lim also informed petitioners of Medel’s condition stating that he was pronounced fitto resume sea duties as of february 11, 2000.

In the interregnum, before Medel actually underwent the procedure of cranioplasty, heclaimed from petitioners the payment of permanent total disability benefits. Petitioners, however,refused to grant the same. Consequently, Medel filed before the Arbitration Branch of the NLRC acomplaint against petitioners for disability benefits, medical expenses, loss of earning capacity,

damages and attorney’s fees. Medel claimed entitlement to permanent total disability benefits asmore than 120 days had passed since he was repatriated for medical treatment but he was yet to bedeclared fit to work or the degree of his disability determined by the company-designatedphysician.

Moreover, petitioners also insist that there was no disability assessment from the company-designated physician. On the contrary, Medel was even assessed to be physically fit to resume work.Petitioners then faulted the courts for rejecting the certification of Dr. Ong that Medel was fit to


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resume sea duties. Petitioners insist that said doctor had personal knowledge of Medel’s condition,as he was a member of a team of physicians tasked to treat Medel. Petitioners maintain that Medeldid not present evidence to prove his incapacity, which would entitle him to the disability benefitsthat he sought.

Issue:

Whether or not Medel is entitled to permanent total disability benefits.

Ruling:

Yes.

With respect to the alleged earlier pronouncement of Dr. Ong as to the fitness of Medel forsea duties, the Court is not thereby persuaded. To recall, the said pronouncement was made onOctober 25, 1999 in a letter addressed to Dr. Lim after the cranioplasty of Medel was undertaken onOctober 20, 1999. After explaining the delay in the conduct of the said procedure, Dr. Ong stated

that he "thinks patient can resume sea duties without any disability." The statement of Dr. Ong,however, was not a categorical attestation as to the actual fitness of Medel to resume his occupationas a seafarer. Plainly, after Medel underwent cranioplasty to repair the fracture in his skull, it is notfarfetched to assume that he still needed additional time for his wound to heal and to recuperate inorder to restore himself to his former state of health. In their Memorandum, petitioners evenacknowledged that despite the above opinion of Dr. Ong, Medel continued to avail of furthermedical treatment and rehabilitation. Medel also had to be evaluated by specialists to assess hiscondition. In their Memorandum, petitioners related that "ultimately, the company-designatedphysicians declared that petitioner was 'fit to resume sea duties' by Medical Certificate dated 15February 2000." The certificate signed by Dr. Lim pertinently stated that "MedeiJ was seen by om·neurologist and neuro-surgeon. His wound is healed. His perimetry result was given to ourneurologist and he opines that patient is now fit to work." The same certificate declared that

"Medel was pronounced fit to resume sea duties as of February 11, 2000." To our mind, the medicalcertificate of Dr. Lim dated February 15, 2000 is the definitive declaration on the physical conditionof Medel. Unfortunately for petitioners, however, this declaration was issued beyond the 240-dayperiod pursuant to Section 2 in Rule X of the Implementing Rules of Book IV of the Labor Code

(Amended Rules on Employees Compensation). Hence, Medel has right to the disability benefits.

PACIFIC OCEAN MANNING, INC. and CELTIC PACIFIC SHIP MANAGEMENT CO., LTD.,

vs. BENJAMIN D. PENALES

G.R. No. 162809, September 5, 2012, J. Leonardo-De Castro

The initial treatment period of 120 days where the seaman is on temporary total disability as

he is totally unable to work making him entitled to 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, may be extended up to a maximum of 240 days under the conditions prescribed by

law, subject to the right of the employer to declare within this period that a permanent partial or total

disability already exists.

The provisions of the POEA SEC, the Labor Code, and its implementing rules and regulations,

are to be read hand in hand when determining the disability benefits due a seafarer .


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Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no suchdeclaration is made because the seafarer requires further medical attention, then the temporarytotal disability period may be extended up to a maximum of 240 days, subject to the right of theemployer to declare within this period that a permanent partial or total disability already exists.The seaman may of course also be declared fit to work at any time such declaration is justified by

his medical condition.

Based on the foregoing, it is clear that the initial treatment period of 120 days may beextended up to a maximum of 240 days under the conditions prescribed by law.

The records show that from the time respondent became injured on August 31, 2000, untilhis last treatment on January 26, 2001, only 148 days had lapsed. While this might have exceeded120 days, this was well within the 240-day maximum period for the company-designated physicianto either declare Petitioner fit to work or assign an impediment grade to his disability at that time.It is worthy to note as well that when respondent filed a complaint before the Labor Arbiter onOctober 2, 2000, not only was he remiss in regularly attending his scheduled treatment sessions,but only 32 days had passed from the time of his injury.

The Court notes that under POEA SEC, the seafarer has the duty to faithfully comply withand observe the terms and conditions of the contract, including the provisions governing theprocedure for claiming disability benefits.

When respondent filed his complaint and refused to undergo further medical treatment, heprevented the company-designated physician from fully determining his fitness to work within thetime allowed by the POEA SEC and by law. A temporary total disability only becomes permanentwhen 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 ofeither fitness to work or the existence of a permanent disability.

Since the Labor Arbiter, the NLRC, and the Court of Appeals all found respondent to be

disabled, this fact is now binding on the petitioners and this Court. The question therefore is the

amount of disability benefits to be awarded to Petitioner. To settle this, Penales disability at the

time of his last treatment should be determined in accordance with Section 20(B) of the POEA.

RETIREMENT BENEFITS

FLAVIO S. SUAREZ, JR., RENATO A. DE ASIS, FRANCISCO G. ADORABLE, et al.

vs. NATIONAL STEEL CORPORATION

G.R. No. 150180, October 17, 2008, J. Leonardo-De Castro

A perusal of Article XIV of the CBA readily shows that retirement benefits shall be gran-ted

only to those employees who, after rendering at least ten (10) years of continuous services, would

retire upon reaching the mandatory retirement age, or would avail of optional voluntary retirement.

Nowhere can it be deduced from the CBA that those employees whose employment was terminated

through one of the authorized causes are entitled to retirement benefits. In fact, Section 3 of the said

article specifically provides that retrenched employees shall be given two (2) months pay for every

year of service. Section 3 shows the intention of the parties to exclude retrenched employees, like


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herein petitioners, from receiving retirement benefits under the existing retirement plan as set forth in

Section.

Facts:

Respondent National Steel Corporation experienced financial reverses sometime in 1994,which culminated in retrenchment affecting herein petitioners. Each of the petitioners received aseparation package consisting of the following: (1) separation pay equivalent to two (2) monthssalary for every year of service; (2) leave balance credits; (3) 13th month pay; and (4) uniform plusrice subsidy differential. Thereafter, petitioners executed and signed release and quitclaimdocuments, written in English and translated in the Visayan dialect, which were duly acknowledgedbefore a notary public. When the new CBA took effect, petitioners were also given their salarydifferentials, and for which they executed and signed another release and quitclaim.

In 1997, petitioners wrote National Steel claiming that they were entitled to retirementbenefits under the CBA. National Steel rejected their claims prompting them to file a labor case. TheLabor Arbiter found no merit to the complaint of petitioners while NLRC reversed the same and

thus upholding the provision of retirement benefits to the retrenched employees. The Court ofAppeals held that petitioners were no longer entitled to such benefits considering that theyaccepted separation pay and validly signed waivers.

Issue:

Whether or not the petitioners are entitled to retirement benefits under the CBA in spitetheir receipt of separation pay.

Ruling:

No, the petitioners can no longer claim retirement benefits.

In past precedents such as Aquino vs. NLRC , University of the East vs. Minister of Labor , andBatangas Laguna Tayabas Bus Co. vs. Court of Appeals, it is made evident that the right to recoverfrom the employer both his separation pay and retirement benefits hinges on what is provided inthe retirement plan and the CBA. Accordingly, the retirement plan of National Steel provides:

X. OTHER GENERAL PROVISIONS

xxx xxx xxx

E. Resignations and Terminations. No retirement benefits are payable in instances of

resignations or terminations for cause; xxx.

Patently, this provision under the retirement plan explicitly prohibits the recovery ofretirement benefit in cases of terminations for cause and undeniably a valid retrenchment is onethe authorized causes under Article 283 of the Labor Code. Contrary to the assertion of petitioners,it must be clarified that this provision under the CBA does not distinguish between just andauthorized causes. Terminations covered by Articles 282 to 284 are all terminations by theemployer for a lawful cause. In the past, the Court has had occasion to use the term dismissal forcause to refer to dismissals for just and/or authorized cause.


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Apart from the above-quoted provision, the CBA itself controverts the claim of petition-ners. Section 3, Article XIV of the CBA states that Employees laid-off by the Company pursuant to aretrenchment program shall be given two (2) months base pay per year of service credits.

A perusal of Article XIV of the CBA readily shows that retirement benefits shall be gran-tedonly to those employees who, after rendering at least ten (10) years of continuous services, wouldretire upon reaching the mandatory retirement age, or would avail of optional voluntaryretirement. Nowhere can it be deduced from the CBA that those employees whose employment wasterminated through one of the authorized causes are entitled to retirement benefits. In fact, Section3 of the said article specifically provides that retrenched employees shall be given two (2) monthspay for every year of service. Section 3 shows the intention of the parties to exclude retrenchedemployees, like herein petitioners, from receiving retirement benefits under the existing retirementplan as set forth in Section.

EMPLOYER-EMPLOYEE RELATIONSHIP

ILIGAN CEMENT CORPORATION vs. ILIASCOR EMPLOYEES AND WORKERS UNION- SOUTHERN

PHILIPPINES FEDERATION OF LABOR (IEWU-SPFL), AND ITS OFFICERS AND MEMBERS

G.R. No. 158956, April 24, 2009, J. Leonardo- De Castro

The law makes the principal responsible to the employees of the “labor -only contractor” as if

the principal itself directly hired or employed the employees.

Facts:

Petitioner Iligan Cement Corporation, is a corporation duly organized and existing underthe laws of the Philippines with plant offices at Kiwalan, Iligan City. Iligan Industrial and AgencyServices Corporation, is the accredited job contractor of petitioner which provided stevedoring andarrastre services to the latter since its operations in the 1970s at its private pier. Vedali GeneralServices is an accredited service agency which provided general services to petitioner’s variousdepartments.

On November 11, 1999, Blue Circle Philippines, Inc. took over the management of ICC’sbusiness,

and decided to bid

out the services at petitioner’s private pier. ILIASCOR lost the bidding

to Luzon Visayas Mindanao Arrastre and Stevedoring, Inc. thereby necessitating it to payrespondents their separation pay of halfmonth pay for every year of service, contrary to thestipulation in the Collective Bargaining Agreement. Meanwhile, the contract between LVMASI and

ICC was not perfected. As a stopgap measure, it issued a service order to Vedali to field stevedoresincluding respondents of the case. On November 15, 2000, ICC entered into a stevedoring andarrastre contract with Northern Mindanao Industrial and Port Services Corporation and the latterthereafter took over the stevedoring duties of individual respondents. Hence, respondents filed acomplaint with the NLRC for violation of Article 246 of the Labor Code, illegal dismissal, with prayerfor preliminary injunction, damages and attorney’s fees. To counter respondent’s claim, petitionermaintained that it never employed the individual respondents and that it only contracted Vedali torender services at its pier so as not to hamper its activities while it was negotiating with another

TERMINATION OF EMPLOYMENT


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contractor.

Issue:

Whether the ICC is the employer of the individual respondents.

Ruling:

Yes, it is.

Vedali is not an independent contractor, it is a labor-only contractor. Laboronlycontracting,

which is prohibited, is an arrangement where the contractor or subcontractor merely

recruits, supplies or places workers to perform a job, work or service for a principal. In laboronlycontracting, the following elements are present: (a) The contractor or subcontractor does not havesubstantial capital or investment to actually perform the job, work or service under its own accountand responsibility; and b) The employees recruited, supplied or placed by such contractor orsubcontractor are performing activities which are directly related to the main business of the

principal. Under this scheme, the “labor-only” contractor is the agent of the principal. The lawmakes the principal responsible to the employees of the “labor-only contractor” as if the principalitself directly hired or employed the employees. Hence, ICC and not Vedali, is the employer ofindividual respondents. As such, ICC has the burden of proving that the dismissal of petitioner wasfor a cause allowed under the law and that petitioner was afforded procedural due process. Failingto discharge such burden, ICC must be made liable to the respondents.

GMA NETWORK, INC.vs. CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO, ARNOLD

L. LAGAHIT, AND ARMANDO A. CATUBIG

G.R. No. 176419, November 27, 2013, J. Leonardo-de Castro

In order to safeguard Athe rights of workers against the arbitrary use of the word “project” to

prevent employees from attaining the status of regular employees, employers claiming that theirworkers are project employees should not only prove that the duration and scope of the employment

was specified at the time they were engaged, but also that there was indeed a project. The project

could either be (1) a particular job or undertaking that is within the regular or usual business of the

employer company, but which is distinct and separate, and identifiable as such, from the other

undertakings of the company; or (2) a particular job or undertaking that is not within the regular

business of the corporation. As it was with regard to the distinction between a regular and casual

employee, the purpose of this requirement is to delineate whether or not the employer is in constant

need of the services of the specified employee. If the particular job or undertaking is within the regular

or usual business of the employer company and it is not identifiably distinct or separate from the other

undertakings of the company, there is clearly a constant necessity for the performance of the task in

question, and therefore said job or undertaking should not be considered a project.

Facts:

Respondents were television technicians of petitioner GMA Network, Inc. engaged by thelatter to perform the following activities: (1) manning of Technical Operations Center; (2) acting asTransmitter/VTR men; (3) acting as Maintenance staff; and, (4) acting as Cameramen.


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On July 19, 1999, due to the miserable working conditions, respondents were forced to file acomplaint against petitioner before the National Labor Relations Commission (NLRC) RegionalArbitration Branch No. VII of Cebu City.

On August 9, 1999, respondents were summoned to the office of petitioner’s Area Manager,

Mrs. Susan Aliño, and they were made to explain why they filed the complaint. The next day,respondents were barred from entering and reporting for work without any notice stating thereasons therefor.

On August 13, 1999, respondents, through their counsel, wrote a letter to Mrs. Susan Aliño,requesting that they be recalled back to work.

On August 23, 1999, a reply letter from Mr. Bienvenido Bustria, petitioner’s head ofPersonnel and Labor Relations Division, admitted the non-payment of benefits but did not mentionthe request of respondents to be allowed to return to work.

On September 15, 1999, respondents sent another letter to Mr. Bustria, reiterating their

request to work but the same was totally ignored. Thus, on October 8, 1999, respondents filed anamended complaint raising the following additional issues: 1) Unfair Labor Practice; 2) Illegaldismissal; and 3) Damages and Attorney’s fees.

On 23 September 1999, a mandatory conference was set to amicably settle the disputebetween the parties but to no avail. As a result, both of them were directed to file their respectiveposition papers.

The Labor Arbiter dismissed the complaint of respondents for illegal dismissal and unfairlabor practice, but held petitioner liable for 13th month pay.

Respondents, then, appealed to the National Labor Relations Commission (NLRC) which

reversed the Decision of the Labor Arbiter. It held that: (a) respondents were regular employeeswith respect to the particular activity to which they were assigned, until it ceased to exist and assuch, they are entitled to payment of separation pay computed at one (1) month salary for everyyear of service; (b) they are not entitled to overtime pay and holiday pay; and (c) they are entitledto 13th month pay, night shift differential and service incentive leave pay. The NLRC also awarded,without explanation, the respondents the attorney’s fees of ten percent (10%) of all theaforementioned awards.

Petitioner, hence, elevated the case to the Court of Appeals (CA) via a Petition for Certioraribut the latter denied its petition for lack of merit; thus, the instant Petition for Review on Certiorari.

Petitioner posited that respondents’ employment was project employment and that theywere merely substitutes or what they call pinch-hitters (which means that they were employed totake the place of regular employees of petitioner who were absent or on leave). As such, petitionerclaimed that respondents were not illegally dismissed and were, therefore, not entitled toseparation pay.

Meanwhile, the CA previously ruled that even assuming that respondents are projectemployees, they would nevertheless have attained regular employment status because of theircontinuous rehiring.


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In response, petitioner adverted to the fixed period allegedly designated in employmentcontracts and reflected in vouchers and argued that respondents were fully aware and freelyentered into agreements to undertake a particular activity for a specific length of time. Hence, theycould not have attained regular status.

As regards night shift differential pay, petitioner claimed that its admission as to thenonpayment thereof was qualified by its allegation that respondents are not entitled thereto.Petitioner pointed out that respondents failed to specify the period when such benefits are due, anddid not present additional evidence before the NLRC and the CA.

Lastly, petitioner complained that the NLRC gravely erred in awarding attorney’s fees torespondents in the absence of justification on the part of NLRC.

Issues:

1. Are the respondents regular employees or project employees?

2. Are the respondents entitled to separation pay?3. Are the respondents entitled to night shift differential pay?

Ruling:

1. Respondents are regular employees.

Article 280 of the Labor Code provides that, regardless of any contract expressingotherwise, an employment shall be deemed to be regular where the employee has been engaged toperform activities which are usually necessary or desirable in the usual business or trade of theemployer, except where the employment has been fixed for a specific project or undertaking – thecompletion or termination of which has been determined at the time of the engagement of the

employee.

In ALU-TUCP vs. National Labor Relations Commission, the Supreme Court clarified the term"project" in the test for determining whether an employee is a regular or project employee. It saidthat “project” could either be: (1) a particular job or undertaking that is within the regular or usualbusiness of the employer company, but which is distinct and separate, and identifiable as such, fromthe other undertakings of the company; or (2) a particular job or undertaking that is not within theregular business of the corporation but, also, identifiably separate and distinct from the ordinary orregular business operations of the employer.

In the instant case, private respondents’ jobs and undertakings were clearly within theregular or usual business of the petitioner and were not identifiably distinct or separate from the

other undertakings of the latter. The manning of the operations center to air commercials, acting astransmitter/VTR men, maintaining the equipment, and acting as cameramen are certainly notundertakings separate or distinct from the business of a broadcasting company.

Petitioner’s allegation that respondents were merely substitutes or pinch-hitters does notchange the fact that their jobs cannot be considered projects within the purview of the law.


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Meanwhile, in order to safeguard the rights of workers against the arbitrary use of the word"project" to prevent employees from attaining the status of regular employees, employers claimingthat their workers are project employees should not only prove that the duration and scope of theemployment was specified at the time they were engaged, but also that there was indeed a projectby reporting the completion of its projects and the dismissal of respondents in its finished projects.

In ABS-CBN Broadcasting Corporation vs. Nazareno, the Court held that the employer’sfailure to report the termination of employees upon project completion to the DOLE Regional Office,having jurisdiction over the workplace, within the period prescribed militates against theemployer’s claim of project employment.

Here, as correctly observed by the CA, nowhere in the records was there any showing thatpetitioner reported the completion of its projects and the dismissal of private respondents in itsfinished projects to the nearest Public Employment Office as per Policy Instruction No. 2015 of theDepartment of Labor and Employment [DOLE].

Nevertheless, even assuming that respondents are project employees, they would have

already attained regular employment status because of their continuous rehiring. In one case, theCourt ruled that a project employee or a member of a work pool may acquire the status of a regularemployee when the following concur:

1) there is a continuous rehiring of project employees even after cessation of a project; and2) the tasks performed by the alleged project employee are vital, necessary and

indispensable to the usual business or trade of the employer.

In the instant case, and, as previously stated, the tasks they performed were vital, necessaryand indispensable to the usual business of the petitioner.

From the foregoing, respondents cannot be considered as project employees but regularemployees of petitioner.

Fixed-term employment, although not expressly mentioned in the Labor Code, is describedin Brent School, Inc. v. Zamora, as an employment contract which specifies that employment will lastonly for a definite period. The decisive determinant, then, in fixed-term employment is not theactivity that the employee is called upon to perform but the day certain agreed upon by the partiesfor the commencement and termination of the employment relationship.

In the same case, the Court held that such contract is not per se illegal or against publicpolicy. But, where, from the circumstances, it is apparent that the periods in fixed-termemployments have been imposed to preclude acquisition of tenurial security by the employee, theyshould be struck down as contrary to public policy or morals.

On the other hand, the Court laid down indications or criteria under which "fixed-termemployment" cannot be said to be in circumvention of the law on security of tenure, namely:

1) the fixed period of employment was knowingly and voluntarily agreed upon by theparties without any force, duress, or improper pressure being brought to bear upon the employeeand absent any other circumstances vitiating his consent; or

2) it satisfactorily appears that the employer and the employee dealt with each other onmore or less equal terms with no moral dominance exercised by the former or the latter.


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In connection to this, it is the employer which must satisfactorily show that it was not in adominant position of advantage in dealing with its prospective employee.

In the case at bar, the Court found it unjustifiable to allow petitioner to hire and rehireworkers on fixed terms, ad infinitum, depending upon its needs, never attaining regular

employment status. Respondents were repeatedly rehired in several fixed-term contracts from1996 to 1999. Petitioner presented cash disbursement vouchers signed by respondents, stating thatthey were merely hired as pinch-hitters. It is, then, apparent that respondents were in no positionto refuse to sign these vouchers, as such refusal would entail not getting paid for their services. Inother words, respondents as "pinch-hitters" cannot be considered to be in equal footing aspetitioner in the negotiation of their employment contract.

Therefore, respondents should be considered to have eventually attained regular statusentitled to security of tenure.

2. Yes, petitioners are entitled to separation pay.

Under the Labor Code, regular employees who are dismissed without just cause are entitledto reinstatement or, in lieu thereof, separation pay. Moreover, in illegal dismissal cases, theemployer has the burden of proving with clear, accurate, consistent, and convincing evidence thatthe dismissal was valid.

In the instant case, having established that respondents were regular employees, the Courtheld that they are entitled to security of tenure and therefore their services may be terminated onlyfor just or authorized causes. Since petitioner failed to prove any just or authorized cause for theirtermination, the Court was constrained to affirm the findings of the NLRC and the Court of Appealsthat they were illegally dismissed.

And, since they were illegally dismissed, respondents are entitled to separation pay

equivalent to one (1) month pay for every year of service, in lieu of reinstatement as reinstatementis no longer practicable because petitioner refused to accept respondents back to work. Allowingrespondents to return to their work might only subject them to further embarrassment,humiliation, or even harassment.

3. Yes, respondents are entitled to night shift differential pay.

The Labor Code provides that every employee shall be paid not less than ten percent (10%)of his regular wage for each hour of work performed between ten o’clock i n the evening and sixo’clock in the morning.

Here, as employees of petitioner, respondents are entitled to the payment of this benefit in

accordance with the number of hours they worked from 10:00 p.m. to 6:00 a.m., if any.

Petitioner’s defense that respondents’ failure to specify the period when such benefits aredue and to present additional evidence before the NLRC and the CA militates against theirentitlement to night shift differential pay is untenable.


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In Dansart Security Force & Allied Services Company vs. Bagoy , the Court held that it isentirely within the employer's power to present such employment records that should necessarilybe in their possession, and that failure to present such evidence must be taken against them.

As a matter of sound policy, an award of attorney's fees remains the exception rather than

the rule. They are not awarded every time a party wins a suit. Anent to this, the factual, legal orequitable justification for the award must be set forth in the text of the decision. The matter ofattorney's fees cannot be touched once and only in the fallo of the decision; else, the award shouldbe thrown out for being speculative and conjectural.

In the case at bar, the factual basis for the award of attorney's fees was not discussed in thetext of NLRC Decision. Therefore, the Court was constrained to delete the same.

DISMISSAL FROM EMPLOYMENT

SAN MIGUEL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION AND WILIAM L.

FRIEND JR.

G.R. No. 153983, May 26, 2009, J. Leonardo-De Castro

The right of an employer to dismiss an employee on account of loss of trust and confidence

must not be exercised whimsically and the employer must clearly and convincingly prove by

substantial evidence the facts and incidents upon which loss of confidence in the employee may be

fairly made to rest; otherwise, the latter’s dismissal will be rendered illegal.

Facts:

Respondent William L. Friend, Jr. was a route salesman of petitioner San Miguel CorporationBacoor Sales Office for ten years with a monthly salary of P30,000.00. On April 3, 1995, Rene deJesus, respondent’s supervisor, conducted an audit of his route on account of complaints of certain

customers for an alleged padding of their accounts in the total amount of P20, 540.00. After theaudit, the supervisor found reasonable ground to hold Friend liable for misappropriation ofcompany funds through falsification of private documents. On April 19, 1995, Friend wassummoned to SMC’s Canlubang Bottling Plant for investigation. After the conduct of suchinvestigation, Friend received a notice of termination on October 3, 1995 for misappropriation ofcompany funds through falsification of company documents. Hence, this case for illegal suspensionand dismissal.

Issue:

Whether Friend’s act of paper renewals through padding of customers’ accounts warrantstermination.

Ruling:

No, it does not.

In termination cases, the employer bears the burden of proving that the dismissal of theemployee is for a just or an authorized cause.

Failure to dispose of the burden would imply that the

dismissal is not lawful, and that the employee is entitled to reinstatement, back wages and accruing


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benefits. While loss of trust and confidence is by law a valid ground for dismissal, the Court hasruled in a long line of jurisprudence that ordinary breach does not suffice.

While the paper renewal committed by Friend may be considered as falsification, such didnot amount to misappropriation that could justify outright dismissal for the first offense, as what

SMC did to respondent Friend. SMC utterly failed to establish that Friend or somebody pecuniarilyor materially benefited from the falsification through paper renewal committed by him that couldhave warranted his dismissal for the first offense. Neither was there clear and convincing evidencethat SMC suffered any material loss by the Friend’s act of paper renewal. The penalty of dismissal istoo severe a penalty for the offense committed. Firstly, there is no showing that complainant’sservice record was replete with offenses. It appears that this is the first time he was charged ofviolation of company rule. Secondly, there is no convincing evidence that he materially benefitedfrom the acts committed. Thirdly, SMC did not suffer from any damage or losses by reason thereof.

COCA-COLA BOTTLERS PHILIPPINES, INC. vs. ANGEL U. DEL VILLAR

G.R. No. 163091, October 6, 2010, J. Leonardo-De Castro

Where there is divergence in the findings and conclusions of the National Labor RelationsCommission (NLRC), on the one hand, from those of the Labor Arbiter and the Court of Appeals, on the

other, the Supreme Court is constrained to examine the evidence, to determine which findings and

conclusion are more conformable with the evidentiary facts.

Managerial prerogatives are subject to limitations provided by law, collective bargaining

agreements, and general principles of fair play and justice.

Redundancy, for purposes of the Labor Code, exists where the services of an employee are in

excess of what is reasonably demanded by the actual requirements of the enterprise.

Facts:

Coca-Cola Bottlers Philippines, Inc. (Company), one of the leading and largest manufacturers ofbeverages in the country, initially hired respondent Angel U. del Villar (Del Villar) as PhysicalDistribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, aside from theuse of a company car, gasoline allowance, and annual foreign travel, among other benefits. In 1992,as part of the reorganization of the Company, Del Villar became the Transportation ServicesManager, under the Business Logistic Directorate, headed by Director Edgardo I. San Juan (SanJuan). As Transportation Services Manager, Del Villar prepares the budget for the vehicles of theCompany nationwide.

Del Villar submitted a Report to the Company President, Natale J. Di Cosmo (Di Cosmo), detailing analleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck

manufacturers, overpricing the trucks purchased by the Company by as much as P70,000.00 each.Del Villar also implicated San Juan and Jose L. Pineda, Jr. (Pineda), among other Company officials,as part of the conspiracy. Pineda then served as the Executive Assistant in the Business LogisticDirectorate in charge of the Refrigeration Services of the Company.

In 1996, the Company embarked on a reorganization of the Business Logistic Directorate. As aresult, the functions related to Refrigeration were assigned to the Transportation Services Manager,which was renamed the Transportation and Refrigeration Services Manager. Mr. Nathaniel


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Evangelista, the Physical Distribution Superintendent of the Zamboanga Plant, was appointed theCorporate Transportation and Refrigeration Services Manager, replacing both Del Villar and Pineda,who were in charge of the Transportation Services and Refrigeration Services of the Company,respectively. Pineda was then appointed as the Corporate Purchasing and Materials ControlManager, while Del Villar as Pineda’s Staff Assistant.

Seven months after the submission of his Report on the fraudulent scheme of several companyofficials, Del Villar received a Memorandum from San Juan informing him that he was designated asStaff Assistant to the Corporate Purchasing and Materials Control Manager, with a job grade of NS-VII, hence, he ceased to be entitled to the benefits accruing to an S-7 position under existingcompany rules and policies; and he should turn over the vehicle assigned to him as TransportationServices Manager to Pineda.

Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, DelVillar continued to receive the same salary as Transportation Services Manager, but his car andother privileges were withdrawn and he spent his time at his new post sitting at a desk with nomeaningful work whatsoever. Del Villar believed that he was demoted by the Company to force him

to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branchof the NLRC a complaint against the Company for illegal demotion and forfeiture of companyprivileges.

The Company filed a Motion to Dismiss, instead of a position paper, praying for the dismissal of DelVillars complaint on the ground that Del Villar had no cause of action. The Company alleged that itwas merely exercising its inherent management prerogative to transfer an employee from oneposition to another.

The Labor Arbiter ruled in favor of Del Villar. The Company, in filing a Motion to Dismiss,hypothetically admitted the truth of the facts alleged in the complaint, and the failure of theCompany to deny or rebut Del Villars allegations of bad faith on the part of the Company, gave rise

to the presumption against the latter. It further held that Del Villar was illegally dismissed statingthat he was not outrightly dismissed; instead, he was removed from his former position asTransportation Services Manager, and demoted to Staff Assistant to the Corporate Purchasing andMaterials Control Manager.

The Company expectedly appealed to the NLRC.

While the case was still pending appeal before the NLRC, Del Villar received a letter from theCompany asserting his separation from work since his position has been determined as no longernecessary due to the reorganization of the Business Logistics Directorate. Contrariwise, NLRC heldthat Del Villar was not demoted and that the Company has not acted in bad faith or with malice. DelVillar moved for the reconsideration of the foregoing NLRC Decision, but the NLRC denied such

motion for lack of merit.

Del Villar appealed to Court of Appeals (CA) via a Petition for Certiorari under Rule 65 of the Rulesof Court. CA decided that NLRC committed grave abuse of discretion by turning a blind eye onseveral indicia that clearly showed Del Villar was demoted without any lawful reason and ruled thatthere is a bad faith against the Company.

Issues:


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1. Whether the Company, in transferring Del Villar from the position of TransportationServices Manager to Staff Assistant to the Corporate Purchasing and Materials ControlManager, validly exercised its management prerogative or committed constructivedismissal, is a factual matter.

2. Whether Del Villar was merely transferred from one position to another and was notdemoted.

3. Whether or not Del Villar was illegally terminated from his service.

Ruling:

1. It is a settled rule that factual findings of labor officials, who are deemed to have acquiredexpertise in matters within their respective jurisdictions, are generally accorded not onlyrespect but even finality. Moreover, in a petition for review on certiorari under Rule 45 ofthe Rules of Court, the Supreme Court reviews only errors of law and not errors offacts. However, where there is divergence in the findings and conclusions of the NLRC, onthe one hand, from those of the Labor Arbiter and the Court of Appeals, on the other, the

Court is constrained to examine the evidence, to determine which findings and conclusionare more conformable with the evidentiary facts. Hence, in the instant Petition, we embarkon addressing not only the legal, but the factual issues as well.

Jurisprudence recognizes the exercise of management prerogative. For this reason, courtsoften decline to interfere in legitimate business decisions of employers. In fact, labor lawsdiscourage interference in employer’s judgment concerning the conduct of their business.

In the pursuit of its legitimate business interest, management has the prerogative totransfer or assign employees from one office or area of operation to another provided there is nodemotion in rank or diminution of salary, benefits, and other privileges; and the action is notmotivated by discrimination, made in bad faith, or effected as a form of punishment or demotion

without sufficient cause. The right of employees to security of tenure does not give them vestedrights to their positions to the extent of depriving management of its prerogative to change theirassignments or to transfer them.

In the case at bar, there is no dispute that Del Villar was transferred by the Company fromthe position of Transportation Services Manager to the position of Staff Assistant to the CorporatePurchasing and Materials Control Manager. The burden thus falls upon the Company to prove thatDel Villars transfer was not tantamount to constructive dismissal. After a careful scrutiny of therecords, we agree with the Labor Arbiter and the Court of Appeals that the Company failed todischarge this burden of proof.

2. Del Villar was evidently demoted.

The dismal performance evaluations of Del Villar were prepared by San Juan and Pinedaafter Del Villar already implicated his two superiors in his Report dated January 4, 1996 in analleged fraudulent scheme against the Company. More importantly, we give weight to the followinginstances establishing that Del Villar was not merely transferred from the position ofTransportation Services Manager to the position of Staff Assistant to the Corporate Purchasing andMaterials Control Manager; he was evidently demoted.


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A transfer is a movement from one position to another which is of equivalent rank, level orsalary, without break in service. Promotion, on the other hand, is the advancement from oneposition to another with an increase in duties and responsibilities as authorized by law, and usuallyaccompanied by an increase in salary. Conversely, demotion involves a situation where an employeeis relegated to a subordinate or less important position constituting a reduction to a lower grade or

rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by adecrease in salary.

First , as the Court of Appeals observed, Del Villars demotion is readily apparent in his newdesignation. F

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