Paulino Ungos III

Lawyer | Law Professor | Author

Author: Paulino Ungos III

  • Just a Lessor; Not an Employer

    Albina and several persons alleged that Abelardo, Quirino, and Lucia employed them for various years, as lady keeper, waitress, receptionist, dispatcher, bus boy, DJ, entertainer, cook, and cashier in the latter’s restaurant.

    Albina and her group narrated that in June 2006, restaurant management began harassing them after they formed a union. Albina and her group further stated that on June 30, 2006, Lucia informed them of the termination of their employment since the restaurant will be closing due to bankruptcy.

    Aggrieved by the development, Albina and her group filed a complaint for unfair labor practice, illegal dismissal, and money claims against Abelardo, Quirino, and Lucia before the Office of the Labor Arbiter. Albina and her group asserted therein that the restaurant was financially stable and that the claim of serious business losses was merely a ruse to terminate their employment.

    On the other hand, Abelardo denied the existence of an employment relationship with Albina and her group. Abelardo argued that he was not the owner of the restaurant since he was merely the lessor of the building where the said restaurant operated.

    As supporting evidence, Abelardo submitted contracts of lease and tax returns showing that he earned income from rentals. Abelardo likewise presented the restaurant’s certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name.

    The Office of the Labor Arbiter found that the presented contracts of lease were inconclusive to disavow any employment relationship between Abelardo and Albina and her group. Said Office ruled that Albina and her group were illegally dismissed from employment. Abelardo, Lucia, and Quirino were held solidarily liable to pay the awards in the total amount of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). Record showed that the Decision of the Office of the Labor Arbiter was received by Abelardo on March 23, 2007.

    On March 30, 2007, or seven days after receiving the Office of the Labor Arbiter’s Decision, Abelardo filed his appeal with the National Labor Relations Commission. He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00). Abelardo also moved to reduce the bond.

    On April 2, 2007, or the last day within which to file his appeal, Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).

    Thereafter, Abelardo moved to substitute the cash bond earlier posted in the amount of Five Hundred Thousand Pesos (Php500,000.00) with a surety bond of the same amount. The National Labor Relations Commission granted the motion and ordered Abelardo to post the surety bond. Abelardo complied with the order.

    Later, the National Labor Relations Commission exonerated Abelardo from liability as it found no substantial evidence of employment relationship with Albina and her group.

    Albina and her group elevated the case to the Court of Appeals and asserted that the National Labor Relations Commission committed grave abuse of discretion in giving due course to Abelardo’s appeal despite his failure to post a bond equivalent to the monetary award.

    The Court of Appeals granted the petition. It ruled that Abelardo failed to perfect his Appeal to the National Labor Relations Commission, and it reinstated the decision of the Office of the Labor Arbiter. According to the Court of Appeals, only the amount of Five Hundred Thousand Pesos (Php500,000.00) was posted as bond when Abelardo filed his appeal. The Court of Appeals added that Abelardo’s Motion to Reduce Bond was deemed denied since the same was not acted upon by the National Labor Relations Commission and since no meritorious ground supported the same.

    For the Court of Appeals, the full amount of the appeal bond should have been posted by Abelardo when he filed his appeal. For failure to comply with the mandatory and jurisdictional appeal bond requirement and in the absence of substantial proof to the contrary, the Court of Appeals ruled that Abelardo’s appeal was never perfected and that the National Labor Relations Commission did not acquire jurisdiction over the case.

    Abelardo filed his petition with the Supreme Court and pointed out the following:

    • He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00) on March 30, 2007, within the period to file an Appeal;
    • Such cash bond was subsequently substituted by a surety bond of the same amount; and
    • He then posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).

    Abelardo also insisted that Albina and her group failed to establish their employment relationship with him. Abelardo stressed that Albina and her group even alleged in their position paper that it was Lucia who dismissed them.

    In their comment, Albina and her group retorted with three points:

    • There was no evidence that Abelardo posted the appeal bond within the reglementary period;
    • The indemnity agreement between Abelardo and the bonding company did not provide the effectivity period and the amount of premium paid; and
    • Through the affidavit of the restaurant’s former manager, it was shown that Abelardo had the final authority in the hiring of employees and their work assignments.

    Was Abelardo’s appeal perfected?

    The Supreme Court ruled in the affirmative.

    The Court reiterated the principle that the right to appeal is a mere statutory privilege exercised only in the manner and in accordance with the requirements of the law.

    With regard to appeals to the National Labor Relations Commission from decisions, awards, or orders of the Office of the Labor Arbiter, the Supreme Court pointed to Article 229 of the Labor Code of the Philippines, which provides that 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.

    The Supreme Court also referred to Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was effective at the time Abelardo questioned the Office of the Labor Arbiter’s Decision. Relevant portion of the provision states:

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

    The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal.

    The Supreme Court explained that the purpose of the posting of cash or surety bond is to assure the employees that they will receive the monetary award granted them if they finally prevail in the case. The bond also serves to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy the judgment. Notably, the Court added, the posting of appeal bond is not only mandatory but jurisdictional as well. Non-compliance with the bond requirement is fatal and has the effect of rendering the judgment final and executory.

    The Supreme Court clarified that in exceptional cases, however, the bond requirement may be relaxed, provided that:

    • There is substantial compliance with the rules;
    • Surrounding facts and circumstances constitute meritorious grounds to reduce the bond;
    • A liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or
    • The appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.

    The Supreme Court continued that the reduction of the bond is not warranted when:

    • No meritorious ground is shown to justify the same;
    • The appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or
    • When circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims.

    In the present case, the Supreme Court ruled that the Court of Appeals erred in dismissing Abelardo’s Appeal for non-perfection. The Supreme Court found that Abelardo received on March 23, 2007 the Office of the Labor Arbiter’s Decision and that he had until April 2, 2007 (or the tenth [10th] day from his receipt of such Decision) to file an appeal. On March 30, 2007, Abelardo appealed and moved to reduce the bond. At the same time, Abelardo deposited a cashier’s check in the amount of Five Hundred Thousand Pesos (Php500,000.00) in favor of Albina and her group. On April 2, 2007 (or the last day of the period to appeal) Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00). Subsequently, with the approval of the National Labor Relations Commission, Abelardo replaced the Five Hundred Thousand Peso (Php500,000.00) check deposit with a surety bond of the same amount. For the Supreme Court, Abelardo posted a total of Three Million Six Hundred Thousand Pesos (Php3,600,000.00) within the reglementary period, which substantially covered the total monetary award of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). The Supreme Court considered such amount as substantial compliance and the same demonstrated Abelardo’s willingness to abide with the rules on perfection of appeals.

    The Supreme Court found no merit to the assertions of Albina and her group regarding the failure of the indemnity agreement to indicate the effectivity period and the amount of premium paid. This is because such aspects do not affect the validity of the surety bond and since the Rules of Procedure of the National Labor Relations Commission does not require such formalities with respect to the contents of the indemnity agreement. The Court stressed that in any case, the rules are explicit that a cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond and shall be binding on the appellants and the bonding company.

    The Supreme Court accordingly ruled that the Court of Appeals should have considered the merits of the case given that the labor adjudication system rests on the norm that rules of technicality must yield to the broader interest of substantial justice.

    In this regard, while the Supreme Court remarked that it could have remanded the case to the Court of Appeals for proper disposition on the merits, the Supreme Court deemed it more appropriate and practical to resolve the question of the existence of the employment relationship in order to avoid further delay.

    Did an employer-employee relationship exist between Abelardo and Albina and her group?

    For this issue, the Supreme Court ruled in the negative.

    The Supreme Court enumerated the four-fold test of employment relationship, namely:

    • Selection and engagement of the employee or the power to hire;
    • Payment of wages;
    • Power to dismiss; and
    • Power to control the employee.

    Applying such test, the Supreme Court declared that Abelardo was not the employer of Albina and her group. This was based on the following findings:

    First, there was no substantial evidence that Abelardo participated in the selection of the restaurant employees. Although the Supreme Court noted the affidavit of the restaurant’s former manager which was presented by Albina and her group, it ruled that the same was not substantial proof absent supporting evidence such as pre-employment records, appointment letters or engagement contracts indicating Abelardo’s involvement in the recruitment process.

    Second, Albina and her group did not present any payslip showing that they directly received their premiums and salaries from Abelardo.

    Third, as to the power to dismiss, Albina and her group admitted that it was Lucia who terminated their services. There was no evidence that Abelardo wielded such authority.

    Fourth, concerning the power of control, there was no proof that Abelardo issued orders and instructions to Albina and her group, or that he supervised and monitored the proper performance of their work.

    On the other hand, the Supreme Court found that Abelardo substantiated his claim that he was a mere lessor of the restaurant. Abelardo submitted contracts of lease and tax returns showing that he earned income solely from building rentals. Abelardo likewise presented the certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name. The Supreme Court considered such certifications as executed in the performance of official duty of the government agencies concerned and can be relied upon as evidence of the facts stated therein. Furthermore, such documents enjoy the presumption of regularity unless the contrary is proved. The Supreme Court thus ruled that Albina and her group’s idle implication that Abelardo used these documents as subterfuge to evade liability deserved scant consideration.

    In sum, the Court reiterated that the quantum of proof in labor cases is substantial evidence or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The burden of proof rests upon the party who asserts the affirmative of an issue. In the present case, the Supreme Court found that Albina and her group utterly failed to establish with substantial evidence their supposed employment relationship with Abelardo. The Supreme Court concluded that their case for illegal dismissal cannot prosper absent employment relationship between the parties.

    The Supreme Court thus granted Abelardo’s petition and reinstated the Decision of the National Labor Relations Commission.

    Further reading:

    • Salazar v. Simbajon, G.R. No. 202374, June 30, 2021.

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  • But Their Services were Coterminous with Their Assigned Projects

    The employees in this case were hired on various dates by Sigma Construction and Supply (Sigma Construction), an independent contractor owned by Eduardo. As cement cutters, the said employees were assigned to work at the drilling site of Philippine Geothermal, Inc. (Philippine Geothermal), beginning in April 1990.

    However, Philippine Geothermal preterminated one of its contracts with Sigma Construction on April 1, 1993. Due to such termination, the project manager of Sigma Construction issued a notice to all cement cutters, informing them that the contract with Philippine Geothermal will be effective only until April 30, 1993.

    The employees filed a complaint for illegal dismissal against Sigma Construction and Philippine Geothermal. They argued that they were regular employees of Sigma Construction because they were continuously hired and assigned to different Philippine Geothermal projects from the beginning of their employment in 1990 until their recent termination in 1993. The employees added that they were even transferred to other projects prior to the completion of a previously assigned project and they also cleaned canals and pipes, fixed tools, and other related work at Philippine Geothermal.

    Eduardo alleged that Sigma Construction was an independent contractor that hired project employees to work on its projects with Philippine Geothermal. In support of this stand, Eduardo presented Sigma Construction’s Service contracts with Philippine Geothermal. According to Eduardo, when Philippine Geothermal preterminated its latest contract with Sigma Construction, the latter was forced to dismiss its employees from employment their services were coterminous with Sigma Construction’s projects with Philippine Geothermal. Eduardo posited that it would be unjust to require Sigma Construction to retain employees in the absence of projects with Philippine Geothermal.

    Are the employees here project employees of Sigma Construction?

    The Supreme Court held that said employees were not project employees, but were regular employees of Sigma Construction.

    The Court stated that the principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a “specific project or undertaking,” the duration and scope of which are specified at the time the employee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring.

    In the present case, the Court found no proof that the employees’ engagement as project employees had been predetermined, as required by law. There was no showing that the employees were informed that they were to be assigned to a “specific project or undertaking” upon their hiring. No employment contracts for the specific project signed by the employees were presented.

    The Court pointed out that Eduardo only presented Sigma Construction’s Service Contracts with Philippine Geothermal. According to the Court, nowhere in the contracts did it show that employees were parties to such contract. More importantly, the said documents did not prove that employees were hired for the projects with Philippine Geothermal.

    For the Court, the presentation of service contracts between Sigma Construction and Philippine Geothermal (even if it showed the duration of the project), in lieu of the employees’ individual employment contracts, did not establish that the latter were project employees.

    Further reading:

    • Jovero v. Cerio, G.R. No. 202466, June 23, 2021.

  • Stubborn Unwillingness to Return to Work

    In October 1988, Jose was employed as a security guard by Twinstar Professional Protective Services, Inc. (Twinstar). He was deployed at the Las Haciendas in Tarlac City.

    Sometime in January 2011, Jose sought assistance from the program of a certain Mr. Tulfo to complain about the underpayment of his salaries. On January 24, 2011, Twinstar directed Jose to report to its office in Quezon City. Jose stated that upon reporting to the office the next day, Twinstar informed him that he was being placed on floating status. Jose also stated that his floating status lasted for more than six (6) months.

    This was why he filed a complaint for illegal dismissal against Twinstar.

    The Office of the Labor Arbiter held that Jose was constructively dismissed from employment. The National Labor Relations Commission reversed the ruling of the Office of the Labor Arbiter and held that no constructive dismissal took place. The Court of Appeals affirmed the decision of the National Labor Relations Commission.

    Was Jose constructively dismissed from employment?

    The Supreme Court ruled in the negative.

    Jurisprudence teaches that there is constructive dismissal when an employer’s act of clear discrimination, insensibility or disdain becomes so unbearable on the part of the employee so as to foreclose any choice on his part except to resign from such employment. It exists where there is involuntary resignation because of the harsh, hostile and unfavorable conditions set by the employer. The standard for constructive dismissal is “whether a reasonable person in the employee’s position would have felt compelled to give up his employment under the circumstances.”

    However, the Court emphasized that “not every inconvenience, disruption, difficulty, or disadvantage that an employee must endure sustains a finding of constructive dismissal.” What is vital is the weighing of the evidence presented and a consideration of whether, given the totality of circumstances, the employer acted fairly in exercising a prerogative.

    In the present case, the Court found that Jose failed that he was constructively dismissed by Twinstar. According to the Court, Jose never presented any evidence, aside from his self-serving allegations, that he was forced to be on floating status for more than six (6) months without being given new assignment by Twinstar.

    On the other hand, the Court found that Twinstar was able to establish that Jose went on absence without leave on or about January 21, 2011 and that it had subsequently sent several notices directing Jose to report for work. The Court also found that Twinstar’s duty officer vainly tried to contact Jose by calling him and sending text messages. Also Twinstar’s field inspector attempted to deliver a company letter on June 8, 2011 but Jose refused to receive the same. Furthermore, the Court discovered that Jose himself admitted declining the assignment offered to him by Twinstar within six (6) months from the time he was placed on floating status in the hearing dated October 18, 2011 before the Office of the Labor Arbiter. According to the Court, Jose’s flimsy claim that he did not understand the question of the Office of the Labor Arbiter and the Minutes of the said hearing, as both were in the English language, would seem like a desperate attempt to feign ignorance in order to retract such statements. The Court stated that Jose had all the opportunity to request the Office of the Labor Arbiter to translate the question and the Minutes to a language he understood, but he chose not to. The Court pointed out that Jose himself indicated in his bio-data that English is one of the languages he can speak and write.

    For the Court, the totality of circumstances led it to conclude that no constructive dismissal happened. Instead, the circumstances revealed Jose’s stubborn unwillingness to return to work despite being required by Twinstar to report to work multiple times within six (6) months from January 21, 2011.

    Thus, this Court ruled that Twinstar had just cause to terminate Jose’s employment.

    Further reading:

    • Dela Torre v. Twinstar Professional Protective Services, Inc., G.R. No. 222992, June 23, 2021.

  • An Employer’s Last Resort

    In 1990, Cathay Pacific Airways Limited (Cathay) hired Salvacion as cabin crew. On May 19, 2007, Cathay received a report that Salvacion and other crew members were caught in possession of goods, specifically bottled water and magazines, after alighting from the aircraft.

    After receiving a written explanation from Salvacion, Cathay terminated her services effective immediately for committing serious misconduct by removing company property without authorization. According to Cathay, it could no longer repose its trust and confidence on Salvacion considering the seriousness of her violation.

    Hence, Salvacion instituted a complaint for illegal dismissal against Cathay.

    Was Salvacion validly dismissed on the ground of loss of trust and confidence?

    No. The Supreme Court ruled that Salvacion was illegally dismissed from employment.

    The Court explained that Salvacion’s termination was not commensurate to the infraction committed.

    There is loss of trust and confidence when an employee fraudulently and willfully committed acts or omission in breach of the trust reposed in her/him by the employer. Two requisites must be complied with to justify this ground for termination. First, the employee must be holding a position of trust, and second, the employer shall sufficiently establish the employee’s act that would justify loss of trust and confidence. The act must be characterized as real wherein the facts that brought about such act were clearly established, and that the employee committed the same without any justifiable reason.

    Cathay has complied with the two aforementioned requisites for loss of trust and confidence.

    The Court declared that Salvacion’s position was imbued with trust and confidence.

    The Court then found that the nature of Salvacion’s duties and obligations required the highest degree of trust and confidence because she had in her control properties of Cathay. In this regard, the Court held that Salvacion’s position was imbued with trust and confidence. According to the Court, she had in her custody and control company properties which are of significant value, and she also had the responsibility of informing the In-flight Service Manager whether there was defective or missing equipment. Moreover, she had oversight over two to four cabin crew members assigned in her section of the aircraft and rated their performance for promotion purposes. She had been entrusted with the custody and control of valuable company properties in the normal and routine exercise of her duties.

    Likewise, the Court ruled that the airline clearly demonstrated that Salvacion committed an infraction of company policy that breached its trust and confidence on her. Said the Court, pilferage of company property is an act characterized by fraud or dishonesty which may be meted with summary dismissal as specifically provided in Cathay’s Disciplinary & Grievance Policy,

    The Court stated that Cathay attached a confirmation from the bottled water brand that the batch number of the Evian water confiscated from Salvacion belonged to the batch of bottled water that was exclusively shipped to Cathay. This certainly established that the bottle of water confiscated from her was Cathay’s property. Admittedly, Salvacion transgressed Cathay’s Disciplinary and Grievance Policy by taking out the bottle of water without authorization.

    The Court stressed that Salvacion’s infraction was clearly a case of misconduct considering that it is “a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” It evidently eroded Cathay’s trust and confidence in her.

    However, the Court also considered that this was Salvacion’s first infraction in her 17 years of service in the airline which involved a mere bottle of water.

    Thus, although Cathay had laid down penalties for violation of its policies, the Court cautioned that all surrounding circumstances must be considered and the penalty must be commensurate to the violation committed by an employee. Termination of the services of an employee should be the employer’s last resort especially when other disciplinary actions may be imposed, considering the employee’s long years of service in the company, devoting time, effort and invaluable service in line with the employer’s goals and mission, as in Salvacion’s case.

    In the present case, the Court found that during Salvacion’s span of employment, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. In this regard, the Court stated that to impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. The Court accordingly concluded that Salvacion was illegally dismissed from service.

    Further reading:

    • Lamadrid v. Cathay Pacific Airways Limited, G.R. No. 200658, June 23, 2021.

  • Employee Quitclaims vis-à-vis Nominal Damages

    In October 1988, Twinstar Professional Protective Services, Inc. (Twinstar) employed Jose as a security guard and deployed him at the Las Haciendas in Tarlac City.

    In January 2011, Jose sought help from a program to complain about the underpayment of his salaries. On January 24, 2011, Twinstar directed Jose to report to its office in Quezon City. Jose stated that upon reporting to the office the next day, Twinstar informed him that he was being placed on floating status. Jose also stated that his floating status lasted for over six (6) months.

    This was why he filed a complaint for illegal dismissal against Twinstar.

    Twinstar failed to file a position paper.

    The Office of the Labor Arbiter then ruled that Twinstar illegally dismissed Jose from employment, which prompted Twinstar to file an appeal.

    The National Labor Relations Commission applied the rules liberally; allowed Twinstar to present evidence on appeal; granted the same; and reversed the decision of the Office of the Labor Arbiter.

    The Commission found that Twinstar had just cause to dismiss Jose from employment because Jose went on unauthorized leave of absence and was unwilling to return to duty.

    However, the Commission also found that Twinstar failed to observe the requirements of procedural due process in the termination of Jose’s employment. Despite such finding, the Commission did not direct Twinstar to pay nominal damages because of the effects of the quitclaim executed by Jose on March 3, 2012.

    The Court of Appeals ruled that the Commission did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in allowing Twinstar to present its evidence for the first time on appeal; in ruling that Jose was not illegally dismissed; and in considering his quitclaim as valid.

    In upholding the validity of the quitclaim, the Court of Appeals ruled that the same erased the infirmities in the notice of termination, which consequently meant that it could not impute abuse of discretion upon the Commission in not awarding nominal damages.

    The totality of circumstances led the Supreme Court to conclude that no constructive dismissal happened. Instead, the circumstances revealed Jose’s stubborn unwillingness to return to work despite being required by Twinstar to report for work multiple times within six (6) months from January 21, 2011.

    Thus, the Court ruled that Twinstar had just cause to terminate Jose’s employment.

    However, the Court also found that Twinstar failed to provide Jose with an ample chance to explain and be heard on the allegations against him. For the Court, this necessitated an award of nominal damages to the latter.

    In this regard, the Court ruled that it was erroneous for the Commission and the Court of Appeals to not award nominal damages because of the existence of the quitclaim executed by Jose on March 3, 2012.

    The Court reiterated the standards that must be observed in determining whether a waiver and quitclaim has been validly executed. Said the Court:

    Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.

    In the present case, while the Court considered the quitclaim valid for complying with all the requisites stated above, it stressed that the stipulations in such quitclaim must still be interpreted within the bounds of law and reason. A waiver/quitclaim is a contract by nature, and thus, following the rule that the law is deemed written into every contract, the stipulations therein must be interpreted with this in mind.

    According to the Court, Jose’s statement in the quitclaim that he had “no more claim, right or action of whatsoever nature whether past, present or contingent against the said respondent and/or its officers” did not include the illegal dismissal case. This is because the legality of an employee’s dismissal is determined by law, and it is the Office of the Labor Arbiter that has the original and exclusive jurisdiction to determine such a case.

    The Court added that while an employee may indeed accept his dismissal and agree to waive his claims or right to initiate or continue any action against his employer, both parties do not have the jurisdiction or authority to determine the legality of such termination; such question of law is still subject to the final determination of the competent labor tribunals and courts, as the case may be. It follows then that the award of nominal damages, which by its nature, arises from the determination of a violation of the employee’s rights in an illegal dismissal case, cannot be deemed to be covered by the quitclaim.

    The Court stressed that nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.

    The Court further stated that any quitclaim or agreement executed by the parties, as with all contracts, must not be contrary to law or public policy. It is apparent that the public policy in the stiffer imposition of nominal damages is to discourage the abhorrent practice of dismiss now, pay later.

    The Court then explained that if it were to allow the quitclaim to cover nominal damages, this will promote, either advertently or inadvertently, the practice of dismiss now, pay later, which would obviously run afoul to the public policy behind the imposition of such nominal damages in the first place.

    For the Court, regardless of the quitclaim, Jose was entitled to an award of P30,000.00 as nominal damages.

    Further reading:

    • Dela Torre v. Twinstar Professional Protective Services, Inc., G.R. No. 222992, June 23, 2021.

  • The Liability Continues

    Antonio was employed by a foreign principal employer, Fairport Shipping Co., Ltd. (Fairport Shipping) to work as Master on board the vessel M/V Orionis from August 4, 2009 to July 24, 2010.

    Antonio states that Fairport Shipping did not pay his salary and benefits, but assured him that these will be paid in full upon disembarkation. Although Antonio disembarked from the vessel on July 27, 2010, he did not receive his salary and benefits despite his demand.

    On July 24, 2012, Antonio filed a complaint before the Office of the Labor Arbiter for money claims against Fairport Shipping and its current local manning agency Stella Marris Shipmanagement, Inc. (Stella Marris).

    Stella Marris denied liability for Antonio’s claims. Although Stella Marris acknowledged having executed an Affidavit of Assumption of Responsibility, the same only pertained to the assumption of full and complete responsibility for all contractual obligations to the seafarers originally processed and recruited by its immediate predecessor, Global Gateway Crewing Services, Inc. (Global Gateway). Stella Marris explained that Antonio was originally hired by Skippers United Pacific, Inc. (Skippers United), whose obligations under Antonio’s contract were transferred to Global Gateway. Since said obligations were beyond the coverage of its Assumption of Responsibility, Stella Marris posited that it should not be held liable for Antonio’s claims.

    The Office of the Labor Arbiter ruled in favor of Antonio and held the three manning agencies, i.e., Skippers United, Global Gateway, and Stella Marris solidarily liable with Fairport Shipping to pay Antonio his claims. The Office of the Labor Arbiter found Skippers United liable as signatory to the employment contract and Global Gateway as substitute manning agent, which assumed full and complete responsibility for all contractual obligations to the seafarers originally recruited and processed by Skippers United.

    The National Labor Relations Commission, in turn, ruled that the Office of the Labor Arbiter erred in holding Skippers United and Global Gateway solidarily liable with Fairport Shipping since they were not impleaded as parties in the complaint. The Commission then found no basis to hold Stella Marris liable, considering that the latter was not the local manning agency which originally deployed Antonio and it did not assume the liability of Skippers United as the deploying agency. According to the National Labor Relations Commission, it was Skippers United which should have been held liable pursuant to Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended, which provides that the liability of the original manning agency continues during the entire period of the employment contract and is not affected by the transfers or substitutions of manning agencies. Finally, it observed that the liability assumed by Stella Marris under its Affidavit of Assumption of Responsibility pertained only to those employees originally recruited by Global Gateway, and not of Skippers United, as Antonio was in this case.

    The Court of Appeals affirmed the Decision of the National Labor Relations Commission. Said Court ruled that Skippers United, as Fairport Shipping’s original manning agent, was solidarily liable with Fairport Shipping for Antonio’s claims under the applicable 2003 POEA Rules and Regulations1recent version is the 2016 Revised POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers (POEA Rules and Regulations) since its liability continued during the entire period of the employment contract and was not affected by the transfers or substitutions of manning agencies. Although Fairport Shipping was a party in the complaint, the Court of Appeals still dismissed Antonio’s petition.

    Could Stella Marris be held liable for Antonio’s claims?

    The Supreme Court ruled in the negative.

    The Court stated that while the POEA Rules and Regulations allow the transfer of the registration and/or accreditation of the foreign principal to another local manning agency, which includes the transfer of the full and complete responsibility over all contractual obligations of the principal to the seafarers, the said transfer, covers only those contractual obligations to seafarers “originally recruited and processed by the former agency” relating to the registration of principal and the transfer of registration.

    In the present case, the Court found that Skippers United recruited Antonio and processed his employment as the original local manning agency of Fairport Shipping. For the Court, Skippers United assumed joint and solidary liability with Fairport Shipping under the contract of employment of Antonio as mandated by law.

    The Court likewise found that Fairport Shipping thereafter transferred its accreditation or registration to Global Gateway in accordance with POEA Rules and Regulations. And by virtue of an Affidavit of Assumption of Responsibility Global Gateway assumed full and complete responsibility and without qualification all contractual obligations to the seafarers originally recruited and processed by Skippers United for the vessel M/V Orionis. Stella Marris then executed an Affidavit of Assumption of Responsibility covering those contractual obligations of Fairport that were “originally processed and recruited by Global.”

    Since the Court considered Stella Marris’ limited assumption of liability to be consistent with the POEA Rules and Regulations which, to reiterate, pertained only to the liability of the substitute manning agent to those contracts originally recruited by the transferor, the Court found no basis to hold Stella Marris liable for Antonio’s claims.

    Did the Court deny Antonio’s claims for his failure to implead Skippers United and Global Gateway?

    No.

    The Court cited relevant portions of Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended, which provides that the local manning agency assumes joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the employment contract.

    This liability remains intact and extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said agreement and covers any and all claims arising therefrom. The solidary liability of the foreign principal and the recruitment agency to the employees shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.

    According to jurisprudence,2Catan v. National Labor Relations Commission, G.R. No. 77279, [April 15, 1988], 243 PHIL 858-864 this must be so, because the obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Otherwise, this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted.

    The Court added that even if an Affidavit of Assumption of Responsibility was validly executed by the transferee agent assuming the full and complete responsibility over all contractual obligations of the principal to the seafarers originally recruited and processed by therein original manning agent, the latter’s liability to its recruited workers remained intact because the said workers were not privy to such contract of transfer.

    In the present case, the Court discovered that prior to the filing of the complaint in the present case, Antonio had earlier filed a complaint against Skippers United and Fairport Shipping. The Court also noticed that during the pendency thereof, Fairport Shipping’s manning agent transferred from Skippers United to Global Gateway, and Global Gateway to Stella Marris.

    However, the Office of the Labor Arbiter rendered a Decision dismissing this earlier complaint, without prejudice to Antonio’s refiling of the case against the alleged proper parties, i.e., Global Gateway, Fairport Shipping, and Stella Marris. Antonio appealed this Decision before the National Labor Relations Commission, but the appeal was dismissed due to his failure to sign the certificate of non-forum shopping. Unfortunately, Antonio no longer moved for reconsideration of the said Resolution.

    According to the Court, since both Skippers United and Global Gateway were not impleaded in the present complaint; it could not adjudge their respective liabilities to Antonio.

    Nonetheless, the Court took into account the mistake of the Office of the Labor Arbiter in dismissing the earlier complaint. Said the Court: “so as not to cause Antonio serious injustice absent any fault or wrongdoing, the Court deems it proper to remand the present case back to the Office of the Labor Arbiter in order to further implead both Skippers United and Global Gateway as respondents together with Fairport Shipping, the original respondent.”

    The Court explained that such course of action found bearing in Section 11, Rule 3 of the Rules of Court, which provides that parties may be added by order of the court on its own initiative at any stage of the action and on such terms as are just.

    The Court stated that once Skippers United and Global Gateway, together with Fairport Shipping, are properly impleaded, Antonio’s monetary claims in the present complaint should be resolved by the Office of the Labor Arbiter with utmost dispatch on its merits.

    Further reading:

    • Orlanes v. Stella Marris Shipmanagement, Inc., G.R. No. 247702, June 14, 2021.

  • Unfit to Work as a Seaman

    Feliciano was hired by a foreign employer, Barker Hill Enterprises (Barker Hill), through its agent, Pacific Ocean Manning, Inc. (Pacific Ocean Manning) to work as a fitter on board the vessel MT Tequila under a Philippine Overseas Employment Administration-Standard Employment Contract (POEA Standard Employment Contract) and a Collective Bargaining Agreement (CBA). Feliciano boarded the vessel on May 9, 2012.

    Feliciano alleged that in July 2012, he figured in an accident when he bumped his right knee on the step of the stairs while on board the ship. On October 25, 2012, Feliciano consulted the on-board doctor due to pain in his right knee. The on-board doctor diagnosed Feliciano with “Damage of the Meniscus of the Right Knee.” He was then referred to a doctor in Poland, who made the same diagnosis. On October 28, 2012 he was medically repatriated to the Philippines.

    Upon arrival in Manila, Feliciano reported to Pacific Ocean Manning’s office and was referred to the company-designated physician. On October 30, 2012, Feliciano was diagnosed with chondromalacia patella, right or patellofemoral syndrome. He was prescribed medications and advised to undergo physical rehabilitation. Feliciano had follow-up consultations on December 4, 2012, as well as January 9, February 8, and March 7, 2013.

    On March 27, 2013, Feliciano consulted his personal doctor, who issued a medical report which stated that Feliciano was unfit for sea duties as he was suffering from partial permanent disability with a disability rating of Grade 10.

    On April 11, 2013, Feliciano had a check-up with the company-designated physician, who issued an interim disability assessment also of Grade 10 and advised Feliciano to continue physiotherapy. Feliciano had another check-up on May 8, 2013, after which, Feliciano’s condition was declared by the company-designated physician to be work-related with a final disability rating of Grade 10. Feliciano had follow-up check-ups on June 10, July 19, and August 2, 2013. During the last consultation on August 2, 2013, the company-designated physician advised that Feliciano’s physiotherapy be stopped and for Feliciano to continue on a home exercise program.

    On October 2, 2013, Feliciano consulted a different personally-appointed doctor, who gave a disability rating of Grade 6.

    Thereafter, Feliciano filed a complaint before the Office of the Labor Arbiter for total and permanent disability compensation. During the preliminary conference, the parties agreed to refer Feliciano to a third and independent doctor, who diagnosed Feliciano with valgus knee 2º to moderate-severe degenerative osteoarthritis and declared him unfit to work as a seaman, with a disability rating of Grade 7.

    Should Feliciano be granted total and permanent disability compensation?

    The Supreme Court ruled that Feliciano is only entitled to partial permanent disability compensation of Grade 7.

    The Court cited the last paragraph of Section 20 (A) (3) of the POEA Standard Employment Contract providing for the mandatory conflict resolution procedure when the findings of the company-designated physician and the seafarer’s appointed physician are different. The provision states: “If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor’s decision shall be final and binding on both parties.”

    In the present case, the Court found that the company-designated physician and Feliciano’s personal doctor were consistent in their diagnoses that Feliciano was suffering from partial permanent disability and that they differed only as to the disability rating. On the one hand, the company-designated physician issued a disability rating of Grade 10. On the other hand, Feliciano’s personal doctor gave a disability rating of Grade 6. The Court noted that in any event, the parties agreed to refer Feliciano’s condition to a third doctor in compliance with the mandatory conflict resolution procedure under the POEA Standard Employment Contract. Said doctor issued a medical report which rated Feliciano’s disability as Grade 7 which is a partial permanent disability under the POEA Standard Employment Contract.

    The Court explained that Section 32 of the POEA Standard Employment Contract provides a schedule of disability from Grade 1 to Grade 14 and only disabilities classified as Grade 1 are considered total and permanent disability. Disabilities with a rating from Grade 2 to Grade 14 are classified as partial permanent disability.

    The Court stressed that the third doctor’s medical report must be viewed and upheld in its entirety. Said medical report did not indicate that Feliciano was suffering from total and permanent disability. According to the Court, were it so, the third doctor would have rated Feliciano’s disability as Grade 1. The phrase “unfit to work as a seaman”, said the Court, should be understood in the context of the third doctor having also given a Grade 7 rating. Thus, the rational understanding of this phrase “unfit to work as a seaman” was that it merely indicated that Feliciano was suffering from a disability which rendered him physically incapable for sea duties. The report clearly did not declare that Feliciano was suffering from total and permanent disability but rather, that he was suffering only from Grade 7 partial permanent disability.

    Furthermore, the Court considered the company-designated physician’s medical report as a final and conclusive assessment of Feliciano’s condition because although treatment of Feliciano continued after he was found to be suffering from disability, the same did not automatically negate the finality of the third doctor’s diagnosis, since there may be illnesses, injuries, or other health conditions which require regular treatment, follow-up consultations, rehabilitation, and maintenance medication.

    Also, the Court stated that the fact that Feliciano had not been redeployed within 240 days from repatriation did not mean that his disability could be deemed total and permanent. This is because Section 20 (A) (6) of the POEA Standard Employment Contract expressly states that the disability shall be based exclusively on the disability ratings under Section 32 and shall not be measured or determined by the number of days a seafarer is under treatment or the number of days in which sickness allowance is paid.

    Finally, the Court no longer gave credence to Feliciano’s assertion of entitlement to total and permanent disability by operation of law in view of the claim that he was not furnished with a copy of the company-designated physician’s medical report. According to the Court, such was a novel allegation that was never raised before the labor tribunals. The Court reiterated the principle that points of law, theories, issues, and arguments not previously raised before the lower court or quasi-judicial tribunal cannot be raised for the first time on appeal or review. Parties are not permitted to belatedly raise new issues or arguments which had not been previously determined by the lower courts or tribunals. To allow parties to do so would be offensive to the tenets of fair play and due process.1Pioneer Insurance & Surety Corp. v. Tan, G.R. No. 239989, July 13, 2020.

    In sum, the Court upheld the final and binding medical report of the third doctor and affirmed the finding that Feliciano was suffering from a Grade 7 disability or partial permanent disability.

    Further reading:

    • Pacific Ocean Manning, Inc. v. Castillo, G.R. No. 230527, June 14, 2021.

  • Prima Facie Evidence of Employee’s Claim

    Reggie alleged that on March 13, 2011, he was hired as a security guard by the employer security agency. Reggie stated that he worked seven days a week from 7:00 a.m. to 7:00 p.m., or from 7:00 p.m. to 7:00 a.m., alternately every two weeks, for a monthly salary of Php8,500.00. Reggie mentioned that his employer did not pay him for overtime work, work rendered on holidays and rest days, as well as 13th month pay, service incentive leave, and night shift differentials.

    Reggie also alleged that on April 21, 2014, he, along with some of his colleagues, received a memorandum suspending them from employment starting April 21, 2014 up to May 20, 2014 without any formal investigation. Reggie claimed that he served the suspension and reported back to work on May 21, 2014. The employer security agency, however, refused to accept him.

    Thus, Reggie filed a complaint against the employer security agency for illegal suspension; underpayment of salary and 13th month pay; non-payment of overtime and holiday pay; holiday and rest day premiums pay; service incentive leave pay; night shift differentials; moral and exemplary damages; and attorney’s fees.

    The employer security agency asserted that Reggie’s suspension was justified since its inspection team caught Reggie sleeping in his post on April 20, 2014. According to the employer security agency, Reggie was directed to report to the head office to explain, but Reggie disregarded the directive. Thus, in a memorandum dated April 21, 2014, the employer security agency suspended him for 30 days, effective April 21, 2014, until May 20, 2014.

    As to Reggie’s money claims, the employer security agency argued that Reggie was oriented as to the salary and benefits to which he is entitled, and he agreed to the same. The employer security agency added that the applicable wage order provides that the minimum wage rate does not apply to persons employed in the personal service of another, such as a private security guard like Reggie.

    The employer security claimed attorney’s fees, and moral and exemplary damages for the besmirched goodwill and reputation that it suffered by reason of the filing of the complaint.

    The Office of the Labor Arbiter ruled that Reggie was validly suspended for sleeping in his post as proved by photographs, which Reggie did not dispute.

    The Office of the Labor Arbiter also held that Reggie failed to substantiate his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.

    The Office of the Labor Arbiter, nonetheless, declared that Reggie is entitled to salary differentials, 13th month pay, and the monetization of his service incentive leave.

    Reggie appealed to the National Labor Relations Commission and insisted on his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.

    The National Labor Relations Commission modified the Decision of the Office of the Labor Arbiter and granted such claims.

    The employer security agency filed a petition for certiorari with the Court of Appeals to question the awards of overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials in favor of Reggie. It also insisted that the National Labor Relations Commission failed to award damages and attorney’s fees in its favor.

    The Court of Appeals held that the National Labor Relations Commission erred in awarding him overtime pay, premium pay for holidays and rest days, and night shift differentials. Thus, it partly granted the petition of the employer security agency by deleting the award of said benefits.

    According to the Court of Appeals, entitlement to payment of overtime pay must first be established by proof that overtime work was actually performed. The Court of Appeals also ruled that entitlement to premium pay must first be established by proof that work was rendered during rest days and holidays because such benefit is not incurred in the normal course of business.

    The Court of Appeals found that Reggie submitted in evidence photocopies of the entries in a logbook and semi-monthly payroll report for a certain period to support his allegations.

    However, the Court of Appeals also found that the photocopies of entries in the logbook did not prove that Reggie rendered overtime work for such period. Said entries were found to have been made by Reggie and other security guards themselves. Although the Court of Appeals observed that these entries were signed by incoming and outgoing security guards, the same were not countersigned by a supervisor or any authorized representative of the employer security agency. According to the Court of Appeals, this raised serious doubt as to whether Reggie actually rendered work on a given date and time.

    The Court of Appeals then found that the semi-monthly payroll report presented by Reggie revealed a period different from that entered in the logbook.

    For the Court of Appeals, the payroll report submitted by Reggie did not clearly reflect that he performed overtime work as indicated in the photocopies of the entries in the logbook.

    On Reggie’s claim for premium pay for holidays and night shift differential, the Court of Appeals ruled that Reggie was unable to adduce concrete proof showing that he had rendered service during regular holidays or rest days or that he had rendered service between 10:00 p.m. and 6:00 a.m.

    Reggie elevated his case to the Supreme Court.

    Was Reggie entitled to the awards of overtime pay, premium pay for holidays and rest days, as well as night shift differentials?

    The Supreme Court ruled that Reggie was not entitled to premium pay, but he was ruled to be entitled to overtime pay and night shift differentials.

    The Court stated that in determining the employee’s entitlement to monetary claims, the burden of proof is shifted from the employer or the employee, depending on the monetary claim sought.

    On claims for payment of salary differentials, service incentive leave, holiday pay, and 13th month pay, the burden rests on the employer to prove payment. This standard follows the basic rule that in all illegal dismissal cases the burden rests on the defendant-employer to prove payment rather than on the plaintiff-employee to prove non-payment. This likewise stems from the fact that all pertinent personnel files, payrolls, records, remittances and other similar documents — which show that the differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but are in the custody and control of the employer.

    On the other hand, for overtime pay, premium pay for holidays and rest days, the burden is shifted on the employee, as these monetary claims are not incurred in the normal course of business. It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day, and that he, in fact, worked on holidays and rest days.

    In the present case, the Court found that in proving his entitlement to the payment of overtime pay, premium pay for holidays and rest days, and night shift differentials, Reggie submitted a photocopy of logbook entries which showed the dates and shift when he reported for work, as well as the specific tasks he performed on that particular work shift. The Court also found that before and after each particular work shift, the incoming and outgoing security guard will sign the corresponding entry in the logbook.

    However, the Court discovered that the logbook did not contain information on whether Reggie worked on holidays or during his rest days. Thus, the Court denied Reggie’s claim for premium pay for lack of factual basis.

    Nonetheless, the Court determined that the entries in the logbook revealed Reggie’s daily 12-hour shifts. Thus, the Court declared him entitled to overtime pay for such work performed beyond eight hours a day, or for four hours for every shift. Based also on the logbook, the Court found that Reggie was entitled to night-shift differentials for each hour of work performed between 10:00 p.m. to 6:00 a.m.

    In this regard, the Court acknowledged the following facts:

    • The logbook was only a personal record of Reggie and other security guards; and
    • It was not verified or countersigned by officers or employees of the employer security agency.

    However, the Court stressed that even if the entries were neither verified nor countersigned, the same would not militate against Reggie.

    This was because the entries in the logbook were prima facie evidence of Reggie’s claim.

    Prima facie evidence, said the Court, is such evidence as, in the judgment of the law, sufficient to establish a given fact, or the group, or chain of facts constituting the party’s claim or defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue it supports, but which may be contradicted by other evidence. 1Wa-acon v. People, G.R. No. 164575, December 6, 2006.

    In the present case, the Court recognized the employer security agency’s dispute on the veracity of the entries in the logbook. However, the Court noticed that such employer did not proffer evidence to rebut them or showed that it paid Reggie for the services he rendered on the dates and the hours indicated in the logbook.

    The Court stressed that the best evidence for the employer security agency would have been the payrolls, vouchers, payslips, daily time records, and the like, which were in its custody and absolute control.

    For the Court, since the employer security agency failed to present such documents, such failure gave rise to the presumption that either it never had them, or if such employer did, their presentation was prejudicial to its cause.2Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019.

    The Court restated the established rule that the burden of showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of proving it.3Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019. Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter.4Lepanto Consolidated Mining Co. v. Mamaril, G.R. No. 225725, January 16, 2019; Dansart Security Force & Allied Services Company v. Bagoy, G.R. No. 168495, July 2, 2010.

    The Court accordingly ruled that Reggie should be paid for overtime work rendered beyond eight hours. In addition, the Court declared that Reggie should be paid night shift differentials.

    The Court thus partly granted Reggie’s petition and consequently modified the decision of the Court of Appeals by declaring his entitlement to the payment of overtime pay, and night shift differentials.

    Further reading:

    • Zonio v. 1st Quantum Leap Security Agency, Inc., G.R. No. 224944, May 5, 2021.

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  • A Verbal Notice of the Seafarer’s Disability Rating Is Not Enough

    Gregorio was engaged under a 10-month employment contract by Panstar Shipping Co., Ltd. (Panstar), through its agent Abosta Shipmanagement Corporation (Abosta) to work as an oiler on board the M/V Sino Trader. He was deployed on March 20, 2016.

    On June 23, 2016, Gregorio and several crewmates were ordered to carry ship supplies and food provisions. While carrying a sack of rice, Gregorio claimed to have felt a sudden snap on his left lower back with a sharp pain radiating down to his thigh/leg. He immediately reported the incident to his superiors, and he was given pain relievers and a waist protector. Since his condition did not improve, he was brought to a medical center in Singapore where he was diagnosed with “Lumbar spondylosis with discopathy at L4-L5, L5-S1” and also prescribed medication. He was again brought to a hospital in Brazil because of persistent pain. On August 6, 2016, he was repatriated to the Philippines for further medical treatment.

    Upon arrival, Gregorio immediately reported to the company-designated physician on August 8, 2016. After running a series of laboratory tests on Gregorio, the company-designated physician diagnosed him with “Herniated Nucleus Pulposus L3-L4, Disc Protrusion L5-S1 and L-4 Radiculopathy,” and recommended that he undergo physical therapy. Gregorio claimed, however, that the employer ceased his treatment and rehabilitation on February 16, 2017.

    During a conference held on February 20, 2017, the employer informed Gregorio that he suffered from Grade 8 disability and offered him the corresponding disability benefits in the amount of US$16,795.00. Gregorio requested for further treatment or an improved monetary offer, but his requests were denied.

    On April 25, 2017, Gregorio consulted his personal doctor, an orthopedic surgeon, who diagnosed him with “Disc Protrusion L5-S1 & Radiculopathy” and declared him permanently unfit for sea duty in any capacity.

    Gregorio instituted a complaint for payment of total and permanent disability benefits against the employer. According to Gregorio, the company-designated physician failed to timely issue a final medical assessment. He emphasized that the employer was not able to present any final medical assessment even during the mandatory conferences before the Office of the Labor Arbiter.

    The employer contended that based on an alleged November 22, 2016 Medical Assessment issued by the company-designated physician, Gregorio only suffered from a Grade 8 disability. The employer posited that said November 22, 2016 Medical Assessment should prevail. Said employer also stressed that Gregorio failed to provide a copy of the medical assessment of his personal doctor of choice prior to his filing of complaint.

    In the meantime, the parties agreed to refer the conflicting medical findings to a third doctor. The appointed third doctor recommended Gregorio to undergo a Magnetic Resonance Imaging (MRI) scan and Electromyography (EMG) test. Despite the release of the MRI scan and EMG test results, the medical assessment of the third doctor was not secured. Gregorio claimed that the non-completion of the conflict-resolution procedure was due to the fault of the employer, which the latter denied.

    Is Gregorio entitled to total and permanent disability benefits?

    The Supreme Court ruled in the affirmative.

    The Court stated that claims for disability benefits for injuries suffered by seafarers on board or during the term of their employment contract are governed by the provisions of Section 20 (A) of the POEA Standard Employment Contract1SECTION 20. COMPENSATION AND BENEFITS. — A. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows: 1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel. 2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to be repatriated. However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-designated physician. 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days. For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor’s decision shall be final and binding on both parties. xxx xxx xxx in that the seafarer has the obligation to report to the company-designated physician within three days from his repatriation, while the company-designated physician has the corresponding obligation to issue a final assessment of the seafarer’s disability within the periods mandated by law. The Court clarified that it is, however, not enough for the company-designated physician to issue a medical assessment within 120 or 240 days from the seafarer’s repatriation. In order to be binding, the medical assessment must be final, definite, and conclusive, otherwise, the law will step in and consider the seafarer totally and permanently disabled. Jurisprudence2Jebsens Maritime, Inc. v. Mirasol, G.R. No. 213874, June 19, 2019. has described a final, conclusive and definite medical assessment as that which must clearly state whether the seafarer is fit to work or the exact disability rating, or whether such illness is work-related, and without any further condition or treatment. It should no longer require any further action on the part of the company-designated physician and it is issued by the company-designated physician after he or she has exhausted all possible treatment options within the periods allowed by law. Jurisprudence3Gere v. Anglo-Eastern Crew Management Phils., Inc., G.R. Nos. 226656 & 226713, April 23, 2018. also teaches that apart from issuing a final, conclusive, and definite medical assessment, the company-designated physician and/or the company must also furnish the seafarer a copy thereof. To require the seafarer to seek the decision of a neutral third-party physician without primarily being informed of the assessment of the company-designated physician is a clear violation of the tenets of due process and is not countenanced.

    In the present case, the Court found that the company-designated physician failed to furnish Gregorio with a copy of the November 22, 2016 Medical Assessment within the periods mandated by law. The Court also found that Gregorio was informed of his Grade 8 disability rating only during the conference held on February 20, 2017 before the Office of the Labor Arbiter.

    The Court stressed that a verbal notice of the seafarer’s disability rating is not enough. The reason for furnishing the seafarer with a copy of the final medical assessment is to afford the seafarer the opportunity to evaluate the same and decide whether he agrees with it or not. Should the seafarer disagree with it, he ought to bring the same to an independent doctor who can only get a better understanding of the opinion of the company-designated physician through a copy of the latter’s medical assessment.

    In the present case, the Court stated that Gregorio cannot be expected to make an informed decision on the medical assessment of the company-designated physician based on a mere verbal declaration of his purported disability. Said the Court: Insofar as he is concerned, no final medical assessment was issued by the company-designated physician to contest. As such, Gregorio need not seek the opinion of an independent physician, more so refer the matter to a third doctor. Without proper notice of the November 22, 2016 Medical Assessment to Gregorio, he was already deemed totally and permanently disabled by operation of law, and therefore entitled to the corresponding disability benefits under the POEA Standard Employment Contract. The medical assessment of Gregorio’s personal doctor, as well as the absence of a medical assessment from a third doctor became immaterial.

    The Court added that the November 22, 2016 Medical Assessment, as an attachment to respondents’ Position Paper, was furnished Gregorio on September 8, 2017, or 396 days from his repatriation. For the Court, the final medical assessment of the company-designated physician was clearly not furnished to Gregorio within the 120 or 240-day periods mandated by law.

    The Court ordered the employer to pay total and permanent disability benefits to Gregorio.

    Further reading:

    • Abella v. Abosta Shipmanagement Corp., G.R. No. 249358, April 28, 2021.

  • A Blank Form with a Checklist

    The employee initially filed on 25 September 2014 a complaint against his employer via the Single-Entry Approach (SENA) before the Regional Conciliation and Mediation Board — NCR for illegal dismissal and non-payment of separation pay and labor standard law benefits (SENA Complaint). The SENA Complaint was, however, deemed closed and terminated because of the employee’s filing of a similar complaint before the National Labor Relations Commission (NLRC) against his employer for money claims (NLRC Complaint). Record shows that although the employee included a claim of separation pay in the causes of action in the NLRC Complaint, he failed to include therein a cause of action for illegal dismissal. The employee’s position paper still revealed that he specifically argued for the illegality of his dismissal from employment, as well as his entitlement to separation pay, among others.

    However, the labor tribunals and the Court of Appeals (CA) refused to resolve the issues on illegal dismissal and the money claims concomitant thereto, such as separation pay, damages, and attorney’s fees. Particularly, they ruled that since these money claims arose from a finding of illegal dismissal and the latter was not among the causes of action listed in the employee’s NLRC Complaint, they were precluded from passing on the issue of illegal dismissal, under Section 12, Rule V of the 2011 NLRC Rules of Procedure, as amended.

    Were the labor tribunals and the CA correct in not passing on the issue of illegal dismissal?

    The Supreme Court ruled that the labor tribunals and the CA were not correct. They should have addressed the issue of illegal dismissal.

    Section 12, Rule V of the 2011 NLRC Rules of Procedure, as amended, governs the rules on submission of position papers and replies before the NLRC. Such provision reads:

    SECTION 12. SUBMISSION OF POSITION PAPER AND REPLY. —

    (a) Subject to Sections 9 and 10 of this Rule, the Labor Arbiter shall direct the parties to submit simultaneously their verified position papers with supporting documents and affidavits on a date set by him/her within ten (10) calendar days from termination of the mandatory conciliation and mediation conference.

    (b) No amendment of the complaint or petition shall be allowed after the filing of the position papers, unless with leave of the Labor Arbiter.

    (c) The position papers of the parties shall cover only those claims and causes of action stated in the complaint or amended complaint, accompanied by all supporting documents, including the affidavits of witnesses, which shall take the place of their direct testimony, excluding those that may have been amicably settled.

    (d) Within ten (10) days from receipt of the position paper of the adverse party, a reply may be filed on a date agreed upon and during schedule set before the Labor Arbiter. The reply shall not allege and/or prove facts and any causes of action not referred to or included in the original or amended complaint or petition or raised in the position paper. (Emphases supplied)

    The Court stated that sub-paragraph (c) purportedly limits the coverage of the position papers of the parties to only those claims and causes of action stated in the complaint or amended complaint; whereas sub-paragraph (d) directs that the reply shall only allege and prove facts and causes of action in the original or amended complaint or in the position paper.

    The Court took judicial notice of the fact that initiatory complaints filed before the NLRC are just blank forms wherein the employee-complainant simply inputs his/her details, the respondent’s details, and ticks off a checklist of causes of action which are applicable to him/her. The Court stated that it is only upon the filing of position papers that the complainant is able to expound on the employer’s acts or omissions which constitute his/her causes of action against the latter.

    According to the Court, it is only reasonable to infer that notwithstanding the aforementioned provision, the complaint could not be the sole basis in determining the complainant’s causes of action given that it is in the position paper that the ultimate facts are presented and established by the submission of all relevant documents and affidavits to support the same and prove their respective causes of action. Otherwise stated, the filing of the position paper, and not the mere complaint, should be the operative act that forecloses the raising of matters constitutive of the employee-complainant’s cause of action.1Dee Jay’s Inn and Café v. Rañeses, G.R. No. 191823, October 5, 2016, 796 PHIL 574-596, citing Tegimenta Chemical Phils. and Garcia v. Buensalida, G.R. No. 176466, June 17, 2008, 577 PHIL 534-546

    The Court added that it is for this reason why sub-paragraph (d) of Section 12, Rule V of the 2011 NLRC Rules allows the replies to discuss matters not only covered by the complaint or amended complaint, but also those covered by the position papers. Such interpretation, the Court said, is in accord with the settled norm that “[i]n labor cases, rules of procedure should not be applied in a very rigid and technical sense,”2Loon v. Power Master, Inc., G.R. No. 189404, December 11, 2013, 723 PHIL 515-533 and that “labor officials should use all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, in the interest of due process.”3Claudia’s Kitchen, Inc. v. Tanguin, G.R. No. 221096, June 28, 2017, 811 PHIL 784-802

    In this case, the Court found that the employee initially filed a SENA Complaint which included, illegal dismissal and the concomitant claim of separation pay as his causes of action. His SENA Complaint was, however, deemed closed and terminated when he filed his NLRC Complaint — which, while including separation pay as among the causes of action indicated therein, did not include illegal dismissal. Nonetheless, the employee went ahead and presented arguments supporting his claim for illegal dismissal in his position paper. For the Court, the employee never intended to remove his cause of action for illegal dismissal when he essentially refiled his SENA Complaint as his NLRC Complaint. The Court accordingly resolved the issue of illegal dismissal.

    Further reading:

    • Burnea v. Security Trading Corp., G.R. No. 231038, April 26, 2021.