Paulino Ungos III

Lawyer | Law Professor | Author

Tag: 2016-02

  • The Goal of Adequate and Sustained Agricultural Production

    San Juan was a tenant to a 6,000-square meter parcel of land owned by Abella, and located at Balatas, Naga City, Camarines Sur (Balatas property). The portion was covered by Certificate of Land Transfer No. 843 (159301) issued on 18 October 1973.

    On 28 January 1981, San Juan and Abella entered into an agreement whereby the Balatas property will be exchanged with a 6,000-square meter agricultural lot situated at San Rafael, Cararayan, Naga City (Cararayan property). The parties agreed that in addition to the Cararayan property, San Juan shall receive from Abella a certain amount as disturbance compensation and a 120-square meter home lot situated at Balatas, Naga City.

    The Department of Agrarian Reform approved the said agreement.

    The controversy started when San Juan filed a complaint against Abella praying that she be declared the absolute and lawful owner of the Balatas property.

    San Juan’s Claims

    • The agreement is void as it contravened the prohibition on transfer under Presidential Decree No. 27.
    • Applying said law, the title to the Balatas property could not have been acquired by Abella, since its transfer ought to have been limited only to the government or the grantee’s heirs by way of succession.
    • The Department of Agrarian Reform’s approval of the agreement was of no moment.

    Abella’s Arguments

    • The agreement, being a mere relocation agreement, did not violate nor contravene the true spirit of Presidential Decree No. 27 and other agrarian reform laws, rules and regulations.
    • The Department of Agrarian Reform, the agency tasked to implement Presidential Decree No. 27 and other agrarian laws, rules and regulations relative to the disputed land, approved the agreement. Abella posits that this fact must be accorded great weight by the courts.
    • San Juan did not surrender the Balatas property to Abella as contemplated under Presidential Decree No. 27. Instead, San Juan received in return the Cararayan property.

    The Supreme Court did not agree with Abella.

    The Agreement was void for contravening Presidential Decree No. 27.

    Presidential Decree No. 27 provides for only two exceptions to the prohibition on transfer, namely,

    • transfer by hereditary succession; and
    • transfer to the Government.

    Sales or transfers of lands made in violation of Presidential Decree No. 271and Executive Order No. 228, July 17, 1987, “Declaring Full Land Ownership to Qualified Farmer Beneficiaries Covered by Presidential Decree No. 27” in favor of persons other than the Government by other legal means or to the farmer’s successor by hereditary succession are null and void.

    The prohibition even extends to the surrender of the land to the former landowner. The sales or transfers are void ab initio, being contrary to law and public policy under Article 5 of the Civil Code of the Philippines which states that “acts executed against the provisions of mandatory or prohibiting laws shall be void.”

    The prohibition against transfers to persons other than the heirs of other qualified beneficiaries stems from the policy of the Government to develop generations of farmers to attain its avowed goal to have an adequate and sustained agricultural production. With certitude, such objective will not see the light of day if lands covered by agrarian reform can easily be converted for non-agricultural purposes.

    In the present case, the Court found that the agreement Abella and San Juan stipulated that the Cararayan property will be placed under Operation Land Transfer and that a new Certificate of Land Transfer shall be issued in the name of San Juan. The parties also agreed that after the execution of the Agreement, San Juan shall vacate the Balatas property and deliver its possession to Abella.

    Furthermore the Court took notice of a certain Deed of Donation of Land Covered by Presidential Decree No. 27 dated 1 July 1981 which provided that “for and in consideration of the [landowner-donor’s] generosity and in exchange of the [tenant-tiller donee’s] [farm lot] at Balatas, City of Naga, the [landowner-donor] do hereby transfer and convey to the [tenant-tiller-donee], by way of [donation] the parcel of land above-described.”

    The intended exchange of properties by the parties as expressed in the agreement and deed entailed transfer of all the rights and interests of San Juan over the Balatas property to Abella.

    According to the Court, it is the kind of transfer contemplated by and prohibited by law.

    Thus, the argument of Abella that the agreement was merely a relocation agreement, or one for the exchange or swapping of properties between him and San Juan, and not a transfer or conveyance under Presidential Decree No. 27, has no merit. The Court said that a relocation, exchange or swap of a property is a transfer of property. They cannot excuse themselves from the prohibition by a mere play on words.

    The Court added that the fact that there was an approval from the Department of Agrarian Reform did not validate the agreement. A transfer of lands under Presidential Decree No. 27 other than to successors by hereditary succession and the Government is void. A void or inexistent contract is one which has no force and effect from the beginning, as if it has never been entered into, and which cannot be validated either by time or ratification. No form of validation can make the void agreement legal.

    Further reading:

    • Abella v. Heirs of San Juan, G.R. No. 182629, February 24, 2016.

  • Secular View of Morality

    At the time of her indefinite suspension from employment in 2006, the employee was the Human Resource Officer of Brent Hospital and Colleges, Inc. (Brent), an educational and medical institution of the Episcopal Church of the Philippines.

    The cause of suspension was the employee’s Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy.

    It appears that the employee became pregnant out of wedlock, and Brent imposed the suspension until such time that she marries her boyfriend in accordance with law.

    The employee then filed a complaint for unfair labor practice, constructive dismissal, non-payment of wages and damages with a prayer for reinstatement.

    The labor tribunals upheld the employee’s dismissal as one attended with just cause.

    The just cause consisted in her engaging in premarital sexual relations with her boyfriend, resulting in her becoming pregnant out of wedlock. The labor tribunals deemed said act to be immoral, which was punishable by dismissal under Brent’s rules and which likewise constituted serious misconduct under Article 297 (a) of the Labor Code of the Philippines.1ARTICLE 297. [Formerly Article 282] Termination by Employer. — An employer may terminate an employment for any of the following causes:

    (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; x x x     For the labor tribunals, since the employee was Brent’s Human Resource Officer in charge of implementing its rules against immoral conduct, she should have been the epitome of proper conduct.

    The Supreme Court declared that the dismissal of the employee here was illegal.

    Immorality as a Just Cause for Termination of Employment

    The Supreme Court ruled that the employee’s premarital relations with her boyfriend and the resulting pregnancy out of wedlock did not constitute immorality, and thus could not be a just cause for termination of her employment.

    The Court noted that immorality was punishable under Brent’s policies by dismissal for the first offense.

    However, the Court also clarified that the determination of whether a conduct is disgraceful or immoral involves a two-step process:

    First, a consideration of the totality of the circumstances surrounding the conduct; and

    Second, an assessment of the said circumstances vis-à-vis the prevailing norms of conduct, i.e., what the society generally considers moral and respectable.

    1)

    In this case, the Court found that the surrounding facts leading to the employee’s dismissal were as follows:

    • she was employed as a human resources officer in an educational and medical institution of the Episcopal Church of the Philippines;
    • she and her boyfriend at that time were both single; and
    • they engaged in premarital sexual relations, which resulted into pregnancy.

    2)

    The labor tribunals characterized these as constituting disgraceful or immoral conduct and sweepingly concluded that as Human Resource Officer, the employee should have been the epitome of proper conduct and her indiscretion “surely scandalized the Brent community.”

    According to the Court, the foregoing circumstances, however, did not readily equate to disgraceful and immoral conduct:

    2a)

    Brent’s Policy Manual and Employee’s Manual of Policies did not define what constitutes immorality; it simply stated immorality as a ground for disciplinary action.

    Instead, Brent erroneously relied on the standard dictionary definition of fornication as a form of illicit relation and proceeded to conclude that the employee’s acts fell under such classification, thus constituting immorality.

    2b)

    Jurisprudence has already set the standard of morality with which an act should be gauged — it is public and secular, not religious.

    Whether a conduct is considered disgraceful or immoral should be made in accordance with the prevailing norms of conduct, which, refer to proscribed conduct because they are detrimental to conditions upon which depend the existence and progress of human society.

    The fact that a particular act does not conform to the traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act as immoral unless it, likewise, does not conform to public and secular standards.

    2c)

    More importantly, there must be substantial evidence to establish that premarital sexual relations and pregnancy out of wedlock is considered disgraceful or immoral.

    The employee and her boyfriend were both single and had no legal impediment to marry at the time she committed the alleged immoral conduct. In fact, they eventually married on April 15, 2008.

    The labor tribunals’ respective conclusion that the employee’s indiscretion scandalized the Brent community was speculative, at most, and there was no proof adduced by Brent to support such sweeping conclusion.

    Even Brent admitted that it came to know of the employee’s “situation” only when her pregnancy became manifest.

    2d)

    Brent also conceded that at the time the employee and her boyfriend were just carrying on their relationship, there was no knowledge or evidence by Brent that they were engaged also in premarital sex. This only showed that the employee did not flaunt her premarital relations with her boyfriend and it was not carried on under scandalous or disgraceful circumstances.

    2e)

    Brent, likewise, could not resort to the Manual of Regulations for Private Schools2At that time the 1992 Revised Manual of Regulations for Private Schools, DECS Order No. 092-92, August 10, 1992 because premarital sexual relations between two consenting adults who have no impediment to marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular view of morality, did not amount to a disgraceful or immoral conduct under the said manual.

    The Court ruled that the totality of the circumstances of this case did not justify the conclusion that the employee committed acts of immorality.

    According to the Court there is no law which penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried persons; that neither does such situation contravene any fundamental state policy enshrined in the Constitution.

    The fact that Brent is a sectarian institution does not automatically subject the employee to its religious standard of morality absent an express statement in its manual of personnel policy and regulations, prescribing such religious standard as gauge as these regulations create the obligation on both the employee and the employer to abide by the same.

    Marriage as a Condition for Reinstatement

    The Court noted that Brent imposed on the employee the condition that she subsequently contract marriage with her then boyfriend for her to be reinstated.

    According to Brent, this was “in consonance with the policy against encouraging illicit or common-law relations that would subvert the sacrament of marriage.”

    The Court did not agree.

    The doctrine of management prerogative gives an employer the right to “regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees.”

    Statutory law is, however, replete with legislation protecting labor and promoting equal opportunity in employment.

    No less than the 1987 Constitution3Article XIII, Section 3 mandates that the “State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.”

    The Labor Code of the Philippines, meanwhile, provides:

    Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

    With particular regard to women, the Magna Carta of Women4Under Section 19 (b) Republic Act No. 9710, Approved on August 14, 2009 which provides: SECTION 19. Equal Rights in All Matters Relating to Marriage and Family Relations. — The State shall take all appropriate measures to eliminate discrimination against women in all matters relating to marriage and family relations and shall ensure: x x x

    (b) the same rights to choose freely a spouse and to enter into marriage only with their free and full consent. The betrothal and the marriage of a child shall have no legal effect; x x x     protects women against discrimination in all matters relating to marriage and family relations, including the right to choose freely a spouse and to enter into marriage only with their free and full consent.

    Weighed against these safeguards, the Court found that Brent’s condition was coercive, oppressive and discriminatory.

    Said the Court:

    There is no rhyme or reason for it. It forces the employee to marry for economic reasons and deprives her of the freedom to choose her status, which is a privilege that inheres in her as an intangible and inalienable right.

    The Court acknowledged that while a marriage or no-marriage qualification may be justified as a “bona fide occupational qualification,” Brent must have proven two factors necessitating its imposition, viz.:

    • that the employment qualification is reasonably related to the essential operation of the job involved; and
    • that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.

    The Court, however, found that Brent had not shown the presence of of these factors. Thus, it did not uphold the validity of said condition.

    Further reading:

    • Capin-Cadiz v. Brent Hospital and Colleges, Inc., G.R. No. 187417, February 24, 2016.

  • A Consequence of Its Participation in Prolonging the Proceedings

    Two employees filed a complaint for “illegal suspension, non-payment of salaries, deprivation of medical benefits, life insurance and other benefits, damages and attorney’s fees” against their employer.

    In a Decision dated 26 February 2008, the Office of the Labor Arbiter declared that the employees’ suspension was illegal and ordered the employer to pay the salaries and benefits withheld during the suspension, as well as 10% of the amount for attorney’s fees.

    It appeared that the employer had sought recourse against the said decision by elevating the case to the National Labor Relations Commission, the Court of Appeals, and the Supreme Court. Worthy of note was the fact that the Court of Appeals rendered a Decision on 4 May 2010, which then became final and executory by way of a Decision rendered by the Supreme Court on 25 July 2011.

    The employees filed a Motion for Issuance of Writ of Execution and a Motion for Re-computation of Monetary Award before the National Labor Relations Commission. The employer, in turn, filed a Manifestation stating that it had already computed the employees’ monetary award and tendered payment based on said computation on 17 April 2013.

    Through an Order dated 29 November 2013, the Office of the Labor Arbiter ordered the employer to pay an amount pertaining to recomputed salaries, benefits, court order indemnification, legal interest [of 6% per annum counted from the date of their illegal suspension until the finality of the Decision of the Court of Appeals dated 4 May 2010], and attorney’s fees.

    Both parties elevated the case to the National Labor Relations Commission, which found that there was basis to impose legal interest at the rate of 12% per annum on the monetary award counted from the date of finality of the Court of Appeals Decision dated 4 May 2010.

    The employer filed a petition to assail the ruling of the National Labor Relations Commission. However, the Court of Appeals, in its Decision dated 13 January 2015, ruled that the employees were entitled to legal interest at the rate of 6% per annum from the time its Decision dated 4 May 2010 became final until full satisfaction thereof.

    In its petition before the Supreme Court, the employer claimed that the employees were not entitled to legal interest, since it had already tendered payment and the employees contributed to the delay in the satisfaction of the Decision of the Court of Appeals dated 4 May 2010. According to the employer, to adjudge it liable for legal interest when the employees themselves partly caused the delay in the satisfaction of the said Court of Appeals Decision was unjust and unconscionable.

    The employer added that assuming that it would be found liable for legal interest, it prayed that legal interest be collected only from the time of the finality of the Supreme Court’s Decision on 25 July 2011, which affirmed the Decision of the Court of Appeals dated 4 May 2010, until said employer’s tender of payment on 17 April 2013.

    The Supreme Court did not accept the employer’s arguments.

    The Court ruled that the legal interest imposed upon the employer was but a consequence of its participation in prolonging the proceedings in the present case.

    According to the Court, that the amount respondents shall now pay had greatly increased was a consequence that it could not avoid, as it was the risk that it ran when it continued to seek recourses against the Office of the Labor Arbiter’s decision.

    With regard to the proper rate of legal interest, the Court reiterated the guidelines it set forth in Nacar v. Gallery Frames.1G.R. No. 189871, August 13, 2013, 716 PHIL 267-283. Thus:

    The Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated 16 May 2013, approved the amendment of Section 2 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799, Series of 2013, effective 1 July 2013. x x x

    [I]n the absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum — as reflected in the case of Eastern Shipping Lines (G.R. No. 97412, July 12, 1994, 234 SCRA 78) and Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 — but will now be six percent (6%) per annum effective 1 July 2013. It should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only until 30 June 2013. Come 1 July 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable.” x x x

    To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:

    I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.

    II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

    1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

    2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

    3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

    And, in addition to the above, judgments that have become final and executory prior to 1 July 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.

    The Court added that prior to Nacar and Bangko Sentral ng Pilipinas Monetary Board Resolution No. 796 dated 16 May 2013, the rate of legal interest was pegged at 12% per annum from finality of judgment until its satisfaction, “this interim period being deemed to be by then an equivalent to a forbearance of credit.”

    The Court in Nacar imposed the legal interest of

    • 12% per annum of the total monetary awards, computed from finality of its own resolution therein until 30 June 2013; and
    • 6% per annum from 1 July 2013 until their full satisfaction.

    In the present case, the Court stated that on 25 July 2011, the Decision of the Court of Appeals dated 4 May 2010 became final and executory and was recorded in the Book of Entries of Judgments.

    Consistent with Nacar, the Court accordingly ruled that the employees in the present case were entitled to legal interest at the following rates:

    • 12% per annum computed from 25 July 2011, the date of the finality of the Decision of the Court of Appeals dated 4 May 2010 up to 30 June 2013; and
    • 6% per annum from 1 July 2013 until full satisfaction of the award.

    Further reading:

    • Limlingan v. Asian Institute of Management, Inc., G.R. Nos. 220481 & 220503, February 17, 2016.

  • My Reliance on the Disputable Presumption of Work-relatedness is Sufficient

    Fred Olsen Cruise Lines, Ltd., through its local agent Bahia Shipping Services, Inc., hired the seafarer in 2008 to work as a casino attendant. After working with said employer on two occasions in 2008 to 2009, the seafarer re-boarded the M/S Braemer on 1 August 2009 to work as a senior casino attendant.

    In February 2010, the seafarer experienced profuse and consistent bleeding, extreme dizziness, and difficulty in breathing. She went to the ship’s clinic and was given medication. The next day, she experienced severe headache. She again went to the ship’s clinic and was prescribed a different medication. She claims that since her headache worsened after taking the said medication, she stopped taking the same.

    The bleeding of the seafarer intensified. She was later advised by the ship’s physician to rest. However, her condition did not improve, so she was taken to a clinic in Barbados. A transvaginal ultrasound conducted on the seafarer revealed that she had two ovarian cysts. She returned to the ship and was assigned to perform light duties.

    On 20 March 2010, the seafarer was medically repatriated to the Philippines.

    On 22 March 2010, the seafarer was placed under the care of the company-designated physician (an obstetrician-gynecologist). Said physician found that the seafarer had “Abnormal Uterine Bleeding Secondary to an Adenomyosis with Adenomyoma.” The seafarer underwent endometrial dilatation and curettage as part of her treatment.

    The company-designated physician was unable to declare the fitness of the seafarer for work by the end of the 120-day period from medical repatriation on 10 March 2010. However, the said physician was able to declare that the seafarer’s fitness to resume sea duties within the 240-day period from said repatriation.

    On 8 September 2010, the seafarer filed a complaint to claim permanent disability benefits based on the collective bargaining agreement she signed.

    Although the Office of the Labor Arbiter and the National Labor Relations Commission ruled in favor of the seafarer, the Court of Appeals reversed the award. The Court of Appeals found that the seafarer failed to provide substantial evidence to prove her allegation that her illness was work-related. Said court gave greater weight to the findings of the company-designated physician, holding that the latter had acquired detailed knowledge and was familiar with the seafarer’s medical condition.

    The Supreme Court affirmed the ruling of the Court of Appeals.

    It stated that the seafarer should fulfill the following requisites for a grant of her claim for disability benefits, to wit:

    (1) She suffered an illness;

    (2) She suffered this illness during the term of her employment contract;

    (3) She complied with the procedures prescribed under Section 20 (B) of the 2000 Philippine Overseas Employment Agency Standard Employment Contract;1Section 20 (B) of the 2000 Philippine Overseas Employment Agency Standard Employment Contract provides:

    B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

    x x x

    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.

    Note: The present version of the above provision can be seen in the 2010 Philippine Overseas Employment Administration Standard Employment Contract (Memorandum Circular No. 010-10, October 26, 2010), as follows:

    SECTION 20. Compensation and Benefits. —

    A. Compensation and Benefits for Injury or Illness

    x x x

    3. x x x

    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. In the course of the treatment, the seafarer shall also report regularly to the company-designated physician specifically on the dates as prescribed by the company-designated physician and agreed to by the seafarer. 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.

    (4) Her illness is one of the occupational diseases within the Standard Employment Contract,2Please refer to Section 32-A of the 2000 (as well as the 2010) Philippine Overseas Employment Administration Standard Employment Contract or her illness or injury is otherwise work-related;3The 2000 Philippine Overseas Employment Agency Standard Employment Contract defines work-related illness as:

    Definition of Terms:

    x x x

    12. Work-Related Illness — any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied.

    Section 20 (B) of the Standard Employment Contract provides:

    B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

    x x x

    4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work-related.

    Note: The present version of the above provision can be seen in the 2010 Philippine Overseas Employment Administration Standard Employment Contract (Memorandum Circular No. 010-10, October 26, 2010), as follows:

    Definition of Terms:

    x x x

    16. Work-Related Illness — any sickness as a result of an occupational disease listed under Section 32-A of this Contract with the conditions set therein satisfied.

    x x x

    SECTION 20. Compensation and Benefits. —

    A. Compensation and Benefits for Injury or Illness

    x x x

    4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work-related.     and

    (5) She complied with the four conditions enumerated under Section 32-A4Section 32-A of the 2000 Philippine Overseas Employment Administration Standard Employment Contract provides:

    SECTION 32-A. OCCUPATIONAL DISEASES. — For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied:

    1. The seafarer’s work must involve the risks described herein;

    2. The disease was contracted as a result of the seafarer’s exposure to the described risks;

    3. The disease was contracted within a period of exposure and under such other factors necessary to contract it;

    4. There was no notorious negligence on the part of the seafarer.

    Note: The cited provision below also appears in the 2010 Philippine Overseas Employment Administration Standard Employment Contract.     of the Standard Employment Contract for an occupational disease, or a disputably-presumed work-related disease, to be compensable.

    In the present case, the first four requisites appear to have been met.

    In February 2010, the seafarer experienced bleeding during her employment on board the M/S Braemer. The seafarer was medically repatriated to the Philippines and was able to visit the company-designated physician. Said physician thereafter diagnosed the seafarer as suffering from adenomyoma.

    Although adenomyoma is not included in the list of occupational diseases under the 2000 Philippine Overseas Employment Administration Standard Employment Contract, the said contract, nevertheless, provides that those illnesses not listed therein are disputably presumed as work-related.

    However, it appears that the seafarer was unable to fulfill the fifth requisite.

    The Court clarified that while the law recognizes that an illness may be disputably presumed to be work-related, the seafarer must still show a reasonable connection between the nature of work onboard the vessel and the contracted or aggravated illness. The seafarer cannot argue that he does not have the burden to prove that his illness was work-related because it is disputably presumed by law. The seafarer cannot simply rely on the disputable presumption provision mentioned in Section 20 (B) (4) of the 2000 Philippine Overseas Employment Administration Standard Employment Contract.

    In other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled. It must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted. According to the Court, concomitant with this presumption is the burden placed upon the seafarer to present substantial evidence that his work conditions caused the disease, or at least increased the risk of contracting the same. Only a reasonable proof of work-connection, not direct causal relation, is required to establish compensability of illnesses not included in the list of occupational diseases.

    In the present case, the Court found no substantial evidence establishing the relation between the seafarer’s work and the illness she contracted.

    The Court also noted that there was no showing that the seafarer’s adenomyoma was pre-existing, thus it was not able to determine whether the adenomyoma was aggravated by the nature of her employment.

    The Court acknowledged the seafarer’s arguments that her illness is the result of her “constantly walking upward and downward on board the vessel carrying loads” and that she “acquired her illness on board the employer’s vessel during the term of her employment as a casino attendant.” However, the Court found that the seafarer did not discuss the duties of a casino attendant. She failed to show the causation between walking, carrying heavy loads, and adenomyoma. She merely asserted that since her illness developed while she was on board the vessel, it was work-related.

    The Court accordingly ruled that it had no means to determine whether the illness of the seafarer was work-related or work-aggravated, since the latter did not describe the nature of her employment as a casino attendant.

    In view of the seafarer’s failure to fulfill the requisites of compensability, the Court ruled against the grant of the seafarer’s claim for disability benefits.

    Further reading:

    • Nonay v. Bahia Shipping Services, Inc., G.R. No. 206758, February 17, 2016.

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  • On Equal Footing

    In a case for illegal dismissal filed by members of a Health Service Team against La Salle Greenhills, Inc., the Supreme Court set aside the finding of said members’ fixed-term employment.

    The parties to the fixed-term employment contract were not on equal footing.

    The Court emphasized that the ruling in Brent School, Inc. v. Zamora1G.R. No. L-48494, February 5, 1990, 260 PHIL 747-765 should be strictly construed, in that it should apply to cases where it appears that the employer and employee are on equal footing. In the present case, the Court found that this was not so for the members of the Health Services Team.

    • The uniform one-page Contracts of Retainer signed by the Health Service Team members were prepared by La Salle Greenhills, Inc.
    • While the Health Service Team members were medical professionals, this fact had not placed them on equal footing with La Salle Greenhills, Inc. According to the Court, the Health Service Team members obviously did not want to lose their jobs that they had stayed in for fifteen years.
    • The contracts had no specificity regarding terms and conditions of employment that would indicate that the Health Service Team members and La Salle Greenhills, Inc. were on equal footing in negotiating it. The Court stated that without specifying what the tasks assigned to each Health Service Team member were, La Salle Greenhills, Inc. “may upon prior written notice to the retainer, terminate [the] contract should the retainer fail in any way to perform his assigned job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just cause.”

    Power of control was exercised over the Health Service Team members.

    The power of control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is enough that the employer has the right to wield that power.

    In ruling that La Salle Greenhills, Inc. exercised control over the Health Services Team members, the Court took into account:

    • The repeated renewal of each Health Service Team member’s contract for fifteen years, interrupted only by the close of the school year;
    • The necessity of the work performed by the Health Service Team members as school physicians and dentists; and
    • The control exercised by La Salle Greenhills, Inc. over the means and method pursued by the Health Service Team members in the performance of their job.

    The repeated renewals of each Health Service Team member’s fixed-term employment contract made for a regular employment.

    Finally, the Court noted the repeated renewals of the Contracts of Retainer of the Health Service Team members spanning a decade and a half. Said the Court: “The repeated engagement under contract of hire is indicative of the necessity and desirability of the [employee’s] work in respondent’s business and where employee’s contract has been continuously extended or renewed to the same position, with the same duties and remained in the employ without any interruption, then such employee is a regular employee.”

    The Court thus declared the Health Service Team members’ regular employment status. They were entitled to security of tenure and could only be dismissed for just and authorized causes.

    Further reading:

    • Samonte v. La Salle Greenhills, Inc., G.R. No. 199683, February 10, 2016.

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  • But One of the Three Witnesses Recanted his Testimony

    The Office of the City Prosecutor of Makati filed an information charging the accused-appellant and her two co-accused with illegal recruitment committed in large scale under the Migrant Workers and Overseas Filipino Act of 1995.1Republic Act No. 8042, as amended by Republic Act No. 10022, Section 6(n) of which provides: “(n) x x x Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.”

    The State presented four witnesses, namely: Virgilio Caniazares, Reynaldo Dahab, Basilio Miparanum and PO3 Raul Bolido.

    Worthy of note is what happened to Dahab, one of the witnesses. Dahab declared that on 27 January 27 2001, he had met the accused-appellant at the Guadalupe Branch of Jollibee to pay P2,500.00 for his medical examination. A week later, he had undergone the three-day training in Mandaluyong City, for which he paid P2,500.00. The accused-appellant had then demanded from him the placement fee of P25,000.00. When Dahab was unable to raise the amount, the accused-appellant was not seen again. He filed a complaint against the accused-appellant with the police authorities.

    Subsequently, Dahab recanted his testimony, and stated that he had only requested assistance from the accused-appellant regarding his medical examination. He insisted that he had voluntarily paid P5,000.00 to her, and she had then paid the amount to the Medical Center or his medical examination.

    The Regional Trial Court, nonetheless, convicted the accused-appellant for illegal recruitment committed in large scale.

    The accused-appellant asserts that the Regional Trial Court, as well as the Court of Appeals, unreasonably disregarded Dahab’s recantation. The recantation would have rendered her liable only for simple illegal recruitment instead of illegal recruitment committed in large scale.

    The Supreme Court found this assertion untenable. The Court ruled:

    Dahab’s supposed recantation to the effect that he had only sought the assistance of the accused-appellant for his medical examination by no means weakened or diminished the Prosecution’s case against her. Its being made after he had lodged his complaint against her with the PNP-CIDG (in which he supplied the details of his transactions with her) and after he had testified against her in court directly incriminating her rendered it immediately suspect. It should not be more weighty than his first testimony against her which that was replete with details. Its being the later testimony of the Dahab did not necessarily cancel his first testimony on account of the possibility of its being obtained by coercion, intimidation, fraud, or other means to distort or bend the truth.

    Recantation by a witness is nothing new, for it is a frequent occurrence in criminal proceedings. As a general rule, it is not well regarded by the courts due to its nature as the mere afterthought of the witness. To be given any value or weight, it should still be subjected to the same tests for credibility in addition to its being subject of the rule that it be received with caution. The criminal proceedings in which sworn testimony has been given by the recanting witness would be rendered a mockery, and put at the mercy of the unscrupulous witness if such testimony could be easily negated by the witness’s subsequent inconsistent declaration. The result is to leave without value not only the sanctity of the oath taken but also the solemn rituals and safeguards of the judicial trial. If only for emphasis, we reiterate that it is “a dangerous rule to reject the testimony taken before the court of justice simply because the witness who has given it later on changed his mind for one reason or another, for such a rule will make a solemn trial a mockery and place the investigation at the mercy of unscrupulous witnesses.”

    Further reading:

    • People v. Bayker, G.R. No. 170192, February 10, 2016.

  • Seafarer’s Work-related Death During Employment

    On 24 April 2002, the seafarer was hired as a messman on board the M/T Umm Al Lulu by the employer, Abu Dhabi National Tanker Company, through its local manning agency, C.F. Sharp Crew Management, Inc. The seafarer and the employer signed a ten-month contract of employment, which was approved by the Philippine Overseas Employment Administration on 9 May 2002.

    Before embarkation, the seafarer underwent a pre-employment medical examination and was declared physically fit to work. He then boarded the M/T Umm Al Lulu on 20 May 2002.

    The seafarer was repatriated in Manila on 16 March 2003. The next day, 17 March 2003, he went to a medical clinic in Kawit, Cavite where he was examined by his personal doctor who then diagnosed him with “Essential Hypertension.” Said doctor advised the seafarer to take the prescribed medication and rest for a week.

    On 19 March 2003, the seafarer died. The certificate of death stated the causes for his death, thus:

    Immediate cause: Irreversible Shock
    Antecedent cause: Acute Myocardial Infarction
    Underlying cause: Hypertensive Heart Disease

    The seafarer’s legal heirs filed a complaint against the employer for the recovery of death compensation benefits and of burial and children’s allowances.

    Employer’s Contentions:

    The employer contended that the seafarer’s death was not compensable based on the following reasons:

    1) The death of the seafarer did not occur during the term of his employment.

    A seafarer’s term of employment commences from his actual departure from the airport or seaport in the point of hire and ceases upon completion of his period of contractual service, signing-off, and arrival at the point of hire.

    The seafarer’s ten-month contract was about to expire on 20 March 2003 when he was safely repatriated without any medical condition a few days earlier, on 16 March 2003, as he was already in a convenient port. In other words, the seafarer finished his employment contract upon signing off from M/T Umm Al Lulu and arriving in Manila, his point of hire, on 16 March 2003.

    Thus, the seafarer’s death on 19 March 2003 could not have been compensable because it happened beyond the term of his contract.

    2) The seafarer’s death was not work-related.

    As a messman, the seafarer’s duties were limited to assisting the chief cook in food preparation. Said duties could not have contributed to his demise or increased the risk of acquiring the illness which caused his death, for there was no showing that the seafarer was subjected to any unusual strain or required to perform any strenuous activity that could have triggered a heart attack.

    3) The seafarer failed to disclose his ailment during his pre-employment medical examination.

    Hypertensive heart disease takes years to develop and most probably the seafarer was already suffering from said disease even before the start of his employment contract. However, the seafarer failed to disclose his ailment during his pre-employment medical examination. This fact barred the seafarer’s heirs from receiving death benefits on the ground of concealment of a pre-existing illness.

    4) The seafarer likewise failed to submit himself to a mandatory post-employment medical examination within three working days from his disembarkation.

    The Court’s Ruling:

    The Supreme Court disagreed with the contentions of the employer and ruled that the seafarer’s heirs were entitled to the benefits they claimed.

    The Court noted the following provisions of Section 20 (A) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract, as these were applicable to the case:

    SECTION 20. COMPENSATION AND BENEFITS. —

    A. COMPENSATION AND BENEFITS FOR DEATH

    1. In case of death of the seafarer during the term of his contract, the employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate prevailing during the time of payment.

    x x x

    4. The other liabilities of the employer when the seafarer dies as a result of injury or illness during the term of employment are as follows:

    a. The employer shall pay the deceased’s beneficiary all outstanding obligations due the seafarer under this Contract.

    b. The employer shall transport the remains and personal effects of the seafarer to the Philippines at employer’s expense except if the death occurred in a port where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be handled or dealt with in accordance with the master’s best judgment. In all cases, the employer/master shall communicate with the manning agency to advise for disposition of seafarer’s remains.

    c. The employer shall pay the beneficiaries of the seafarer the Philippine currency equivalent to the amount of One Thousand US dollars (US$1,000) for burial expenses at the exchange rate prevailing during the time of payment. (Emphasis supplied.)

    The Court addressed the employer’s contentions, as follows:

    1) Clarification of the phrase “work-related death of the seafarer, during the term of his employment contract”

    The Court found that Section 20 (A) (1) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract covered cases wherein the seafarer’s death occurred “during the term of his contract.” The Court also noted that the same phrase could be found in Section 20 (A) (1) of the 2000 Philippine Overseas Employment Administration Standard Employment Contract, only this more recent version of the provision additionally required that the death be “work-related.”

    The Court acknowledged that although medical repatriation of the seafarer at the point of hire strictly meant the termination of his employment, heirs of a seafarer who has died after his medical repatriation could still recover compensation and benefits.

    Applying the rule on liberal construction, the Court stated that medical repatriation cases should be considered as an exception to Section 20 of the Standard Employment Contract.

    1.1)

    Accordingly, the phrase “work-related death of the seafarer, during the term of his employment contract” under Part A (1) of the Standard Employment Contract should not be strictly and literally construed to mean that the seafarer’s work-related death should have precisely occurred during the term of his employment.

    Rather, it is enough that the seafarer’s work-related injury or illness which eventually causes his death should have occurred during the term of his employment.

    According to the Court, it is by this method of construction that undue prejudice to the seafarer and his heirs may be obviated and the State policy on labor protection be championed. For if the seafarer’s death was brought about (whether fully or partially) by the work he had harbored for his employer’s profit, then it is but proper that his demise be compensated.

    1.2)

    It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the seafarer or the heirs to benefits provided therefor. It is enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about seafarer’s death.

    1.3)

    Even assuming that the ailment of the seafarer was contracted prior to his employment, this still would not deprive him or his heirs of compensation benefits. For what matters is that the work of the seafarer had contributed, even in a small degree, to the development of the disease and in bringing about his eventual death.

    1.4)

    Neither is it necessary, in order to recover compensation, that the seafarer be in perfect health at the time he contracted the disease. A seafarer brings with him possible infirmities in the course of his employment, and while the employer is not the insurer of the health of his seafarers, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the seafarer’s death for which compensation is sought, the previous physical condition of the seafarer is unimportant, and recovery may be had for said death, independently of any pre-existing disease.

    The Court concluded that medical repatriation is an exceptional circumstance and allows the heirs of the seafarer who died after he had been medically repatriated to recover the compensation and benefits provided in Section 20 (A) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract .

    The phrase “death of the seafarer during the term of his contract” in Section 20 (A) (1) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract should not be strictly and literally construed to mean that the seafarer’s death should have occurred during the term of his employment; it is enough that the seafarer’s work-related injury or illness which eventually caused his death occurred during the term of his employment.

    2) Context of the illness that caused the seafarer’s death

    According to the Court, for a seafarer’s death to be compensable under the said contract, the illness leading to the eventual death of the seafarer need not be shown to be work-related in order to be compensable, but must be proven to have been contracted during the term of the contract. Neither is it required that there be proof that the working conditions increased the risk of contracting the disease or illness. An injury or accident is said to arise “in the course of employment” when it takes place within the period of employment, at a place where the employee reasonably may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto.

    The Court ruled in favor of the seafarer’s heirs since the particular circumstances in the present case revealed that the seafarer contracted the illness which eventually caused his death during the term of his contract or in the course of his employment.

    3) Seafarer’s hypertension and/or heart disease easily detected by standard/routine tests

    The Court found that before the seafarer boarded M/T Umm Al Lulu on 20 May 2002, he underwent a pre-employment medical examination and was declared fit to work. In this regard, the Court ruled that the same negated the employer’s claim that the seafarer concealed a pre-existing illness.

    The Court acknowledged its declarations that the pre-employment medical examination could not be relied upon to inform the employer/s of a seafarer’s true state of health, and there were instances when the pre-employment medical examination could not have divulged the seafarer’s illness considering that the examinations were not exploratory.

    However, the Court noted that the seafarer’s hypertension and/or heart disease could have been easily detected by standard/routine tests included in the pre-employment medical examination, i.e., blood pressure test, electrocardiogram, chest x-ray, and/or blood chemistry.

    The Court added that even assuming that the ailment of the seafarer was contracted prior to his employment on board the M/T Umm Al Lulu, this could not be a drawback to the compensability of the disease.

    The Court reiterated that it is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided therefor. It is enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about his death.

    Neither is it necessary, in order to recover compensation, that the seafarer must have been in perfect condition or health at the time he contracted the disease. Every workingman brings with him to his employment certain infirmities, and while the employer is not the insurer of the health of his seafarers, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the seafarer’s death for which compensation is sought, the previous physical condition of the seafarer is unimportant and recovery may be had therefor independent of any pre-existing disease.

    4) Post-employment medical examination of the seafarer by a company-designated physician within three days from arrival not a requisite for recovery of compensation and benefits relating to a seafarer’s death

    Finally, the Court ruled that the insistence of the employer on the post-employment medical examination of the seafarer by a company-designated physician within three days from arrival at the point of hire was misplaced.

    Said post-employment medical examination was required under Section 20 (B) (3) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract for compensation and benefits for a seafarer’s injury or illness; it was not a requisite under Section 20 (A) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract for compensation and benefits for a seafarer’s death.

    In addition, Section 20 (B) (3) of the 1996 Philippine Overseas Employment Administration Standard Employment Contract itself allowed as an exception from said requirement a seafarer who is physically incapacitated from complying with the same.

    The Court found that the seafarer in this case was already of poor health and weak physical condition upon his repatriation on 16 March 2003, which necessitated his immediate visit to a nearby clinic the very next day, on 17 March 2003.

    In any event, the seafarer still had until 19 March 2003 to see a company-designated physician but he died on the same day of a cause (“Hypertensive Heart Disease”) directly linked to the illness (“Essential Hypertension”) he developed during his term of employment on M/T Umm Al Lulu and for which he was medically repatriated.

    The Court reiterated the principle that the post-employment medical examination requirement is not absolute and admits of an exception, i.e., when the seaman is physically incapacitated from complying with the requirement.

    For a man who was terminally ill and in need of urgent medical attention, one could not reasonably expect that he would immediately resort to and avail of the required medical examination, assuming that he was still capable of submitting himself to such examination at that time.

    Under the circumstances, the seafarer’s surviving heirs cannot be denied their right to claim benefits under the law.

    Further reading:

    • C.F. Sharp Crew Management, Inc. v. Legal Heirs of Repiso, G.R. No. 190534, February 10, 2016.

  • But the Employee Had No Wrongful Intent

    The employee in this case was declared to have been dismissed for a valid cause. It was found that the said employee not only violated Security Bank Savings Corporation’s Code of Conduct, but also committed gross and habitual neglect of duties when he repeatedly allowed his branch manager to bring outside the bank premises checkbooks and bank forms despite knowledge of the bank’s prohibition on the matter.

    Notwithstanding the foregoing findings, separation pay was awarded the employee for the following reasons:

    • it was a measure of social justice;
    • the employee’s infractions involved violations of company policy and habitual neglect of duties, not serious misconduct;
    • the employee’s dismissal from work was not reflective of his moral character;
    • the employee did not commit a dishonest act since he readily admitted to the bank that he allowed the branch manager to bring out the subject checkbooks; and
    • although the employee acquiesced to the branch manager’s improper marketing strategy, there was no showing that his conduct was perpetrated with self-interest or for an unlawful purpose.

    The Supreme Court, however, ruled that the award of separation pay in the employee’s favor was not proper.

    Rule:

    An employee dismissed for any of the just causes enumerated under Article 2971ARTICLE 297. (Formerly ARTICLE 282) Termination by Employer. — An employer may terminate an employment for any of the following causes:

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

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

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

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

    (e) Other causes analogous to the foregoing.     of the Labor Code of the Philippines, being causes attributable to the employee’s fault, is not, as a general rule, entitled to separation pay. According to the Court, the non-grant of such right to separation pay is premised on the reason that an erring employee should not benefit from his wrongful acts.

    Exception:

    As an exception, the grant of separation pay or financial assistance to a legally dismissed employee has been allowed in certain instances as a measure of social justice or on grounds of equity. The Court said:

    There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. It is not the employee’s fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause.

    Clarification:

    The Court, nonetheless, stated that the grant of separation pay to such a dismissed employee is primarily determined by the cause of the dismissal.

    Instances excluded from the grant of separation pay based on social justice are those listed under Article 2972ARTICLE 297. (Formerly ARTICLE 282) Termination by Employer. — An employer may terminate an employment for any of the following causes:

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

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

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

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

     of the Labor Code of the Philippines, namely, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family.

    However, with respect to analogous causes3ARTICLE 297. (Formerly ARTICLE 282) Termination by Employer. — An employer may terminate an employment for any of the following causes:

    (e) Other causes analogous to the foregoing.     for termination like inefficiency, drug use, and others, the social justice exception could be made to apply depending on certain considerations, such as the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee, and the like.

    In the present case, the employee’s valid dismissal on the ground of gross and habitual neglect of duty had already been established, not having been contested on appeal.

    The Court noted that the employee was the custodian of accountable bank forms in his assigned branch and as such, was mandated to strictly comply with the monitoring procedure and disposition thereof as a security measure to avoid the attendant high risk to the bank.

    However, the employee’s repeated act of allowing the branch manager to bring checkbooks and bank forms outside of the bank’s premises violated bank policy, put the bank’s credibility and business at risk, and exposed the bank to regulatory sanction.

    The Court emphasized that the banking industry is imbued with public interest. Banks are required to possess not only ordinary diligence in the conduct of its business but extraordinary diligence in the care of its accounts and the interests of its stakeholders. The banking business is highly sensitive with a fiduciary duty towards its client and the public in general, such that central measures must be strictly observed.

    With regard to the employee’s excuse that the branch manager merely prompted him towards such ineptitude, the Court found no reason to lend credence to the same. The Court found that the employee readily admitted that he violated established company policy against bringing out checkbooks and bank forms, which meant that he was well aware of the fact that the same was prohibited. Nevertheless, he still chose to, regardless of his superior’s influence, disobey the same not only once, but on numerous occasions. All throughout, there was no showing that he questioned the acts of the branch manager; neither did he take it upon himself to report said irregularities to a higher authority.

    The Court maintained that the infractions, while not indicative of wrongful intent on the part of the employee, was, nonetheless, serious in nature when one considered the employee’s functions. The Court accordingly found no reason to award separation pay based on social justice. Said the Court: “A contrary ruling would effectively reward (the employee) for his negligent acts instead of punishing him for his offense, in observation of the principle of equity.”

    Further reading:

    • Security Bank Savings Corp. v. Singson, G.R. No. 214230, February 10, 2016.

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  • Contractor’s Supervision Over Its Employees Found to Be Dependent Upon Principal’s Needs

    Contracting arrangements for the performance of specific jobs or services under the law are allowed. However, jurisprudence dictates that contracting must be made to a legitimate and independent contractor since labor rules expressly prohibit labor-only contracting.

    Labor-only contracting exists when the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are present:

    a)

    i. The contractor or subcontractor does not have substantial capital, or

    ii. The contractor or subcontractor does not have investments in the form of tools, equipment, machineries, supervision, work premises, among others; and

    iii. The contractor’s or subcontractor’s employees recruited and placed are performing activities which are directly related to the main business operation of the principal; or

    b)

    The contractor or subcontractor does not exercise the right to control over the performance of the work of the employee.1now Section 5, Rules Implementing Articles 106 to 109 of the Labor Code, as Amended, Department of Labor and Employment Order No. 174-17, March 16, 2017 (formerly Section 6, Department Order No. 18-A-11 and Section 5, Department Order No. 18-02).

    The Supreme Court ruled that the complainants in this case were regular employees of Manila Memorial Park Cemetery, Inc. (Manila Memorial) despite having been engaged by Ward Trading and Services (Ward Trading).

    • Ward Trading did not have substantial capital or investment in the form of tools, equipment, machinery, work premises and other material, as it was Manila Memorial which owned the equipment used by Ward Trading’s interment and exhumation services.
    • Ward Trading could not have raised substantial capital from its income alone without the inclusion of the equipment owned and allegedly sold to it by Manila Memorial.
    • Manila Memorial admitted that the complainants performed various interment services at one of its branches. Said activities were directly related to Manila Memorial’s business of developing, selling and maintaining memorial parks and interment functions.
    • Manila Memorial retained the right to control complainants’ performance of their work. Although Ward Trading was still in charge of the supervising the complainants, the exercise of its supervision was heavily dependent upon the needs of Manila Memorial.
    • The service contract between Manila Memorial and Ward Trading further provided that the former had the option to take over the functions of the complainants if it finds any part or aspect of their work or service to be unsatisfactory.

    According to the Supreme Court, Manila Ward Trading was a labor-only contractor. Consequently, Manila Memorial was deemed the employer of the complainants. Said complainants, as regular employees of Manila Memorial, were entitled to their claims for wages and other benefits.

    Further reading:

    • Manila Memorial Park Cemetery, Inc. v. Lluz, G.R. No. 208451, February 3, 2016.

  • No Objection to Company-designated Physician’s Assessment

    The seafarer in this case entered into a ten-month employment contract and was engaged to work as an able seaman by his employer, Marlow Navigation Co., Ltd., through its agent, Marlow Navigation Philippines, Inc., onboard the vessel M/V BBC OHIO. His engagement was also subject to a collective bargaining agreement between the employer and its employees. The seafarer boarded the vessel on 23 November 2009.

    While on duty on 30 December 2009, the seafarer fell from a height of four meters in his work area. The fall affected his side, shoulder, and head. He was brought to a hospital in Huangpu, China, where he was diagnosed with “Left l-4 Verterbra Transverse Bone broken (accident).” He was declared unfit to work for 25 days. On 7 January 2010, he was medically repatriated to the Philippines.

    The seafarer arrived in Manila on 8 January 2010, where he was referred to the company-designated physician for examination and treatment. After undergoing several tests (which included a CT scan, audiometry and MRI, as well as therapy sessions with the company-designated physician that spanned six months) the company-designated physician gave him a combined 36% disability assessment.

    The seafarer did not object to the company-designated physician’s assessment. Yet, he filed a claim for permanent total disability compensation against his employer.

    The Supreme Court ruled that the seafarer was not entitled to permanent total disability compensation.

    The Court noted that the Philippine Overseas Employment Administration Standard Employment Contract and the collective bargaining agreement were instruments that governed the seafarer’s employment with the petitioners. According to the Court, these instruments are the law between the parties.

    Under the Standard Employment Contract, it is the company-designated physician who not only declares/establishes the fitness to work or the degree of disability of a seafarer who is repatriated for medical reasons, but also determines whether a seafarer needs further medical attention. Thus, under the said contract, the seafarer is required to submit to a post-employment medical examination by the company-designated physician.

    Furthermore, under the collective bargaining agreement, the disability suffered by the Seafarer shall be determined by a doctor appointed mutually by the employer and the union, and the employers shall provide disability compensation to the seafarer in accordance with the compensation scale prescribed therein. The Court found that the company-designated physician based her assessment of the seafarer’s disability on the said compensation scale.

    In the present case, the seafarer was able to submit himself to the care of the company-designated physician upon his medical repatriation. The company-designated physician thereafter gave the seafarer a 36% disability assessment under the compensation schedule prescribed in the collective bargaining agreement.

    The Court noted the seafarer’s own admission that he no longer disputed the findings of the company-designated physician. It was also not shown that the seafarer offered a contrary finding. And although the collective bargaining agreement stated that the seafarer’s disability shall be determined by a doctor mutually appointed by the employer and the union, it was was not established that the parties even resorted to this step.

    The Court ruled that the absence of a disability assessment by a doctor chosen by the parties will not invalidate the company-designated physician’s assessment, not only because the seafarer accepted said physician’s findings, but also because record established that the seafarer refused the employer’s proposal that his medical condition be referred to a mutually appointed doctor for determination.

    According to the Court, a seafarer could not claim full disability benefits on his mere say-so, in complete disregard of the Standard Employment Contract and the collective bargaining agreement.

    The Court thus held that company-designated physician’s assessment should stand.

    Further reading:

    • Marlow Navigation Phils., Inc. v. Cabatay, G.R. No. 212878, February 1, 2016.