Tag: 2020-07

Appeal Bonds and Insolvency Proceedings

In March 2004, Miguel commenced his employment with Karj Global Marketing Network, Inc. (Karj Global) as Assistant General Manager. He alleged that Karj Global agreed to grant him 14th month bonus, a vehicle, and vehicle maintenance benefits.

On July 6, 2006, Miguel instituted a complaint before the Office of the Labor Arbiter against Karj Global for non-payment of 14th month pay, refund of his expenditures for vehicle maintenance, damages and attorney’s fees.

Karj Global denied Miguel’s entitlement to said claims. With regard to the claim of 14th month pay, Karj Global asserted that the same was discretionary in nature and that such gratuity was never part of the regular compensation of its employees.

On October 16, 2006, the Office of the Labor Arbiter ruled in favor of Miguel and ordered not only the payment of 14th month pay benefit, but also the refund of car maintenance costs. Karj Global appealed the said decision to the National Labor Relations Commission.

Record showed that prior to the issuance of the Office of the Labor Arbiter’s decision, certain creditors instituted before the Regional Trial Court of Parañaque City a Petition for Involuntary Insolvency against Karj Global. On October 2, 2006, the Regional Trial Court issued an Order enjoining Karj Global from disposing its property and from making any payments outside of necessary or legitimate expenses of its business or industry.

Karj Global filed before the National Labor Relations Commission its Motion to Suspend Proceedings dated November 2, 2006 and alleged therein its receipt of the Office of the Labor Arbiter’s Decision on October 27, 2006, as well as its receipt the Order of the Regional Trial Court on October 9, 2006. Karj Global further stated in the said motion that it informed the Regional Trial Court of the pendency of Miguel’s labor case.

Meanwhile, on November 28, 2008, the National Labor Relations Commission dismissed Karj Global’s appeal for non-perfection as the same was filed without the required bond.

Karj Global filed a petition for certiorari with the Court of Appeals, which dismissed the same and affirmed the decision of the National Labor Relations Commission.

Was the strict adherence to the appeal bond posting requirement correct?

The Supreme Court ruled that the appeal bond requirement should have been liberally applied in the present case and that the National Labor Relations Commission, which was mandated to act with justice, reason and equity, should have allowed the appeal and ruled on the merits considering the circumstances of the case. Specifically, the Court found that the employees of Karj Global (including Miguel) had many layers of protection under law, despite Karj Globa’s insolvency proceedings. This is because the rule on a requirement of an appeal bond cannot operate in a vacuum. Said the Court: “[W]hen the law does not clearly provide a rule or norm for the tribunal to follow in deciding a question submitted, but leaves to the tribunal the discretion to determine the case in one way or another, the judge must decide the question in conformity with justice, reason and equity, in view of the circumstances of the case.”

The Court started by discussing Article 223¹ of the Labor Code of the Philippines which requires the posting of a cash or surety bond when the judgment appealed from involves a monetary award. The Court reiterated prevailing jurisprudence² in that the posting of the bond is an indispensable requisite for the perfection of an appeal by the employer. The mandatory nature of the bond is clearly limned in the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The Court stressed that the word ‘only’ makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer’s appeal may be perfected.

However, the Court also mentioned the following exceptional circumstances under jurisprudence:³

The Court excused the failure of an appellant to post a bond in view of its counsel’s reliance on the notice of the decision in the case which stated the requirements of an appeal without any mention of the bond requirement. The Court found that the said counsel, as well as the opposing party, apparently had no knowledge of the amendments caused by Republic Act No. 6715 on the bond requirement, including the issuance of the NLRC Interim Rules requiring the posting of a bond on appeal.⁴
An appellant was likewise excused from the requirement, when its failure to post a bond was partly caused by the Office of the Labor Arbiter’s failure to state the exact amount of monetary award due, which would have been the basis of the amount of the bond to be posted.⁵
An appeal was given due course despite the failure of the appellant to post a bond, on account of its insolvency and poverty.⁶
Finally, the appellant was allowed to post a property bond in lieu of a cash or surety bond. The Court found that the assailed judgment involved more than P17 million and its execution could adversely affect the economic survival of the appellant, which was a medical center.⁷

The Court stated that in determining whether to allow a liberal application of the rule on bonds, it is crucial to understand whether employees stand to lose such security provided by the appeal bond, which ensures that when employees prevail, they will receive the money judgment in their favor.

In the present case, the Court deemed the existence of the insolvency proceedings as an exceptional circumstance that warranted the liberal application of the rules requiring an appeal bond. Said the Court: The failure to file an appeal bond did not contradict the need to ensure that the employee, if his claim is deemed valid, will receive the money judgment.

At this point, the Court recognized the seeming absence of a rule or norm to follow on the requirement of an appeal bond when the appealing employer is subject of involuntary liquidation proceedings.

The Court noted that under Article 217⁸ of the Labor Code of the Philippines, money claims arising from an employer-employee relationship may only be filed and ruled upon by the Office of the Labor Arbiter. However, the Court also noted that when an employer is undergoing insolvency proceedings, Article 217 of the Labor Code of the Philippines has to be read together with Section 60⁹ of the Insolvency Law,¹⁰ or the law in effect when the National Labor Relations Commission dismissed the appeal on November 28, 2008, which states that a creditor may be allowed to proceed with the suit to ascertain the amount due to it but the execution of which shall be stayed.

The Court discussed that during the pendency of the insolvency proceedings, employees are afforded a measure of protection by having their claim considered as a contingent claim before the insolvent court following Section 55¹¹ of the Insolvency Act. The Court stated that like any other contingent claim, employees may prosecute their case before the labor tribunals, and exhaust other remedies, until he or she obtains a final and executory judgment. Assuming the employees obtain a favorable money judgment, the execution will be stayed following Section 60 of the Insolvency Act because the insolvency proceedings is where all creditors of the employer may establish their claims.

The Court added that assuming the insolvent corporation undergoes liquidation, the measure of protection given to employees is stated in Article 110¹² of the Labor Code of the Philippines, which prescribes not only the preference for unpaid wages and monetary claims even before the payment of claims of the government and other creditors, but also the only proper venue for the enforcement of such preferential right.¹³ In other words, what Article 110 means in the context of an insolvent employer is “that during bankruptcy, insolvency or liquidation proceedings involving the existing properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of certain claims which may be proved therein.”

In sum, the Court ruled that employees of an employer who is undergoing insolvency proceedings has many layers of protection starting from being allowed to prosecute his claim, registering a contingent claim before the insolvency court, and finally, enjoying a preference in case the assets of the corporation are ordered liquidated to pay for its debts.

Here, the Court found that Karj Global informed the National Labor Relations Commission and the Regional Trial Court of the pendency of the insolvency proceedings and of the labor case, respectively. The Court also noted that even as Karj Global wanted a suspension of the proceedings in the labor case, it still filed a Notice of Appeal and Memorandum of Appeal Ad Cautelam. For the Court, the National Labor Relations Commission erred in dismissing the appeal outright especially when the foregoing circumstances reveal that the law itself provides many measures of protection for the employee, such that an appeal before the Commission may be allowed to proceed despite the lack of an appeal bond.

No Alternative But to Implement a Retrenchment Program

In February 1999, the employee was hired to work as a production operator in the hermetic department of the employer corporation. Later, the employee was promoted to the position of quality assurance calibration technician.

On 23 April 2009, the employee filed for and commenced her 60-day maternity leave, which was to end on 21 June 2009. She gave birth on 27 April 2009.

On 8 May 2009, while on her maternity leave, the employee was asked to see the employer’s human resource and administrative manager. During their meeting on 21 May 2009, the employee received a letter informing her of her dismissal from employment, effective on 22 June 2009, or the day after the end of her maternity leave. She was told that she would receive her separation pay on the same date. The employer explained that it had to implement survival measures (such as energy saving programs, forced leaves, and compressed workweek arrangements) in view of the global economic crisis that started in the previous year. The employer added that it also suffered a 30% reduction in business volume resulting to substantial losses that threatened its survival. According to the employer, to minimize continuing losses and to ensure survival of the company, it had no alternative but to implement a retrenchment program.

The employee then went to the Department of Labor and Employment, where she was advised to first accept her separation pay before filing a complaint. Thus, on 8 June 2009, after she had been required to process her clearance and sign several documents, the employee received her separation pay.

On 9 July 2009, the employee lodged her complaint for illegal dismissal against her employer.

Was the dismissal from employment on the ground of retrenchment valid?

In Team Pacific Corp. v. Parente¹, the Supreme Court declared the illegality of the employee’s dismissal from employment.

Under Article 298² of the Labor Code of the Philippines, retrenchment is one of the authorized causes to dismiss an employee. It involves a reduction in the workforce and is resorted to when the employer encounters business reverses, losses, or economic difficulties, such as “recessions, industrial depressions, or seasonal fluctuations.” This is usually done as a last recourse when other methods are found inadequate.³

There is a valid retrenchment if the employer had complied with the procedural and substantive requisites of valid retrenchment.

With regard to the procedural requisites for a valid retrenchment, the employer must:

serve a written notice on the employee and the Department of Labor and Employment one month before the date of the dismissal; and
pay the required amount of separation pay.

As to the substantive requisites, the employer must show that:

the retrenchment was a necessary measure to prevent substantial and serious business losses;
the retrenchment was done in good faith and not to defeat employees’ rights; and
it was fair and reasonable in selecting the employees who will be retrenched.⁴

Absent any of these, the dismissal is illegal.

In the said case, the Court found that the employer failed to comply with all the requisites for a valid retrenchment.

Record revealed that the employer submitted the following documents:

Audited Financial Statements for the years 2006 to 2009, showing its net losses and deficits amounting to millions;
Letter dated 29 April 2008 advising the Department of Labor and Employment of the compressed work week arrangement it will be implementing;
Notice of Retrenchment dated 8 May 2009, served on the Department of Labor and Employment;
Duly accomplished Establishment Employment Report received by the Department of Labor and Employment on 8 May 2009;
List of Affected Workers by Displacements received by the Department of Labor and Employment on 8 May 2009; and
The Decision granting the employer’s Petition for Corporate Rehabilitation.

Although the Court acknowledged that these documents would suffice to show business losses and compliance with notice requirements, it, nonetheless, ruled that the employer failed to establish that the employees chosen for retrenchment were selected through fair and reasonable criteria. According to the Court, the employer failed to prove that it used fair and reasonable criteria in carrying out the retrenchment program. It also failed to justify why it included the employee, who had already been employed for 10 years. The Court thus ordered the employer to reinstate the employee to her former position and pay her backwages.

Did the acts of accepting separation pay from the employer and signing a waiver and quitclaim bar the employee from questioning the illegality of her dismissal?

The Court held that the employee was not barred by estoppel. According to the Court, such acts are generally taken with a grain of salt, considering that employees are usually at an economic disadvantage and are often left with no choice, since they are suddenly faced with the pressure to meet financial burdens. Here, the Court found that the employee was dismissed from employment when she had just given birth. Her dismissal’s effectivity was set on the date she was supposed to return from her maternity leave. For the Court, the employee was at a clear disadvantage, having found herself without a job and a source of income right at a time when finances were crucial. Thus, the employee could not be deemed to have waived her right to file a complaint. She was not estopped from contesting the legality of her dismissal.

Can the officers be held solidarily liable with the employer corporation?

The Supreme Court ruled in the negative in view of the principle that corporate directors and officers are solidarily liable with the corporation for the termination of employees done with malice or bad faith. According to the Court, although the employer was unable to show that it applied fair and reasonable criteria in selecting the employees to be entrenched, it did not mean that the dismissals were automatically done in bad faith or with malice. It may have simply failed to strictly comply or to sufficiently prove compliance with the stringent rules for a valid retrenchment. As such, bad faith or malice must still be proved. Since the employee failed to present clear and convincing evidence that the officers of the employer corporation acted in bad faith or with malice, breached any duty, or were motivated by ill will, the employer corporation’s separate and distinct personality was respected.

Returning to the Same Employer

Z was hired in 1985 by LS, Inc. He filed a case on 4 January 1991 for illegal dismissal and regularization against LS, Inc. and SM Corp. before the National Labor Relations Commission.

In its Decision dated 15 December 1994, the Office of the Labor Arbiter ruled that Z was a regular employee of SM Corp., as LS, Inc. was declared to be a labor-only contractor. It was also ruled that Z was illegally dismissed from employment in 1990. Thus, SM Corp. (the true employer) was ordered to reinstate Z to his former position as regular employee, his regular status “effective as of the date of the Office of the Labor Arbiter’s decision.” Z was also awarded backwages.

Should Z’s employment be reckoned from 15 December 1994 (the date of the Office of the Labor Arbiter’s decision), or should it be reckoned from 1985 (the year when Z was hired to work in SM Corp)?

The Supreme Court ruled that Z’s employment started from 1985. This is because service to an employer is presumed continuous unless there is evidence that employer-employee relations were validly severed in the interim. If an employee returns to work upon an order of reinstatement, he or she is not considered a new hire.

Following this principle, the employment relationship between Z and SM Corp. should have been considered as continuous and not validly severed when Z was illegally dismissed from employment. When Z was returned to work upon an order of reinstatement, Z was not a new hire. Thus, the reckoning point of his length of service must be in 1985, or that date when he first started working in SM Corp.

Unique Skills and Talents

The complainants here were engaged on various dates as camera operators and were later dismissed in May 2013.

Because of the termination of their employment, the said camera operators filed a complaint for illegal dismissal and regularization against GMA Network, Inc. (GMA).

The camera operators asserted that they were assigned to several television programs of GMA and had performed functions that were necessary and desirable to GMA’s business as both a television and broadcasting company. They further contended that their repeated and continuous employment with GMA after each television program they covered showed the necessity and desirability of their functions. The camera operators concluded they have already attained the status of regular employees.

On the other hand, GMA asserted that the camera operators were never hired as employees, as they were merely pinch-hitters or freelancers engaged on a per-shoot basis whenever the need for additional workforce arose. Further, GMA asserted that the “service fees” given to the camera operators were “not compensation paid to an employee, but rather remuneration for the services rendered” as pinch-hitters/freelancers. GMA also belied the contention that it exercised control over the camera operators. It claimed that it only monitored the performance of their work to ensure that the “end result” is compliant with company standards.

GMA added that, even assuming that an employer-employee relationship did exist between them, the camera operators could not have attained regular status considering their failure to render “at least one year of service” as required by law.

Specifically, with respect to one of the camera operators, named Adonis, GMA added that he was engaged as a fixed-term employee under a valid “Talent Agreement.” Accordingly, Adonis’ employment was automatically terminated upon the happening of the day certain stipulated in the contract. GMA further maintained that it may not be obliged to re-engage Adonis.

Did an employer-employee relationship exist between GMA and the camera operators?

The Supreme Court did not agree with GMA’s assertion as it found that the four-fold test in determining the existence of an employer-employee relationship was met.

Jurisprudence¹ dictates that to determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished. Of these criteria, the so-called “control test” is generally regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under this test, an employer-employee relationship is said to exist where the person for whom the services are performed reserves the right to control not only the end result but also the manner and means utilized to achieve the same.

On the power of hiring, the Court found that the camera operators were engaged by GMA and had rendered services directly to it. GMA was found to have engaged the camera operators to perform functions necessary and desirable to its usual business as both a television and broadcasting company.

On the payment of wages, there was no question that GMA directly compensated the camera operators for their services. Although GMA paid the camera operators “service fees” or “talent fees,” the Court ruled that this was merely a matter of nomenclature. The Court further ruled that although the camera operators were paid on a per-shoot basis, this was only a mode of computing compensation and did not, in any way, preclude GMA’s control over the distribution of their wages and the manner by which they carried out their work. According to the Court, what matters is that the employee received compensation from the employer for the services that he or she rendered.²

On the power to dismiss, the Court found that GMA’s act of disengaging the camera operators from service amounted to a dismissal from employment.

Finally, on the element of control, the Court noted GMA’s implicit assertion that it engaged the camera operators as independent contractors in view its denial of an employer-employee relationship, coupled with the claim that it merely exercised control over the output required of the camera operators. The Court thus inquired whether the camera operators fell within the concept of an independent contractor.

Jurisprudence³ has recognized a certain kind of independent contractor: individuals with unique skills and talents that set them apart from ordinary employees. In such a situation there is no trilateral relationship (as in legitimate contracting provided under Article 106 of the Labor Code of the Philippines) because the independent contractor himself or herself performs the work for the principal. In other words, the relationship is bilateral.

In the present case, the Court found that the relationship between GMA and the camera operators was bilateral since the camera operators themselves performed work for GMA. Therefore, in order to be considered independent contractors GMA should establish that the camera operators were hired because of their “unique skills and talents” and that they were not controlled over the means and methods of their work.

However, the Court found no proof that they were hired because of their unique skills, talent and celebrity status not possessed by ordinary employees.

Significantly, there was a showing that the camera operators were subject to GMA’s control in that:

Their recordings and shoots were never left to their own discretion and craft;
They were required to follow the work schedules which GMA provided to them;
They were not allowed to leave the work site during tapings, which often lasted for days;
They were also required to follow company rules like any other employee.

The Court also found that GMA provided the equipment they used during tapings and assigned supervisors to monitor their performance and guarantee their compliance with company protocols and standards.

Should the camera operators be considered regular employees of GMA?

The Supreme Court ruled in the affirmative.

It found that GMA is primarily engaged in the business of broadcasting, which encompasses the production of television programs. Following the nature of its business, GMA was naturally and logically expected to engage the service of camera operators, such as the camera operators. The Court said that there was no denying that a reasonable connection exists between camera operators’ work and GMA’s business as both a television and broadcasting company. The repeated engagement of camera operators over the years only reinforces the indispensability of their services to GMA’s business. For the Court, the camera operators were GMA’s regular employees.

The Court did not accept GMA’s assertion that the camera operators were mere casual employees.

The Court stated that it is clear from the law that the requirement of rendering “at least one (1) year of service[,]” before an employee is deemed to have attained regular status, only applies to casual employees. An employee is regarded a casual employee if he or she was engaged to perform functions which are NOT necessary and desirable to the usual business and trade of the employer. Thus, when one is engaged to perform functions which are necessary and desirable to the usual business and trade of the employer, engagement for a year-long duration is not a controlling consideration.

The Court stressed that GMA’s claim that the camera operators were required to render at least one (1) year of service before they may be considered regular employees had no basis in law. This was because the camera operators were never casual employees as they performed functions that were necessary and desirable to the usual business of GMA. For the Court, the camera operators need not render a year’s worth of service to be considered regular employees.

Although the Court noted that the camera operators’ functions could mean that they were project employees whose engagements were fundamentally time-bound, the Court ruled that they were not. The Court found that GMA repeatedly engaged them as camera operators for its television programs. As camera operators, they performed activities which were within the regular and usual business of GMA and NOT identifiably distinct or separate from the other undertakings of GMA. According to the Court, it would be absurd to consider the nature of their work of operating cameras as distinct or separate from the business of GMA, a broadcasting company that produces, records, and airs television programs. From this alone, the camera operators could not be considered project employees for there was no distinctive “project” to even speak of.

On GMA’s assertion that the camera operators were merely pinch-hitters or substitutes, the Court did not lend credence to the same. According to the Court, every industry has to deal with securing substitutes for employees who are absent or on leave. Such tasks, whether performed by the usual employee or by a substitute, cannot be considered separate and distinct from the other undertakings of the company. While it is management’s prerogative to device a method to deal with this issue, such prerogative is not absolute and is limited to systems wherein employees are not ingeniously and methodically deprived of their constitutionally protected right to security of tenure. It is unlikely that a big corporation could not device a system wherein a sufficient number of technicians can be hired with a regular status who can take over when their colleagues are absent or on leave, especially when it appears from the records that petitioner hires so-called pinch-hitters regularly every month.

Finally, on GMA’s assertion of Adonis’ fixed-term employment, the Court did not accept the same. The Court said that it would be improper to classify Adonis as a fixed-term employee considering that GMA did not even allege the manner as to how the terms of the contract with him were agreed upon. The Court stressed that it is “the employer which must satisfactorily show that it was not in a dominant position of advantage in dealing with its prospective employee.” Thus, GMA as the employer had the burden to prove that it dealt with Adonis in more or less equal terms in the execution of the talent agreements with him. Sweeping guarantees that the contract was knowingly and voluntarily agreed upon by the parties and that the employer and the employee stood on equal footing will not suffice. The Court added that although Adonis never contested the execution of his talent agreements, such could not preclude him from attaining regular employment status. In the words of the Court, it is not blind to the unfortunate tendency for many employees to cede their right to security of tenure rather than face total unemployment.

Were the camera operators validly dismissed from employment?

The Supreme Court ruled that the camera operators were illegally dismissed from employment since GMA failed to allege and that the camera operators’ dismissals were impelled by any of the just or authorized causes recognized in the Labor Code of the Philippines. The camera operators were thus awarded the reliefs of reinstatement and backwages.

PTSD and Claims for Disability Benefits

On 30 October 2013, the seafarer entered into a 7-month employment contract with Anglo-Eastern (ANTWERP), NV, through its agent, Anglo-Eastern Crew Management Philippines (Anglo-Eastern Crew), Inc., to work as a Messman aboard the M/V Mineral Water. On 23 February 2014, the seafarer boarded the vessel.

The seafarer claimed that sometime in June 2014, he was sexually harassed by the chief officer of the vessel during the course of his employment. He also claimed that the chief officer also threatened to kill him upon learning that he filed a complaint against the latter before the ship captain. After the incident, the seafarer opted for voluntary repatriation and was able to return to the Philippines on 12 July 2014.

On 24 November 2014 the seafarer consulted his personal doctor, a clinical psychologist, who diagnosed him with Post Traumatic Stress Disorder (PTSD). The diagnosis of this doctor was verified by another doctor, who concluded that the seafarer cannot return to his job as a seafarer.

Due to his illness, the seafarer requested for compensation from Anglo-Eastern Crew. However, his request remained unheeded.

On 2 March 2015, the seafarer filed a complaint for constructive dismissal, sexual harassment and maltreatment. In addition, he prayed for the payment of disability benefits, damages and attorney’s fees since he claims to have been rendered permanently and totally disabled due to his post-traumatic stress disorder from his unfortunate experience onboard the vessel.

The Office of the Labor Arbiter awarded the salaries of the seafarer for the unexpired portion of his employment contract because of the finding that the seafarer was forced to repatriate himself due to the hostile environment brought about by the filing of the complaint. The Office of the Labor Arbiter also awarded him moral damages for the mental torture that he endured and exemplary damages to dissuade such incident from further occurring. It also granted the claim for attorney’s fees since the seafarer was constrained to avail the services of a lawyer.

When the case reached the Supreme Court, the seafarer insisted on his entitlement to disability benefits. However, the Court denied his claim for said benefits. The Court ruled:

To support his claim for disability benefits, petitioner presented a psychiatric report and a medical certificate. These documents only prove that he was diagnosed with PTSD, prescribed to take medication, and recommended for psychotherapy sessions. However, there was no disability grading.
The medical certificate states that “[a]t this point in time he cannot return to his work as a seafarer.” This statement is not sufficient for this court to conclude that petitioner is permanently and totally disabled to work as a seafarer. It does not instruct us how petitioner’s PTSD is work-related or work-aggravated. It also does not tell us whether petitioner underwent psychotherapy sessions, as recommended by his physicians. Assuming that petitioner underwent psychotherapy sessions and took his prescribed medication, no evidence was presented showing how he responded to treatment.
It is established that petitioner suffered some form of injury, but the pieces of evidence he submitted are not sufficient to convince this Court that he has been rendered permanently and totally disabled. Thus, this Court is precluded from awarding disability benefits, not because of his non-compliance with the 3-day reportorial requirement, but because there is barely any evidence to support the claim for disability benefits.

Totality of Circumstances and Constructive Dismissals

In early August of 2014, Donna entered into a 2-year employment contract to work as a household service worker with a foreign employer in the Kingdom of Saudi Arabia through its local agent, FS Manpower. She was deployed overseas on January 11, 2015.

Donna only stayed abroad for less than 3 months before an early repatriation. She narrated that at around noontime on January 31, 2015, she was washing the dishes when she felt a hard object rubbing against her bottom and was surprised to see her male employer attempting to rape her. She went upstairs to report the matter to her female employer, but the latter did not believe her. Instead, the female employer began to ill-treat her. On February 16, 2015, her female employer violently threw a shoe at her.

Donna escaped and went to her agency’s counterpart in the KSA where she met another Overseas Filipino Worker who mentioned that they might be sold to other Arab employers. That fellow OFW suggested that they escape the agency through the window of the second-floor comfort room, since the agency keeps their doors locked at night. The fellow OFW succeeded in escaping the agency. Donna, however, fell and injured her back. The case mentioned a rather unsavory experience they had with a passerby during that time, anyway, an ambulance later took Donna to a hospital where she underwent surgery on February 28, 2015. After a few days, representatives from the Overseas Workers Welfare Administration brought them to bahay kalinga where they waited for their ticket exit visas.

On July 2, 2015, Donna filed a case for constructive illegal dismissal before the Office of the Labor Arbiter. She claimed that her working environment abroad allegedly became so intolerable that she was impelled to leave her job. She also assailed the validity of Final Settlement.

On the other hand, FS Manpower countered that Donna was the one who commenced the pre-termination of her contract since she was feeling “homesick.” Donna allegedly requested to be repatriated as soon as possible. When her foreign employer tried convincing her to stay, she repeatedly threatened to run away if she will not be permitted to leave.

Was Donna constructively dismissed from employment?

The Supreme Court found that Donna was constructively dismissed.

The Court said that in resolving issues of constructive dismissal, courts do not only weigh the evidence presented by the parties, but also delve into the totality of circumstances in a case.

The Court found that the controversy emanated from the lewd actuations of her male foreign employer on January 31, 2015. To avert a commotion, she reported the matter to her female employer but unfortunately, she was merely discredited and even blamed for the incident. From then on, Donna’s female foreign employer treated her differently. Donna was subjected to physical and verbal harm that she was left with no other choice but to relinquish her employment.

The treatment Donna experienced in the hands of her foreign employers fostered a hostile and unbearable work setting which impelled her not only to leave her employers but also, as in Donna’s words, to escape (or the Filipino word tumakas).

For the Court, it was clear that there existed a well-grounded fear on her part prompting her to run away despite having been employed overseas for barely 2 months. The cessation of Donna’s employment was not of her own doing but was brought about by unfavorable circumstances created by her foreign employers. If Donna failed to continue her job, it was because she refused to be further subjected to the ordeal caused by the her employers’ conduct.

Donna, the Court added, could not have gone to the counterpart agency and eventually injure herself in the course of escape were it not for the hostile treatment afforded by her foreign employers which made her run away.

The Court concluded that all of these evidently constituted a case of constructive dismissal.

Existence of the Right to Control the Manner of Doing the Work

P alleged that he was employed sometime in October 1996, as a fitter/welder by O, Inc., a corporation engaged in the business of ship building. As a fitter/welder, P assembled, welded, fitted, installed, and repaired certain barge components. P presented a copy of his O, Inc. company Identification Card (ID), Certificate of Employment (COE) dated 5 February 2001, and time keeper report.

P stated that sometime in 2003, O, Inc. changed its corporate name to S, Inc., maintained the same line of business, and retained in its employ P and other O, Inc. employees.

P further stated that sometime in May 2006, he was assigned to Lamao, Limay, Bataan to do a welding job on one of S, Inc.’s barges. On 11 May 2006, an explosion occurred which caused P to sustain third degree burns on certain parts of his body. P was then hospitalized from 11 May until 6 June 2006 and had received financial assistance from S, Inc. for the duration of his confinement.

P alleged that S, Inc. verbally dismissed him from service effective 1 May 2008 due to lack of work, which was why he filed a complaint for illegal dismissal against S, Inc.

S, Inc. denied that it engaged P as its regular employee. In support of its claim that no employer-employee relationship existed between them, S, Inc. pointed out that it was only incorporated sometime in November 2002, several years after O, Inc. engaged P as its fitter/welder in 1996. Furthermore, S, Inc. maintained that it was a separate and distinct entity from O, Inc. and that no such change of corporate name as claimed by P.

S, Inc. alleged that, at best, P was only a helper brought in by its regular employees on certain occasions when repairs were needed to be done on its barges. It stressed that it did not engage P on a regular basis as his work on the barges was merely temporary or occasional. It further stated that P was free to seek employment elsewhere at any given time.

Was P an employee of S, Inc.?

In Parayday v. Shogun Shipping Co., Inc.,¹ the Supreme Court declared that an employer-employee relationship existed between P and S, Inc.

Initially, the Court did not give credence to the ID and COE presented by P, for the said documents were issued by O, Inc. and not by S, Inc. The Court also did not consider the time keeper report presented by P because their genuineness and due execution were unverifiable.

Nonetheless, the Court found that S, Inc. failed to categorically deny the following circumstances:

Sometime in May 2006, it permitted P to work on repairs on one of its barges. It was also found that S, Inc. did not also deny that P worked for it until he was supposedly verbally dismissed from employment on 1 May 2008. Notably, S, Inc. even admitted that P was called in to do repairs on its barges.
P was duly compensated for his work done on the barges. S, Inc. even categorically admitted that it provided him financial assistance when he was hospitalized from 11 May until 6 June 2006. It also did not disprove P’s allegation that it continued to pay his salaries after he was discharged from the hospital on 7 June 2006.
P was verbally dismissed on 1 May 2008. The Court noted S, Inc.’s allegation that P only did repair work whenever the same was available. The Court viewed that it was S, Inc. that determined the cessation of P’s services.

According to the Court, the Rules of Court², which supplements the NLRC Rules of Procedure, provides that allegations which are not specifically denied are deemed admitted.

As regards S, Inc.’s power of control over P, the Court emphasized that the control test calls merely for the existence of the right to control the manner of doing the work and not the actual exercise of the right.³ The Court added that an employer’s power of control, particularly over personnel working under the employer, is deemed inferred, more so when said personnel are working at the employer’s establishment.

In the present case, the Court found that P worked on the barges alongside regular employees of S, Inc. and that S, Inc. did not deny that he was taking orders from its engineers as to the required specifications on how the barges of Shogun Ships should be repaired. For the Court, it could thus logically infer that S, Inc., to some degree, exercised control or had the right to control the work of P.

P was an employee of S, Inc.

Foreign Doctor Who Provided Urgent Care — a Company-Designated Physician?

On 7 August 2015, the seafarer entered into a 9-month employment contract with Beks Gemi Isletmeciligi Ve Ticaret A.S. through its agent, Status Maritime Corporation, to work as a fitter.

Before boarding the vessel, the seafarer underwent a pre-employment medical examination and was declared fit to work.

On 25 March 2016, the seafarer’s shoulder snapped and was dislocated while he was allegedly lifting a heavy object. He was repatriated and recommended for surgical repair after being diagnosed with recurrent left shoulder dislocation.

Immediately after repatriation, the seafarer reported to Status Maritime, which referred him to the company-designated physician. Although the company-designated physician initially recommended that the seafarer undergo an MRI, Status Maritime disapproved of the procedure and rejected the seafarer’s sickness allowance claim.

The seafarer then consulted his personal doctor. After undergoing an MRI, the seafarer was diagnosed with “Rotator cuff tear (Supraspinatus), left shoulder.” Said personal doctor declared him permanently disabled and “unfit to work” as a seafarer.

On 16 June 2016, the seafarer filed a complaint for permanent total disability benefits before the Office of the Labor Arbiter.

The Office of the Labor Arbiter found that when the seafarer underwent pre-employment medical examination, he misrepresented that he was not suffering from any illness. However, when he was diagnosed abroad, he admitted to a certain Dr. Selvarajah that it was already his third time to sustain a left shoulder dislocation and that two episodes occurred before he boarded the vessel.

The Office of the Labor Arbiter added that even if the seafarer did not conceal his medical history, he still could not claim disability benefits because his injury was not work-related. While his condition manifested onboard, the seafarer failed to show the connection of his injury to the nature of his work as a fitter. For his failure to present substantial evidence that his work condition caused or aggravated his injury, the seafarer was accordingly denied his claim for disability benefits.

When the case reached the Supreme Court, the seafarer asserted the following:

No diagnosis was made by a company-designated physician. Dr. Selvarajah, a foreign doctor, was not a company-designated physician and, therefore, not qualified to make conclusive findings. The failure of a company-designated physician to give a definite medical finding after the period set under the POEA Standard Employment Contract renders his disability permanent and total.
He did not willfully conceal his medical condition during his pre-employment medical examination. He merely forgot to disclose his medical history and, being a layman without medical background, thought there was no need to disclose this information.
There was a presumption of fitness which was uncontroverted by evidence.
His medical condition should have been detected during the pre-employment medical examination because it was an apparent and external injury. Status Maritime was estopped because it had all the opportunity to screen him for the injury.

Did Status Maritime comply with its obligation to refer the seafarer to a company-designated physician?

The requirement of a post-employment medical examination can be gleaned in the provisions of Section 20 (A) of the POEA Standard Employment Contract.¹

Jurisprudence teaches that the conduct of the post-employment medical examination is a reciprocal obligation shared by the seafarer and the employer. The seafarer is obliged to submit to an examination within 3 working days from his or her arrival, and the employer is correspondingly obliged to conduct a meaningful and timely examination of the seafarer.²

This post-employment medical examination is primarily conducted by the company-designated physician.³ However, to be reliable, the assessment or findings of the company-designated physician must be “complete and definite to give the proper disability benefits to seafarers.” When the employer refuses to comply with its obligation to have the seafarer examined, the seafarer may rely on the medical findings of his or her chosen doctor.⁴ Between a non-existent medical assessment of a company-designated physician and the medical assessment of the seafarer’s doctor of choice, the latter evidently stands.⁵

In the present case, the Supreme Court found that the seafarer went to Status Maritime immediately after arriving in the Philippines. However, when he requested a medical diagnosis of his condition, Status Maritime refused to subject him to a post-employment medical examination. This compelled the seafarer to go to a doctor of his choice. As noted above, this personal doctor declared him permanently disabled and “unfit to work” as a seafarer.

On the other hand, the Court ruled that Dr. Selvarajah’s diagnosis could not be considered as that rendered by a company-designated physician. This is because a strict reading of the POEA Standard Employment Contract requires that the company-designated physician be the one to diagnose the seafarer upon repatriation.

The Court further stated that even if the rules were to be applied liberally, the assessment of Dr. Selvarajah could not be considered thorough, final, and definitive, as it was merely for the seafarer’s urgent medical care. In Dr. Selvarajah’s medical report, there was no showing that he conducted tests to arrive at a proper diagnosis. In fact, he even recommended for the seafarer to undergo further tests to determine the extent of the injury. Furthermore, Dr. Selverajah’s report explicitly stated that it was not meant for any medicolegal proceedings, that it should not be used as a reference in any court hearing and that it does not support any compensation claim. The provisional nature of Dr. Selvarajah’s diagnosis was further supported by his act of recommending that the seafarer see an orthopedic surgeon for further assessment.

The Court thus ruled that when there is no post-employment medical examination by a company-designated physician, the evaluation of the seafarer’s personal doctor is considered by law as binding between the parties. The refusal of Status Maritime to submit the seafarer to a medical examination was a contravention of its responsibility under the POEA Standard Employment Contract. Thus, the Court upheld the permanent disability rating of the seafarer’s personal doctor.

Was the seafarer qualified to claim disability benefits?

Despite the conclusion of his personal doctor, the Supreme Court declared that the seafarer was disqualified from claiming disability benefits on the ground of fraudulent concealment.

Section 20 (E) of the POEA Standard Employment Contract states that “[a] seafarer who knowingly conceals a pre-existing illness or condition” is disqualified from claiming compensation and benefits.⁶

In the present case, the Court found that the seafarer knowingly concealed his history of shoulder dislocation. According to the Court, the seafarer had two instances of left shoulder dislocation prior to his employment — once in June 2015 and another in July 2015. Knowing that he had this recurring condition, the seafarer should have disclosed this fact during his pre-employment medical examination. This non-disclosure was apparent in his medical certificate, wherein he answered “no” to the question “Is applicant suffering from any medical condition likely to be aggravated by service at sea or to render the seafarer unfit for service. . .?”

The Court further stated that the seafarer could not bank on the fact that he was cleared during the pre-employment medical examination. Jurisprudence dictates that this examination is not exploratory in nature and employers are not burdened to discover any and all pre-existing medical condition of the seafarer during its conduct. Pre-employment medical examinations are only summary examinations. They only determine whether seafarers are fit to work and does not reflect a comprehensive, in-depth description of the health of an applicant. This is precisely why Section 20 (E) mandates the seafarer to disclose his or her medical history during the pre-employment medical examination.⁷

According to the Court, intentional concealment of a pre-existing illness or injury is a ground for disqualification for compensation and benefits under the POEA Standard Employment Contract. While the laws give ample protection to our seafarers, this protection does not condone fraud and dishonesty.

In the present case, the seafarer could not feign ignorance and downplay the concealment of his medical condition. The seafarer knew that he had a recurring shoulder dislocation and never denied this fact. Hence, his disability claim was not granted.

Paulino Ungos III

Appeal Bonds and Insolvency Proceedings

Was the strict adherence to the appeal bond posting requirement correct?

Further reading:

No Alternative But to Implement a Retrenchment Program

Was the dismissal from employment on the ground of retrenchment valid?

Did the acts of accepting separation pay from the employer and signing a waiver and quitclaim bar the employee from questioning the illegality of her dismissal?

Can the officers be held solidarily liable with the employer corporation?

Further reading:

Returning to the Same Employer

Should Z’s employment be reckoned from 15 December 1994 (the date of the Office of the Labor Arbiter’s decision), or should it be reckoned from 1985 (the year when Z was hired to work in SM Corp)?

Further reading:

Unique Skills and Talents

Did an employer-employee relationship exist between GMA and the camera operators?

Should the camera operators be considered regular employees of GMA?

Were the camera operators validly dismissed from employment?

Further reading:

Totality of Circumstances and Constructive Dismissals

Was Donna constructively dismissed from employment?

Further reading:

Existence of the Right to Control the Manner of Doing the Work

Was P an employee of S, Inc.?

Further reading: