Tag: #BarNiJLo2024

Suggested Answers to the 2024 Bar Examinations (Labor Law)
Several students and examinees have asked my father and me how we would answer the questions in the Bar Examinations in Labor Law. We drafted a post for this.
While we’re here to share our take on the questions, consider the answers you read here as mere opinions from strangers you met online. Deploy critical thinking, and feel free to engage your own thoughts as you read on.
1.
Zhi Go (Zhi) is a non-resident Chinese national who plans to live and establish a career in the Philippines. Zhi went to the Philippines and applied with the Tarlac Agricultural Products (TAP) as an ordinary farm worker. The TAP hired Zhi because of her diverse set of farming skills. The TAP assigned Zhi in its Bamban Farm. Did TAP lawfully hire Zhi Go as a farm worker? Explain.
SUGGESTED ANSWER:
No. TAP did not lawfully hire Zhi Go as a farm worker.
Under the Labor Code of the Philippines, any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor and Employment.¹
Here, TAP hired Zhi, a non-resident Chinese national, as an ordinary fam worker for its Bamban Farm.
As there was no showing that an employment permit was obtained from the Department of Labor and Employment, TAP cannot be said to have lawfully hired Zhi Go.
Refer to page 218, Labor Law 3: The Fundamentals of Labor Law Review (2021)
2.
Manila Yummy Restaurant (MYR) pays its receptionists PHP 500.00 a day. The receptionists contested the amount because the present minimum wage in the National Capital Region is PHP 645.00 for the nonagricultural sector. MYR countered that it is paying the receptionists a total of PHP 700.00 which is more than the required minimum wage. MYR explained that it provides the receptionists food and beverage worth PHP 200.00 per day in addition to the PHP 500.00 cash component of their wages. The food and beverage are given during lunch time to ensure that the receptionists will entertain guests instead of leaving their stations. Thus, the PHP 200.00 value of the food and beverage must be added to the PHP 500.00 cash component of their wage. May MYR lawfully add the value of the food and beverage as part of the wages of its receptionists? Explain.
SUGGESTED ANSWER:
No. MYR may not lawfully add the value of the food and beverage as part of the wages of its receptionists.
Under the Labor Code of the Philippines, fair and reasonable value of facilities customarily furnished by the employer to the employee may be part of an employee’s wages.² Furthermore, the Rules Implementing the Labor Code clarify that facilities do not include articles primarily for the benefit of the employer or necessary to the conduct of the employer’s business.³
Here, although food and beverage were provided by MYR to its receptionists, these were for the purpose of ensuring that receptionists will entertain guests instead of leaving their stations.
Since food and beverage were clearly given for the benefit of the employer and considered necessary for the conduct of its business, the value of the same cannot be added to the cash component of their wage.
Refer to page 137, Labor Law 3: The Fundamentals of Labor Law Review (2021)
3.
Lexi Enterprises always made sure that the salary of its supervisory employees is 70% higher than the wage of its rank-and-file workers. Later, the management of Lexi Enterprises realized that its business is highly dependent on rank-and-file workers because they spend more time in providing services to the clients. Thus, Lexi Enterprises significantly increased the wages of its rank-and-file workers such that they are only 10% behind the salary of the supervisory employees. Consequently, the supervisory employees demanded an increase in their salaries and alleged that Lexi Enterprises must correct the wage distortion. May the supervisory employees validly demand an increase in their salaries? Explain.
SUGGESTED ANSWER:
No. The supervisory employees may not validly demand an increase in their salaries, there being no wage distortion.
A wage distortion, as contemplated under the Labor Code of the Philippines, requires the presence of several conditions, relevant of which is that such distortion be the result of a wage increase granted by virtue of a law or wage order.⁴
Here, the increase in wages (that drastically reduced the wage gap between supervisory employees and rank-and-file employees) was initiated solely by Lexi Enterprises.
As no law or wage order caused a wage distortion, the supervisory employees cannot validly demand that their salaries be increased.
Refer to pages 152-153, Labor Law 3: The Fundamentals of Labor Law Review (2021)
4.
The Philippines celebrates “Ninoy Aquino Day” every August 21 of the year as a special non-working holiday. Tyson Plastic Company (TPC) scheduled its machine shutdown on August 21, 2024 and informed the workers that the factory will be closed for maintenance. Later, the President of the Philippines issued Proclamation No. 665 moving the observance of “Ninoy Aquino Day” from August 21, 2024, Wednesday, to August 23, 2024, Friday, to promote domestic tourism in the country. The TPC announced that the machine shutdown will push through as scheduled and required the workers to report on August 23, 2024. Winslet is paid PHP 700.00 daily salary as a machine operator. Winslet reported for work on August 23, 2024 and claimed holiday premium pay. The TPC denied the claim and argued that Winslet already enjoyed the holiday on August 21, 2024 when the factory was closed. How much is Winslet entitled to for working on August 23, 2024? Explain.
SUGGESTED ANSWER:
Winslet is entitled to the amount of PHP910.00 for working on August 23, 2024, based on the formula:
- Daily salary of PHP700 x 1.3 = PHP910.00
Under the Labor Code of the Philippines, work performed by employees on any special holiday shall be paid an additional compensation of at least thirty (30%) of their regular wage.⁵
Refer to page 126, Labor Law 3: The Fundamentals of Labor Law Review (2021)
5.
Spouses Felix and Sarah have three minor children. In 2022, Felix was detained for committing a non-bailable offense. Sarah looked for a job to support her children. On May 18, 2024, Jared Corporation hired Sarah as a cashier. On August 18, 2024, Sarah claimed that she is a solo parent and applied for parental leave under Republic Act No. 11861 or the Expanded Solo Parents Welfare Act. Is Sarah entitled to parental leave? Explain.
SUGGESTED ANSWER:
No. Sarah is not entitled to parental leave.
Under the Expanded Solo Parents Welfare Act, parental leave shall be granted to any solo parent employee who has rendered service of at least six (6) months.⁶
Since Sarah was shown in the given problem to be in the employ of Jared Corporation for only three (3) months, she is not entitled to parental leave under the Expanded Solo Parents Welfare Act.
6.
In August 2019, Vans Taste Restaurant (VTR) entered into a yearly and renewable service contract with Colin Consultancy Services (CCS) for the supply of professional advisors that will design action plans for the restaurant business. CCS has a capital of PHP 20,000,000.00 based on its audited financial statements. CCS hired Grayson, Oswald, and Peyton (Grayson, et. al.) and deployed them to VTR as professional advisors. CCS prescribed Grayson, et. al.’s daily work schedules and specific steps in designing the action plans. Whereas VTR required Grayson, et. al. to submit five action plans each month. In August 2024, the service contract expired without VTR and CCS renewing the agreement. VTR then no longer permitted Grayson, et. al. to enter the restaurant. Aggrieved, Grayson, et al. filed against VTR a complaint for regularization and illegal dismissal because they have been working as its professional advisors for five years. Grayson, et al. also claimed that CCS is a labor-only contractor since it has no investment in the form of tools, equipment, and machineries. Will the complaint for regularization and illegal dismissal prosper? Explain.
SUGGESTED ANSWER:
The complaint for regularization will not prosper because CCS is an independent contractor as shown by the fact that it has an independent business (consultancy services) with substantial capital.
The contract between VTR and CCS not for the supply of manpower, but for services of professional advisors who will design action plans for the restaurant business. These professional advisors are not subject to the control of VTR because VTR does not interfere on how the professional advisors will perform their jobs. It is CCS who prescribes the steps to be taken in designing the action plans. Furthermore, CCS prescribes their work schedules. While it is true that VTR requires the professional advisors to submit five action plans each month, this matter pertains to results and not on how to achieve the action plan.
Under the circumstances, the complaint for regularization will not prosper.
SUGGESTED ALTERNATIVE ANSWER:
Yes. The complaint for regularization and illegal dismissal will prosper.
Department of Labor and Employment Order No. 174, Series of 2017 defines “labor-only contracting” as an arrangement requiring the presence of certain elements, one of which is a situation where the contractor or subcontractor merely recruits, supplies or places workers to perform a job or work for a principal.⁷ In such a contracting arrangement, the Labor Code of the Philippines considers such contractor or subcontractor to be an agent of the employer who shall be responsible to the workers in the same manner and extent as if said workers were directly employed by him.⁸
Furthermore, the Labor Code of the Philippines protects the employee’s right to security of tenure by prohibiting the employer from terminating the services of an employee except for just or authorized causes.⁹ Jurisprudence strikes down as invalid any employer act that attempts to undermine workers’ tenurial security.¹⁰
In the given problem, CCS contracted itself to supply professional advisors for the restaurant business of VTR. Since CCS merely provided workers and not services, then Grayson, et al.’s complaint for regularization can prosper, as there is ground to consider VTR to be their employer.
Moreover, since there was no showing that any just or authorized cause attended the decision of VTR to disallow Grayson, et al. from working in the restaurant, there is reason to claim that their right to security of tenure was violated. Thus, their complaint for illegal dismissal should prosper.
Refer to pages 88-95 and 457, Labor Law 3: The Fundamentals of Labor Law Review (2021)
7.
Grand Duke Manila (GDM), a five-star world-class hotel, hired Zoey as a banquet server. GDM informed Zoey of its company rule against tattoos as part of grooming standards. The policy prohibits hospitality staff members from having tattoos due to their different cultural meanings that might offend foreign guests. Later, GDM discovered that Zoey had an existing tattoo on her nape which she concealed during the hiring process. After the required notices, GDM dismissed Zoey for violation of the company policy against tattoos. Is Zoey’s dismissal valid? Explain.
SUGGESTED ANSWER:
The dismissal is valid because Zoey violated a company rule that prohibits hospitality staff members from having tattoos.
Zoey’s violation was deliberate because during the hiring process, she was informed of the rule, but she concealed the fact that she has a tattoo. The company rule against tattoos is part of the hotel’s grooming standards. It is the prerogative of an employer to promulgate rules and regulations, especially when they have a valid purpose. In this case, the purpose is valid, i.e., to prevent foreign guest from being offended especially from the point of view of their culture.
Therefore, the dismissal of Zoey is justified.
SUGGESTED ALTERNATIVE ANSWER:
No. Zoey’s dismissal is not valid.
Jurisprudence has recognized the power to dismiss to be a formal prerogative of the employer. However, the same is not without limitations. To effect a valid dismissal, the law requires not only that there be just and valid cause; it must also be supported by evidence.¹¹
Here, although GDM decided to terminate Zoey’s employment, such decision was not anchored on a cause that was valid and supported by evidence. As the given problem narrates, the termination was based on a mere conjecture that tattoos might offend foreign guests.
Zoey’s right to security of tenure was violated. Thus, it cannot be said that her dismissal from employment was valid.
Refer to pages 457, 503, and 504, Labor Law 3: The Fundamentals of Labor Law Review (2021)
8.
Brent Therapy Clinic (BTC) engaged Franklin as a probationary physical therapist for a period of five months. BTC informed Franklin that he must obtain satisfactory grades in these criteria: (a) diagnosis of movement dysfunction; (b) therapeutic exercise techniques; (c) stimulation and healing massage; and (d) proper use of machines and equipment. After three months, BTC observed that Franklin cannot meet the minimum criteria. Franklin was unfamiliar with therapeutic exercise techniques and was unable to remember the use of therapy machines. The following day, the owner of BTC left a note on Franklin’s desk which reads:
Hi Franklin. I tried to guide and train you in the past months but there has been no improvement. The management is unhappy with your work performance. Thus, your probationary employment is terminated one week from notice for failure to meet the minimum standards for regularization. Aggrieved, Franklin questioned his termination for lack of procedural due process.
Is BTC required to comply with the twin-notice rule before terminating Franklin’s employment? Explain.
SUGGESTED ANSWER:
No. BTC is not required to comply with the twin-notice rule before terminating Franklin’s employment.
In a situation where an employee fails to meet standards of regularization, the Rules Implementing the Labor Code require an employer to serve only a written notice within a reasonable time from the effective date of termination.¹²
The given problem shows that the employer decided to terminate Franklin’s employment because he failed to meet the minimum criteria for regularization.
Thus, compliance by BTC of the twin-notice rule is not required.
Refer to page 44, Labor Law 3: The Fundamentals of Labor Law Review (2021)
9.
Preston Salon and Spa (PSS) hired Nixon as a senior stylist in its Manila branch. Nixon signed an employment contract which provides that “employees shall not engage in or set up within the same locality a business similar or related to the company during their course of employment and for a period of one year after their tenure.” Thereafter, PSS received information that Nixon assisted his sister in establishing a new salon in Manila. Nixon admitted lending PHP 300,000.00 to his sister as capital and that he shall be entitled to 10% yearly profits of the new salon. Nixon also referred two former PSS employees as applicants to the new salon. After the required notices, PSS dismissed Nixon for violation of his employment contract. Is Nixon’s dismissal valid? Explain.
SUGGESTED ANSWER:
Yes. Nixon’s dismissal is valid because of his willful disobedience of PSS’s order not to set up a competing business, as reflected in his employment contract.
Disobedience will constitute a valid cause for dismissal when:
(1) The disobedience is willful; and
(2) The order is reasonable, lawful, known to the employee, and work-connected.¹³
In the given problem, PSS incorporated in the employment contract a reasonable and lawful order prohibiting Nixon to set up within the same locality a business similar or related to the company during the course of his employment. The prohibition was contained in an employment contract, which Nixon signed.
Despite the prohibition, Nixon:
- assisted his sister in establishing a new salon in Manila;
- lent PHP 300,000.00 to his sister as capital;
- demanded 10% yearly profits of the new salon; and
- referred two former PSS employees as applicants to the new salon.
Since Nixon committed a willful disobedience to a lawful order of PSS, his dismissal is valid.
Refer to page 518, Labor Law 3: The Fundamentals of Labor Law Review (2021)
10.
Ronin Airline Company (RAC) hired Orwell as a flight engineer. In January 2024, RAC and Orwell entered into a three-month overseas training agreement which reads: “the employer agrees to invest on the travel expenses and allowances of the employee abroad provided that he will remain in the company for two years after the training. Otherwise, the employee must reimburse the employer travel expenses and pay liquidated damages of PHP 30,000.00.” Orwell completed the training abroad and returned to the Philippines. In August 2024, Orwell tendered his irrevocable resignation. Aggrieved, RAC filed against Orwell a complaint for sum of money before the trial court. Orwell sought to dismiss the action for lack of jurisdiction and argued that it is the labor arbiter that has authority to decide money claims arising from employment relationship. Which between the trial court and labor arbiter has jurisdiction over the complaint? Explain.
SUGGESTED ANSWER:
The trial court has jurisdiction over the complaint.
Jurisprudence teaches that in order for a dispute to fall within the jurisdiction of the Labor Arbiter, it must arise from employer-employee relationship or must at least have a reasonable causal connection with employer-employee relationship.¹⁴ A claim is said to have a reasonable causal connection with employer-employee relationship if the principal relief sought can be resolved only by reference to the Labor Code or other labor laws and not by the general civil law. ¹⁵
In the given problem, RAC’s claim arose from Orwell’s supposed breach of contract when the latter prematurely resigned from employment.
Since the claim is based on our law on contracts to which civil law should apply, it is the trial court that has jurisdiction over the complaint.
Refer to pages 720-733, Labor Law 3: The Fundamentals of Labor Law Review (2021)
11.
Athena Coffee Company (ACC) hired 300 coffee roasters under similar employment terms and conditions. ACC assigned these employees to its three roasting factories in Manila, Laguna, and Cavite. In August 2024, the AAC Manila Workers Organization (AAC-MWO) filed a petition for certification election to represent all coffee roasters including those in the unorganized Laguna and Cavite factories. AAC opposed the petition and argued that the three factories do not constitute an appropriate bargaining unit on account of their different geographical locations. May the coffee roasters in the three factories constitute an appropriate bargaining unit? Explain.
SUGGESTED ANSWER:
Yes, the coffee roasters in the three factories constitute an appropriate bargaining unit.
Under the Rules Implementing the Labor Code, in order for a collective bargaining unit to exist, it must be shown that a group of employees shares mutual interests within a given employer unit.¹⁶
In the given problem, since it was shown that the coffee roasters share similar employment terms and conditions within ACC, such workers may constitute an appropriate bargaining unit.
Refer to pages 364-365, Labor Law 3: The Fundamentals of Labor Law Review (2021)
12.
EXO Corporation, Inc. (ECI) and its exclusive bargaining agent Kami Labor Union (KLU) entered into a collective bargaining agreement effective from December 15, 2019 to December 14, 2024. The agreement prohibits KLU and its members from holding a strike and lockout. In May 2024, ECI and KLU negotiated the economic provisions of the agreement but ended in a deadlock. KLU filed a notice of strike. After the conciliation failed, KLU conducted a strike vote which obtained majority support. KLU reported the strike vote to the Department of Labor and Employment. KLU then went on strike after the mandatory cooling-off period. ECI questioned the validity of the strike for being contrary to the collective bargaining agreement. In contrast, KLU argued that it complied with the strict requirements for staging a strike. Is the strike legal? Explain.
SUGGESTED ANSWER:
The strike was illegal because KLU did not strictly comply with all the requirements for staging a valid strike. Specifically, KLU failed to comply with the 7-day strike ban requirement.
Under the Labor Code of the Philippines, a union cannot strike during the 7-day period from submission of the strike vote report.¹⁷ This is because the provision requires a union to furnish the Department of Labor and Employment the results of the voting at least 7 days before the intended strike.
In the given problem, although KLU went on strike after the mandatory cooling-off period, there was no showing that it staged the strike after the lapse of the 7-day strike ban.
Since KLU failed to comply with the 7-day strike ban, the strike is illegal.
Refer to pages 422-423, Labor Law 3: The Fundamentals of Labor Law Review (2021)
13.
On May 31, 2024, the collective bargaining agreement between Gretel Corporation, Inc. (GCI) and Gretel Labor Union (GLU) expired. After several negotiations, GCI and GLU signed a new collective bargaining agreement on August 31, 2024, which obliged the company to pay a wage increase in favor of the employees. GLU then demanded salary differentials starting June 1, 2024. However, GCI argued that the provisions of the new collective bargaining agreement as to the wage increase shall be prospective in application beginning August 31, 2024. When shall the salary increase be reckoned? Explain.
SUGGESTED ANSWER:
The salary increase should be reckoned from the agreed date of the effectivity of the collective bargaining agreement (CBA).
This is because under the Labor Code of the Philippines, if any such collective bargaining agreement is entered into beyond six months from the date of expiry of its term, the parties shall agree on the duration of effectivity thereof.¹⁸
Notes:
The CBA in the given problem is a new CBA, not a renegotiation before the 3rd year of effectivity. The terms thereof should be applied prospectively, unless the parties agree on retroactive application of some provisions.
Refer to pages 400-402, Labor Law 3: The Fundamentals of Labor Law Review (2021)
14.
In 2023, Star Maxima Corporation (SMC) and Astra Labor Union (ALU) executed a collective bargaining agreement covering the rank-and-file employees effective for five years. In 2024, Troy called for the removal of Andres as union president and obtained majority support of ALU members through signature campaign. Thereafter, Troy assumed the position of union president, changed the name of ALU to Stella Labor Organization (SLO), adopted new by-laws, and appointed other union officers. Andres informed SMC that ALU remained the exclusive bargaining agent. On the other hand, Troy demanded recognition of SLO and its new leadership to administer the collective bargaining agreement and to receive the union dues. Eventually, SMC turned over the collected union dues to the SLO treasurer. Aggrieved, Andres filed a complaint for unfair labor practice against SMC alleging gross violation of the collective bargaining agreement. Is SMC guilty of unfair labor practice? Explain.
SUGGESTED ANSWER:
SMC is guilty of unfair labor practice because it violated its duty to bargain collectively.
Under the Labor Code of the Philippines, it is unlawful for an employer to violate the duty to bargain collectively.¹⁹ Jurisprudence teaches that if a union seeking to bargain collectively is not certified by the Department of Labor and Employment as the collective bargaining agent of the employees, the employer has no obligation to bargain with it.
In the given problem, ALU remains to be the certified bargaining agent, and therefore, SMC must continue to deal with it. SMC cannot deal with SLO because it is not a certified bargaining agent.
Considering that SMC dealt with SLO by turning over the union dues to the SLO Treasurer, SMC violated its duty to bargain collectively, and therefore, it is guilty of unfair labor practice.
Notes:
The removal of Andres as union president is anomalous because it was not done in accordance with the constitution and by-laws of the union. The ousting of Andres was done through a signature campaign only. Likewise, the assumption by Troy of the presidency, the appointment of union officers, the change of name from ALU to SLO, and the adoption of new by-laws are all irregular. Thus, SLO and its officers are not legitimate officers. Such being the case, SLO and its officers have no personality to deal with SMC.
Refer to pages 300-302, Labor Law 3: The Fundamentals of Labor Law Review (2021)
15.
Thalia, the owner of Quinn Karaoke Club (QKC), hired Darrence as an accountant. On January 19, 2023, QKC’s owner verbally informed Darrence to look for another job and banned him from the club. Darrence filed against QKC a complaint for illegal dismissal. Meantime, Darrence was hired as an accountant in another company on February 14, 2023. In its answer, QKC countered that Darrence abandoned his work in favor of a better paying job. On June 22, 2024, QKC ceased business. In due course, the Labor Arbiter declared Darrence unjustly dismissed from work and awarded him full backwages computed from January 19, 2023, when he was verbally dismissed, until June 22, 2024, when QKC stopped operations. Thalia sought reconsideration and invoked the principles of “no work no pay” and “unjust enrichment.” Thalia argued that Darrence’s salaries earned from another employer should be deducted from the award of backwages. The Labor Arbiter granted the motion and recomputed backwages from January 19, 2023, Darrence’s date of illegal dismissal, until February 14, 2023, when another employer hired him. Is the Labor Arbiter correct in limiting the period for computing the award of backwages? Explain.
SUGGESTED ANSWER:
The Labor Arbiter was not correct in limiting the period for computing the award of backwages.
Jurisprudence teaches that backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee.²⁰
Following prevailing jurisprudence, Darrence is entitled to backwages from January 19, 2023, when he was verbally dismissed, until June 22, 2024, when QKC stopped operations.
Refer to page 481, Labor Law 3: The Fundamentals of Labor Law Review (2021)
Notes:
A further reason why the Labor Arbiter is not correct is that he/she should not have entertained the motion for reconsideration (of the decision of the Labor Arbiter) since the same is a prohibited pleading.²¹
Refer to page 746, Labor Law 3: The Fundamentals of Labor Law Review (2021)
16.
Zoe Enterprises hired Celine as a machine operator. In January 2024, Celine was medically diagnosed with tuberculosis and declared “unfit to continue working.” Zoe Enterprises dismissed Celine because of serious illness and gave her separation pay of one month salary per year of service which she used for her hospitalization and medical expenses. In April 2024, Celine was cleared of tuberculosis and was issued a medical certificate that she is medically fit to work. Celine demanded reinstatement from Zoe Enterprises but was refused. Aggrieved, Celine filed a complaint for illegal dismissal. Zoe Enterprises countered that Celine was validly dismissed because she was suffering from a contagious disease. Is Zoe Enterprises liable for illegal dismissal? Explain.
SUGGESTED ANSWER:
Zoe Enterprises is liable for illegal dismissal.
Under the Labor Code of the Philippines, an employer is authorized to terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees,²² However, the decision to terminate employment must be supported by a certification by a competent public health authority that the disease is incurable within a period of six (6) months even with proper medical treatment.²³
In the given problem, the refusal of Zoe Enterprises to reinstate Celine was not supported by a medical certificate issued by a competent public health authority attesting to the fact that Celine’s illness cannot be cured within 6 months. Although the given problem mentions a medical certificate, it was not issued by a public health authority, and it merely states that Celine was unfit to continue working. Furthermore, Zoe Enterprises’ assertion that tuberculosis is contagious does not merit termination of employment because tuberculosis is curable, as in fact Celine was cured in 4 months.
The absence of such a medical certificate issued by a competent public health authority thus rendered the dismissal of Celine illegal.
Refer to page 1289, Labor Law 3: The Fundamentals of Labor Law Review (2021)
17.
Mabuhay Travels, Inc. (MTI), a local manning agency acting for its principal Carousel Cruise Corporation (CCC), deployed Elizabeth as waitress on board the vessel M/S Carnival Miracle. Elizabeth finished the contract and prepared for repatriation. Upon arrival in Manila, Elizabeth complained of episodic chest and neck pains. Elizabeth consulted a cardiologist and was diagnosed of “mitral regurgitation, allergic rhinitis, and thyroid pathology.” The chest and neck pains of Elizabeth persisted that rendered her unfit for sea service. Elizabeth then filed a complaint for disability benefits against MTI and CCC. The Labor Arbiter dismissed the complaint because Elizabeth did not undergo a post-employment medical examination with the company-designated physician within three working days from arrival in the Philippines. Is the Labor Arbiter correct in dismissing the complaint for failure of Elizabeth to comply with the mandatory three-day reportorial requirement? Explain.
SUGGESTED ANSWER:
The Labor Arbiter was correct in dismissing the complaint for failure of Elizabeth to comply with the mandatory 3-day reportorial requirement.
The POEA Standard Employment Contract requires a seafarer to submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return. A failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim benefits therein.²⁴ Jurisprudence dictates that this requirement subsists regardless of the cause of his repatriation, in order for the company-designated physician to ascertain if the seafarer is really suffering from a work-related injury or illness.²⁵
In the given problem, Elizabeth came back to the Philippines upon finishing her contract. However, there was no showing that she submitted herself to medical examination by the company-designated physician within three (3) working days from her arrival.
In view of such a failure, the Labor Arbiter’s dismissal of the complaint is proper.
18.
Fabio entered into a contract of overseas employment as a seafarer with Gibson Ship Management (GSM), a local manning agency acting in behalf of its principal Blythe Tankers Company (BTC). On board the vessel, Fabio suffered lower back pains while performing his assigned task. Despite therapy and medication, Fabio continued to suffer severe lower back pains. The company-designated physician diagnosed Fabio with “Lumbar Strain T/C Slipped Disc.” Fabio then filed a complaint for disability benefits before the Labor Arbiter. GSM and BTC countered that Fabio is disqualified from claiming disability benefits because he concealed his urinary tract infection and hypertension during his preemployment medical examination. Is Fabio entitled to disability benefits even if he concealed pre-existing medical conditions? Explain.
SUGGESTED ANSWER:
Fabio is entitled to disability benefits even if he concealed pre-existing medical conditions.
Although the POEA Standard Employment Contract disqualifies a seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical Examination (PEME),²⁶ jurisprudence teaches that the applicability of Section 20 (E) should be limited to the disability resulting from the concealed illness.²⁷
In the present case, the company-designated physician claimed that Fabio concealed his urinary tract infection and hypertension during his PEME.
However, since the disability of which Fabio was repatriated was not caused by urinary tract infection and hypertension, but by “Lumbar Strain T/C Slipped Disc,” his entitlement to disability benefits thus remained.
19.
Virgie and Nina are neighbors. Virgie requested her house helper Sandro to help Nina with the upkeep of her house for two days each month. Sandro agreed and rendered general household work in Nina’s house. Nina paid Sandro PHP 1,000.00 per day of work. Virgie learned about this additional compensation. Thus, Virgie deducted from Sandro’s monthly wage the amount corresponding to his wage for two days. Can Virgie lawfully make deductions from Sandro’s monthly wage? Explain.
SUGGESTED ANSWER:
Virgie cannot lawfully deduct the amount paid by Nina to Sandro.
Under the Domestic Workers Act, an employer is prohibited from making deductions from the wages other than those mandated by law or unless allowed by the domestic worker through a written consent.²⁸
In the given problem, there was no showing that the deductions made by Virgie were mandated by law. Neither was there a showing that Sandro allowed in writing the deductions made to his salary.
Thus, the deductions made by Virgie are not lawful.
20.
Lottie, Mathie, and Cachie asked Homer if he is interested to work in Indonesia. Homer inquired about the available job and Lottie told him that he will work as a restaurant entertainer. Mathie said that Homer only needs a passport. Cachie added that a certain Mr. Park will finance Homer’s travel expenses. After a week, Cachie gave a ticket to Homer and informed him that he can now leave for Indonesia. Homer, together with Lottie and Mathie, boarded a boat which transported them to Miangas Island. Lottie and Mathie brought Homer to a restaurant and introduced him to Mr. Park. A vehicle fetched Homer and took him to a club. The driver said that the place is a prostitution den. Inside the club, Homer was forced to have sexual intercourse with customers every night. Later, the police authorities rescued Homer and repatriated him to the Philippines. Homer filed against Lottie, Mathie, and Cachie criminal complaints for illegal recruitment and human trafficking. In her counter-affidavit, Cachie claimed that she cannot be convicted of illegal recruitment and human trafficking because she was not part of the group that transported Homer to Miangas Island. Is Cachie criminally liable for both illegal recruitment and human trafficking? Explain.
SUGGESTED ANSWER:
Cachie is criminally liable for illegal recruitment and human trafficking.
Illegal recruitment pertains to recruitment activities carried out by a person who is not a holder of a license or authority, including those who engage in recruitment activities while their license is suspended.²⁹
Furthermore, under the Expanded Anti-Trafficking in Persons Act of 2022, it is unlawful for any person to recruit a person for the purpose of prostitution.³⁰
In the given problem, Cachie conspired with Lottie and Mathie in the commission of a recruitment activity without the requisite license or authority by offering employment to Homer. Cachie was the one who gave Homer his ticket and informed him that he could now leave for Indonesia. Cachie was also the one who informed Homer that that a certain Mr. Park would finance his travel expenses. Moreover, Cachie was part of the conspiracy that recruited Homer to work in a prostitution den.
Cachie is thus criminally liable for illegal recruitment and human trafficking.
Refer to pages 50,51, and 62, Labor Law 3: The Fundamentals of Labor Law Review (2021)
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2025 April 09
Based on Two Supreme Court Decisions, the Contractor Is Legitimate
Rico alleged that on October 2, 2002, PPI Holdings, Inc. (PPI), the sole franchisee of Pizza Hut in the Philippines, hired him as a messenger for its human resources department, and later on, for its accounting department.
Rico stated that his employment was transferred to a manpower agency, a certain Human Resources, Inc., and subsequently, to Consolidated Buildings Maintenance, Inc. (CBMI), now Atalian Global Services.
Rico also stated that despite such transfer, nothing changed with his employment in that he continued to be PPI’s messenger in its accounting department until CBMI sent him, along with other coworkers, a letter dated August 1, 2016 informing him of the termination of his services with PPI.
Rico thus filed an illegal dismissal case with money claims against PPI, CBMI, and their owners, arguing that he was a regular employee of PPI for having worked with it for 14 years, and that there was no just cause for his dismissal.
PPI denied having an employer-employee relationship with Rico. It posited that Rico was merely assigned to it by CBMI, a legitimate contractor that had rendered janitorial, sanitation, warehousing services, and allied services to PPI until the termination of their latest Contract of Services Agreement on September 1, 2016. Invoking the service agreement with CBMI, PPI averred that it was CBMI which relayed the company rules, regulations, and working terms and conditions upon Rico’s engagement, and which paid Rico’s salary, Social Security System, Pag-IBIG, and PhilHealth contributions.
For its part, CBMI acknowledged Rico as its employee assigned to PPI. It asserted that it is a legitimate contractor engaged in the business of providing janitorial, kitchen, elevator maintenance, and allied services to various entities, including PPI. However, while it recognized Rico’s employment, CBMI denied having terminated his services. Instead, it alleged that Rico, along with his other co-employees, was merely placed on floating status when it decided to terminate its latest service contract with PPI effective September 1, 2016 due to certain financial disagreements. Hence, for CBMI, Rico’s complaint should be dismissed for being prematurely filed.
The Office of the Labor Arbiter considered CBMI as a legitimate contractor based on the following documents:
- CBMI Securities and Exchange Commission (SEC) Registration;
- CBMI Company Profile;
- Contracts of Services entered into with PPI for several years;
- CBMI Certificates of Registration with the Department of Labor and Employment under such Department’s Orders numbered 18-A, Series of 2011 and 18-02, Series of 2002; and
- Audited Financial Statement filed with the SEC showing substantial capital or investment.
The Office of the Labor Arbiter further found that, as stipulated in the service agreements, CBMI carried out its work/service independently from its principal in accordance with its own means, method, and manner.
Nonetheless, the Office of the Labor Arbiter ruled that Rico was PPI’s regular employee as it found no evidence of the existence of an employer-employee relationship between CBMI and Rico. Such Office found that Rico’s 14 years of service with PPI, performing tasks which are usually necessary or desirable to PPI’s main business as messenger, proved that Rico was PPI’s employee. Since PPI failed to present any just or authorized cause in terminating his employment, the Office of the Labor Arbiter directed PPI to reinstate Rico and held PPI and CBMI solidarily liable for payment of his backwages.
PPI filed a partial appeal from the Office of the Labor Arbiter’s Decision, insisting that Rico was not its employee but that of CBMI, which is a legitimate contractor as found by said Office.
The National Labor Relations Commission ruled that CBMI is a labor-only contractor. The Commission found that, despite proof of substantial capitalization, there was no showing that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from PPI’s control and supervision. The Commission added that the contracts of services between PPI and CBMI clearly showed that CBMI undertook to merely supply manpower. The Commission further added that CBMI’s registration with the DOLE as an independent contractor was not conclusive of such status.
Further, the Commission agreed with the Office of the Labor Arbiter’s ruling that Rico was PPI’s regular employee. The Commission found that Rico’s job as a messenger was necessary and vital to PPI’s business as the only franchisee of Pizza Hut, which requires food and kitchen services, sanitation, delivery, warehousing, commissary, and related services for its various restaurants. The Commission also took note of Rico’s 14 years of uninterrupted service with PPI.
Finally, the Commission upheld the Office of the Labor Arbiter’s finding that PPI failed to adduce evidence that Rico’s dismissal was for a just or authorized cause, and that procedural due process was observed in his dismissal from employment.
When the case reached the Court of Appeals, such Court declared CBMI as a legitimate contractor, based solely on two cases decided by the Supreme Court concerning PPI and CBMI, specifically, Consolidated Building Maintenance, Inc. v. Asprec, Jr.¹ and Philippine Pizza, Inc. v. Cayetano.² On that premise, the Court of Appeals concluded that Rico was CBMI’s direct employer. Nevertheless, the Court of Appeals sustained the labor tribunals’ uniform ruling that Rico was illegally dismissed from employment.
Rico filed a petition for review on certiorari to assail the ruling of the Court of Appeals.
Did PPI and CBMI engage in labor-only contracting?
The Supreme Court ruled that PPI and CBMI engaged in labor-only contracting.
The Court began by stating that outsourcing of services is not totally prohibited in the Philippines. It pointed out that Articles 106 to 109 of the Labor Code of the Philippines, Department of Labor and Employment Orders numbered 18-02, Series of 2002 and 18-A, Series of 2011, or the implementing rules in force at the time of Rico’s employment, provided the legal basis for service contracting and delineated the situations when it is not permitted. Considering such laws and rules, the Court stated that the following must be considered in determining whether CBMI was a legitimate contractor or engaged in labor-only contracting:
- registration with the proper government agencies;
- existence of substantial capital or investment;
- service agreement that ensures compliance with all the rights and benefits under labor laws;
- nature of the activities performed by the employees, i.e., if they are usually necessary or desirable to the operation of the principal’s company or directly related to the main business of the principal within a definite predetermined period; and
- the exercise of the right to control the performance of the employees’ work.³
In the present case, the Supreme Court found the certificates of registration, financial statements, and service agreements insufficient in supporting PPI and CBMI’s claim of legitimate contracting. The Court mentioned the following reasons:
- A certificate of registration as an independent contractor is not conclusive evidence of such status, as such registration merely prevents the legal presumption of being a labor-only contractor from arising;⁴
- It is settled that, despite proof of substantial capital, a contractor is still considered engaged in labor-only contracting whenever it is established that the principal actually controls the manner of the employee’s work;⁵ and
- The true nature of the relationship between the principal, contractor, and employee cannot be dictated by mere expedience of a unilateral declaration in a contract;⁶
The Supreme Court added that the totality of attendant circumstances led to a finding that PPI and CBMI engaged in labor-only contracting.
First, there was no evidence that CBMI carried on an independent business or undertook the performance of its service contracts according to its own manner and method, free from the control and supervision of PPI. While the various service agreements between PPI and CBMI contained the latter’s undertaking for the employees’ qualification and training, hiring and payroll, as well as their supervision, discipline, suspension or termination, said clauses were still but empty words that hardly helped PPI’s case, in absence of concrete proof that CBMI indeed carried on an independent business.
Second, there was also no evidence that CBMI hired Rico. In fact, there was no contract of employment showing that Rico was an employee of CBMI, nor were there records submitted in evidence to show such relationship.
Third, the fact that PPI exercised the right of control over Rico’s work was clear and unmistakable. As messenger, Rico had been performing his tasks at PPI’s premises for about fourteen (14) years. All those times, all the tools and equipment which he used in the performance of his work were owned by PPI and the latter’s managers and supervisors controlled his work inside the company premises.
Fourth, the various contract of services executed between PPI and CBMI, which spanned for several years from 1999 to 2012, showed that CBMI undertook to supply manpower only.
And fifth, Rico’s job as messenger was necessary and vital to PPI’s business as the Philippine franchisee of Pizza Hut which requires waitering, food and kitchen services, sanitation, delivery, warehousing, commissary and related services for its various restaurants. Otherwise, Rico would not have been repeatedly and continuously hired by PPI for fourteen (14) years. The Court stressed that such repeated and continuing need for the performance of the job is sufficient evidence of the necessity, if not indispensability, of the activity to the business.
The Supreme Court added that the Court of Appeals gravely erred in declaring CBMI as a legitimate contractor solely on the basis of the pronouncements in Consolidated Building Maintenance, Inc. v. Asprec, Jr.⁷ and Philippine Pizza, Inc. v. Cayetano.⁸
The Supreme Court emphasized that the principle of stare decisis cannot be applied in determining whether one is engaged in permissible contracting or otherwise, since such characterization should be based on the distinct features of the relationship between the parties, and the totality of the facts and attendant circumstances of each case, then measured against the terms of and criteria set by the statute.⁹ Specifically, the Court mentioned while those two cases also involved PPI and CBMI, the nature of work and treatment of employment of the employees in those cases may be different from Rico’s. Hence, the Court found it necessary to independently determine Rico’s case, which was aptly undertaken by the Commission in this case.
The Supreme Court further pointed out that the Court of Appeals merely made inference from previous cases without reference to the evidence on hand in concluding that CBMI was a legitimate contractor, and as such was Rico’s direct employer. The Supreme Court reiterated that the totality of the facts and the surrounding circumstances of the case must be considered in distinguishing prohibited contracting from permissible contracting.¹⁰
With the finding that CBMI was a labor-only contractor, such company was considered as a mere agent of PPI, which, in turn, was deemed to be Rico’s employer. Consequently, PPI and CBMI were held solidarily liable for payment of Rico’s awards.
This is because of the established principle that in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.¹¹
Further reading:
- Conjusta v. PPI Holdings, Inc., G.R. No. 252720, August 22, 2022.
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2022 August 22
But the President’s Approval of the Grant of CBA Benefits Was Presumed Under Article 4
On March 20, 2012, the Clark Development Corporation, the operating arm of the Bases Conversion Development Authority, tasked to manage the Clark Special Economic Zone, executed a renegotiated collective bargaining agreement with its supervisory employees’ union.
The collective bargaining agreement contained economic terms in favor of the supervisory employees, specifically the grant of additional annual union leave, bereavement leave, salary increases, uniform allowance, monthly Personal Economic Relief Allowance and a signing bonus. Said agreement also granted free use of guesthouses, use of a service vehicle, as well as the reproduction and distribution of the agreement to all members of the supervisory employees’ union.
However, the Governance Commission for Government-Owned and -Controlled Corporations (Governance Commission) opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, which was signed by the Philippine President on September 8, 2010. Section 9 imposed a moratorium on increases in the salaries, allowances, incentives and other benefits in Government-Owned and -Controlled Corporations unless specifically authorized by the Philippine President.
The Governance Commission stated that the Philippine President has not given Clark Development Corporation the authority to renegotiate the collective bargaining agreement with the supervisory employees’ union and to grant the union members increases or additional benefits.
Furthermore, the Bases Conversion Development Authority recommended that Clark Development Corporation defer or renegotiate its collective bargaining agreement with the supervisory employees’ union should it fail to prove the financial sustainability of the economic terms of such agreement.
On August 1, 2012, the supervisory employees’ union filed before the National Conciliation and Mediation Board a complaint against Clark Development Corporation for its failure to implement the collective bargaining agreement.
On November 5, 2012, the Accredited Voluntary Arbitrator ruled in favor of the supervisory employees’ union and upheld the economic terms or grant of benefits in the collective bargaining agreement. According to the Accredited Voluntary Arbitrator, Section 10 of Executive Order No. 7, Series of 2010, suspended the grant of allowances, bonuses, incentives, and other perks to members of the boards of directors/trustees of Government-Owned and -Controlled Corporations, but only until December 31, 2010. The Accredited Voluntary Arbitrator also held that the approval of the Philippine President in the grant of additional benefits was presumed under the rule on liberal construction in favor of labor under Article 4 of the Labor Code of the Philippines.
Aggrieved, Clark Development Corporation elevated the case to the Court of Appeals through a petition for review.
On April 8, 2013, the Court of Appeals affirmed the Accredited Voluntary Arbitrator’s findings. The Court of Appeals explained that Executive Order No. 7, Series of 2010, does not apply to Clark Development Corporation, as well as to the supervisory employees’ union. The Court of Appeals added that the Philippine President’s approval of the grant of additional benefits was presumed in line with the principle that all doubts should be resolved in favor of labor.
Clark Development Corporation filed its petition for review on certiorari before the Supreme Court and asserted that the Court of Appeals and the Accredited Voluntary Arbitrator erred in allowing the grant of additional benefits to the supervisory employees’ union.
Clark Development Corporation asserted the following:
- The economic terms of the collective bargaining agreement were invalid and cannot be enforced because these were renegotiated without the approval of the Philippine President.
- The GOCC Governance Act of 2011 gave the Philippine President the authority to fix the Government-Owned and -Controlled Corporations’ compensation framework.
- Corollarily, approval of additional benefits by the Philippine President cannot be presumed.
By contrast, the supervisory employees’ union contended that:
- The collective bargaining agreement was the law between the parties and must be respected.
- The collective bargaining agreement was renegotiated consistent with the employees’ rights to organization and collective bargaining.
- Executive Order No. 7, Series of 2010, was not applicable to Government-Owned and -Controlled Corporations without original charter.
- The GOCC Governance Act of 2011 recognized the vested rights of government employees to their salaries.
In the meantime, the Governance Commission moved to intervene in the proceedings and argued that:
- The collective bargaining agreement contravened Executive Order No. 7, Series of 2010, and the GOCC Governance Act of 2011.
- The moratorium on the grant of additional benefits remained effective pending the promulgation and approval of the compensation and position classification system for Government-Owned and -Controlled Corporations.
- In any event, there were no factual and legal bases to presume the consent of the Philippine President on the collective bargaining agreement’s economic provisions.
Were the additional benefits granted to the supervisory employees under the collective bargaining agreement valid?
The Supreme Court ruled in the negative.
The Supreme Court began with the settled rule that the right of government employees to self-organization is not as extensive as in the right of private employees. It then mentioned that the right of government employees to collective bargaining and negotiation is subject to limitations, in that only the terms and conditions of government employment not fixed by law can be negotiated.
The Supreme Court pointed out that in order to control the grant of excessive salaries, allowances, incentives, and other benefits, Executive Order No. 7, Series of 2010, particularly Section 9, has imposed a moratorium on the grant of additional salaries and allowances to employees and officers of Government-Owned and -Controlled Corporations until specifically authorized by the Philippine President.
The Supreme Court stressed that the clause “until specifically authorized by the Philippine President” is not in the nature of an exception. Rather, the clause provides for the situation where the Philippine President, deems it proper to lift the moratorium. According to the Supreme Court, the use of the preposition “until” before the phrase “specifically authorized by the Philippine President” denotes that the moratorium continues up to a particular time, i.e., when the President authorizes anew the grant of the prohibited increases.
On this score, the Supreme Court took judicial notice that the Philippine President has not lifted the moratorium. The Court thus ruled that the economic terms of the collective bargaining agreement executed by the Clark Development Corporation with its supervisory employees’ union on March 20, 2012 were void for violating the law.
The Supreme Court noted the reliance of the Accredited Voluntary Arbitrator and the Court of Appeals upon Section 10 of Executive Order No. 7, Series of 2010. The Supreme Court, however, pointed out that Section 10 is inapplicable to the supervisory employees’ union of Clark Development Corporation, as the said section pertains to members of the Board of Directors/Trustees of Government-Owned and -Controlled Corporations.
The Supreme Court then declared as erroneous the exclusion by the Court of Appeals of Clark Development Corporation from the coverage of Executive Order No. 7, Series of 2010. This was because nothing in the law makes any express distinction between Government-Owned and -Controlled Corporations with original charter, and those incorporated under the Corporation Code. For the Supreme Court, Executive Order No. 7, Series of 2010, applies to all Government-Owned and -Controlled Corporations regardless of the manner of creation.
The Supreme Court added that although the GOCC Governance Act of 2011 authorizes the Governance Commission to develop a compensation and position classification system applicable to all officers and employees of Government-Owned and -Controlled Corporations, such system is subject to approval of the Philippine President.
In the present case, the Supreme Court found that the Governance Commission did not give its favorable recommendation on the renegotiation of additional benefits by Clark Development Corporation and the supervisory employees’ union. The Supreme Court noted that the Governance Commission even opined that the collective bargaining agreement violated Section 9 of Executive Order No. 7, Series of 2010.
The Supreme Court then highlighted that on March 22, 2016, the Philippine President issued Executive Order No. 203, Series of 2016, which disallowed the Governing Boards of all covered Government-Owned and -Controlled Corporations, whether Chartered or Non-chartered, to negotiate with their officers and employees the economic terms of their collective bargaining agreements.
For the Supreme Court, such provision supports the finding that the moratorium under Executive Order No. 7, Series of 2010, has remained effective pending the promulgation and approval of the compensation framework for all the Government-Owned and -Controlled Corporations. The Court found no factual and legal bases for the Court of Appeals and the Accredited Voluntary Arbitrator to presume that the Philippine President approved the renegotiated economic provisions of the collective bargaining agreement between Clark Development Corporation and its supervisory employees’ union.
The Supreme Court emphasized that the construction in favor of labor only applies when there are doubts in the interpretation and implementation of the provisions of the Labor Code of the Philippines and its implementing rules and regulations. The Supreme Court stated that the language of Section 9 of Executive Order No. 7, Series of 2010, on the moratorium on increases in rates of salaries and other benefits is unambiguous. Consequently, the Supreme Court emphasized that the law must be interpreted following its plain and obvious meaning and applied according to its express terms. For the Supreme Court, the law requires the Philippine President’s consent as to additional benefits effectively lifting the moratorium, and any presumption of such approval is unwarranted.
The Supreme Court concluded that Clark Development Corporation had valid reason not to implement the increases in salaries and benefits as provided in the renegotiated collective bargaining agreement. This is because the law has fixed the terms and conditions of government employment, and any contract that violates the law is void and cannot be a source of rights and obligations.
Further reading:
- Clark Development Corp. v. Association of CDC Supervisory Personnel Union, G.R. No. 207853, March 30, 2022.
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2022 March 30
Jurisdiction of the Labor Arbiter and the POEA
Mike and Ryan alleged that on May 11, 2011, they were hired by The W Construction through its agent, U R Employed International Corporation, as construction workers in Malaysia. They entered into a two-year employment contract with a monthly salary of 800 Malaysian Ringgit.
Mike and Ryan narrated that upon their arrival in Malaysia, the broker who fetched them from the airport took their passports. They were made to live in a place with unsafe living conditions. Also, they worked beyond regular hours without pay. Later, they discovered that they only had tourist visas, and that the employer was hiding them from the authorities because they did not have work permits.
Mike and Ryan claimed that they reported their living and working conditions to their broker, but their grievances were unheeded.
Mike and Ryan stated that they were left without any other recourse, which was why on August 14, 2011, Ryan sent an e-mail to the editorial of a Philippine newspaper company, narrating their experience and seeking assistance.
Mike and Ryan continued that in the last week of August 2011, the employer’s human relations officer questioned them about the e-mail sent to the Philippine newspaper company. On September 13, 2011, a supervisor informed them about the termination of their employment. The employer told them that they were processed for repatriation and would be sent home on September 15, 2011. However, they were only repatriated sometime in November 2011. In the meantime, the employer cut off their food supply.
On December 5, 2011, Mike and Ryan filed a complaint for illegal dismissal and money claims against their employer.
Initially, the complaint was dismissed without prejudice because both parties failed to submit their respective position papers. On March 26, 2012, the complaint was reinstated upon a Motion to Revive filed by Mike and Ryan.
The employer denied the allegations of Mike and Ryan. The employer countered that Mike voluntarily resigned from his job, while Ryan was dismissed from employment on the ground of grave misconduct when he sent a derogatory email to a Philippine newspaper company. The employer further submitted a summary of pay slips to prove that Mike and Ryan were properly paid their salary and benefits.
The Office of the Labor Arbiter found that Mike and Ryan were constructively dismissed due to the unbearable and unfavorable working conditions set by the employer. They were awarded reimbursement of placement fees, backwages until the end of their employment contracts, damages, and attorney’s fees. Ryan’s claims for overtime pay and illegal deductions were denied for being unsubstantiated. Mike’s claim of illegal deduction was given credence by the Office of the Labor Arbiter.
The National Labor Relations Commission denied the employer’s appeal and affirmed the ruling of the Office of the Labor Arbiter.
The employer sought recourse before the Court of Appeals, ascribing grave abuse of discretion on the part of the National Labor Relations Commission.
Record revealed that before Mike and Ryan filed their complaint with the Office of the Labor Arbiter, they also filed a complaint with the Philippine Overseas Employment Administration against the employer and its agent for violation of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. The complaint alleged the same set of facts in the complaint before the Office of the Labor Arbiter and were supported by the same affidavits. The complaint filed before the Philippine Overseas Employment Administration was dismissed for failure of Mike and Ryan to substantiate their allegations and attend the scheduled hearings. Mike and Ryan appealed the dismissal to the Department of Labor and Employment, which issued an order dismissing their appeal.
Regarding the petition assailing the ruling of the National Labor Relations Commission, the Court of Appeals dismissed the same since it found substantial evidence to prove that respondents were illegally dismissed.
The employer then elevated its case to the Supreme Court. It pointed out that the other complaint filed by Mike and Ryan before the Philippine Overseas Employment Administration had been dismissed. The employer thus posited that it was erroneous for the Court of Appeals to not consider the orders issued by the Philippine Overseas Employment Administration and the Department of Labor and Employment, when Mike and Ryan alleged the same facts in their complaint filed before the Office of the Labor Arbiter.
Was the Court of Appeals correct in dismissing the employer’s petition?
The Supreme Court ruled in the affirmative because no basis supported the argument that the Office of the Labor Arbiter should have considered the orders issued by the Philippine Overseas Employment Administration and the Department of Labor and Employment in the adjudication of the complaint filed by Mike and Ryan before the Office of the Labor Arbiter.
The first reason discussed by the Supreme Court was that the Philippine Overseas Employment Administration could not have prevented the Office of the Labor Arbiter from ruling on the complaint of Mike and Ryan. Stated otherwise, the Doctrine of Primary Jurisdiction did not apply.
The Supreme Court discussed that the Doctrine of Primary Jurisdiction, also known as the Doctrine of Prior Resort, is the power and authority vested by the Constitution or by statute upon an administrative body to act upon a matter by virtue of its specific competence. The Doctrine of Primary Jurisdiction prevents the court from arrogating unto itself the authority to resolve a controversy which falls under the jurisdiction of a tribunal possessed with special competence.
The Supreme Court further discussed that Primary Jurisdiction does not necessarily denote Exclusive Jurisdiction. Primary Jurisdiction applies where a claim is originally cognizable in the courts and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, has been placed within the special competence of an administrative body; in such case, the judicial process is suspended pending referral of the issues to the administrative body for its review.
In the present case, the Supreme Court found that while Mike and Ryan alleged the same set of facts and submitted the same affidavits before the Office of the Labor Arbiter and the Philippine Overseas Employment Administration, the complaints raised different causes of action. Specifically, the complaint filed before the Office of the Labor Arbiter involved the issue of illegal dismissal and various money claims, while the Philippine Overseas Employment Administration complaint involved administrative disciplinary liability for violation of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. For the Supreme Court, the Doctrine of Primary Jurisdiction could not have applied.
The second reason discussed by the Supreme Court was that in some instances, an administrative body is granted primary jurisdiction, concurrent with another government agency or the regular court.
However, the Supreme Court found that a review of the respective jurisdictions of the Philippine Overseas Employment Administration and the Office of the Labor Arbiter reveals that these administrative bodies do not have concurrent jurisdiction.
The Supreme Court mentioned that Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, provides that the Office of the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary, and other forms of damage. On the other hand, Section 6, Part A, Rule X of the Implementing Rules and Regulations of Republic Act No. 10022 provides that the Philippine Overseas Employment Administration exercises administrative jurisdiction arising out of violations of rules and regulations and administrative disciplinary jurisdiction over employers, principals, contracting partners, and overseas Filipino workers.
For the Supreme Court, the jurisdiction of these administrative bodies does not in any way intersect as to warrant the application of the doctrine of primary jurisdiction. Accordingly, said the Supreme Court, the appreciation by the Philippine Overseas Employment Administration and Office of the Labor Arbiter of the complaints should be limited to matters falling within their respective jurisdictions, and only insofar as relevant to the resolution of the controversies presented before them.
The third reason discussed by the Supreme Court was that the finality of the Order issued by the Department of Labor and Employment had no effect on the resolution of the present petition. For the Supreme Court, the Doctrine of Immutability of Judgments does not apply to this case.
Under the Doctrine of Immutability of Judgments, all the issues between the parties are deemed resolved and laid to rest once a judgment becomes final. No other action can be taken on the decision except to order its execution. The decision becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it will be made by the court that rendered it or by the highest court of the land.
In the present case, the Supreme Court found that the Order of the Department of Labor and Employment, which had become final, settled the issue of whether the employer and its agent violated the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers. It did not involve the issue of the illegal dismissal and money claims lodged by Mike and Ryan with the Office of the Labor Arbiter. To reiterate, the Supreme Court found that the finality of the Order issued by the Department of Labor and Employment had no effect on the resolution of the present petition.
Further reading:
- U R Employed International Corp. v. Pinmiliw, G.R. No. 225263, March 16, 2022.
2022 March 16
The Subcontractor Assigned Him to Work on Our Projects
Freddie alleged that in April 2012, he was hired by Helenar Construction as painter and made to work in its various products.
Freddie narrated that on October 24, 2014, Helenar Construction’s foreman required him to sign a labor contract for a period of 3 months with a clause stating that his employment would be renewable depending on the evaluation of such company’s site engineer and foreman. Believing that the contract would violate his security of tenure, Freddie refused to sign the contract. On November 7, 2014, Helenar Construction’s project-in-charge, barred him from entering the construction site.
On November 9, 2014, Freddie filed a complaint claiming that he was Helenar Construction’s regular employee who was illegally dismissed from employment.
Helenar Construction countered that Freddie is not its regular employee. It explained that Freddie was hired by its subcontractor as a painter for projects. Helenar Construction pointed out that in the construction industry, subcontractors are hired for the flooring, ceiling, painting, electrical and other related services. It likewise claimed that Freddie unjustifiably stopped reporting for work after refusing to sign the labor contract it prepared.
The Office of the Labor Arbiter declared Freddie as a regular employee of Helenar Construction and ruled that he was illegally dismissed from service.
Helenar Construction appealed to the National Labor Relations Commission, which reversed the Office of the Labor Arbiter’s findings. According to the Commission, no employment relationship existed between Freddie and Helenar Construction. Applying the four-fold tests, the Commission ruled that the subcontractor was Freddie’s true employer, based on the following findings: First, the unsigned contract bore the name of the subcontractor and identified him as the employer. Second, through cash vouchers, it was revealed that the subcontractor paid Freddie’s weekly wages. Third, the contract showed that the subcontractor reserved the right to dismiss his painters if they have violated the terms of the labor contract. Finally, Helenar Construction hired subcontractors for specific works such as painting.
Freddie elevated the case to the Court of Appeals, which, however, affirmed the judgment of the Commission.
Freddie thus filed his petition before the Supreme Court and maintained that he was a regular employee of Helenar Construction and that he was illegally dismissed from employment.
Was Freddie a regular employee of Helenar Construction?
The Supreme Court ruled that Freddie was a regular employee of Helenar Construction.
The Court discussed that what determines regular employment is not the employment contract, written or otherwise, but the nature of the job. The applicable test is the reasonable connection between the particular activity performed by the employee, in relation to the usual business of the employer. The standard supplied by Article 295 of the Labor Code of the Philippines is whether the work undertaken is necessary or desirable in the usual business or trade of the employer. This can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business is pursued in the usual course.
In the present case, the Court found that Helenar Construction was principally engaged in the construction business and that Freddie, as a painter, was tasked with preparing, sanding and painting various construction works. The Court mentioned that the nature of Freddie’s job inarguably required him to perform activities which were deemed necessary in Helenar Construction’s usual business and that Freddie’s continuous rehiring to different construction projects from April 2012 until his dismissal in November 2014 attested to the desirability of his services.
The Court added that at any rate, Helenar Construction, as well as the supposed subcontractor, did not comply with the requirements of the law with respect to the hiring of project employees. The Court reiterated that the principal test in determining project-based employment is whether a person is assigned to carry out a specific project or undertaking, the duration and scope of which was specified at, and made known to him, at the time of his engagement. It is crucial that the worker was informed of his status as a project employee at the time of hiring and that the period of his employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure vitiating consent.
In the present case, the Court found no substantial evidence proving that Freddie was adequately informed of his status as a project employee at least at the time of his engagement. There was also no showing that Freddie was fully apprised of the duration and scope of the projects.
While the Court noted the reliance on the provisions of the unsigned labor contract to characterize Freddie as a project employee, the Court viewed the labor contract as an afterthought designed to deny Freddie the benefits of a regular employee, particularly, his security of tenure. The Court stressed that a worker shall be presumed a regular employee absent clear agreement showing that he was properly informed of the nature of his employment. For the Court, the Office of the Labor Arbiter correctly held that Freddie was a regular employee of Helenar Construction.
As a regular employee, said the Court, Freddie may be dismissed subject to both substantive and procedural limitations.
Was the termination of Freddie’s employment valid?
The Court expounded that the dismissal must be for a just or authorized cause provided in the Labor Code of the Philippines, and the employee must be accorded procedural due process, basic of which is the opportunity to be heard and to defend himself. The Court reiterated that in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a valid cause, failure to do so would necessarily mean that the dismissal is not justified. Likewise, evidence must be clear, convincing and free from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to further any vindictive end.
In the present case, the Court found that Helenar Construction failed to establish a valid cause for dismissing Freddie since there was no proof that Freddie unjustifiably stopped reporting for work. The Court gathered that Freddie refused to sign the belated labor contract that Helenar Construction prepared. This irked the foreman and engineer of Helenar Construction and resulted in Freddie being barred from the construction site. The Court similarly found that Freddie’s dismissal from employment was attended with procedural infirmity as there was no administrative investigation conducted. Neither were there prior notices served upon Freddie.
The Court thus affirmed the Office of the Labor Arbiter’s ruling of Freddie’s illegal dismissal.
Further reading:
- Laurente v. Helenar Construction, G.R. No. 243812, 07 July 2021.
2021 July 07
Just a Lessor; Not an Employer
Albina and several persons alleged that Abelardo, Quirino, and Lucia employed them for various years, as lady keeper, waitress, receptionist, dispatcher, bus boy, DJ, entertainer, cook, and cashier in the latter’s restaurant.
Albina and her group narrated that in June 2006, restaurant management began harassing them after they formed a union. Albina and her group further stated that on June 30, 2006, Lucia informed them of the termination of their employment since the restaurant will be closing due to bankruptcy.
Aggrieved by the development, Albina and her group filed a complaint for unfair labor practice, illegal dismissal, and money claims against Abelardo, Quirino, and Lucia before the Office of the Labor Arbiter. Albina and her group asserted therein that the restaurant was financially stable and that the claim of serious business losses was merely a ruse to terminate their employment.
On the other hand, Abelardo denied the existence of an employment relationship with Albina and her group. Abelardo argued that he was not the owner of the restaurant since he was merely the lessor of the building where the said restaurant operated.
As supporting evidence, Abelardo submitted contracts of lease and tax returns showing that he earned income from rentals. Abelardo likewise presented the restaurant’s certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name.
The Office of the Labor Arbiter found that the presented contracts of lease were inconclusive to disavow any employment relationship between Abelardo and Albina and her group. Said Office ruled that Albina and her group were illegally dismissed from employment. Abelardo, Lucia, and Quirino were held solidarily liable to pay the awards in the total amount of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). Record showed that the Decision of the Office of the Labor Arbiter was received by Abelardo on March 23, 2007.
On March 30, 2007, or seven days after receiving the Office of the Labor Arbiter’s Decision, Abelardo filed his appeal with the National Labor Relations Commission. He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00). Abelardo also moved to reduce the bond.
On April 2, 2007, or the last day within which to file his appeal, Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).
Thereafter, Abelardo moved to substitute the cash bond earlier posted in the amount of Five Hundred Thousand Pesos (Php500,000.00) with a surety bond of the same amount. The National Labor Relations Commission granted the motion and ordered Abelardo to post the surety bond. Abelardo complied with the order.
Later, the National Labor Relations Commission exonerated Abelardo from liability as it found no substantial evidence of employment relationship with Albina and her group.
Albina and her group elevated the case to the Court of Appeals and asserted that the National Labor Relations Commission committed grave abuse of discretion in giving due course to Abelardo’s appeal despite his failure to post a bond equivalent to the monetary award.
The Court of Appeals granted the petition. It ruled that Abelardo failed to perfect his Appeal to the National Labor Relations Commission, and it reinstated the decision of the Office of the Labor Arbiter. According to the Court of Appeals, only the amount of Five Hundred Thousand Pesos (Php500,000.00) was posted as bond when Abelardo filed his appeal. The Court of Appeals added that Abelardo’s Motion to Reduce Bond was deemed denied since the same was not acted upon by the National Labor Relations Commission and since no meritorious ground supported the same.
For the Court of Appeals, the full amount of the appeal bond should have been posted by Abelardo when he filed his appeal. For failure to comply with the mandatory and jurisdictional appeal bond requirement and in the absence of substantial proof to the contrary, the Court of Appeals ruled that Abelardo’s appeal was never perfected and that the National Labor Relations Commission did not acquire jurisdiction over the case.
Abelardo filed his petition with the Supreme Court and pointed out the following:
- He posted a cash bond of Five Hundred Thousand Pesos (Php500,000.00) on March 30, 2007, within the period to file an Appeal;
- Such cash bond was subsequently substituted by a surety bond of the same amount; and
- He then posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00).
Abelardo also insisted that Albina and her group failed to establish their employment relationship with him. Abelardo stressed that Albina and her group even alleged in their position paper that it was Lucia who dismissed them.
In their comment, Albina and her group retorted with three points:
- There was no evidence that Abelardo posted the appeal bond within the reglementary period;
- The indemnity agreement between Abelardo and the bonding company did not provide the effectivity period and the amount of premium paid; and
- Through the affidavit of the restaurant’s former manager, it was shown that Abelardo had the final authority in the hiring of employees and their work assignments.
Was Abelardo’s appeal perfected?
The Supreme Court ruled in the affirmative.
The Court reiterated the principle that the right to appeal is a mere statutory privilege exercised only in the manner and in accordance with the requirements of the law.
With regard to appeals to the National Labor Relations Commission from decisions, awards, or orders of the Office of the Labor Arbiter, the Supreme Court pointed to Article 229 of the Labor Code of the Philippines, which provides that in case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
The Supreme Court also referred to Section 6 of Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was effective at the time Abelardo questioned the Office of the Labor Arbiter’s Decision. Relevant portion of the provision states:
No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award.
The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal.
The Supreme Court explained that the purpose of the posting of cash or surety bond is to assure the employees that they will receive the monetary award granted them if they finally prevail in the case. The bond also serves to discourage employers from using the appeal to delay, or even evade, their obligation to satisfy the judgment. Notably, the Court added, the posting of appeal bond is not only mandatory but jurisdictional as well. Non-compliance with the bond requirement is fatal and has the effect of rendering the judgment final and executory.
The Supreme Court clarified that in exceptional cases, however, the bond requirement may be relaxed, provided that:
- There is substantial compliance with the rules;
- Surrounding facts and circumstances constitute meritorious grounds to reduce the bond;
- A liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or
- The appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.
The Supreme Court continued that the reduction of the bond is not warranted when:
- No meritorious ground is shown to justify the same;
- The appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or
- When circumstances show the employer’s unwillingness to ensure the satisfaction of its workers’ valid claims.
In the present case, the Supreme Court ruled that the Court of Appeals erred in dismissing Abelardo’s Appeal for non-perfection. The Supreme Court found that Abelardo received on March 23, 2007 the Office of the Labor Arbiter’s Decision and that he had until April 2, 2007 (or the tenth [10th] day from his receipt of such Decision) to file an appeal. On March 30, 2007, Abelardo appealed and moved to reduce the bond. At the same time, Abelardo deposited a cashier’s check in the amount of Five Hundred Thousand Pesos (Php500,000.00) in favor of Albina and her group. On April 2, 2007 (or the last day of the period to appeal) Abelardo posted a surety bond in the amount of Three Million One Hundred Thousand Pesos (Php3,100,000.00). Subsequently, with the approval of the National Labor Relations Commission, Abelardo replaced the Five Hundred Thousand Peso (Php500,000.00) check deposit with a surety bond of the same amount. For the Supreme Court, Abelardo posted a total of Three Million Six Hundred Thousand Pesos (Php3,600,000.00) within the reglementary period, which substantially covered the total monetary award of Three Million Six Hundred Eighty Three Thousand Three Hundred Ninety Four Pesos and Forty Five Centavos (Php3,683,394.45). The Supreme Court considered such amount as substantial compliance and the same demonstrated Abelardo’s willingness to abide with the rules on perfection of appeals.
The Supreme Court found no merit to the assertions of Albina and her group regarding the failure of the indemnity agreement to indicate the effectivity period and the amount of premium paid. This is because such aspects do not affect the validity of the surety bond and since the Rules of Procedure of the National Labor Relations Commission does not require such formalities with respect to the contents of the indemnity agreement. The Court stressed that in any case, the rules are explicit that a cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond and shall be binding on the appellants and the bonding company.
The Supreme Court accordingly ruled that the Court of Appeals should have considered the merits of the case given that the labor adjudication system rests on the norm that rules of technicality must yield to the broader interest of substantial justice.
In this regard, while the Supreme Court remarked that it could have remanded the case to the Court of Appeals for proper disposition on the merits, the Supreme Court deemed it more appropriate and practical to resolve the question of the existence of the employment relationship in order to avoid further delay.
Did an employer-employee relationship exist between Abelardo and Albina and her group?
For this issue, the Supreme Court ruled in the negative.
The Supreme Court enumerated the four-fold test of employment relationship, namely:
- Selection and engagement of the employee or the power to hire;
- Payment of wages;
- Power to dismiss; and
- Power to control the employee.
Applying such test, the Supreme Court declared that Abelardo was not the employer of Albina and her group. This was based on the following findings:
First, there was no substantial evidence that Abelardo participated in the selection of the restaurant employees. Although the Supreme Court noted the affidavit of the restaurant’s former manager which was presented by Albina and her group, it ruled that the same was not substantial proof absent supporting evidence such as pre-employment records, appointment letters or engagement contracts indicating Abelardo’s involvement in the recruitment process.
Second, Albina and her group did not present any payslip showing that they directly received their premiums and salaries from Abelardo.
Third, as to the power to dismiss, Albina and her group admitted that it was Lucia who terminated their services. There was no evidence that Abelardo wielded such authority.
Fourth, concerning the power of control, there was no proof that Abelardo issued orders and instructions to Albina and her group, or that he supervised and monitored the proper performance of their work.
On the other hand, the Supreme Court found that Abelardo substantiated his claim that he was a mere lessor of the restaurant. Abelardo submitted contracts of lease and tax returns showing that he earned income solely from building rentals. Abelardo likewise presented the certificate of registration of business name, mayor’s permit, and certificate of registration with the Bureau of Internal Revenue which were all issued in Lucia’s name. The Supreme Court considered such certifications as executed in the performance of official duty of the government agencies concerned and can be relied upon as evidence of the facts stated therein. Furthermore, such documents enjoy the presumption of regularity unless the contrary is proved. The Supreme Court thus ruled that Albina and her group’s idle implication that Abelardo used these documents as subterfuge to evade liability deserved scant consideration.
In sum, the Court reiterated that the quantum of proof in labor cases is substantial evidence or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The burden of proof rests upon the party who asserts the affirmative of an issue. In the present case, the Supreme Court found that Albina and her group utterly failed to establish with substantial evidence their supposed employment relationship with Abelardo. The Supreme Court concluded that their case for illegal dismissal cannot prosper absent employment relationship between the parties.
The Supreme Court thus granted Abelardo’s petition and reinstated the Decision of the National Labor Relations Commission.
Further reading:
- Salazar v. Simbajon, G.R. No. 202374, June 30, 2021.
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2021 June 30
Prima Facie Evidence of Employee’s Claim
Reggie alleged that on March 13, 2011, he was hired as a security guard by the employer security agency. Reggie stated that he worked seven days a week from 7:00 a.m. to 7:00 p.m., or from 7:00 p.m. to 7:00 a.m., alternately every two weeks, for a monthly salary of Php8,500.00. Reggie mentioned that his employer did not pay him for overtime work, work rendered on holidays and rest days, as well as 13th month pay, service incentive leave, and night shift differentials.
Reggie also alleged that on April 21, 2014, he, along with some of his colleagues, received a memorandum suspending them from employment starting April 21, 2014 up to May 20, 2014 without any formal investigation. Reggie claimed that he served the suspension and reported back to work on May 21, 2014. The employer security agency, however, refused to accept him.
Thus, Reggie filed a complaint against the employer security agency for illegal suspension; underpayment of salary and 13th month pay; non-payment of overtime and holiday pay; holiday and rest day premiums pay; service incentive leave pay; night shift differentials; moral and exemplary damages; and attorney’s fees.
The employer security agency asserted that Reggie’s suspension was justified since its inspection team caught Reggie sleeping in his post on April 20, 2014. According to the employer security agency, Reggie was directed to report to the head office to explain, but Reggie disregarded the directive. Thus, in a memorandum dated April 21, 2014, the employer security agency suspended him for 30 days, effective April 21, 2014, until May 20, 2014.
As to Reggie’s money claims, the employer security agency argued that Reggie was oriented as to the salary and benefits to which he is entitled, and he agreed to the same. The employer security agency added that the applicable wage order provides that the minimum wage rate does not apply to persons employed in the personal service of another, such as a private security guard like Reggie.
The employer security claimed attorney’s fees, and moral and exemplary damages for the besmirched goodwill and reputation that it suffered by reason of the filing of the complaint.
The Office of the Labor Arbiter ruled that Reggie was validly suspended for sleeping in his post as proved by photographs, which Reggie did not dispute.
The Office of the Labor Arbiter also held that Reggie failed to substantiate his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.
The Office of the Labor Arbiter, nonetheless, declared that Reggie is entitled to salary differentials, 13th month pay, and the monetization of his service incentive leave.
Reggie appealed to the National Labor Relations Commission and insisted on his entitlement to overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials.
The National Labor Relations Commission modified the Decision of the Office of the Labor Arbiter and granted such claims.
The employer security agency filed a petition for certiorari with the Court of Appeals to question the awards of overtime pay, holiday pay, premium pay for holidays and rest days, and night shift differentials in favor of Reggie. It also insisted that the National Labor Relations Commission failed to award damages and attorney’s fees in its favor.
The Court of Appeals held that the National Labor Relations Commission erred in awarding him overtime pay, premium pay for holidays and rest days, and night shift differentials. Thus, it partly granted the petition of the employer security agency by deleting the award of said benefits.
According to the Court of Appeals, entitlement to payment of overtime pay must first be established by proof that overtime work was actually performed. The Court of Appeals also ruled that entitlement to premium pay must first be established by proof that work was rendered during rest days and holidays because such benefit is not incurred in the normal course of business.
The Court of Appeals found that Reggie submitted in evidence photocopies of the entries in a logbook and semi-monthly payroll report for a certain period to support his allegations.
However, the Court of Appeals also found that the photocopies of entries in the logbook did not prove that Reggie rendered overtime work for such period. Said entries were found to have been made by Reggie and other security guards themselves. Although the Court of Appeals observed that these entries were signed by incoming and outgoing security guards, the same were not countersigned by a supervisor or any authorized representative of the employer security agency. According to the Court of Appeals, this raised serious doubt as to whether Reggie actually rendered work on a given date and time.
The Court of Appeals then found that the semi-monthly payroll report presented by Reggie revealed a period different from that entered in the logbook.
For the Court of Appeals, the payroll report submitted by Reggie did not clearly reflect that he performed overtime work as indicated in the photocopies of the entries in the logbook.
On Reggie’s claim for premium pay for holidays and night shift differential, the Court of Appeals ruled that Reggie was unable to adduce concrete proof showing that he had rendered service during regular holidays or rest days or that he had rendered service between 10:00 p.m. and 6:00 a.m.
Reggie elevated his case to the Supreme Court.
Was Reggie entitled to the awards of overtime pay, premium pay for holidays and rest days, as well as night shift differentials?
The Supreme Court ruled that Reggie was not entitled to premium pay, but he was ruled to be entitled to overtime pay and night shift differentials.
The Court stated that in determining the employee’s entitlement to monetary claims, the burden of proof is shifted from the employer or the employee, depending on the monetary claim sought.
On claims for payment of salary differentials, service incentive leave, holiday pay, and 13th month pay, the burden rests on the employer to prove payment. This standard follows the basic rule that in all illegal dismissal cases the burden rests on the defendant-employer to prove payment rather than on the plaintiff-employee to prove non-payment. This likewise stems from the fact that all pertinent personnel files, payrolls, records, remittances and other similar documents — which show that the differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but are in the custody and control of the employer.
On the other hand, for overtime pay, premium pay for holidays and rest days, the burden is shifted on the employee, as these monetary claims are not incurred in the normal course of business. It is thus incumbent upon the employee to first prove that he actually rendered service in excess of the regular eight working hours a day, and that he, in fact, worked on holidays and rest days.
In the present case, the Court found that in proving his entitlement to the payment of overtime pay, premium pay for holidays and rest days, and night shift differentials, Reggie submitted a photocopy of logbook entries which showed the dates and shift when he reported for work, as well as the specific tasks he performed on that particular work shift. The Court also found that before and after each particular work shift, the incoming and outgoing security guard will sign the corresponding entry in the logbook.
However, the Court discovered that the logbook did not contain information on whether Reggie worked on holidays or during his rest days. Thus, the Court denied Reggie’s claim for premium pay for lack of factual basis.
Nonetheless, the Court determined that the entries in the logbook revealed Reggie’s daily 12-hour shifts. Thus, the Court declared him entitled to overtime pay for such work performed beyond eight hours a day, or for four hours for every shift. Based also on the logbook, the Court found that Reggie was entitled to night-shift differentials for each hour of work performed between 10:00 p.m. to 6:00 a.m.
In this regard, the Court acknowledged the following facts:
- The logbook was only a personal record of Reggie and other security guards; and
- It was not verified or countersigned by officers or employees of the employer security agency.
However, the Court stressed that even if the entries were neither verified nor countersigned, the same would not militate against Reggie.
This was because the entries in the logbook were prima facie evidence of Reggie’s claim.
Prima facie evidence, said the Court, is such evidence as, in the judgment of the law, sufficient to establish a given fact, or the group, or chain of facts constituting the party’s claim or defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue it supports, but which may be contradicted by other evidence. ¹
In the present case, the Court recognized the employer security agency’s dispute on the veracity of the entries in the logbook. However, the Court noticed that such employer did not proffer evidence to rebut them or showed that it paid Reggie for the services he rendered on the dates and the hours indicated in the logbook.
The Court stressed that the best evidence for the employer security agency would have been the payrolls, vouchers, payslips, daily time records, and the like, which were in its custody and absolute control.
For the Court, since the employer security agency failed to present such documents, such failure gave rise to the presumption that either it never had them, or if such employer did, their presentation was prejudicial to its cause.²
The Court restated the established rule that the burden of showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of proving it.³ Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter.⁴
The Court accordingly ruled that Reggie should be paid for overtime work rendered beyond eight hours. In addition, the Court declared that Reggie should be paid night shift differentials.
The Court thus partly granted Reggie’s petition and consequently modified the decision of the Court of Appeals by declaring his entitlement to the payment of overtime pay, and night shift differentials.
Further reading:
- Zonio v. 1st Quantum Leap Security Agency, Inc., G.R. No. 224944, May 5, 2021.
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2021 May 05
Genuine Loss of Trust and Confidence
Noel alleged that on January 2, 2013, he was hired as Assistant Vice President for Mining Services by Delta Earthmoving to take charge of the company’s human resources department and to perform other administrative functions. In June 2013, the company assigned him to work as Officer-in-Charge of the Oceana Gold Philippines, Inc. — Didipio Gold Project to assist in the operations while his immediate supervisor, Ian, was on roster break.
Noel claimed that on December 29, 2013, Ian instructed him to pack his things and to not report back to work since his employment was already terminated. On January 6, 2014, Noel confirmed from Ed, who was Delta Earthmoving’s Executive Vice President and Chief Operating Officer, the termination of his employment.
Noel stated that he was also asked to tender his resignation, but he refused. Instead, he filed the present complaint.
Delta Earthmoving maintained that Noel was validly dismissed due to poor performance, resulting in loss of trust and confidence.
To prove the just cause for the dismissal, Delta Earthmoving pointed to the Performance Evaluation and various memoranda indicating gross neglect of duty and inefficiency on the part of Noel, as follows:
- neglecting instructions from his superiors, such as truck hauling and volume studies;
- failing to improve KM 20 to serve as employees’ accommodation;
- failing to submit 2013 mine operations budget;
- delaying the submission of cost reports and billings, which delayed collection; and
- failing to perform his duties despite constant reminders.
Delta Earthmoving stated that Noel refused to receive the performance evaluation as he insisted on having performed his job well.
Aside from the presence of just cause, Delta Earthmoving also claimed to have complied with the requirements of procedural due process in terminating Noel’s employment.
The Office of the Labor Arbiter found that Noel was illegally dismissed, and it held Delta Earthmoving liable for payment of the awards.
Delta Earthmoving filed an appeal with an urgent motion to reduce appeal bond before the National Labor Relations Commission.
The Commission issued a Resolution, granting the prayer for reduction of appeal bond after considering Delta Earthmoving’s posting of a bond equivalent to ten percent (10%) of the monetary award to be reasonable and finding the grounds raised in the appeal to be meritorious.
On the main issue of illegal dismissal, the Commission held in the same Resolution that Noel was validly dismissed by reason of loss of trust and confidence. According to the Commission, Delta Earthmoving received reports of Noel’s failure to perform various tasks, and this led to the issuance of six memoranda relative to his work assignments. Delta Earthmoving conducted a performance evaluation, which Noel failed. While Noel denied these allegations, he did not present any proof that he turned in the required reports, or that he completed the assigned tasks.
On the procedural aspect of Noel’s dismissal from employment, the Commission ruled that Noel was afforded due process as his adamant refusal to submit a written explanation should not be taken against Delta Earthmoving.
Noel elevated the matter on certiorari to the Court of Appeals.
In its Decision, the Court of Appeals upheld the Commission’s judgment of Noel’s valid dismissal. Noel sought reconsideration but this too was denied.
Noel filed his petition before the Supreme Court
He claimed that Delta Earthmoving’s appeal should not have been given due course as there was no meritorious ground to justify the reduction of the appeal bond.
As for his dismissal, Noel insisted that the alleged loss of trust and confidence was not proven since he was not even apprised of his superiors’ alleged dissatisfaction with his performance. Noel added that he was not given copies of the memoranda and the Performance Management Form and was therefore deprived of the opportunity to submit his explanation.
Noel also pointed out that Hansen, his immediate superior, informed him of the good job he did on the mining site. In this regard, Noel contended that the Commission and the Court of Appeals failed to recognize that Hansen, who closely worked with him on-site, was in a better position to evaluate his work performance than his other superiors who were stationed in the Delta Earthmoving main office.
On the procedural aspect, Noel alleged that his termination was aggravated by Delta Earthmoving’s failure to give the required notices. Noel mentioned that Hansen asked him to leave the company premises after the Christmas break and told him to stop reporting for work upon instruction of Delta Earthmoving’s management. Noel stated that Ed also tried to convince him to execute a letter of resignation in exchange for payment of one month’s salary.
Was the Commission correct in giving due course to the appeal?
The Supreme Court ruled in the affirmative.
The Court cited Article 229 of the Labor Code of the Philippines which governs appeals in labor cases. The law provides that decisions, awards, or orders of the Office of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
The Court added that Section 4 (b), Rule VI of the 2011 NLRC Rules of Procedure, as amended, highlights the indispensable nature of the posting of a bond in appeals from the Office of the Labor Arbiter to the National Labor Relations Commission. Such rule states that a mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal.
The Court explained that the posting by the employer of a cash or surety bond is mandatory to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. The requirement was designed to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees’ just and lawful claims.
In the present case, the Court found that Delta Earthmoving’s appeal was accompanied by a motion to reduce appeal bond, and by an amount equivalent to ten percent (10%) of the judgment award, which was posted as appeal bond.
The Court stressed that in order to stop the running of the period to perfect an appeal, a motion to reduce bond must comply with two conditions:
- the motion to reduce bond shall be based on meritorious grounds; and
- a reasonable amount of bond in relation to the monetary award is posted by the appellant.
Regarding “meritorious ground” the Court expounded that the same takes into account the respective rights of the parties and the attending circumstances and could pertain to either the appellant’s lack of financial capability to pay the full amount of the bond, the merits of the main appeal, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are raised in the appeal.
In the present case, the Court found that the Commission made a preliminary determination that Delta Earthmoving had a valid claim as there was no illegal dismissal to justify the award.
For the Supreme Court, the Commission did not err in giving due course to the appeal. Thus, the Supreme Court did not fault the Court of Appeals in sustaining the Commission’s approval of the motion to reduce the appeal bond, considering that the determination of the presence of a “meritorious ground” is a matter fully within the Commission’s discretion.
Was the dismissal of Noel from employment valid?
The Supreme Court ruled that Noel was illegally dismissed from employment.
The Court stated that Article 297 (c) of the Labor Code of the Philippines allows an employer to terminate an employment for willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
The Court explained that an employer cannot be compelled to retain an employee who is guilty of acts inimical to its interests, particularly one who has committed willful breach of trust under Article 297 (c). This is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. However, to justify a valid dismissal based on loss of trust and confidence, the concurrence of two (2) conditions must be satisfied:
- the employee concerned must be holding a position of trust and confidence; and
- there must be an act that would justify the loss of trust and confidence.
The Court found that the first requisite was present in that the parties admitted that Noel was a managerial employee, thus held a position of trust and confidence. The Court noted that a great deal of Delta Earthmoving’s business relied on the competence of Noel.
As regards the second requisite, the Court discussed that in terminating managerial employees based on loss of trust and confidence, proof beyond reasonable doubt is not required. The mere existence of a basis for believing that such employee has breached the trust of his employer is enough. This degree of proof differs from that of a rank-and-file employee which requires proof of involvement in the alleged events, and that mere uncorroborated assertions by the employer will be insufficient. Despite the less stringent degree of proof involving managerial employees, jurisprudence is firm that loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse due to its subjective nature. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith.
In the present case, the Court doubted the evaluation conducted on Noel’s performance based on the following findings:
- The date of evaluation and period covered were not indicated;
- Gaddi, the person who conducted the evaluation, was not competent to conduct the same since he was not Noel’s immediate supervisor;
- No copy of the evaluation was given to Noel. If Noel really refused to receive the same, Delta Earthmoving should have sent a copy of the same to Noel by registered mail.
For the Court, the Performance Evaluation was a mere afterthought to justify Noel’s termination from employment due to alleged poor performance.
On the other hand, the Court found that Ian’s email to Noel was telling in that Noel was commended for all the good work he had done at Didipio Gold Project.
At the same time, the Court discredited Delta Earthmoving’s memoranda which directed Noel to explain in writing certain acts of negligence because there was no showing that the same were served on Noel. The Court viewed the memoranda as concoctions on the part of the employer to strengthen its position against Noel. The Court emphasized that Delta Earthmoving should have instead submitted records revealing Noel’s dismal work performance. There being no showing of poor performance, gross negligence and inefficiency on Noel’s part, no basis supported the alleged loss of trust and confidence upon him.
The Court pointed out that loss of trust and confidence, as a ground for dismissal, may not be invoked arbitrarily. Managerial employees could not simply be dismissed on account of their position.
Moreover, the Court observed that Delta Earthmoving failed to comply with the requirements of procedural due process in the termination of Noel’s employment since the fact of his termination was only relayed to him by his immediate supervisor in the mining site, upon instructions received from Delta Earthmoving’s main office. Noel’s email correspondence with his supervisor even shows that he had to go to Delta Earthmoving’s office in Quezon City to verify for himself if his employment was indeed terminated.
Noel’s dismissal was thus declared illegal as he was denied his right to substantive and procedural due process.
The Court reminded employers that the misdeed attributed to the employee must be a genuine and serious breach of the established expectations required by the exigencies of the position regardless of its designation, and not a mere distaste, apathy, or petty misunderstanding. What is at stake are the employee’s reputation, good name, and source of livelihood, at the very least. Employment and tenure cannot be bargained away for the convenience of attaching blame and holding one accountable when no such accountability exists.
Further reading:
- Manrique v. Delta Earthmoving, Inc., G.R. No. 229429, November 9, 2020.
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2020 November 09
No Second Contract, No Substitution
Maria Antoniette alleged that she was hired by Thanaya Al-Yaqoot Medical Specialist through its agent, Fil-Expat Placement Agency, to work as an orthodontist specialist in the Kingdom of Saudi Arabia.
Maria Antoniette narrated that in May 2016, her employer asked her to sign a document written in Arabic and wanted her to agree that only half of the stipulated salary would be declared to the Kingdom of Saudi Arabia (KSA) government for insurance purposes. She claimed to have expressed hesitation, but she eventually signed the document using a different signature.
Maria Antoniette stated that the employer then repeatedly forced her to execute a new employment contract. When she refused, the employer subjected her to varied forms of harassment in that she was given additional duties. Her employer also threatened to deduct 10,000 Saudi Riyal from her salary and force her out of her accommodation. Furthermore, her employer attempted to make sexual advances on her, and showed no concern when she suffered a severe allergic reaction to latex surgical gloves.
After her repatriation on June 24, 2016, she filed a complaint against her employer for constructive dismissal, contract substitution, breach of contract, and damages before the Office of the Labor Arbiter.
The employer denied that Maria Antoniette was maltreated. It pointed out that Maria Antoniette was visited by the Philippine Overseas Labor Office Local Hire together with the employer’s representative. They observed that Maria Antoniette had no swollen hands, bleeding blisters, and evidence of additional duties or sexual abuse. The employer added that it did not receive any complaint from Maria Antoniette. Although Maria Antoniette mentioned an incident when she was shouted at, the employer explained that it was normal for Arab people to talk in a loud voice.
The employer also denied that it committed contract substitution. Although it admitted that Maria Antoniette was asked to sign a new employment contract, this was only due to Maria Antoniette’s refusal to provide a copy of her contract and diploma, which must be submitted to the KSA Ministry of Health.
The employer also stated that Maria Antoniette was not threatened with a salary deduction. Instead, it merely explained to her that it would be fined should it fail to submit a copy of the contracts to the government.
Finally, the employer retorted that Maria Antoniette’s case could hardly be construed as one of constructive dismissal since she could decide to discontinue her contract. That no dismissal occurred could also be gleaned from its request for her to stay for two more months until her replacement arrives.
The Office of the Labor Arbiter declared the employer guilty of breach of contract and constructive dismissal.
This constrained the employer to appeal the Office of the Labor Arbiter’s Decision to the National Labor Relations Commission.
The Commission reversed the Office of the Labor Arbiter’s Decision and ruled that there was no breach of contract and constructive dismissal. According to the Commission, no contract substitution happened since the employer never intended to prejudice Maria Antoniette in the execution of a new employment contract. The Commission also ruled that since the execution of the new contract was for the purpose of complying with a foreign law requirement of devising a uniform contract for the protection of the worker and the employer, there could be no contract substitution. Furthermore, the Commission ruled out constructive dismissal because if found no evidence that Maria Antoniette’s continued employment was rendered impossible, unreasonable, or unlikely.
Aggrieved, Maria Antoniette elevated the case to the Court of Appeals.
The Court of Appeals reinstated the Decision of the Office of the Labor Arbiter because there was substantial evidence that the employer attempted to force Maria Antoniette into signing a new employment contract. The Court of Appeals stressed that the employer’s attempt to commit contract substitution should be punished to avoid repetition. The Court of Appeals also held that Maria Antoniette was compelled to seek repatriation because her employment became intolerable as she suffered verbal and psychological abuses after she refused to sign the new contract.
The employer assailed the Decision of the Court of Appeals before the Supreme Court.
Did the employer commit contract substitution?
The Supreme Court ruled in the affirmative.
The Court stated that substitution or alteration of employment contracts is listed as a prohibited practice under Article 34 (i) of the Labor Code of the Philippines. The Court further stated that to substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment is considered an act of illegal recruitment under Section 6 (i) of the Migrant Workers and Overseas Filipinos Act of 1995.
In the present case, the Supreme Court noted the admission of the employer that it attempted to make Maria Antoniette sign a new contract.
However, the Supreme Court doubted the claim of the employer that it had no intention of prejudicing Maria Antoniette relative to the supposed second contract.
This was because the employer failed to prove the specific foreign law which required a separate employment contract apart from the Philippine Overseas Employment Administration (POEA)-approved Standard Employment Contract.
In addition, the Supreme Court found it illogical to require Maria Antoniette to sign a second contract for purposes of uniformity if it would only restate the contents of the POEA-approved employment contract, which incidentally, already included an Arabic translation of the agreed terms and conditions between the employee and the employer. The Supreme Court continued that assuming Maria Antoniette failed to provide the employer a copy of the POEA-approved employment contract, the employer could just easily request a copy of the same from its agent.
The Supreme Court also noted the employer’s contention that because Maria Antoniette did not sign another document, there was no second contract, and hence, no contract substitution happened.
The Supreme Court rejected such contention because under prevailing jurisprudence, a refusal of the Overseas Filipino Worker to sign another employment contract does not absolve the employer from liability and the mere intention to commit contract substitution should not be left unpunished.
Was Maria Antoniette constructively dismissed from employment?
The Supreme Court likewise ruled in the affirmative.
The Supreme Court discussed that the law recognizes situations wherein the employee must leave his or her work to protect one’s rights from the coercive acts of the employer. The employee is considered to have been illegally terminated because he or she is forced to relinquish the job due to the employer’s unfair or unreasonable treatment. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances.
In the present case, the Supreme Court found that despite the seeming benevolence of the employer in providing housing accommodation and other benefits to its employees, evidence, nonetheless, showed that Maria Antoniette was singled out and verbally intimidated after she refused to sign the second employment contract. Record revealed the following facts, which impelled Marie Antoniette to seek assistance from the Philippine Embassy and Consulate Officials in Saudi Arabia, as well as from the media:
- Her employer told her that “she will see hell” if she reports her situation to the Philippine embassy;
- Her employer threatened to reduce her salary for her refusal to sign the new contract;
- She was constantly harassed and pressured into signing the new employment contract even in the middle of work;
- She was humiliated in front of her co-workers and her employer’s relatives and friends; and
- Her employer showed no concern over her severe allergic reaction to latex surgical gloves.
Moreover, the Supreme Court criticized the employer’s assertion of Marie Antoniette being overly sensitive. The Court viewed such assertion to be absurd if not downright insulting. According to the Court, Overseas Filipino Workers, especially medical professionals working abroad, could discern a loud voice from abusive language.
Taken together, the Supreme Court considered the foregoing circumstances as sufficient indications of the employer’s bad faith, hostility, and disdain toward Maria Antoniette. The Court stressed that while there was no formal termination of her services, she was left without any option except to quit her job. Maria Antoniette’s continued employment was rendered unlikely and unbearable, amounting to constructive dismissal.
Further reading:
- Fil-Expat Placement Agency, Inc. v. Lee, G.R. No. 250439, September 22, 2020.
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2020 September 22
Consequences of Deliberate Concealment
Magno alleged that on November 13, 2014, he was hired by Goodwood Ship Management, Pte., Ltd., through its agent, Trans-Global Maritime Agency, Inc., as Oiler on board MT G.C. Fuzhou for a period of nine months. He stated that after he was declared fit for sea duty in his pre-employment medical examination, he boarded the vessel on November 15, 2014.
Magno narrated that on January 25, 2015, he suddenly felt severe chest pain, accompanied by dizziness and weakness while carrying out his duties. He was made to endure his condition until his repatriation on May 18, 2015. Upon arrival in the Philippines, he was referred to the employer-company’s designated physician. From May 20, 2015, he was subjected to various tests and treatment for coronary artery disease. After five months of treatment, the company-designated physician discontinued his treatment. Consequently, he consulted his personal cardiologist, who concluded that the nature and extent of his illness rendered him permanently and totally unfit to work as a seaman. Thus, on January 19, 2016, he filed a complaint for disability benefits, medical expenses, damages and attorney’s fees against his employer.
For its part, the employer retorted that Magno denied having a history of high blood pressure or any kind of heart disease when he ticked the “No” box opposite “High Blood Pressure” and “Heart Disease Vascular/Chest Pain” under the section, Medical History in his Pre-Employment Medical Examination (PEME). The employer stated that it was on May 17, 2015, that Magno complained of back and chest pains, with difficulty of breathing and easy fatigability, and was thereafter medically repatriated. During his treatment by the company-designated physician sometime in September 2015, Magno disclosed that he was diagnosed, as early as 2009, with coronary artery disease, for which he underwent Percutaneous Coronary Intervention of the left anterior descending artery. The company-designated physicians later stopped his treatment, prompting him to file a complaint for the payment of permanent total disability benefits.
The Office of the Labor Arbiter ruled in favor of Magno and awarded him permanent total disability benefits. Said Office considered the company-designated physician’s continuation of Magno’s treatment despite his belated disclosure of his existing coronary artery disease as an instance of employer’s waiver of its right to deny liability for disability benefits. According to the Office of the Labor Arbiter, such treatment constituted an implied admission of compensability and work-relatedness of Magno’s lingering cardio-vascular illness. The Office of the Labor Arbiter further found that the company-designated physician failed to issue a final assessment of Magno’s illness or fitness to work, which failure deemed Magno totally and permanently disabled.
On appeal, the National Labor Relations Commission affirmed the Office of the Labor Arbiter’s ruling because Magno’s illness occurred within the duration of his contract, and his treatment lasted for more than 120 days. For the Commission, the award of permanent total disability benefits was justified.
The employer then filed a petition for certiorari with the Court of Appeals, which dismissed the petition.
Thus, the employer sought recourse before the Supreme Court, alleging that the Court of Appeals committed serious errors of law in upholding the Commission’s Decision. The employer insisted that Magno was not entitled to permanent and total disability benefits and his other monetary claims because of deliberate concealment of his coronary artery disease.
For his part, Magno maintained entitlement to permanent total disability benefits since his illness was work-related and had contributed to the development of his condition that resulted in his disability.
Is Magno entitled to permanent total disability benefits?
The Supreme Court ruled that Magno is not entitled to permanent total disability benefits. The Court of Appeals erred in upholding the decision of the National Labor Relations Commission.
The Court started by stating that entitlement of seafarers on overseas work to disability benefits is a matter governed, not only by medical findings, but by law and by contract. The Court stated that the material statutory provisions are Articles 197 to 199 of the Labor Code of the Philippines in relation to Section 2 (a), Rule X of the Amended Rules on Employee Compensation. By contract, the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), the parties’ collective bargaining agreement, if any, and the employment agreement between the seafarer and the employer are pertinent.
The Court pointed out that Section 20, paragraph E of the POEA-SEC clearly provides that “[a] seafarer who knowingly conceals a pre-existing illness or condition in the Pre-Employment Medical Examination (PEME) shall be liable for misrepresentation and shall be disqualified from any compensation and benefits.” The Court said that such rule seeks to penalize seafarers who conceal information to pass the pre-employment medical examination. It even makes such concealment a just cause for termination.
Under the POEA-SEC, there is a “pre-existing illness or condition” if prior to the processing of the POEA contract, any of the following is present:
- the advice of a medical doctor on treatment was given for such continuing illness or condition; or
- the seafarer has been diagnosed and has knowledge of such illness or condition but failed to disclose it during the pre-employment medical examination, and such cannot be diagnosed during such examination.
In the present case the Court found that:
- In his September 18, 2014 PEME, Magno indicated that he was not suffering from any medical condition likely to be aggravated by service at sea or which may render him unfit for sea service;
- Magno also indicated in the PEME that he did not have a history of heart disease/vascular/chest pain, high blood pressure, or that he underwent treatment for any ailment and was taking any medication; and
- He signed the PEME certificate acknowledging that he had read and understood and was informed of the contents of such certificate.
However, the Court further found a medical report issued by the company-designated physician, dated September 17, 2015, which stated therein Magno’s disclosure of a history of coronary artery disease for which he underwent percutaneous coronary intervention of the left anterior descending artery in 2009.
With this disclosure, the Court declared that Magno had obscured his pre-existing cardiac ailment, and such concealment thus disqualified him from disability benefits notwithstanding the medical attention extended by the company-designated physician upon his repatriation.
The Court discussed that even if the misrepresentation was discovered during Magno’s treatment with the company-designated physician, the same was immaterial and could not have canceled out his deception.
The Court reiterated that a PEME is generally not exploratory in nature, nor is it a totally in-depth and thorough examination of an applicant’s medical condition. It does not reveal the real state of health of an applicant, and does not allow the employer to discover any and all pre-existing medical condition with which the seafarer is suffering and for which he may be taking medication. The PEME is nothing more than a summary examination of the seafarer’s physiological condition and is just enough for the employer to determine his fitness for the nature of the work for which he is to be employed.
Since the PEME is not exploratory, the Court emphasized that its failure to reveal or uncover Magno’s ailments cannot shield him from the consequences of his deliberate concealment. In this regard, the “fit to work” declaration in the PEME cannot be a conclusive proof to show that he was free from any ailment prior to his deployment.
For knowingly concealing his history of coronary artery disease during the PEME, Magno committed fraudulent misrepresentation which unconditionally barred his right to receive any disability compensation from his employer.
The Court added that even if it were to disregard Magno’s fraudulent misrepresentation, his claim would still fail.
Coronary artery disease, which is subsumed under cardio-vascular disease, and hypertension are listed as occupational diseases under item 11, Section 32-A of the POEA-SEC.
However, before such disease to be compensable, a seafarer must establish concurrence of the following conditions enumerated in the first paragraph of Section 32-A of the POEA-SEC:
- The seafarer’s work must involve the risk described therein;
- The disease was contracted as a result of the seafarer’s exposure to the described risks;
- The disease was contracted within a period of exposure and under such other factors necessary to contract it; and
- There was no notorious negligence on the part of the seafarer.
Relevant thereto, the Court reiterated prevailing jurisprudence in that the table of illnesses and the corresponding nature of employment in Section 32-A only provides the list of occupational illnesses. However, even if the illness may be considered as work-related for having been specified in the table, the seafarer is still not exempted from providing proof of the conditions under the first paragraph of Section 32-A in order for the occupational illnesses complained of to be considered as compensable. Whoever claims entitlement to benefits provided by law should establish his right thereto by substantial evidence which is more than a mere scintilla; it is real and substantial, and not merely apparent. Further, while in compensation proceedings in particular, the test of proof is merely probability and not ultimate degree of certainty, the conclusion of the courts must still be based on real evidence and not just inference and speculations.
In the present case, the Court found that Magno failed to present sufficient evidence to show how his working conditions contributed to or aggravated his illness. According to the Court, the general statements in his Position Paper were not validated by any written document or other proof. Neither was any expert medical opinion presented regarding the cause of his condition.
The Court expounded that although Magno suffered from coronary artery disease, a cardiovascular illness under item 11 of Section 32-A of the POEA-SEC, the conditions for compensability under the same section were not present since Magno did not present any proof of the required conditions to demonstrate that his illness is work-related and, therefore, compensable. Specifically, Magno failed to discharge his burden to prove the risks involved in his work, that his illness was contracted as a result of his exposure to the risks within the period of exposure and under such other factors necessary to contract it, and that he was not notoriously negligent. The Court thus ruled that Magno was not entitled to permanent total disability benefits.
In deciding against the seafarer in this case, the Court emphasized that the constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers, as justice is for the deserving and must be dispensed within the light of established facts, the applicable law, and existing jurisprudence. The Court said that its commitment to the cause of labor is not a lopsided undertaking. The Court concluded by stating that such commitment cannot and does not prevent it from sustaining the employer when it is in the right.
Further reading:
- Trans-Global Maritime Agency, Inc. v. Utanes, G.R. No. 236498, September 16, 2020.
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2020 September 16

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