Tag: decision

Prematurely Filing a Complaint for Permanent Total Disability Benefits

On 3 November 2010, F.J. Lines, Inc. Panama, through its agent, Eastgate Maritime Corporation, hired the seafarer on board the vessel MV Corona Lions to work as a Chief Cook. The seafarer underwent the requisite Pre-Employment Medical Examination and was found fit for sea duty. Thereafter, he boarded the vessel on 4 December 2010.

Sometime in November 2011, while in the performance of his duties, the seafarer experienced pain in his right leg radiating to his lower extremities. He reported the matter to the Master of the vessel who, in turn, brought him to a hospital in Reihoku, Japan on 14 November 2011. There, he was diagnosed to be suffering from urinary stone in his right urinary tract and was prescribed pain reliever drugs. Due to persistent back and leg pains, he was again taken to a hospital in Newcastle, England on 16 December 2011 where the doctor recommended his medical repatriation for further management and treatment.

Upon arrival in Manila on 19 December 2011, the seafarer was given medical attention by the company-designated physician. He was subjected to rigorous medical examinations, was prescribed medications and was put on therapy to address his condition. On 19 April 2012, the company-designated physician issued a medical opinion stating, among others, that the seafarer’s lumbar spondylosis will require further treatment. As such, he gave an interim assessment of Grade 8. Thereafter, the seafarer continuously received medical treatment from the company-designated physicians. However, on 8 May 2012, the seafarer filed a complaint for total and permanent disability benefits and asserted that his illness was a result of an accident that occurred while he was performing his duties as chief cook.

Question:

Will the complaint prosper?

Answer:

No. The complaint should be dismissed for lack of cause of action.

Jurisprudence dictates that a seafarer may have basis to pursue an action for total and permanent disability benefits in any of the following conditions:

the company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability, hence, justify an extension of the period to 240 days;
240 days had lapsed without any declaration as to his fitness to engage in sea duty or disability being issued by the company-designated physician;
the company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of choice and the third doctor chosen under Section 20 (A) (3) of the Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships¹ are of a contrary opinion;
the company-designated physician acknowledged that he is partially permanently disabled but other doctors who he consulted, on his own and jointly with his employer, believed that his disability is not only permanent but total as well;
the company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability grading;
the company-designated physician determined that his medical condition is not compensable or work-related but his doctor-of-choice and the third doctor selected under Section 20 (A) (3) of the Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarers On-Board Ocean-Going Ships² found otherwise and declared him unfit to work;
the company-designated physician declared him totally and permanently disabled but the employer refuses to pay him the corresponding benefits; and
the company-designated physician declared him partially and permanently disabled within the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after the lapse of the said periods.³

In the present case the seafarer filed his complaint on 8 May 2012, or 141 days from his medical repatriation on 19 December 2011. It was premature for him to invoke his claim for permanent total disability benefits at this time. As such, the complaint should have been dismissed as the seafarer had no cause of action.

Sale of Agricultural Land and Waiver of Retention Rights

Decision in Department of Agrarian Reform v. Carriedo, G.R. No. 176549, January 20, 2016.

On 26 June 1986, Romeo C. Carriedo bought approximately 70.4788 hectares of agricultural land covered by the following titles and tax declarations:

Transfer Certificate of Title No. 35055
Tax Declaration No. 48354
Transfer Certificate of Title No. 17681
Transfer Certificate of Title No. 56897
Transfer Certificate of Title No. 17680

The area sold to Romeo C. Carriedo included a part covered by Transfer Certificate of Title No. 17680 of which herein petitioner, Pablo Mendoza, was a tenant.

In June of 1990, Romeo C. Carriedo then sold these lands to the Peoples’ Livelihood Foundation, Inc. Except for that area covered by Transfer Certificate of Title No. 17680, the lands were subjected to the Voluntary Land Transfer/Direct Payment Scheme and were awarded to agrarian reform beneficiaries in 1997.

On 5 October 1999, the land covered by Transfer Certificate of Title No. 17680 was divided into five (5) sub-lots.

Three of these lots were then distributed to beneficiaries under Presidential Decree No. 27 and covered by Transfer Certificate of Title Nos. 44384, 44385, and 44386, issued on 10 September 1999.

The remaining two (2) lots, consisting of approximately 5 hectares and which was also the land being occupied by Pablo Mendoza, were registered in the name of Romeo C. Carriedo and covered by Transfer Certificate of Title Nos. 344281 and 344282, respectively.

On 26 February 2002, Pablo Mendoza, Corazon Mendoza, and Orlando Gomez filed a Petition for Coverage of these two (2) lots under Comprehensive Agrarian Reform Law of 1988. They claimed that they had been in physical and material possession of the said land as tenants since 1956 and had made the land productive. They prayed that

an order be issued placing the land under Comprehensive Agrarian Reform Program; and
the Department of Agrarian Reform, the Provincial Agrarian Reform Officer, and the Municipal Agrarian Reform Officer be ordered to proceed with the acquisition and distribution of the land in their favor.

The Regional Director granted the petition in an Order dated 2 October 2002.

The Supreme Court, in Department of Agrarian Reform v. Carriedo, G.R. No. 176549, January 20, 2016, however, reversed the said order and declared that the land covered by Transfer Certificate of Title Nos. 344281 and 344282 was Romeo C. Carriedo’s retained area.

In said case, the Court ruled:

The right of retention is a constitutionally-guaranteed right¹, subject to certain qualifications specified by the legislature². It serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the tenant by implementing the doctrine that social justice was not meant to perpetrate an injustice against the landowner.

Deparment of Agrarian Reform Administrative Order No. 02, Series of 2003³ clearly shows that the disposition of agricultural land is not an act constituting waiver of the right of retention.

The Court further found that Romeo C. Carriedo has not committed any of the acts found under Deparment of Agrarian Reform Administrative Order No. 02, Series of 2003.

1)

Romeo C. Carriedo was not shown to have expressly waived in writing his right of retention, as required under sub-section 6.3, Section 6 of Department of Agrarian Reform Administrative Order No. 02, Series of 2003.

2)

Romeo C. Carriedo was not said to have abandoned or declined to assert his right of retention, under subsection 6.7, Section 6 of Department of Agrarian Reform Administrative Order No. 02, Series of 2003.

According to the Court, prevailing rules⁴ give Romeo C. Carriedo any time before receipt of the notice of coverage to exercise his right of retention, or if under compulsory acquisition, within sixty (60) days from receipt of the notice of coverage. Since the validity of the notice of coverage was the very subject of the present case, the Court ruled that the period within which Romeo C. Carriedo should exercise his right of retention had yet to commence.

The Court added that even assuming that the period within which Romeo C. Carriedo could exercise his right of retention has commenced, he could not have been said to have neglected to assert his right of retention over the land, for he filed an application for retention which was even contested by Pablo Mendoza’s son, Fernando. Although Romeo C. Carriedo was shown to have subsequently withdrawn his application, his act of filing an application for retention had belied the allegation that he abandoned his right of retention or declined to assert it.

3)

Not even the sale made by the herein Romeo C. Carriedo of more than fifty (50) hectares in favor of the Peoples’ Livelihood Foundation, Inc. could have been considered as a waiver of his right of retention.

In this case, it was asserted that Romeo C. Carriedo has waived his right of retention by way of estoppel under another rule, i.e., Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 which states:

II. Statement of Policies
x x x
4. Where the transfer/sale involves more than the five (5) hectares retention area, the transfer is considered violative of Sec. 6 of R.A. No. 6657.
In case of multiple or series of transfers/sales, the first five (5) hectares sold/conveyed without DAR clearance and the corresponding titles issued by the Register of Deeds (ROD) in the name of the transferee shall, under the principle of estoppel, be considered valid and shall be treated as the transferor/s’ retained area but in no case shall the transferee exceed the five-hectare landholding ceiling pursuant to Sections 6, 70 and 73(a) of R.A. No. 6657. Insofar as the excess area is concerned, the same shall likewise be covered considering that the transferor has no right of disposition since CARP coverage has been vested as of 15 June 1988. Any landholding still registered in the name of the landowner after earlier dispositions totaling an aggregate of five (5) hectares can no longer be part of his retention area and therefore shall be covered under CARP. x x x (emphasis supplied)

It was argued that Romeo C. Carriedo should have lost his right of retention over the land because he had already sold or disposed, after the effectivity of the Comprehensive Agrarian Reform Law of 1988, more than fifty (50) hectares of land in favor of Peoples’ Livelihood Foundation, Inc.

The Court, however, found such assertions untenable. According to the Court, nowhere in the Comprehensive Agrarian Reform Law of 1988 was it indicated that a multiple or series of transfers/sales of land would result in the loss of retention rights. Neither did it provide that the multiple or series of transfers or sales would amount to the waiver of such right.

The Court mentioned the following relevant portions of the Comprehensive Agrarian Reform Law of 1988, as referred to in Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006:

Section 6. Retention Limits. — Except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural land, the size of which shall vary according to factors governing a viable family-size farm, such as the commodity produced, terrain, infrastructure, and soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created hereunder, but in no case shall retention by the landowner exceed five (5) hectares. x x x
x x x
Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession of private lands executed by the original landowner in violation of the Act shall be null and void: Provided, however, That those executed prior to this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within thirty (30) days of any transaction involving agricultural lands in excess of five (5) hectares.

Section 70. Disposition of Private Agricultural Lands. — The sale or disposition of agricultural lands retained by a landowner as a consequence of Section 6 hereof shall be valid as long as the total landholdings that shall be owned by the transferee thereof inclusive of the land to be acquired shall not exceed the landholding ceilings provided for in this Act.
Any sale or disposition of agricultural lands after the effectivity of this Act found to be contrary to the provisions hereof shall be null and void. x x x

Section 73. Prohibited Acts and Omissions. — The following are prohibited:
(a) The ownership or possession, for the purpose of circumventing the provisions of this Act, of agricultural lands in excess of the total retention limits or award ceilings by any person, natural or juridical, except those under collective ownership by farmer-beneficiaries; x x x

The Court ruled that Sections 6 and 70 are clear in stating that any sale and disposition of agricultural lands in violation of the Comprehensive Agrarian Reform Law of 1988 shall be null and void. The reasonable reading of these three provisions in relation to the constitutional right of retention reveals that the consequence of nullity pertains to the area/s which were sold, or owned by the transferee, in excess of the five (5)-hectare land ceiling. Thus, the Court ruled that the lands covered by Transfer Certificate of Title Nos. 344281 and 344282 fell within Romeo C. Carriedo’s retained area.

The Court stressed that item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 has attempted to defeat the above reading by providing that, under the principle of estoppel, the sale of the first five (5) hectares is valid. But, said rule has also hastened to add that the first five (5) hectares sold corresponded to the transferor/s’ retained area. Thus, since the sale of the first five (5) hectares was valid, therefore, the landowner had lost the five (5) hectares because it happened to be, at the same time, the retained area limit. In reality, Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 had operated as a forfeiture provision in the guise of estoppel. It punished the landowner who had sold agricultural land in excess of five (5) hectares. For the Court, forfeitures, however, partake of a criminal penalty.

The Court stated that in order for an administrative regulation to have the force of a penal law, (1) the violation of the administrative regulation must be made a crime by the delegating statute itself; and (2) the penalty for such violation must be provided by the statute itself.

The Court also found that Sections 6, 70 and 73 (a) of the Comprehensive Agrarian Reform Law of 1988 did not provide that a sale or disposition of land in excess of five (5) hectares results in a forfeiture of the five (5) hectare retention area. According to the Court, Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 imposed a penalty where none was provided by law.

The Court further stated that the repugnancy between the Comprehensive Agrarian Reform Law of 1988 and Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 was apparent by a simple comparison of their texts. The conflict undermined the statutorily-guaranteed right of the landowner to choose the land he shall retain, and Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006, in effect, amended the Comprehensive Agrarian Reform Law of 1988, which should not have happened.

Consistent with the principle that a statute prevails over an administrative order, the Court declared the invalidity of Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 for being ultra vires. Thus, Romeo C. Carriedo neither waived his right to retain the land, nor was placed under estoppel for his sale the land to the Peoples’ Livelihood Foundation, Inc.

Resolution of Petitioners’ Motion for Reconsideration in Department of Agrarian Reform v. Carriedo, G.R. No. 176549, October 10, 2018.

The Court gave due course to the motion filed by the Department of Agrarian Reform that sought the reconsideration of the Decision dated 20 January 2016.

The Court noted that the Department of Agrarian Reform is legally mandated to implement the Comprehensive Agrarian Reform Law of 1988. The said department possesses the special knowledge and acquired expertise on the implementation of the agrarian reform program. According to the Court, to pay no heed to the issues the said department has raised would ignore the basic precepts of due process. The Court accordingly revisited its Decision by taking into account the arguments and position of the department.

The Court reversed and set aside its Decision dated 20 January 2016, taking into consideration Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006, which provides:

II. STATEMENT OF POLICIES
x x x
4. Where the transfer/sale involves more than the five (5) hectare retention area, the transfer is considered violative of Sec. 6 of R.A. No. 6657.
In case of multiple or series of transfers/sales, the first five (5) hectares sold/conveyed without DAR clearance and the corresponding titles issued by the Register of Deeds (ROD) in the name of the transferee shall, under the principle of estoppel, be considered valid and shall be treated as the transferor/s’ retained area but in no case shall the transferee exceed the five-hectare landholding ceiling pursuant to Sections 6, 70 and 73 (a) of R.A. No. 6657. Insofar as the excess area is concerned, the same shall likewise be covered considering that the transferor has no right of disposition since CARP coverage has been vested as of 15 June 1988. Any landholding still registered in the name of the landowner after earlier dispositions totaling an aggregate of five (5) hectares can no longer be part of his retention area and therefore shall be covered under CARP.

In the present case, the Court acknowledged that the sale of the first (5) hectares of agricultural land to the Peoples’ Livelihood Foundation, Inc. made by Romeo C. Carriedo could be viewed as valid.

However, said sale should also be treated as the exercise of Romeo C. Carriedo’s retention rights, such that he would no longer be able to lawfully claim the subject landholding as his retained area.

Accordingly, the remaining landholding also can no longer be part of his retention area and therefore shall be covered under Comprehensive Agrarian Reform Program. As narrated above, the remaining land that pertained to Transfer Certificate of Title No. 17680 was divided into sub-lots, of which two (2) of the lots (the land covered by Transfer Certificate of Title Nos. 344281 and 344282) were thereafter registered in the name of Romeo C. Carriedo.

1)

Both the Constitution⁵ and Comprehensive Agrarian Reform Law of 1988⁶ underscore the underlying principle of the agrarian reform program, that is, to endeavor a more equitable and just distribution of agricultural lands taking into account, among others, equity considerations. The objective of Department of Agrarian Reform Administrative Order No. 05, Series of 2006 is equitable — that in order to ensure the effective implementation of the law, previous sales of landholding (without Department of Agarian Reform clearance) should be treated as the exercise of retention rights of the landowner, as embodied in Item No. 4 of the said administrative order.

2)

The equity in this policy of Department of Agrarian Reform Administrative Order No. 05, Series of 2006 is apparent and easily discernible. With the sale of the lands, it was reasonably presumed that the landowner already received an amount (as purchase price) commensurate to the just compensation conformable with the constitutional and statutory requirement. At this point, equity dictates that he ought not to claim anymore, either in the guise of his retention area or otherwise, that which he already received in the previous sale of his land.

3)

Department of Agrarian Reform Administrative Order No. 05, Series of 2006 is in consonance with the Stewardship Doctrine, under which private property is supposed to be held by the individual only as a trustee for the people in general, who are its real owners. As a mere steward, the individual must exercise his rights to the property not for his own exclusive and selfish benefit but for the good of the entire community or nation. Property use must not only be for the benefit of the owner but of society as well. The State, in the promotion of social justice, may regulate the acquisition, ownership, use, enjoyment, and disposition of private property, and equitably diffuse property ownership and profits.

4)

The objective of land distribution to the landless farmers and farmworkers is carried out by Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006, as it provides for the consequences in situations where a landowner had sold portions of his/her land with an area more than the statutory limitation of five (5) hectares. In this scenario, such administrative order treats the sale of the first five hectares as the exercise of the landowner’s retention rights because, effectively, the landowner has already chosen, and in fact has already disposed of, and has been duly compensated for, the area he is entitled to retain under the law.

5)

Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006 is consistent with Section 70⁷ of the Comprehensive Agrarian Reform Law of 1988, as the former likewise treats the sale of the first five hectares (in case of multiple/series of transactions) as valid, such that the same already constitutes the retained area of the landowner. This legal consequence arising from the previous sale of land therefore eliminates the prejudice, in terms of equitable land distribution, that may befall the landless farmers and farmworkers.

6)

Finally, the sale of Romeo C. Carriedo’s landholdings was made in violation of the Comprehensive Agrarian Reform Law of 1988⁸, having been made without the clearance of the Department of Agrarian Reform. To rule that Romeo C. Carriedo was still entitled to retain the land covered by Transfer Certificate of Title Nos. 344281 and 344282 will, in effect, reward the violation, which the Court maintains will not allow. The Court stressed that the right of retention serves to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the tenant, and by implementing the doctrine that social justice is not meant to perpetrate an injustice against the landowner.

In this case, however, the Court noted that Romeo C. Carriedo has claimed his right over the land covered by Transfer Certificate of Title Nos. 344281 and 344282, not because he was “deprived” of a portion of his land as a consequence of compulsory land coverage, but precisely because he already previously sold his landholdings, so that the remaining portion would still be his.

The Court accordingly stated that although the exercise by a landowner of his retention right is constitutionally guaranteed, the same should not be done without due regard to other considerations which may affect the implementation of the agrarian reform program. This is especially true when such exercise pays no heed to the intent of the law, or worse, when such exercise amounts to its circumvention.

The Court upheld the validity of Item No. 4, Statement of Policies, Department of Agrarian Reform Administrative Order No. 05, Series of 2006. As a corollary, Romeo C. Carriedo no longer possessed retention rights to the land covered by Transfer Certificate of Title Nos. 344281 and 344282.

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2018 October 10

Supervening Events Made It Impossible for Me to Reinstate My Employee

The Court noted Rogel’s illegal dismissal case (G.R. No. 196038), a case related to the present one, which awarded the reliefs of reinstatement and backwages to Rogel. The Court stated that the decision in such case became final and executory on March 30, 2012. Thereafter, during execution proceedings therein, Rogel was granted separation pay in lieu of reinstatement.

Furthermore, the Court found that Consolidated Distillers of the Far East, Inc. (Consolidated Distillers), or Rogel’s employer, no longer questioned the propriety of the awards of separation pay and backwages, as it only took issue with their computation. Specifically, the Court found that Consolidated Distillers argued that it should only be liable for separation pay and backwages until the year 2007 in view of the execution of the Asset Purchase Agreement and the termination of the subsequent Service Agreement it had with Emperador Distillers, Inc. (Emperador Distillers). For Consolidated Distillers, these were supervening events that caused the impossibility of Rogel’s reinstatement, as his position became inexistent as of 2007, consistent with the ruling of the Court in Olympia Housing, Inc. v. Lapastora¹

Should computation of separation pay and backwages be limited to the year 2007, as Consolidated Distillers had asserted?

The Court ruled in the negative.

The Court stated that Consolidated Distillers cannot find support in Olympia Housing because the ruling in that case was against its position.

The Court explained that in Olympia Housing, the employer therein was able to prove in a separate labor case that it had closed its business and followed all statutory requirements arising from the closure of its business. Given this, the Court in Olympia Housing ruled that the employer was liable for backwages and separation pay only until the date of the closure of the business of the employer, even if this was prior to the Office of the Labor Arbiter’s decision finding illegal dismissal.

However, the Court stressed that for Olympia Housing to apply, the employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and separation pay. The statutory requirements referred to by the Court were:

notice to the Department of Labor and Employment;
notice to the employees; and
financial statements substantiating its claim that it was operating at a loss.

In the present case, Consolidated Distillers failed to show that it had closed its business in 2007 and that it had complied with all the statutory requirements for the closure.

The Court found that Consolidated Distillers only alleged the execution of the Asset Purchase Agreement and the termination of the Service Agreement with Emperador Distillers. For the Court, these never meant that Consolidated Distillers had closed its business. The Court even found no evidence that in 2007, Consolidated Distillers had notified the Department of Labor and Employment or its employees of the closure of its business and the reason for its closure. There was also no showing that Rogel was affected by this purported closure of Consolidated Distillers’ business.

The Court thus ruled that Consolidated Distillers was liable for backwages and separation pay until the finality of its decision.

It applied its Decision in Bani Rural Bank, Inc. v. De Guzman,² since separation pay, in lieu of reinstatement, was awarded after the finality of the decision declaring illegal dismissal and during the execution proceedings because the employees therein manifested that they no longer wanted to be reinstated. The Supreme Court held therein that when there is a supervening event that renders reinstatement impossible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay. The Court explained that when there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequently ordered in light of a supervening event making the award of reinstatement no longer possible), the employment relationship is terminated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employment relationship and represents the final settlement of the rights and obligations of the parties against each other.

In the present case, the Court found that the award of separation pay in lieu of reinstatement, was made subsequent to the finality of the decision in Rogel’s illegal dismissal case (G.R. No. 196038). The Court thus ruled that Consolidated Distillers could not evade its liability to Rogel for backwages and separation pay computed until the finality of the Court’s Decision which affirmed the order granting separation pay.

Dismissal of Employees for Minor Offenses

Laura was hired to join ProHealth’s audit team in 2007. She was later promoted to Finance Officer.

On November 26, 2007, Laura’s superior ordered her to give three thousand pesos from the training funds to Prohealth’s District Business Manager, to serve as cash advance.

On November 27, 2007, Prohealth issued a show cause memorandum for Laura’s failure to release the cash advance. Laura was also relieved of her duties and reassigned to the Office of the Personnel and Administration Manager.

In her explanation, Laura alleged that when the District Business Manager saw that she was busy receiving cash sales from another District Business Manager, he told her that he would just return the next day to collect his cash advance. When he told her that the cash advance was for car repairs, Laura told him to get the cash from his revolving fund, which she would reimburse after the repairs were done. Prohealth was dissatisfied with her explanation and transferred her to another office.

On December 3, 2007, Laura was invited to a fact-finding investigation, which was held on December 10, 2007, where Laura was again asked to explain her actions.

On December 17, 2007, she was handed a notice of termination effective December 31, 2007 for disobeying an order of her superior.

Laura filed a complaint for illegal dismissal against Prohealth.

The Office of the Labor Arbiter declared the illegality of Laura’s dismissal from employment. This ruling was affirmed by the National Labor Relations Commission. However, the Court of Appeals reversed and set aside the decision of the Commission and ruled the validity of Laura’s dismissal from employment. The Court of Appeals viewed Laura failure to comply with her superior’s order, an instance of arrogance and hostility, that, in turn, warranted her dismissal.

When the case reached the Supreme Court, Laura insisted that she was illegally dismissed from employment. According to Laura, she believed in good faith that the District Business Manager would just claim his cash advance the day after he tried to claim it and that there was nothing in her actions that would prove that she intended to disobey or defy respondent Prohealth’s order.

Was the dismissal of Laura valid?

The Supreme Court declared that Laura was illegally dismissed from employment.

The Court stated that under the Labor Code of the Philippines an employer may terminate the services of an employee who commits willful disobedience of the lawful orders of the employer. The Court explained that for disobedience to be considered as just cause for termination, two (2) requisites must concur:

the employee’s assailed conduct must have been wilful or intentional; and
the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he [or she] had been engaged to discharge.

For disobedience to be willful, the Court added, it must be characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination. The conduct complained of must also constitute harmful behavior against the business interest or person of his [or her] employer. Thus, it is implied in every case of willful disobedience that the erring employee obtains undue advantage detrimental to the business interest of the employer.

In the present case, the Court found that Laura, as Finance Officer, was instructed by her superior to give a cash advance of three thousand pesos to the District Branch Manager on November 26, 2007. For the Court, such instruction or order was reasonable, lawful, made known to Laura, and pertained to her duties.

The Court then tried to determine whether Laura intentionally and willfully violated such order as to amount to insubordination.

The Court ruled in the negative.

The Court found that when the District Business Manager went to collect the money from Laura, he was told to return the next day as she was still busy. When Laura found out that the money was to be used for a car tune-up, she suggested to the District Business Manager to just get the money from his mobilization fund and that she just would reimburse it after.

Diverging from the ruling of the Court of Appeals, the Supreme Court ruled that no ill will existed between the District Business Manager and Laura. According to the Supreme Court, Laura’s failure to immediately give the money to the District Business Manager was not the result of a perverse mental attitude but was merely because she was busy at the time. Neither did she profit from her failure to immediately give the cash advance for the car tune-up nor did respondents suffer financial damage by her failure to comply. For the Court, the severe penalty of dismissal was not commensurate to her infraction. Laura was illegally dismissed from employment.

Substantial Compliance with Appeal Bond Requirements

The situation in this case was that the Office of the Labor Arbiter found that the employer had illegally dismissed three of its employees. This decision of the Office of the Labor Arbiter was affirmed by the National Labor Relations Commission. All parties then filed a Petition for Certiorari before the Court of Appeals.

A portion of the Decision of the Court of Appeals related to its finding that the employer substantially complied with the requirement of an appeal bond despite it not appearing in the records of the surety company since the employer believed in good faith that the bond it secured was genuine.

However, the employees argued that the Court of Appeals should have dismissed the Petition for Certiorari outright since the employer failed to post a genuine appeal bond before the National Labor Relations Commission. The petitioner-employees alleged that when the Sheriff of the Commission attempted to enforce the judgment award against the appeal bond, said Sheriff was informed that the appeal bond procured by the employer did not appear in the records of the bonding company. The petitioners-employees also claimed that the employer was notified by the National Labor Relations Commission that its appeal bond was not genuine, showing that the employer did exhibit good faith.

On the other hand, the employer countered that procedural rules should liberally be applied to their case since it acted in good faith in posting their appeal bond. The employer further asserts that the issue should have already been considered moot since the employees were able to garnish and collect the amounts allegedly due to them.

Did the employer perfect its appeal upon discovery of its forged appeal bond?

Yes, because the Supreme Court found that the employer had substantially complied with the requirements on the posting of an appeal bond.

The Court reiterated the principles that an appeal is not a matter of right. Courts and tribunals have the discretion whether to give due course to an appeal or to dismiss it outright. The perfection of an appeal is, thus, jurisdictional. Non-compliance with the manner in which to file an appeal renders the judgment final and executory. In labor cases, an appeal by an employer is perfected only by filing a bond equivalent to the monetary award.

The Court further stated that the ruled of the National Labor Relations Commission require that the appeal bond filed be genuine. An appeal bond determined by the National Labor Relations Commission to be irregular or not genuine shall cause the immediate dismissal of the appeal. The Court also stated that while the procedural rules strictly require the employer to submit a genuine bond, an appeal could still be perfected if there was substantial compliance with the requirement.

In this instance, the Court found that the National Labor Relations Commission certified that the employer was able to file a security deposit in the amount of more than 6.5 million pesos showing that the premium for the appeal bond was duly paid and that there was willingness to post it. The Court also noted that the employees likewise attached documents proving that Alpha Insurance was a legitimate and accredited bonding company.

The Court stressed that despite the employees’ failure to collect on the appeal bond, the employees never denied that they were eventually able to garnish the amount from the employer’s bank deposits. For the Court, such situation fulfilled the purpose of the bond, which was, to guarantee the payment of valid and legal claims against the employer.

The Court accordingly considered the employer to have substantially complied with the requirements on the posting of an appeal bond.

Employment Status the Day Before the Occurrence of the Strike or Lockout

The employer here found a need to improve its selling and distribution system if it wanted to remain viable and competitive in the business. Thus, it decided to implement a new cost-effective and simplified scheme of selling and distributing its products, that, in turn, led to a separation of twenty seven (27) rank-and-file, regular employees and union members on the ground of redundancy.

The employer claimed that prior to the termination of employment, it had made a careful study of how to be more cost effective in operations and competitive in the business. It recognized in the process that its multi-layered selling and distribution system had to be simplified. Thus, it determined that the phasing out of said system was necessary which, however, resulted in the termination of employment of certain employees as their positions have become redundant.

On May 29, 2009, the employer issued notices of termination to twenty seven (27) rank-and-file, regular employees and members of the union on the ground of redundancy due to the ceding out of its selling and distribution systems to the Market Execution Partners. The termination of their employment was made effective on June 30, 2009, but the union members were no longer required to report for work as they were put on leave of absence with pay until the effectivity date of termination. The union members were also granted individual separation packages, which many of them accepted, but under protest.

The union asserted that the new selling and distribution system adopted and implemented by the employer would result in the diminution of the union membership amounting to union busting and to a violation of the Collective Bargaining Agreement provision against contracting out of services or outsourcing of regular positions. Thus, they filed a Notice of Strike with the National Conciliation and Mediation Board on June 3, 2009 on the ground of unfair labor practice, among others. On June 11, 2009, the union conducted a strike vote where a majority decided on conducting a strike.

On June 23, 2009, the Secretary of the Department of Labor and Employment assumed jurisdiction over the labor dispute by certifying for compulsory arbitration to the National Labor Relations Commission the issues raised in the notice of strike. The Secretary also enjoined the parties from committing any act that may further exacerbate the situation.

At this point, the union asserted that the employer should have enjoined the termination of employment which took effect on July 1, 2009. On the other hand, the employer contended that termination of employment was a certainty, from the time it issued the notices of termination and that the status quo prior to the issuance of the assumption order included the impending termination of the employment of the 27 employees.

On March 16, 2010, the National Labor Relations Commission ruled that the employer implemented a valid redundancy program and that it did not commit unfair labor practice. The Commission further found no violation in the dismissal of the employees from employment because their respective notices of dismissal were received prior to the assumption order of the Secretary of the Department of Labor and Employment. The Commission found that the employer did not commit an act that exacerbated the dispute.

The Court of Appeals affirmed the Decision of the National Labor Relations Commission.

The Supreme Court, in turn, affirmed the validity of the employer’s redundancy program.

One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

The Court reiterated prevailing jurisprudence in that unfair labor practice refers to acts that violate the workers’ right to organize. The Court stated that there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers’ right to self-organization. Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize. To prove the existence of unfair labor practice, substantial evidence has to be presented.

In the present case, the Court found that the union failed to substantiate its charge of unfair labor practice against the employer. According to the Court, the consequent termination of employment due to redundancy is not per se an act of unfair labor practice amounting to union busting. For while the number of union membership was diminished due to the termination of the employment of union members, it cannot safely be said that the employer acted in bad faith in terminating their services because the termination was not without a valid reason. There was no showing that the redundancy program was motivated by ill will, bad faith or malice, or that it was conceived for the purpose of interfering with the employees’ right to self-organize.

The findings of the National Labor Relations Commission and the Court of Appeals on said issue were affirmed.

However, the Court found that the employer violated the return-to-work order in that the status quo was not maintained after the Secretary of the Department of Labor and Employment had assumed jurisdiction over the dispute on June 23, 2009.

In this regard, the Court relied on Article 278 [Formerly 263] (g) of the Labor Code of the Philippnines, which provides the conditions for, and the effects of, the assumption of jurisdiction by the Secretary of the Departent of Labor and Employment over a dispute.

The Court explained that the powers given to the Secretary of the Department of Labor and Employment under Article 278 [Formerly 263] (g) is an exercise of police power with the aim of promoting public good. In fact, the scope of the powers is limited to an industry indispensable to the national interest as determined by the Secretary of the Department of Labor and Employment. Industries that are indispensable to the national interest are those essential industries such as the generation or distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries. And following Article 263 (g), the effects of the assumption of jurisdiction are the following:

the enjoining of an impending strike or lockout or its lifting, and

an order for the workers to return to work immediately and for the employer to readmit all workers under the same terms and conditions prevailing before the strike or lockout, or the return-to-work order.

The Court added that when the Secretary of the Department of Labor and Employment exercises these powers, he is granted “great breadth of discretion” in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction over a labor dispute, or as in this case the certification of the same to the National Labor Relations Commission for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout.

The Court then highlighted the significance of the return-to-work order, which is interlocutory, and is merely meant to maintain the status quo while the main issue is being threshed out in the proper forum. The Court stressed that the status quo is simply the status of the employment of the employees the day before the occurrence of the strike or lockout.

According to the Court, from the date the Secretary of the Department of Labor and Employment assumes jurisdiction over a dispute until its resolution, the parties have the obligation to maintain the status quo while the main issue is being threshed out in the proper forum — which could be with Secretary of the Department of Labor and Employment or with the National Labor Relations Commission. This is to avoid any disruption to the economy and to the industry of the employer — as this is the potential effect of a strike or lockout in an industry indispensable to the national interest — while the Secretary of the Department of Labor and Employment or the National Labor Relations Commission is resolving the dispute.

In the present case, the Court found that since the union voted for the conduct of a strike on June 11, 2009, when the Secretary of the Department of Labor and Employment issued the return-to-work order dated June 23, 2009, this meant that the status quo was the employment status of the employees on June 10, 2009. This status quo should have been maintained until the National Labor Relations Commission resolved the dispute in its Resolution dated March 16, 2010. For the Court, the said Resolution then took the place of the return-to-work order of the Secretary of the Department of Labor and Employment and the employer no longer had the duty to maintain the status quo after March 16, 2010.

The Court accordingly awarded to the employees backwages and other benefits from July 1, 2009 until March 16, 2010, with a recomputation of their separation pay taking into consideration the termination of their employment beginning March 16, 2010.

The Goal of Adequate and Sustained Agricultural Production

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

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

The Department of Agrarian Reform approved the said agreement.

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

San Juan’s Claims

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

Abella’s Arguments

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

The Supreme Court did not agree with Abella.

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

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

transfer by hereditary succession; and
transfer to the Government.

Sales or transfers of lands made in violation of Presidential Decree No. 27¹ in favor of persons other than the Government by other legal means or to the farmer’s successor by hereditary succession are null and void.

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

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

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

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

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

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

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

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

Secular View of Morality

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

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

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

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

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

The just cause consisted in her engaging in premarital sexual relations with her boyfriend, resulting in her becoming pregnant out of wedlock. The labor tribunals deemed said act to be immoral, which was punishable by dismissal under Brent’s rules and which likewise constituted serious misconduct under Article 297 (a) of the Labor Code of the Philippines.¹ For the labor tribunals, since the employee was Brent’s Human Resource Officer in charge of implementing its rules against immoral conduct, she should have been the epitome of proper conduct.

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

Immorality as a Just Cause for Termination of Employment

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

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

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

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

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

1)

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

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

2)

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

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

2a)

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

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

2b)

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

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

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

2c)

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

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

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

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

2d)

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

2e)

Brent, likewise, could not resort to the Manual of Regulations for Private Schools² because premarital sexual relations between two consenting adults who have no impediment to marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular view of morality, did not amount to a disgraceful or immoral conduct under the said manual.

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

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

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

Marriage as a Condition for Reinstatement

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

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

The Court did not agree.

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

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

No less than the 1987 Constitution³ mandates that the “State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.”

The Labor Code of the Philippines, meanwhile, provides:

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

With particular regard to women, the Magna Carta of Women⁴ protects women against discrimination in all matters relating to marriage and family relations, including the right to choose freely a spouse and to enter into marriage only with their free and full consent.

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

Said the Court:

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

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

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

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

A Consequence of Its Participation in Prolonging the Proceedings

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

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

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

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

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

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

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

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

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

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

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

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

With regard to the proper rate of legal interest, the Court reiterated the guidelines it set forth in Nacar v. Gallery Frames.¹ Thus:

The Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated 16 May 2013, approved the amendment of Section 2 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799, Series of 2013, effective 1 July 2013. x x x
[I]n the absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum — as reflected in the case of Eastern Shipping Lines (G.R. No. 97412, July 12, 1994, 234 SCRA 78) and Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 — but will now be six percent (6%) per annum effective 1 July 2013. It should be noted, nonetheless, that the new rate could only be applied prospectively and not retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only until 30 June 2013. Come 1 July 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable.” x x x
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to 1 July 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.

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

The Court in Nacar imposed the legal interest of

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) She suffered an illness;

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

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

(4) Her illness is one of the occupational diseases within the Standard Employment Contract,² or her illness or injury is otherwise work-related;³ and

(5) She complied with the four conditions enumerated under Section 32-A⁴ of the Standard Employment Contract for an occupational disease, or a disputably-presumed work-related disease, to be compensable.

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

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

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

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

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

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

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

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

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

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

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

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Paulino Ungos III

Supervening Events Made It Impossible for Me to Reinstate My Employee

Should computation of separation pay and backwages be limited to the year 2007, as Consolidated Distillers had asserted?

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Dismissal of Employees for Minor Offenses

Was the dismissal of Laura valid?

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Substantial Compliance with Appeal Bond Requirements

Did the employer perfect its appeal upon discovery of its forged appeal bond?

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Employment Status the Day Before the Occurrence of the Strike or Lockout

One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

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A Consequence of Its Participation in Prolonging the Proceedings

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Decision in Department of Agrarian Reform v. Carriedo, G.R. No. 176549, January 20, 2016.

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Resolution of Petitioners’ Motion for Reconsideration in Department of Agrarian Reform v. Carriedo, G.R. No. 176549, October 10, 2018.

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Should computation of separation pay and backwages be limited to the year 2007, as Consolidated Distillers had asserted?

Further reading:

Was the dismissal of Laura valid?

Further reading:

Did the employer perfect its appeal upon discovery of its forged appeal bond?

Further reading:

One issue that reached the Supreme Court was whether the employer’s implementation of the redundancy program was an unfair labor practice.

The other issue resolved by the Court was whether the employer should have enjoined the effectivity of the termination of the employment of the 27 affected union members when the Secretary of the Department of Labor and Employment assumed jurisdiction over their labor dispute.

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San Juan’s Claims

Abella’s Arguments

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

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Immorality as a Just Cause for Termination of Employment

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Marriage as a Condition for Reinstatement

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